Orders of the Day — Energy Bill [Lords]

– in the House of Commons at 4:30 pm on 10th May 2004.

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[Relevant documents: Ninth Report from the Transport Committee, Session 2003–04, on Navigational Hazards and the Energy Bill (HC 555); Evidence taken before the Transport Committee on 28th April and appendices thereto, relating to Navigational Hazards (uncorrected typescripts are available in the Vote Office).]

Order for Second Reading read.

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry 4:34 pm, 10th May 2004

I beg to move, That the Bill be now read a Second time.

The Bill is an important step towards fulfilling the Government's commitment to a sustainable energy policy, which we set out last year in the energy White Paper and which is designed to deal with three major challenges facing our nation. The first is the challenge of climate change, the second is the shift from being a net exporter of energy to becoming a net importer, and the third is the need to modernise our energy infrastructure to cope with changing technologies and needs. The Bill implements proposals on renewable energy and on competition in the energy market that we made in the White Paper. It also gives effect to the commitments on managing nuclear energy that we made in the 2002 White Paper.

Important though it is, this legislation is not the whole picture. Since the energy White Paper was published, we have been active on many fronts, set out fully in our first annual report two weeks ago. For example, we have agreed principles for a new framework treaty with Norway for a new gas pipeline capable of delivering 20 per cent. of our annual gas supplies by 2006–07. We have submitted our draft national allocation plan for the European emissions trading system to the European Commission. We have put in place stringent new social and environmental guidelines to help Ofgem—the Office of Gas and Electricity Markets—to regulate markets, while making a sustainable energy supply more achievable.

We have already given consent to, or have under consideration, applications for some 4.6 GW of new renewable capacity. Together with the existing capacity, that amounts to more than 60 per cent. of what is needed to achieve our 2010 target. The round 2 offshore proposals will add substantially to that figure. We have also lifted more than 750,000 vulnerable households out of fuel poverty through the Warm Front programme.

Photo of Mr Kevin Hughes Mr Kevin Hughes Labour, Doncaster North

Does my right hon. Friend believe that taking this country into being a net importer of energy complies with part 1, clause 1, which states:

"The Secretary of State shall have a duty to ensure the integrity and security of electricity and gas supply"?

That seems a little strange to me.

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

My hon. Friend raises an important point, and I shall come in a moment to clause 1 as currently drafted. However, as he knows, because we have discussed it on other occasions, although the United Kingdom has been in the fortunate position for some decades now of being a net energy exporter, most developed countries are not energy exporters, and that in no way damages their capacity for economic growth.

Photo of Mrs Gillian Shephard Mrs Gillian Shephard Conservative, South West Norfolk

Further to the previous intervention, when the Secretary of State comes to give that explanation to her hon. Friend Mr. Hughes, will she also explain what she means by saying in part 1 of the Bill that the Government should be required

"to develop effectively sources of energy enabling the UK to avoid undue reliance on imports"?

That chimes with what the hon. Gentleman said, and I am sure that the Secretary of State will want to expand on both those statements in part 1.

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

I am grateful to the right hon. Lady for that intervention, and I shall return to that point in a moment.

Before I do that, may I underline the fact that the Bill has already benefited from extensive scrutiny? The part of the Bill that creates the single wholesale electricity market for Britain, the BETTA—British electricity trading and transmission arrangements—system, was published for pre-legislative scrutiny in January last year. The draft Nuclear Sites and Radioactive Substances Bill, which contained provisions on the nuclear decommissioning authority, was published for pre-legislative scrutiny last June. I am grateful to right hon. and hon. Members on the Trade and Industry Committee for their reports, which have been of great assistance in the preparation of this legislation.

The Bill has also benefited from full and thorough debate in another place. Indeed, there have been 75 hours of debate on it already, and some valuable changes have been made as a result. For example, we have clarified the scope of and extended the time limit for appeals in part 4.

Photo of Gwyneth Dunwoody Gwyneth Dunwoody Labour, Crewe and Nantwich

Before my right hon. Friend leaves the point about the amendments made in those 75 hours, can she assure me that her Department's position now is that it does not intend to make changes to clauses 100 and 101?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

I shall come to that point in a moment. I shall deal with the amendments made in another place as I deal with each of the issues in the Bill.

The Bill has three main themes—competitive markets that will deliver for consumers, renewable energy and nuclear clean-up—and I shall deal with each in turn.

Photo of Norman Baker Norman Baker Liberal Democrat, Lewes

The Secretary of State did not mention energy efficiency, which as she knows can play a major part in tackling climate change. Why is energy efficiency not a central part of the Bill, and why was the Government's target sunk last week?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

Both my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs and I are acting to ensure that we achieve the substantial improvements in energy efficiency that are necessary, and which we set out in the energy White Paper. My right hon. Friend the Deputy Prime Minister, in his review of building regulations, is considering what more needs to be done to raise standards of energy efficiency in homes and offices.

The first central issue in the Bill is competitive markets, and how they will deliver for consumers. Security of supply is a major concern for domestic consumers, for business and for Government. The current law places obligations relating to security of supply on me, as Secretary of State, and on Ofgem as the independent regulator. As hon. Members would expect, those duties are taken extremely seriously.

I believe that the existing regulatory framework is best placed to deliver security of supply—a properly functioning market framework rather than command and control, or intervention by the Government.

Photo of Crispin Blunt Crispin Blunt Conservative, Reigate

While the right hon. Lady is making clear the value of the competitive market, will she also tell us that that competitive market has lifted far more people out of fuel poverty than her Warm Front initiative?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

The significant fall in electricity prices resulting from our reforms of the previously rigged market have indeed helped many low-income households out of fuel poverty, as have the substantial improvements in low-income families' incomes resulting directly from benefit improvements and the tax credits introduced by my right hon. Friend the Chancellor of the Exchequer. All that is in addition to the Warm Front programme.

Let us consider what happened last winter. The House will remember that at the beginning of the winter, just before Christmas and subsequently, we continually heard from various prophets of doom that there would be a winter of black-outs. [Interruption.] No, we did not hear that from Mr. O'Brien, but we heard it from many people who were extensively quoted in the press.

What actually happened was that early in the winter, National Grid Transco signalled its prediction of the plant margin that might be available. The result of that clear information was that generators brought mothballed plant back, in response both to the NGT signals and to rising prices. Capacity increased, the lights stayed on and the scaremongers were proved wrong.

Photo of Mr Martin O'Neill Mr Martin O'Neill Chair, Trade & Industry Committee, Chair, Trade & Industry Committee

My right hon. Friend is to be congratulated on getting the mothballed plant into place, but the only problem—or perhaps I should say the advantage—was that it was never tested, because last winter was a good winter. It cost money for the companies to hold that hitherto mothballed plant in readiness for dramatic drops in temperature. How can we encourage them to do the same next winter? I hope that, again, it will not be cold, but the companies will still have the expense of keeping the kit ready for immediate switch-on.

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

My hon. Friend makes an important point. As that mothballed plant, which had been withdrawn in response to low prices, was brought back on stream, the margin was about the same as it had been in previous winters. That was the market operating properly.

I am concerned that as drafted, clause 1, which was introduced in another place, undermines the principle of properly working markets and independent regulation. We are therefore working with the energy industry to determine the best way forward. Members may have noticed a letter of 26 April to the Financial Times from the chief executive of Centrica and the managing director of British Gas. They said that what is certain is that if the Government change the rules now, regulatory risk would increase and potential investors in new capacity, including British Gas, would reconsider.

Photo of Joan Walley Joan Walley Labour, Stoke-on-Trent North

Irrespective of the changes and the discussions that my right hon. Friend is having on clause 1, can she assure the House that she will speak to the Association for the Conservation of Energy, which is obviously very concerned about this issue?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

If ACE has not already been part of those discussions, I am happy to give my hon. Friend that assurance.

Part 4 of the Bill contains a number of provisions to promote competition in the energy market. Chapter 1 establishes a single wholesale electricity market for Great Britain—British electricity trading and transmission arrangements, or BETTA—which will provide access to a larger market for all generators. That is especially important to those in Scotland, where capacity already outstrips demand by 70 per cent., and where many of the new renewable generation projects are being built. But the new system will also help consumers: we estimate that Scottish customers' electricity bills should fall by some £13 a year on average.

Chapter 2 implements European electricity and gas legislation—

Photo of Paddy Tipping Paddy Tipping Labour, Sherwood

Prices have fallen in real terms for many years, but the renewables obligation, the need to rewire Britain, emissions trading and energy efficiency will all add to costs. Is it not true that the days of relatively cheap power have gone, and that we need to think through the social, economic and political cost of increasing prices?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

As my hon. Friend says, energy prices have fallen very significantly; in most cases, they are at a 20 or even 30-year low. We have to ensure that a market framework is in place—the White Paper made this case in some detail— that gives proper signals about the cost of environmental pollution, which is why we are so committed to the principle of the European emissions trading scheme. We also have to ensure much more investment in, and emphasis on, energy efficiency, which we all accept is by far the cheapest and most effective way of achieving our environmental, fuel poverty and security of supply objectives.

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

I shall give way one more time on this point and then I will make some progress.

Photo of Andrew Stunell Andrew Stunell Shadow Chief Whip (Commons), Shadow Spokesperson (Environment, Food and Rural Affairs), Liberal Democrat Chief Whip, Liberal Democrat Spokesperson (Environment, Food and Rural Affairs)

I am very encouraged to hear the Secretary of State's comments on energy efficiency, but can she explain, therefore, why the energy efficiency targets published last week reduced the original figures, rather than maintaining or increasing them?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

I have already dealt with our determination to ensure that we make progress on energy efficiency, in response to an intervention from Norman Baker.

Chapter 2 implements European electricity and gas legislation and, crucially, ensures fair access for third parties by extending the current licensing regimes to the electricity and gas interconnectors that will become increasingly important as we diversify and become dependent on imported gas supplies. Chapter 3 provides for an energy administration regime to be available in the event of the actual or threatened insolvency of a protected energy company.

Chapter 4 provides for a mechanism for appeals to the Competition Commission against decisions of the Gas and Electricity Markets Authority—a key outcome of our consultation with industry. That will deliver greater accountability without unduly increasing regulatory uncertainty or delay. But the mechanism is tightly constrained to prevent trivial and vexatious appeals, involving a tightly defined process to ensure a swift outcome. The remaining clauses in chapter 4 and part 5 cover a number of smaller market-related items.

I return to the point that my hon. Friend Mrs. Dunwoody made about clauses 100 and 101, which deal with shipping. We do indeed intend to retain the substance of those clauses. We are considering whether they need to be amended to make them work in practice, and we shall of course reflect on the Transport Committee's recommendations.

The second main area of the Bill deals with renewable energy. Every developed country is turning to renewable energy technology to deal with the increasingly urgent problem of climate change. Renewable energy undoubtedly offers huge business opportunities, as well as being a way of addressing an urgent environmental imperative.

Photo of Michael Jack Michael Jack Conservative, Fylde

I was personally delighted to discover the terms of clause 128 on renewable transport fuel obligation, because the clause reflects exactly the line that I put to the House a year ago when I spoke about the development of a biofuels industry. Does the Secretary of State have any intention of exercising the powers in the clause, according to which, she

"may, by regulations, introduce a renewable transport fuel obligation."?

Is it her intention so to do?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

In association with my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs and her colleagues, we are looking into that matter. The right hon. Gentleman made an important point last year, and we certainly believe that there is the possibility of that power being extremely valuable in future. We are looking further into the detail at present.

I stress that, although we are making progress on renewable energy, we start from a very low base, particularly by comparison with some of our European colleagues. In 2002, less than 2 per cent. of the UK's electricity was generated from renewable sources, so hitting the target of 10 per cent. by 2010 will require about 10 GW of renewables regeneration capacity.

Photo of Desmond Turner Desmond Turner Labour, Brighton, Kemptown

There has been intense debate about the performance and innovation unit report and the White Paper. The expectation in many quarters was that the legislation arising from that would make considerable advances in the deployment of renewable energy. I have to say that, per se, this Bill contains little that will contribute to the more rapid deployment of renewable energy. Will the Secretary of State tell us whether the Bill represents the last word on Government policy, or can we look forward to a further Bill that will actually drive renewable energy?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

As I explained earlier, the Bill is not all that we are doing in respect of renewables or other aspects of the White Paper. The renewables obligation itself will build up by 2010 to be worth support of £1 billion a year. We have also extended the obligation to 15.4 per cent. by March 2016, so that investors can have no doubt at all about our commitment to renewable energy in the longer term. Indeed, we now have the first large-scale offshore wind farm at North Hoyle, which is already generating electricity. By the time it is fully operational, it will be capable of powering 50,000 households. Scroby Sands is under construction and consents have been given to a further 12 projects around the coast.

The effect of clause 120, however—it was also inserted by the other place—will be to take combined heat and power out of the renewables obligation base. That will mean either less renewable energy or, if compensating measures were in place to keep the obligation level, additional costs to electricity consumers of some £90 million a year by 2010. We continue to look for practical ways to support combined heat and power, which is facing particularly difficult times with high gas prices and low electricity prices, but we should not do so at the expense of renewable energy. My hon. Friend the Minister for Energy, E-Commerce and Postal Services will therefore seek to reverse that provision later in the Bill's passage.

Photo of Mr Brian White Mr Brian White Labour, North East Milton Keynes

My right hon. Friend will be aware that many renewables companies, such as Powergen and British Sugar, have said that support for the combined heat and power industry is necessary. They believe that use of the renewables obligation is the right way forward because the state of the industry requires such a step forward. Will my right hon. Friend take into account the views of those major renewables companies that are pressing for the clause to remain?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

We have worked extremely closely with the CHP industry but we do not want to support CHP at the expense of the renewable electricity sector or the renewables obligation itself.

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

If hon. Members will forgive me, I intend to make a little more progress.

Part 3 creates the right legal framework to support future renewable energy developments further offshore, beyond the UK's territorial waters. It will pave the way for developments that could harness wave and tidal power, as well as wind, and it makes provision for new transmission networks to connect groups of developments to the shore. Part 3 will also allow us to move to a UK-wide system of tradable certificates for renewables electricity, once certificates can be issued in Northern Ireland and once Northern Ireland has implemented a corresponding system of mutual recognition.

The Bill provides for new arrangements for nuclear clean-up. The nuclear industry makes a significant contribution to our economy, but the liabilities of waste and decommissioned plants that date right back to the 1940s add up to some £48 billion, and they will need proper management well into the next century. Our White Paper in 2002 spelled out how we would manage that nuclear legacy safely, securely and cost-effectively in a way that ensures protection of the environment. Chapters 1 and 2 of part 2 implement that commitment.

Photo of Robert Smith Robert Smith Opposition Deputy Chief Whip (Commons)

As the Secretary of State said, nuclear clean-up is a long-term commitment. The Government have insisted on a segregated account for that, rather than putting the money into a separate fund. Why do the Government feel they need a segregated account to allow flexibility when that will undermine confidence in future generations that the money will definitely be there? A segregated account will make it easy for future Chancellors to decide not to allocate money.

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

The arrangements that we are making will make it quite clear, and transparently so, that the resources being dedicated to managing the nuclear legacy are used for that purpose.

The Bill will establish a non-departmental public body, the nuclear decommissioning authority, to manage those liabilities better, and that will be operational by April 2005, subject to the Bill's safe passage. The NDA will have further strategic control over all public sector civil nuclear liabilities. It will operate clearly and transparently, and by fostering competition for the management of sites, it will ensure that the best skills and expertise deliver the highest standards of clean-up most efficiently.

Chapter 3 modernises the existing policing arrangements for the nuclear industry, transferring the current UK Atomic Energy Agency constabulary to a newly created civil nuclear police authority, which will have responsibility for it. Chapters 4 and 5 include more minor updates and amendments to nuclear legislation, dealing with our international obligations in the event of a nuclear accident, and security of equipment and software relating to uranium enrichment and sensitive nuclear information.

Photo of David Drew David Drew Labour/Co-operative, Stroud

In order to meet our international obligations, we have to maintain the basic integrity of our nuclear industry. Will my right hon. Friend ensure that the Bill underlines the need to train and upskill the existing work force and to get younger people into the industry? If it does not, with the best will in the world, it will never fulfil its potential.

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

My hon. Friend makes an extremely important point, which we underlined in the White Paper. Since we published the White Paper and made our commitment to working with the nuclear industry to sustain and grow the skills it needs, we have established a sector skills council, Cogent, which is moving forward on that matter. Quite apart from any issue about new nuclear build, the nuclear decommissioning and waste management operation will offer extremely interesting, well paid and highly skilled jobs for a very long time to come. The industry therefore offers wonderful career opportunities for young engineers and technicians.

Photo of Michael Weir Michael Weir Shadow Spokesperson (Trade and Industry), Shadow Spokesperson (Environment, Food and Rural Affairs), Shadow Spokesperson (Health)

Before the Secretary of State moves on from chapter 5, will she tell us something about the thinking behind clause 82 and the extra expenditures allowed by the Government to buy out nuclear power stations that may have been sold on to third parties?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

I am delighted to say that my hon. Friend the Minister for Energy, E-Commerce and Postal Services will deal with that point when he winds up.

I stress that we all appreciate the world-class scientific, professional and engineering skills of the people who work in our nuclear industry. I can also confirm to the House that the chosen location for the NDA is west Cumbria. I hope that there, and in the other places where the NDA will have responsibility for sites, we will develop even stronger clusters of nuclear business and talent. We will also give the NDA a statutory function to encourage and support the socioeconomic life of local communities and to work in partnership with people in those communities. It will have a key part, therefore, to play in the strategic taskforce for west Cumbria that is led by the Northwest Development Agency and which we announced in December last year.

Photo of Dr Jack Cunningham Dr Jack Cunningham Labour, Copeland

My right hon. Friend has been generous in allowing interventions. As she is talking specifically about my constituency and that of my hon. Friend Tony Cunningham, it is appropriate to say that we applaud and appreciate her decision to locate the headquarters of the NDA in west Cumbria and to set up a strategic taskforce to provide some joined-up thinking across Whitehall on the future of west Cumbria. However, there is a sting in the tail. To our great pleasure and the satisfaction of local authorities and the work force in the industry, the Secretary of State took that initiative in November last year, but the taskforce has not yet met. Can she tell us why?

Photo of Patricia Hewitt Patricia Hewitt Secretary of State, Department of Trade and Industry

I am grateful to my right hon. Friend for the work that he did in bringing together some of the key partners in Cumbria to visit me, so that we could discuss exactly what was needed. My understanding is that the Northwest Development Agency is already in discussions with the local councils in Cumbria and that we are awaiting proposals from them. If it is not making satisfactory progress, I will make inquiries and ensure that progress is made because, like my right hon. Friend, I understand its importance to his constituents and the community.

I stress that the energy industries contribute 4 per cent. directly to the gross domestic product of this country and they power all the rest of our economy. There is no issue that is more fundamental to our economy, to the quality of our lives and to sustainable development and our environmental future. In the White Paper, we set out a 50-year vision of sustainable energy and how that could contribute to the shift to a low-carbon economy. It was a 50-year vision, but action started immediately. The Bill will move us even closer to the cleaner, secure and affordable energy that our people and our businesses all depend on. I commend the Bill to the House.

Photo of Stephen O'Brien Stephen O'Brien Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Industry 5:03 pm, 10th May 2004

This is a Bill of modest ambitions in the context of even the White Paper, especially when measured against the burgeoning resources of the Department responsible for drafting it and, even more importantly, against the context of our country's medium to long-term security of energy supplies—an issue from which the Secretary of State and her Department continue to shy away.

The Bill, which started its passage in the other place, contains some positive provisions, not least because it was improved enormously by some constructive amendments from my colleagues in the other place and some from Liberal Democrats and Cross Benchers. I pay tribute to their success and I am sure that the House will recognise the great and, in some cases, incomparable experience that some noble Lords bring to such matters.

It is invidious to single out one contribution, given the first-class team, ranging across shadow departmental briefs, that the official Opposition put together to work on the Bill, but the House will wish to join me in thanking warmly Baroness Miller of Hendon for her steadfast, indefatigable and insightful leadership and outstanding work on the Bill in the other place. We shall not, therefore, seek to oppose the Bill, but we will want to continue the excellent work commenced by our colleagues to improve it in Committee and beyond.

A Government spokesman in the other place said that the Bill

"provides . . . solutions to a number of legislative problems related to parts of our energy strategy." —[Hansard, House of Lords, 11 December 2003; Vol. 655, c. 834.]

With a few qualifications, I do not dissent from that view, other than its pretence that the Government's policies amount to an energy strategy taken—to use a Blairism—in their totality. My main concern is that the Bill represents a missed opportunity, which we may all shortly come to regret, to set out a coherent and realistic strategy to ensure secure, safe, sustainable and affordable low-carbon energy supplies to UK domestic and business customers in the medium to long term. That is particularly regrettable since, when all is said and done, it is hard to conceive of a more basic responsibility for any Government than to create the framework and enable conditions whereby the market ensures that the nation's lights stay on.

It is not the presence of the Bill that I object to, but the absence of a different energy Bill that addresses the big and pressing problems at a time when a nexus of factors combine to make the matter an acute national consideration. The reasons for that are familiar, but I shall summarise them again. To put it bluntly, there is a looming black hole in the nation's energy mix. Taking breakdowns into account, normal operative standby energy capacity is more like 16 per cent. than the 21 to 23 per cent. habitually claimed. That scenario has prompted Professor Dieter Helm of Oxford university to remark:

"We are very close to the margins, when this is something we should really be very risk averse about . . . The costs to everybody of any failure are so enormous. If there's a catastrophic failure in the shoe industry, nobody suffers very much. If electricity goes wrong, everybody is in big trouble."

Meanwhile, we are committed to reducing our carbon dioxide emissions by 60 per cent. by 2050. We are becoming increasingly reliant on gas supplies, just as we are set to become net importers of gas for the first time—primarily through pipelines, as well as by shipments of liquefied natural gas—at a period when global terrorism and geopolitical instability show little sign of receding. Nuclear power's share of electricity generating capacity is in steep decline. It is expected to fall from 21 per cent. today to just 2 per cent. in 2023—just under 20 years. In addition, in the absence of so-called clean coal technology, coal-derived energy remains in decline and we shall also see an imminent decline in domestic oil supplies from the North sea. The latter has less to do with energy production and more to do with powering transportation and commercial and domestic heating.

There is an enormous weight of expectation about the planned major expansion of renewable energy and energy efficiency. That is, of course, to be relentlessly encouraged, but the expectation, created by the Government, is that that will fill the looming gap in our energy supply. However, the Government have just had to revise downwards both their energy efficiency and carbon emissions targets. They are expected to miss their combined heat and power target for 2010 by about 20 per cent. Likewise, experts do not expect the Government to come close to meeting their ambitious target of 10 per cent. of power being generated by renewables by 2010, even when the loosest definition of "renewables" shows that we have remained stubbornly between 2 and 3 per cent. since 1997.

We should keep a beady eye on the Government's definition of renewables. Changing the definitions is the surest way to avoid admitting a series of missed Government targets. It does not take a genius to see that if nuclear power were replaced by renewables, no carbon emissions reduction would be achieved by such a mere substitution. Only 11 days ago, the Department of Trade and Industry told the Financial Times:

"Plainly, our policies on energy efficiency, emissions trading, renewable sources, transport and others will need to deliver more in future."

Energy policy cannot simply rely on the hope that the Government's policy will miraculously start to deliver more at some unspecified date in the future. It is too important to be determined by the aspirational target setting in which the Government specialise.

That is why I am delighted that Conservative peers tabled an amendment that will require the Government to make specific progress reports on the development of new energy sources. I am also pleased that they succeeded in securing a separate amendment to clause 106, which strengthens the Government's insubstantial policy on energy efficiency by allowing energy produced by CHP to be exempted from the renewables obligation. As we have seen, without such incentive the Government are currently on course to fall well short of their targets. I was disappointed to hear that the Secretary of State wants to amend that. The £90 million that she claims as a fiscal cost has to be seen in the context of the fact that offshore wind turbines currently receive a subsidy of £117 million. So this is a matter of choices, rather than absolutes.

We welcome the use of biofuels. The use of biodiesel and bioethanol can result in the reduction of carbon emissions. I have a very fine example in my constituency—e-diesel, produced by Stephen Whittaker. We welcome the fact that the Treasury is currently consulting on the fiscal regime. The Government must report their plans to the EU by July 2004, and we await the report with interest. The development of biofuels is expected to produce long-term benefits for the environment and can certainly bring economic gains for agriculture.

Photo of Michael Jack Michael Jack Conservative, Fylde

Does my hon. Friend think, however, that there is a need for greater clarity of leadership on biofuels, given that the Treasury currently sets the fiscal regime, that the Department for Transport is dealing with the consultation paper on the introduction of biofuels in transport, that the Department of Trade and Industry deals with matters connected with biofuels and energy and that the Department for Environment, Food and Rural Affairs deals with the agriculture side of the issue?

Photo of Stephen O'Brien Stephen O'Brien Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Industry

I am glad that my right hon. Friend has demonstrated how one can be joined up in opposition, even when that is not apparent in the Government. I very much hope, therefore, that the Government will consider his joined-up approach and deliver a package that can give him the confidence to report positively to his constituents and the interests that he represents on an important initiative in biofuels.

Photo of Mr Martin O'Neill Mr Martin O'Neill Chair, Trade & Industry Committee, Chair, Trade & Industry Committee

Does the hon. Gentleman agree that there are some dangers in going overboard in this respect? Only a limited amount of timber is available, and a number of timber processing plants across the country, such as the one in my constituency, convert wood into timber for the construction industry. If there were an undue demand for such wood, it could affect the availability of timber for house building and the like, thus producing the opposite effect in terms of doing the business.

Photo of Stephen O'Brien Stephen O'Brien Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Industry

I am grateful to the Chairman of the Select Committee on Trade and Industry for raising that point, because it must be recognised that we are talking not just about timber but about rape seed and other matters. We must consider encouraging a package of contributions to renewables, rather than banking on any particular approach, because it will be enough of a struggle to meet not just the Government's renewables targets but any substantial, worthwhile renewables targets in the overall energy mix. We must be extraordinarily careful and not simply talk about timber, as that would be a distortion.

Photo of Gwyneth Dunwoody Gwyneth Dunwoody Labour, Crewe and Nantwich

I am doubly honoured that both hon. Gentlemen have given way.

May I put the hon. Gentleman's mind at rest? Recently, while questioning a member of a very powerful environmental lobby group, we were informed that we should insist that people take only six flights a year, and that if they insist on taking more they should plant a tree every time they do so. On that basis, judging by the number of flights taken by the environmental groups, the United Kingdom would soon be reforested.

Photo of Stephen O'Brien Stephen O'Brien Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Industry

I most grateful to the hon. Lady for that intervention. We work closely on a non-party basis as, I hope, friendly neighbours in our constituencies, and I now look forward to the border between our constituencies being marked by some impenetrable forests, although I do not think that either of us would welcome an airport at Nantwich.

Photo of Mr Richard Page Mr Richard Page Conservative, South West Hertfordshire

My intervention will not be as amusing as the hon. Lady's, but perhaps a little more serious. May I ask my hon. Friend not to press so quickly for a biofuels obligation? We do not have the production plants in this country to convert and produce the necessary biofuels. In that respect, the only thing that we do effectively is to process used fish and chip oil, whereas the Government should be developing plants to use timber and other products as biofuels. Let us get the production plants first, and then have the obligation.

Photo of Stephen O'Brien Stephen O'Brien Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Industry

My hon. Friend raises a very important issue, which will be fully explored in Committee, as hon. Members on both sides of the House find it interesting. On the pace of introduction, which is dealt with in clause 128, the expectation is that such things should be phased in. That should give him some assurance and comfort, but the principal issue is to consider the vast variety and mix, even of the initial raw materials.

My constituent, Stephen Whittaker, has taken redundant vegetable fats from cooking oils and produced the extraordinarily successful product of e-diesel, which I am glad to say is now being used by the lorry fleet of one of the large supermarket chains. In addition to all the great environmental benefits, it has the attractive smell of almonds when it emerges from the exhaust.

Photo of Mrs Gillian Shephard Mrs Gillian Shephard Conservative, South West Norfolk

I hope the House will not be misled into thinking that the only sources of biofuel production are used fish and chip cooking oil and timber: rape, sugar beet and cereals can also be used. Is not the only reason that we do not have any plants the fact that we do not have a Government policy, let alone Government action, despite their oft-repeated statements in support of their environmental commitments?

Photo of Stephen O'Brien Stephen O'Brien Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Industry

I am grateful to my right hon. Friend. I know that she has taken a long and distinguished approach to this subject on behalf of her constituents. She underlines the point about the multifarious sources that can lead to a successful biofuels policy. Signals from the Government are required and I hope that she will have the opportunity to develop that point if she catches your eye, Mr. Deputy Speaker.

I shall now move from biofuels to the wider issue at stake, which goes to the heart of everything that is or is not in the Bill—the responsibility of Government to provide strategic leadership and to make the hard choices that inevitably lie ahead. Indeed, I am reminded of the words of the Chancellor of the Exchequer, who observed in The Guardian recently:

"The Britain that will fail is the Britain that would duck the hard choices."

I suggest, in a similar fashion, that the Government who would duck the hard choices are the Government who will fail, let people down and let the lights go out.

That is why my colleagues in the other place inserted the security and supply amendment that formalises in statute a fact that is already implicit and well understood, not least by politicians, the energy industry and the wider public and the electorate. If, beyond a catastrophic act of God or a few hours of temporary or partial geographic failure, the lights go out, the fact cannot be ducked that the Secretary of State and the Minister for Energy, E-Commerce and Postal Services would have to resign. The Government of the day would have to take the urgent steps to enable the lights to be put back on again by the market. That is why it is plain wrong to suggest that the amendment is in any sense radical or that it represents a material shift in the role of the state in a competitive and liberalised energy market. It is categorically not an invitation to renationalisation.

The Secretary of State surely recognises that she has duty to

"maintain the reliability of our energy supplies", not least because that is the phrase used in the White Paper that she signed off last year. Furthermore, the logic of the amendment is no different from that of clause 153, which records the commitment that Ofgem has already made to being guided by best regulatory practice. No one is suggesting that that this confers greater regulatory powers on Ofgem; it just acknowledges those that already exist.

It would be wrong to suggest that the amended clause is a prelude to interventionism. In codifying the de facto position today, it delineates the Government's duty and places on them the responsibility to create the framework that enables the conditions whereby the market can deliver security of supply.

Photo of Paddy Tipping Paddy Tipping Labour, Sherwood

Does the hon. Gentleman accept that clause 1 now gives the Secretary of State the duty to intervene? Does he also accept that it is the market that will produce the energy? Is there not a danger that, by giving the Secretary of State the power to intervene, long-term investment from the private sector will be turned away?

Photo of Stephen O'Brien Stephen O'Brien Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Industry

I am glad that the hon. Gentleman has raised that point. As I have just explained, the amendment codifies the current de facto position, not least in respect of the Norwegian gas pipeline. It takes Governments, by treaty, to negotiate the framework and conditions that enable the market to deliver the security of energy supplies. That is precisely what the amendment sought to do and, it can be argued, has achieved. I have made it crystal clear that the intention is not to be interventionist in the way that the hon. Gentleman implied. I do not think that the amendment can be interpreted in that way.

With that clear statement, the Government's stubborn opposition to the security of supply amendment tabled in another place is a surprise and reflects their failure to apply themselves to the creation of a sustainable and long-term framework in which markets can deliver energy supplies. Since then, we have had the undignified and somewhat stealthy approach by the DTI, which has apparently urged, behind cupped hands, certain members of the industry to contact us on its behalf to drop the amendment. As it happens, my team and I heard not a word before the debate from the Secretary of State or her Ministers. There has been no attempt to forge a sensible dialogue in the national interest. Why? Perhaps the Government are afraid of tabling an amendment so that they cannot be held responsibility for delaying the Bill, which needs to be on the statute book to create the British electricity trading and transmission arrangements and the nuclear decommissioning agency by the summer. It is clear that amending the security of supply may engage the hostility of their lordships—there is certainly a good argument to be had—and risk delaying the Bill. The Secretary of State may want to take the opportunity to clarify that, but it seems that she does not.

It has been suggested that the Bill is a misnomer and that it would more properly have been called the Energy (Miscellaneous Provisions) Bill or even the waste Bill. That is because its objectives—not in themselves invaluable—relate in large part to creating an effective framework for cost managing the nuclear legacy at the same time as ducking the debate on whether we are to have a nuclear future. As we just heard from the Secretary of State, that would take the form of the nuclear decommissioning authority and, appropriate at a time of heightened security needs, the creation of a civil nuclear constabulary.

Subject to appropriate scrutiny in Committee, I have no overriding objections to either provision, although my colleagues will look closely at the arrangements by which qualified companies can apply for contracts to manage NDA sites as the legislation progresses. In relation to the civil nuclear constabulary, I reiterate the calls, repeatedly made from Opposition Benches, for a Minister for homeland security, who would be responsible for providing overarching strategic leadership on all security issues.

Another important feature is the establishment of the new British electricity trading and transmission arrangements. The creation of a competitive wholesale electricity market, based on the same rules throughout England, Scotland and Wales, is rational given the interpenetration of power companies across borders. I wonder whether the Government considered the possible difficulties of implementing such legislation when they drew up their eye-catching devolution initiative on the back of an envelope. Has the Secretary of State stopped to consider what will happen if the democratically elected MSPs in the Scottish Parliament do not agree to the provisions? How then—if at all—should Scottish MPs in this House vote?

Part 3 deals with wind power and renewables. I accept fully the reality of climate change and the importance of low-carbon energy supplies. The issue, however, is establishing the appropriate response to that challenge. The Government have placed renewables, in particular onshore and offshore wind energy, at the heart of their policy. It is clear from the Bill that they are prepared to subsidise wind power, which costs about three times as much as conventional power. Leaving aside the structural confusion of having a regulator who tries to promote a competitive energy market and a Government whose ambition is to promote distorted markets—whether through the climate change levy or by subsidising renewables, possibly to the tune of £1 billion a year by 2010—taxpayers will quite properly wish to know whether the Government are spending their money wisely or whether they are making the most giant mistake about windmills since Don Quixote. To rely heavily on wind and, for that matter, on wave and tidal energy to be a major contributor to the long-term energy mix, when renewables contribute just 3 per cent., and to do so in the absence of a plan B, is a high roll of the dice.

Let us not be hoodwinked. That 3 per cent. was derived in 2002 from 1.41 per cent. from biofuels, 1.26 per cent. from hydropower and a mere 0.33 from wind. To increase production without warning customers of the inevitable rise in energy costs is even less forgivable. I am indebted to Lord Jenkin of Roding for his successful amendment to clause 157, which requires transparency in the way in which consumers are properly informed of the financial ramifications of subsidising renewable energy sources. The Royal Academy of Engineering's report two months ago demonstrated that the costs per kilowatt of wind generation, including stand-by capacity, is almost three times the cost of the average power produced by coal, gas or nuclear.

Wind energy is not without its drawbacks. Onshore, wind turbines are a blemish on the landscape. Do the Government not realise that they will be held to blame for the terrible despoliation and blight that they will inflict on Orton fell in Cumbria if, through subsidies for wind turbines and their proposals to change planning guidelines—I refer specifically to planning policy statement 22—they force that ugly scar of a scheme through?

Offshore, wind turbines can interfere with and disrupt ships' essential navigation systems. Again, I note that my colleagues have already secured important amendments limiting the siting of wind farms in shipping lanes and acknowledging the cumulative dangers posed to navigation by offshore wind farms. What is the Secretary of State's answer to the points raised by the British Chamber of Shipping in its letter to MPs just three days ago on clauses 100 and 101? I was glad to hear the response to the intervention of Mrs. Dunwoody, which is that the Government propose to retain the substance of the amendments. However, with so many interests at stake and with such expertise available, I urge the Government, for once, not to table amendments late; we need plenty of time to consider them in advance of the Committee, where, I assure the Secretary of State, they will be explored in detail.

The White Paper points out that the Ministry of Defence has objected to one third of all recent proposals, both onshore and offshore, because they would interfere with its operational needs, including training and radar monitoring. Wind turbines cause environmental damage, affecting birds, fish and livestock, increasing damaging noise and being an unnatural intrusion in some of our most prized environmentally sound settings, not to mention being unsightly.

Finally and most importantly, we must remember that wind turbines are only an intermittent source and thus cannot be relied on to provide a stable baseline source of supply. Denmark, where at 18 per cent. of energy production the proportion of wind power is the highest in the EU, has found that at any one time it has roughly 13 per cent. of its turbines out of commission. The Danish Government have recently announced that they are ending all subsidies to new wind power installations. Should not this Government be avoiding the same mistake?

The Government's zealous support for wind power is matched by confusion and indecision about the future of nuclear energy, which emits no carbon dioxide and, according to the Royal Academy of Engineering, is more cost-efficient than wind. It is no surprise that every time the word "nuclear" is uttered, the knee-jerk response from the Liberal Democrat spokesman, who is not in his place, is that those who utter it are obsessed. [Interruption.] I refer to Malcolm Bruce who, on the occasion in question, was dealing with energy matters. Ducking the hard choices is a speciality of the Liberal Democrats, as is their reliance on wind.

As the Government's chief scientific adviser, Professor David King, said on the "Today" programme in 2002:

"Those who are opposed to nuclear on environmental grounds have to weigh up this difficult balance . . . Are we going to continue with global warming or are we going to mitigate it?"

Let me say for the record that we have an open mind on the future of nuclear energy. Its environmental benefit is its technology, which emits no CO 2 or other greenhouse gases during generation, but of course there are concerns over cost, decommissioning and long-term storage. Its long-term use will depend on Government policy now—it cannot be postponed because signals have to be given—on the economies of the new lower- cost, safer plant, often from France; on the pace of deliverable research on renewables; on making nuclear fusion a reality; and on the progress of the international market.

Photo of Russell Brown Russell Brown Labour, Dumfries

Many Labour Members are in favour of the nuclear option being far wider than at present. I am not aware of any company or organisation that is falling over itself to build nuclear reactors. Is that not at least partly a result of the failure of British Energy, which is yet another failure of privatisation?

Photo of Stephen O'Brien Stephen O'Brien Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Industry

The hon. Gentleman encapsulates a number of issues that are highly relevant to the debate. The first is that, leaving aside decommissioning, which is of course what the Bill intends to do, nuclear does not receive subsidies in the same way that wind farms do, so it has to be said that the economics of new nuclear plants are not particularly attractive. The hon. Gentleman's points are more of an operational nature. The key issue is that Government policy should give signals about the expectation for the fuel mix for the delivery of our energy supplies. That cannot be postponed because the industry and providers need that knowledge, in proper time, to inform the decisions that they have to make on basic commercial and economic grounds.

Photo of Nigel Evans Nigel Evans Conservative, Ribble Valley

Some people think that anything to do with nuclear is bad. Is it not bizarre that, although some Members say no to nuclear in any form, they are only too happy to import electricity from France, which draws 70 per cent. of its power from nuclear energy?

Photo of Stephen O'Brien Stephen O'Brien Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Industry

I agree—in fact, I think that the proportion is larger, at about 80 per cent. More to the point, because the French have been able to retain a vibrant nuclear industry, they have developed a nuclear energy capacity that is as safe, if not safer, more efficient, and even cheaper for the purpose of production.

My final point in response to Mr. Brown is that he should remember that nuclear-derived energy is subject to the climate change levy, despite the fact that nuclear produces no carbon dioxide emissions.

Photo of Mr Bill Tynan Mr Bill Tynan Labour, Hamilton South

The document "The Cost of Generating Electricity" has been mentioned. The hon. Gentleman says that nuclear energy is not economic at present. Does he not accept that, according to the costs set out in that document, it is very competitive with any other energy source?

Photo of Andrew Robathan Andrew Robathan Conservative, Blaby

My hon. Friend knows that I am a great supporter of wind energy, but may I suggest an option for plan B if wind energy does not come up to expectations? If—God forbid—Labour were to win the next election and put in place a plan B that consisted of enhancing nuclear plant, what would my hon. Friend's reaction be?

Photo of Stephen O'Brien Stephen O'Brien Shadow Secretary of State for Business, Innovation and Skills, Shadow Secretary of State for Industry

That is an interesting speculation, which I might have explored later in my speech.

As I understand it, Ministers are—perhaps unsurprisingly—involved in a deep ideological argument on the subject of nuclear that has the potential to do a lot of damage both to themselves and to the industry. On the one hand, we have the Secretary of State for Environment, Food and Rural Affairs, who last month told a newspaper that the prospect of new nuclear is

"not valid . . . come back in another generation".

The breathtaking arrogance and irresponsibility of that statement beggars belief. On the other hand, in December last year, the Minister for Energy, E-Commerce and Postal Services told the all-party nuclear energy group that

"we need the possibility of new nuclear build", and only last Thursday, in response to Lord Tombs's unstarred question, which was supported by my expert and senior colleagues, DTI Minister Lord Sainsbury of Turville said,

"The first question is whether we should consider nuclear as part of the . . . plans for energy. The position of the Government is clear. We think that nuclear may well play a large part, for many of the reasons given in this House during the debate, including environmental issues and security of supply. But that is one issue, and that is why we believe that we must keep our option open."—[Hansard, House of Lords, 6 May 2004; Vol. 660, c. 1268.]

While Ministers continue to argue, nuclear generation's present 20 per cent. contribution to our power is declining, and it is expected to be as little as 2 per cent. by 2023. At the same time, our nuclear expertise is dwindling. It is simply not good enough for Ministers to postpone the debate until 2006. As my hon. Friend Mr. Robathan suggested, that might have something to do with the timing of the general election. The White Paper states that

"even without new build the nuclear fuel cycle, power generation and environmental restoration sectors are likely to need around 19,000 graduates and skilled trades people"

However, a parliamentary answer in the Official Report of the other place records that

"no universities currently offer undergraduate courses specifically in nuclear science and engineering."—[Hansard, House of Lords, 26 June 2003; Vol. 650, c. WA42.]

There are consequences to ducking the hard decisions today and coming back in another generation, as the Secretary of State for Environment, Food and Rural Affairs says we should do. We must find a way to make progress, because if the Government do not come out from under the covers, the House, the industry and the country will not be able to judge the desirability and doability of future nuclear build based on proven fission technology.

It is unacceptable that the White Paper clearly states:

"In the long term, nuclear fusion could provide power generation from an abundant fuel source with zero carbon emissions and without the problems associated with long-term highly radioactive waste", when the DTI's most recent departmental report reveals a cut in funding for research into nuclear fusion from £15 million a year to zero for the foreseeable future. Either the Government believe what the White Paper says, in which case they should make the appropriate investment, or they do not, in which case they should state once and for all that the nuclear option is now closed—and wrestle with the consequences of that as a policy. At present, the official position stated in the White Paper is that "The initiative" for any nuclear build "lies with the market". That statement is somewhat cynical, as Ministers are fully aware, especially as the White Paper concedes openly that competitive markets cannot deliver some wider policy objectives.

That approach merely reaffirms the importance of our security of supply amendment in attempting to ensure that the Government do not shirk the tough decisions. At the moment, it seems, the only direction on which the Government are clear is signing up to an EU constitution that threatens to include an energy chapter, which, against the UK's national interest, would bring responsibility for security of supply under the control of Brussels rather than Parliament. Or is it just part of the tidying-up exercise? Taxpayers expect leadership on energy policy, but all they get is a mixture of high aspirations on renewables, low cynicism on the future of nuclear, blazing ministerial rowing, which has been kept largely behind closed doors, and a bloated and bureaucratic research and skills structure.

Science research councils have an enormous budget of £2.5 billion, yet for several of them administration costs represent 50 per cent. of income. Much of the energy research is being directed into renewables, and, as I mentioned, funding on nuclear fusion has been cut altogether. Meanwhile, the inordinate rise in the DTI's resource budget has been matched by bureaucratic proliferation of the various research and funding channels for energy, which now include the science research councils, the new sector skills councils, the Sector Skills Development Agency, the Learning and Skills Council, the regional development agencies, the Small Business Service and the Carbon Trust. A report entitled "Science and the RDAs" published last week by the Select Committee on Science and Technology in the other place concluded:

"The main message of our Report is the need for coherence, longer term perspectives and reduced bureaucracy".

I wholeheartedly concur with that conclusion.

This Bill, as now hugely improved by their lordships, is worth supporting subject to the detailed scrutiny and further improvements that we hope to secure in Committee, led by my hon. Friend Mr. Robertson. But, to substantiate the arguments that I have outlined, has the Secretary of State taken the time to study the serious, important and timely PricewaterhouseCoopers global survey published four days ago, in which security of supply is now seen as the leading strategic aspect of the power market? It states:

"Last year security of supply barely rated as a concern among European and US companies in our Movers and Shakers survey. It is now top of the industry's agenda. The blackouts have raised serious questions about the adequacy of transmission facilities, and whether the right signals are being given to the market in relation to ensuring sufficient investment in the required infrastructure."

British businesses are not alone and are right in highlighting security of supply as a key issue facing them, whereas the Government, in whom responsibility lies with the Secretary of State, are deliberately putting their heads in the sand over the future of the UK's secure, safe, affordable and sustainable energy supplies. As the fourth largest economy in the world, we have a right to expect the right signals from the Government and the regulator to create the conditions whereby the market can deliver security of supply and reassurance, for businesses and consumers alike, that there is a sustainable long-term strategy for the future.

It is about time that the Department discovered its focus and started delivering some bang for its bucks—all £8.2 billion of them—starting with setting out its medium to long-term strategy for the future of our energy supplies. It would be politically cynical in the extreme to put that off until after the general election, not least as price signals and investment decisions must be made now—as I said in response to an intervention from the Labour Benches—to stop the black hole becoming too big to fill or too high a risk of a gap between supply and demand. It is the responsibility of the Government of the day, and if they will not come forward with a policy on medium to long-term UK energy strategy, or at least a transparent debate in front of the people of this country, given the huge resources and access to expertise that they have at their disposal, which is not available to the Opposition, they should make way for a Conservative Government who will do so.

Photo of Michael Lord Michael Lord Deputy Speaker (Second Deputy Chairman of Ways and Means)

Order. Before I call the next Member to speak, I remind the House that Mr. Speaker has placed a 10-minute limit on all Back-Bench speeches, which applies from now.

Photo of Dr Jack Cunningham Dr Jack Cunningham Labour, Copeland 5:38 pm, 10th May 2004

Twelve thousand or more people work at British Nuclear Fuels' Sellafield plant in my constituency. What is in the Bill—and, equally importantly, what is not in the Bill—is therefore of huge importance to them. It is important to the future social, economic and environmental well-being not only of them and their families but of their communities in Copeland and Allerdale.

Photo of Tony Cunningham Tony Cunningham Labour, Workington

I thank my right hon. Friend for including my constituency in his remarks. Does he agree that what is needed is a sense of responsibility from both the nuclear decommissioning authority and the Government towards the communities of west Cumbria, because many of those people have spent their entire working lives in the nuclear industry?

Photo of Dr Jack Cunningham Dr Jack Cunningham Labour, Copeland

I agree, and I shall return to that theme shortly.

Those workers are dedicated, skilled, mature, reliable men and women, who safely manage, on behalf of the nation, hugely important nuclear installations. They deserve our support and gratitude.

I especially welcome part 2, which would create a nuclear decommissioning authority. For many years, Governments of both parties have failed to address the issue in a coherent, long-term way, and I congratulate my right hon. Friend on making progress with it. What I regret—here I agreed with at least part of what Mr. O'Brien said—is the absence of a long-term commitment to the inclusion of nuclear energy in the nation's energy strategy.

The International Energy Agency estimates that $10,000 billion of electricity-generating capacity will be required worldwide in the next quarter of a century. Energy demand in that time is forecast to increase by 66 per cent. Global population growth, global economic growth, global warming and the Kyoto accord, and our obligations that flow from those things all indicate the need for long-term thinking about secure energy supply. The Bill, I regret to say, misses an opportunity to address those important issues.

In the United Kingdom market, doubts about regulation, about emissions trading and about the EU's future commitment to emissions trading after 2007 affect long-term investment, as do doubts about aims for wind power. When we look at energy investment we are looking at very long-term projects, whether they involve wind power, nuclear power, coal, gas or anything else. Planning, too, must be long-term, and if we fail to make decisions when they are due we shall risk problems with supply for the future. I have no problem with the Government's commitment to wind power, but I do not think we should get too carried away by the contribution that it can actually make.

If the Government's objectives are to be fulfilled, we need to build 20 times 2 MW of capacity every week in this country, from now until 2020, in the hope that we shall produce 20 per cent. of our electricity. That is an heroic assumption. Moreover, wind power is by definition an intermittent source of supply. It cannot supply base load electricity and must be backed up by conventional generating capacity. Estimates suggest that the UK's electricity infrastructure requires some £70 billion of investment over the medium term. Against a background of uncertainty, achieving that seems unlikely.

The UK consumes about 2.5 per cent. of world energy. That figure will fall as we see continued growth in the People's Republic of China, India and other developing countries. UK renewables will meet 0.3 per cent. of world energy demand if we reach all our renewables targets by 2020. In other words, our renewables efforts have a minuscule impact on world energy supply, and therefore a minimum impact on carbon production globally. We should bear that in mind.

We can set against that the fact that we as a country are supplying coal-fired generating stations to developing countries. By contrast, the Governments of countries including China, Finland, France, India, Japan, Russia, Sweden, South Korea and the United States have recognised that nuclear generating capacity for the future is essential. Our Government should accept that reality to ensure that the same is possible for the UK.

Nuclear power is a zero-carbon electricity source. It should be exempt from the climate change levy and should be included in renewables targets for generators. Simply to say that the nuclear option is being kept open is not sufficient—we have to do something to keep the option open. Last autumn, the Government's report on research and development said that the industries that invested most in R and D were the most successful. It is the same for economies: the economies that invest most in R and D are the most successful. I would like us to invest more not simply in R and D on nuclear power, but in R and D on clean coal technology and combined and heat power systems, because they, and only they, with gas, are capable of generating base-load electricity. For all their merits, renewables cannot do so.

I strongly support my right hon. Friend the Secretary of State's decision not only to create a nuclear decommissioning authority but to establish its headquarters in west Cumbria. I cannot understand the pusillanimity of the civil service about the exact location. The West Lakes science and technology park already hosts a cluster of nuclear-related industries and is about 10 miles from Sellafield, where 60 per cent. of the nation's legacy is. It seems a no-brainer to look at any other site for the location of the headquarters. I hope that eventually people will see the sense of that. I warmly welcome those decisions.

The work force in west Cumbria have the skill, experience, commitment and trust of local communities to deliver the decommissioning and remediation work, which it is broadly estimated has a value of about £50 billion. I want the Government to ensure that the west Cumbrian economy benefits from the changes that British Nuclear Fuels and others will be obliged to grasp. British Nuclear Fuels has established the British Nuclear Group. The United Kingdom Atomic Energy Authority should not be overlooked. Both organisations have considerable experience in successfully decommissioning major nuclear facilities.

West Cumbria very much depends on the nuclear industry for employment. The people who work in the industry support the policy objectives set down for their industry by the Government. Ironically, however, because of the delay in British Nuclear Fuels bringing forward its near-term work proposals, there are already strains in the supply chain, reflected in the threat to jobs in west Cumbria, even before the nuclear decommissioning authority has come into existence. I urge the Secretary of State to look urgently at those problems. It would be ironic in the extreme if, in looking for and supporting a way forward to deal with that national legacy, the west Cumbrian economy, far from benefiting from the changes, were to suffer damage. That would be unacceptable, and those communities' commitment and support for the future of the industry would be lost.

BNFL and its suppliers have had massive inputs into the west Cumbrian economy in salaries and through the supply chain. Those problems need to be addressed urgently, as does the length of contract that the NDA will award when it comes into being. We have so many objectives already on work programmes at Sellafield—some of those objectives have been imposed by the nuclear installations inspectorate. It would be bizarre, not to say reckless, to have a hasty, short-term contractual approach to these matters that would threaten some of the existing objectives.

In looking at the future, we need to consider skills. The nuclear skills academy should be located at West Lakes science and technology park. We need to look at the work of the taskforce that the Secretary of State has rightly established, not least because, as we speak, 7,000 vehicle movements a day take place at Sellafield, yet the Department for Transport is talking about de-trunking the only trunk road in west Cumbria. That is an obvious example for the Secretary of State's taskforce to grasp. It should say, "We simply cannot do that, especially at a time when there are proposals to bring low-level nuclear waste by road from Dounreay to west Cumbria, adding to the burden on the roads." That simply is not something that I or the people in west Cumbria are willing to accept.

Photo of Andrew Stunell Andrew Stunell Shadow Chief Whip (Commons), Shadow Spokesperson (Environment, Food and Rural Affairs), Liberal Democrat Chief Whip, Liberal Democrat Spokesperson (Environment, Food and Rural Affairs) 5:50 pm, 10th May 2004

We welcome the fact that we have an energy Bill before us today. They do not come along very often; the last substantial Bill on this topic became the Utilities Act 2000. It is therefore with some regret that I say that the Bill misses some substantial opportunities and makes some provisions that we believe are mistaken.

The Bill fails to set out any clear steps by which the Government's White Paper is to be implemented, and fails to increase the chances of them achieving their targets. As far as we can see, the Bill does nothing to reverse the increase in carbon dioxide emissions recorded in three of the last four years. On the other hand, it entrenches in law the huge bail-out for the nuclear industry. My hon. Friend Norman Baker will say something about that if he catches your eye later, Mr. Deputy Speaker. The Bill also extends the discredited new electricity trading arrangements.

Photo of Dr Jack Cunningham Dr Jack Cunningham Labour, Copeland

The hon. Gentleman talks pejoratively about the nuclear industry and mentions a "huge bail-out". Does he recognise that the overwhelming part of the nuclear legacy—established over 50 years in this country— has nothing at all to do with BNFL, but arises from the military programme carried out by successive Governments? It is a national legacy and liability, not a liability of the current civil nuclear industry.

Photo of Andrew Stunell Andrew Stunell Shadow Chief Whip (Commons), Shadow Spokesperson (Environment, Food and Rural Affairs), Liberal Democrat Chief Whip, Liberal Democrat Spokesperson (Environment, Food and Rural Affairs)

The right hon. Gentleman is extremely knowledgeable about these matters and will recognise that the Bill provides for the purchase of existing civil nuclear power reactors by the nuclear decommissioning authority from the private sector and BNFL. Therefore, what I said was legitimate. I agree with him on the requirement that the NDA should have a social commitment to the local west Cumbria community. I was sorry to hear the Secretary of State indicate that she might want to reverse that in Committee.

The Bill, as outlined by the Secretary of State, covers three broad and important areas, one of which is nuclear decommissioning. We broadly welcome the establishment of the NDA and the opportunity to separate the operation of that authority and the issue of decommissioning and waste disposal from the semi-commercialised sector in which it has been placed in the past. However, the Bill still provides no clear direction or long-term system for managing and disposing of nuclear waste, an issue that we will want to test in Committee.

I was interested to hear Mr. O'Brien criticising the Government's failure to set out the future of the nuclear industry; he described it as a missed opportunity. He then quoted, at some length, from various Government documents about their uncertainty about the future of the industry. He went on to say that he did not have an idea, or a Conservative policy, to put on the table. He was kind enough to outline Liberal Democrat policy, which is that the existing plants should continue in use for as long as they are safe and economic, but that there should be not be a new generation of civil nuclear plant built.

I shall move on, appropriately, to deal with the second section of the Bill on which I wish to comment in detail: offshore renewables. Broadly speaking, we welcome the proposals in the Bill on this subject but, again, the Secretary of State has missed an opportunity to say how she intends to ensure that Government policy in relation to the White Paper, the Kyoto commitments and the Government's further commitment to have a 60 per cent. reduction in carbon emissions by 2050 is achieved to any significant degree.

Photo of Mr Kevin Hughes Mr Kevin Hughes Labour, Doncaster North

I thought that the Secretary of State and the Government had made it clear: it will all be left to market forces, which will deliver everything that we could possibly want. Not only that, but there will be no problem with security of supply. I think that is what the Secretary of State was trying to say from the Dispatch Box.

Photo of Andrew Stunell Andrew Stunell Shadow Chief Whip (Commons), Shadow Spokesperson (Environment, Food and Rural Affairs), Liberal Democrat Chief Whip, Liberal Democrat Spokesperson (Environment, Food and Rural Affairs)

That intervention is more welcome to me than it is to the Minister.

The House of Lords has referred to the consideration of further technologies. Given the Government's targets, it is astonishing that, again, the Secretary of State seemed to say that she wants to backtrack on that in Committee. We shall try to prevent her from doing so.

Thirdly, the Bill deals with the extension of NETA—new electricity trading arrangements—to Scotland. We have identified problems with NETA, some of which were drawn to the attention of the Secretary of State's predecessor during the passage of the Utilities Act. We have seen the shutting down of two thirds of the combined heat and power generating capacity in this country and the total collapse in investment in CHP for the future.

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

The hon. Gentleman says that we have seen the shutting down of two thirds of CHP capacity. If he reflects on that, he will realise that that is not the case. Will he correct that?

Photo of Andrew Stunell Andrew Stunell Shadow Chief Whip (Commons), Shadow Spokesperson (Environment, Food and Rural Affairs), Liberal Democrat Chief Whip, Liberal Democrat Spokesperson (Environment, Food and Rural Affairs)

I was trying to say that there has been a significant reduction in the amount of electricity contributed to the grid from the combined heat and power plant already installed because of the collapse that has taken place as a result of NETA.

Photo of Mr Martin O'Neill Mr Martin O'Neill Chair, Trade & Industry Committee, Chair, Trade & Industry Committee

Is not it also the case that CHP plants are run on gas, the price of which has gone up greatly? Coal is cheaper and although it is environmentally less friendly, it is certainly more attractive to the accountants who often make the decisions.

Photo of Andrew Stunell Andrew Stunell Shadow Chief Whip (Commons), Shadow Spokesperson (Environment, Food and Rural Affairs), Liberal Democrat Chief Whip, Liberal Democrat Spokesperson (Environment, Food and Rural Affairs)

Indeed. CHP plants, with an efficiency of about 70 per cent., are being shut down, whereas coal plants, with an efficiency of 35 per cent., are being reopened. Those plants are only half as efficient, producing twice the carbon dioxide emissions for a given amount of electricity.

The Lords have done their best to improve the original Bill and have made some important improvements. I was disappointed to hear that the Secretary of State intends to attempt to reverse every improvement made by the Lords on which she chose to comment. I hope sincerely that she can be talked out of that in Committee.

My colleague in the other place, Lord Ezra, christened the Bill the Energy (Miscellaneous Provisions) Bill, which is pretty much what it has become. It is not the decisive move forward that is essential if we are to achieve the UK's Kyoto targets, the aspirations in the performance and innovation unit report or the aims of the White Paper. It does not even plug the gaps that were described to the Government during the passage of the Utilities Act four years ago.

Photo of Nigel Evans Nigel Evans Conservative, Ribble Valley

After eight minutes, I remain unclear as to what the hon. Gentleman is saying about wind power. I saw his party leader being interviewed by Jeremy Vine yesterday on "The Politics Show" and, quite frankly, he took a hammering. The accusation was that the Liberal Democrats were in favour of wind power generally, but not in specific cases. Would the hon. Gentleman care to say whether the Liberal Democrats are in favour of wind power?

Photo of Andrew Stunell Andrew Stunell Shadow Chief Whip (Commons), Shadow Spokesperson (Environment, Food and Rural Affairs), Liberal Democrat Chief Whip, Liberal Democrat Spokesperson (Environment, Food and Rural Affairs)

We are certainly in favour of all renewables where appropriate. Our policy paper that was passed last year set out those terms, and I have previously referred hon. Members to the book I have written on the subject. The hon. Gentleman is welcome to read it.

Year by year, step by step, little by little, the Government are backing away from the targets that they set. Carbon dioxide emissions are going up and the energy efficiency targets are being watered down: last week the target went down from 5 million tonnes of carbon to 4.2 million tonnes, a reduction of 16 per cent.

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

The hon. Gentleman made that point in an intervention earlier. Although we said in the White Paper that we thought that there would be about 5 million tonnes of carbon savings from household energy efficiency, and we now think that there will be 4.2 million tonnes, that is more than made up for by the increase that we now expect in business energy efficiency savings compared with what the White Paper said. The total is now 12 million tonnes of carbon savings, rather than the 10 million mentioned in the White Paper.

Photo of Andrew Stunell Andrew Stunell Shadow Chief Whip (Commons), Shadow Spokesperson (Environment, Food and Rural Affairs), Liberal Democrat Chief Whip, Liberal Democrat Spokesperson (Environment, Food and Rural Affairs)

That is a disappointing reply, because the domestic sector of our economy uses 30 per cent. of our energy. If we are not going to make a significant improvement in the efficiency with which we use energy in the domestic sector, the Government's chances of reaching their overall targets are considerably reduced.

NETA has been a serious handicap to renewables, and it is sad that the Government now plan to extend it to Scotland. The Minister is well intentioned, and so were his predecessors, but the policies change and the intentions are not delivered. In seven years, we have had five Energy Ministers and three different policies, and none of them have had any clout. There has been a long list of them, and it was only when Mr. Battle was Energy Minister in 1997 that we had a Minister solely dedicated to energy. He was followed by Mrs. Liddell, who was Minister for Energy and Competitiveness, then Mr. Hain, who was Minister for Energy and Competitiveness, then Mr. Wilson, who was Minister for Industry and Energy then for Energy and Construction. The current Energy Minister is doing his best, but his main jobs are supervising the closure of thousands of post offices and trying to wean the Child Support Agency staff off their pocket calculators as yet another Government IT project bites the dust. It has so often been the case that energy policy has been a hobby for the DTI.

Photo of Michael Jack Michael Jack Conservative, Fylde

The hon. Gentleman talks about an energy policy. Given his party's support for the eventual closure of Britain's nuclear industry, and if that capacity were replaced by renewables, could he spell out to me in some detail how the base-load requirement for UK electricity supply would be met, against a background of the desire to reduce carbon dioxide emissions, which has been the substance of many of his remarks so far?

Photo of Andrew Stunell Andrew Stunell Shadow Chief Whip (Commons), Shadow Spokesperson (Environment, Food and Rural Affairs), Liberal Democrat Chief Whip, Liberal Democrat Spokesperson (Environment, Food and Rural Affairs)

I am more than happy to do that, although I do not know how far you want me to stray from the specific topics under discussion, Mr. Deputy Speaker. My booklet is, I believe, available through the House of Commons Library.

Photo of Mr Kevin Hughes Mr Kevin Hughes Labour, Doncaster North

The hon. Gentleman has done an injustice. Before he gave way to Mr. Jack, he said that the DTI treated energy like a hobby. That is unfair, because most people take their hobbies very seriously.

Photo of Andrew Stunell Andrew Stunell Shadow Chief Whip (Commons), Shadow Spokesperson (Environment, Food and Rural Affairs), Liberal Democrat Chief Whip, Liberal Democrat Spokesperson (Environment, Food and Rural Affairs)

May I assure you that we did not practise this routine before we started, Mr. Deputy Speaker?

The DTI officials are only too happy to fill up this place's time with endless market meddling and technical fiddling. Rather than spending day after day on the difference between NETA and BETTA, we would be better in Committee, although the Minister's Department would be horrified, to turn the Bill into what it should be: the foundation of a long-term sustainable energy policy. Such a policy should be designed to implement the action needed to reach our Kyoto obligations by 2010—we are going in the wrong direction on that at the moment—to achieve the royal commission recommendations of a 60 per cent. reduction by 2050, which I understand the Government believe they are committed to, and to reshape our production and use of energy to achieve those aims. My hon. Friends and I will seek to do just that in Committee. We will vigorously defend the limited gains made in the Lords and push for further significant improvements to the existing provisions. We will also want to give the Bill some backbone and bottle so that the half-dead energy mouse that the Minister has dragged into the House today can be taken back to the Lords with something of a roar.

To do what is needed does not require a great deal of rocket science. It does not need a multiplicity of new technologies, it does not need miracles and it does not, funnily enough, need a great deal of money. Given that a quarter of our carbon dioxide emissions come from our homes and extra energy efficiency in that sector cuts fuel bills, increases home comfort and has major health benefits as well as carbon dioxide reductions, savings could be made if we invested in that field. I believe that to achieve an effective energy policy and a piece of legislation that reflects that policy, some wholehearted and full-time commitment is needed from the Government, with a conviction at the most senior levels of Government that a sustainable energy policy is a public good, an electoral asset and, on the bottom line, a big plus. My Liberal Democrat colleagues and I will do all that we can during the Bill's passage to persuade the Government of the urgent necessity to get their head out of the sand, to beef up the Bill and to give the United Kingdom a sustainable energy policy.

Photo of Mr Martin O'Neill Mr Martin O'Neill Chair, Trade & Industry Committee, Chair, Trade & Industry Committee 6:07 pm, 10th May 2004

The Bill has been somewhat dismissed as a miscellaneous provisions Bill, but I remember asking for such a piece of legislation because I felt that it would be one of the quickest ways to meet a number of our urgent requirements. One of those was the need to secure a nuclear decommissioning authority, which was necessary to address systematically the legacy to which my right hon. Friend Dr. Cunningham has already referred.

We now have a different way of operating, because we tried in the past at Dounreay, Sellafield and other places to bring in outside contractors, and there was chaos in the mid-1990s as a consequence of the way in which that was handled. We now have a more rational structure, and a shadow agency will operate for a 12-month transitional period before the Bill takes effect, assuming that it passes all its stages. We can therefore foresee two outcomes. First, we will have a better way of handling nuclear waste and the nuclear legacy—the two are different—and secondly, that will be done in a way that is more commercially competitive but uses in many cases all the skills and capabilities that still reside in British Nuclear Fuels, the United Kingdom Atomic Energy Authority and British Energy.

Photo of Dr Jack Cunningham Dr Jack Cunningham Labour, Copeland

I support the legislation, as I have made clear, but does my hon. Friend recognise that it would be an error to rush into hasty decisions and short-term contracts in an industry as sensitive and critical as the nuclear industry? I beg him to think about the hasty rush into contractorisation in the railways, and remember its consequences. We should avoid that at all costs.

Photo of Mr Martin O'Neill Mr Martin O'Neill Chair, Trade & Industry Committee, Chair, Trade & Industry Committee

I regret it if I have given my right hon. Friend the impression that we want to return to something akin to the bad old days of the '90s. We have to recognise, however, that there may well be other types of management approach to the activity necessary to do the job, and that although the people in BNFL, the UKAEA and British Energy have a tremendous record across the world, they might not necessarily have all the skills and experience needed. The decisions that my right hon. Friend and I are discussing cannot be taken rapidly, but we have to start the process, and we must be far more systematic. Indeed, part of the burden of his remarks was that we have taken too long to get where we are now.

In the background, there will be the debate about nuclear power. It appears that there are those who would like the Government to rush to a decision on nuclear power, even if they cannot make up their own minds—or, in the case of the Liberals, have totally closed minds. Before any decisions are taken about nuclear power, we must be satisfied that the European Commission is prepared to accept the support package granted to British Energy when it was in crisis. We must also show potential investors that the UK has the capability to build and run nuclear generation capacity, and we must choose the type of reactor best suited to our needs. At the moment, there is a South African, an American and a Canadian option. Any one of those could stand up to close scrutiny, but it would be a rash person who would rush to judgment on them.

We also have to decide how many stations we want. The Conservatives built Sizewell and no more. They should have built more if they wanted a serious nuclear contribution, going on into what was then the next century. They had plenty of time, but they did not do it. Moreover, if we choose a reactor, we should commit ourselves to building several stations—and if we are to do that, we need to win the support not only of investors but, more importantly, of the people in whose areas the power stations will be located.

Such decisions cannot be taken overnight; they have to be taken over time. July is the earliest time for the European Union, and there is a succession of other factors. There will be a general election in between, but people should not make cheap political capital out of accusing the Government of indecision, because there are so many major decisions that need to be taken over time. I would be happy for decisions to be made earlier, but I do not want the wrong decisions to be made for the wrong reasons, and the reactors to be located in the wrong places.

Photo of Laurence Robertson Laurence Robertson Shadow Minister (Treasury)

I agree that careful consideration is needed, but as the next nuclear plant is due to close as soon as 2008, does the hon. Gentleman not think that the Government need to make their mind up about that plant, if nothing else?

Photo of Mr Martin O'Neill Mr Martin O'Neill Chair, Trade & Industry Committee, Chair, Trade & Industry Committee

I am not talking about a piecemeal approach. The capacity of several of the Magnox stations is fairly small; their advantage is that they are connected to the national grid and that, by and large, they are in areas where there is a tolerance of their presence. We can come to decisions about them in the medium term.

I do not have the time to go into my reasons now, but I think that 2012 is the earliest possible date when—with all the planning problems, if there are any, are overcome, and the construction has been dealt with—we could expect to see something beginning to be tested and run. It will be a close-run thing, but I do not see us being able to do that any earlier. Perhaps this is a debate for another day, but it is important to have the wiring and the infrastructure in place in the United Kingdom, so that we can make the best of the assets that we have.

That is why I welcome the establishment of the British electricity trading and transmission arrangements—BETTA. I do not know what planet Mr. Stunell lives on, but some of us are concerned about the prices that people have to pay for their electricity. The pool system operated on the basis of prices 40 per cent. higher than they should have been, and driving down those prices was the achievement of NETA—the new electricity trading arrangements.

I am glad that my right hon. Friend the Member for Coatbridge—or at least, that is where she comes from. I think her constituency is—[Interruption.] Ah yes, it is Airdrie and Shotts, although my right hon. Friend actually comes from the other place. It is all very confusing; Lanarkshire is a complex area, and the geography is almost as difficult as nuclear power. As I said, I am glad to see my right hon. Friend Mrs. Liddell in her place.

The achievement of NETA was to drive down electricity prices, not as much for the domestic consumer as we would have wished, but certainly a great deal, and now we want a trading system that covers the whole of the UK. Of course, there are problems. A number of my constituents work in Longannet power station, which produces 2,400 MW, and is one of the biggest in Europe. It has had considerable problems with the rapid changeover from NETA to BETTA, and I make a plea for some transitional arrangements that would soften the cost changes.

The situation is somewhat complex, and I wish those who will serve on the Standing Committee well; they will be able to go into that matter in some detail. All that I shall say now is that although the cost of sending electricity generated in the centre of Scotland to the markets of England will have to be paid for, the change in price will probably be rather more dramatic than necessary unless some kind of transitional arrangements are made. I record that now as a constituency point.

Some hon. Members have talked about combined heat and power. Large CHP plants are important, and those possibilities are not being properly addressed. ILEX has produced some research, and I know that the Secretary of State did not have much time, but I do not believe that she did that research justice this afternoon. Large CHP plants are highly efficient, and can make a contribution without the bedevilment of windmills and suchlike. They should be given some status in the context of the renewables obligation, because waste is a renewable facility.

There is ill-concealed delight on the Opposition Benches that the revising capacities of the House of Lords have been exercised before we have even had the opportunity to say anything about the Bill. I am interested to see that the Secretary of State already has an obligation to keep the lights burning. Some of us who are a wee bit longer in the tooth can remember how one of the authors of that provision made a major contribution to our thinking on energy policy 30 years ago. That was probably the last time that Lord Jenkin made any such contribution—and it was not that the Secretary of State should be responsible for energy policy, but that we should brush our teeth in the dark during the power cuts that resulted from the coal dispute in 1974.

That refined obligation inserted at the beginning of the Bill is nothing more than mischievous. The provisions covering the role of Ofgem, the regulator, are clear, and so is the link between Ofgem and the Secretary of State. If the lights went out and there were problems, after the first 45 minutes it would not be the power companies but the Secretary of State who, regardless of political party, would get the blame.

It is irresponsible to talk about Britain being in danger over security of supply—certainly for the next decade. My colleagues on the Select Committee and I have examined the nature of power cuts in recent years, and we have found that the problems were not akin to what took place in California or Italy. Mistakes were made, and there were maintenance problems, but scaremongering for simplistic political gain is irresponsible in such an important area.

I would like to think that the Bill will be seen merely as a contribution to the jigsaw puzzle of a new energy Britain, which will not create the emissions, such as greenhouse gases, that we create now. I hope that we will be able to move on. We have set ourselves a target for 2050, and one piece of legislation will not do everything. The Bill, however, is a modest start, and I welcome it.

Photo of Andrew Robathan Andrew Robathan Conservative, Blaby 6:20 pm, 10th May 2004

It is a great pleasure to follow the Chairman of the Trade and Industry Committee, Mr. O'Neill, who speaks with real authority. I hope that he does not regard any of my remarks as scaremongering, because that is not my intention.

A bright young researcher of mine—he has recently come down from Oxford—with whom I discussed global warming, agrees that climate change is taking place, but he questions whether it is man-made. In anecdotal terms, when the weather in February is warmer than that in May, it is obvious that something is happening to our climate. I was therefore pleased to be able to show my researcher a report published last week in The Times. It is an important report, given that there are still people in America, for example—perhaps even in the Bush Administration—who question whether man has any role in climate change. The report states:

"This lack of tropospheric warming has long puzzled scientists, as it is predicted by all the major models of climate change. It has also been seized on by a small but vocal minority of scientists, who have used it to raise doubts about whether global temperatures are rising at all. The enigma, however, has been explained" by a report by the university of Washington in Seattle.

I am not an expert on tropospheric warming, but it is now entirely clear that we must address man's actions. To that extent, I believe that climate change has been caused by our actions, and I applaud the Government's stated intention to tackle that issue in the Energy Bill, but I question whether the Bill and the White Paper will achieve their intention to reduce emissions, while at the same time securing our supply.

I do not wish to scaremonger, but anyone who saw the recent television programme "If . . . The Lights Go Out"—it was set, I think, in the 2020s—must be concerned, especially given that the topical trigger for the lights going out in Britain was a Chechen terrorist attack on a gas pipeline in Russia. Of course, yesterday the Chechen President was assassinated.

The Government's concentration on renewables is laudable. I was keen on renewables long before I entered Parliament. I have a solar photovoltaic roof, which was supported by the Minister's Department, at great cost. I also have an anemometer on a farm behind my house—as Members will know, an anemometer measures wind speed—and I hope to be able to generate wind energy. There could be planning problems and I might lose a few constituency votes, but never mind—I believe in putting my money where my mouth is.

The photovoltaic roof is very expensive, even with a Department of Trade and Industry grant, and I have so far found the electricity generated fairly disappointing, although it is being monitored. The wind energy generated is excellent, but of course, wind is intermittent and such energy cannot be the whole answer. Tidal and wave power—maritime energy—may have their part to play, but not yet. Hydrogen cracked from renewable sources and stored in fuel cells also has its part to play. The technological developments are very exciting, but they are for the future, not now.

Most observers do not believe that the Government will achieve their target of 10 per cent. generating capacity from renewables by 2010. On the other hand, combined heat and power is a proven technology. The Government had two targets for that as well, the first of which was 5 GW generating capacity by 2000. We have yet to meet that target. The second target was 10 GW generating capacity by 2010, which to some extent is why our noble Friends in the House of Lords introduced clause 120.

According to a briefing from the Combined Heat and Power Association, CHP can play a major role in achieving the Government's carbon reduction targets because it improves competitiveness by reducing energy costs. It is a highly efficient means of energy production that converts 70 to 90 per cent. of fuel into energy. Yet the Government are not on track to meet their election manifesto pledge. CHP output has remained stagnant in the past three years. The hon. Member for Ochil mentioned the independent study by ILEX, which I commend to the Government. It could help them to meet their carbon reduction targets by incentivising the CHP industry.

Photo of Bob Blizzard Bob Blizzard Labour, Waveney

The hon. Gentleman has professed his support for wind generation, but is he aware of the briefing provided to Members by the British Wind Energy Association? It states that clause 120

"would disrupt the working of the renewables obligation . . . mean a lower demand for renewables obligation certificates and . . . a lower price, which would affect the income of renewable generators."

It continues by stating that

"the Association does not believe this is the right time to be making . . . changes to the RO . . . before the review", because doing so will simply bring uncertainty and unpredictability into the equation.

Photo of Andrew Robathan Andrew Robathan Conservative, Blaby

I am grateful to the hon. Gentleman for that intervention, and I should point out that I do not accept everything that every briefing says. Apparently, 60 per cent. of UK renewables developers are in favour of clause 120, so there are two views in the renewables market. Before moving on from discussing the CHPA, I should point out that I am a vice-president of it, although sadly unpaid. So CHP is part of the answer, but it is not the whole answer. By forcing down prices, the new electricity trading arrangements—NETA—which was Government policy until recently, have scuppered CHP investment in the past two years. That is not what we call joined-up government.

I turn to the energy mix, the excellent points made by my hon. Friend Mr. O'Brien and what is a major hole in Government policy. Renewables will not make up the 21 per cent. or so of our generating capacity that is currently produced by nuclear energy. By 2020, nuclear will supply only 7 per cent. or less of our capacity. As has been pointed out, no carbon emissions will be prevented by substituting renewable energy for nuclear; there is a hole, and it must be filled.

I believe that, should this Government win the next general election—God forbid!—they intend to announce a new generation of nuclear power stations, because that is the only way in which the hole can be filled. I find that distasteful, and any voters who might be influenced by such considerations would be surprised at that announcement. Such a policy might influence a campaign by Greenpeace, for example, in the run-up to the general election. Such actions are typical of this Government. I hope that the Minister will come clean and say how he intends to fill that hole. His predecessor, Mr. Wilson, made clear his belief that further investment in nuclear is required. I look forward to an answer to that point in the winding-up speech.

In terms of energy policy over the past five or six years, the views of the former Minister with responsibility for energy are interesting. In an interview for The Sunday Times of 17 August last year, the right hon. Member for Cunninghame, North, said:

"Throughout my time as energy minister I was highly skeptical of the priority given by the regulator to driving down the generator price of electricity.

Apart from anything else, by driving producers out of the market it became inevitable the price would rise later so any political gain is short term.

Government has to some extent abdicated its power in this area by creating an independent regulator."

I have a high regard for the right hon. Gentleman, and those points need to be mentioned. The closed-down generating capacity—the closed-down future supply—has largely been caused by Government policy, so they should take responsibility.

Will the Government's policy as constituted in the Energy Bill work? In an article in The Times of 18 August last year, Sir Alec Broers, the president of the Royal Academy of Engineering, warned that renewable energy will not stop global warming or blackouts. He said that the Government's plan to generate 20 per cent. of electricity from renewable sources by 2020 is unrealistic, and that investment in nuclear power is critical if shortages are to be avoided. So he obviously does not think that the policy will work.

I finish by referring to a paper published last week by PricewaterhouseCoopers—"Supply Essentials: Utility Survey"—which was mentioned by my hon. Friend the Member for Eddisbury. It is a global survey, but the observations apply to the UK as well. It states:

"Last year security of supply barely rated as a concern among European and US companies . . . it is now top of the industry's agenda.

Renewable energy will not generate sufficient power to make up the shortfall as more nuclear plants are retired . . .

The current reliance on coal will increasingly be replaced with gas, and longer term this raises issues of security of fuels sources . . .

There is a need for swift action from utilities and regulatory authorities alike to prevent further grid supply collapses".

These questions need answers, and I look forward to the Minister's answers to them in his winding-up speech.

Photo of Mrs Helen Liddell Mrs Helen Liddell Labour, Airdrie and Shotts 6:30 pm, 10th May 2004

I am grateful to you, Mr. Deputy Speaker, for calling me at this early stage, given that I have already had two name-checks this evening. I reckon that I was one of the longest-serving Energy Ministers in this Administration. May I say to my hon. Friend Mr. Hughes that I never regarded the job as a hobby, especially not when I was trying to save the pits in his constituency and trying to secure compensation for his miners. His comment will cost him a cup of tea later.

Photo of Mr Kevin Hughes Mr Kevin Hughes Labour, Doncaster North

I am sure that my right hon. Friend knows that I was not casting any aspersions in her direction. Things may well have altered since she and, particularly, my right hon. Friend Mr. Wilson left.

Photo of Mrs Helen Liddell Mrs Helen Liddell Labour, Airdrie and Shotts

Obviously I have scared my hon. Friend.

Mr. Stunell said that Energy Ministers have often had other responsibilities, but he got it wrong about me, because I was the Minister for Energy and Competitiveness in Europe. There is a perfectly logical reason for that: energy policy is about competitiveness. I am surprised to hear Opposition Members talk with derision about the idea of reducing energy costs. If we are to be truly competitive, our industry requires low energy costs and, frankly, my constituents, who live in one of the coldest parts of the UK, very much require lower energy costs. That is why I am so grateful to the Government for introducing the proposals in the Bill for BETTA.

It is important to end the position whereby Scotland has two major energy companies and its energy prices are higher than in the rest of the UK. We also need to tackle the substantial difficulties in Scotland in respect of the maintenance and repair of the grid. That is particularly important when we talk about renewables. Later on, my hon. Friend Mr. MacDonald may wish to catch your eye, Mr. Deputy Speaker, because the great opportunities for the Western Isles will be limited if we cannot upgrade the grid.

As a little anecdote, as I was preparing my thoughts last night, I suffered a two-hour power cut, but I did not blame the Secretary of State for Trade and Industry for that, and her resignation would not have cooked my tea any quicker, which shows the illogicality of the new clause that was introduced in the other place. I blame it on some of the maintenance problems with the Scottish grid, which must be tackled, particularly in the remoter parts of the country.

Photo of Michael Weir Michael Weir Shadow Spokesperson (Trade and Industry), Shadow Spokesperson (Environment, Food and Rural Affairs), Shadow Spokesperson (Health)

The right hon. Lady may be surprised to learn that I agree with some of what she is saying, but I am concerned about what she said about the lowering of costs through BETTA. I note that the Public Accounts Committee, in reporting on NETA, observed that although the cost of commercial energy for industry had decreased, it had not done so for domestic customers to anything like the same extent. Is she certain that domestic energy prices will fall under the proposed BETTA provisions?

Photo of Mrs Helen Liddell Mrs Helen Liddell Labour, Airdrie and Shotts

I believe that there is an important job for Ofgem in that respect, as there is for every Member of Parliament. Our constituents need to be alert to the fact that switching energy suppliers can produce cheaper bills at the end of the month. Particularly with pensioners and those on pre-payment meters, I always make the point that it is now possible to shop around for cheaper energy. I always encourage them to do so. We have further to go, however, to ensure that reductions in energy costs are passed on to the consumer in a coherent and transparent way. Transparency has often been lacking in the past.

My right hon. Friend Dr. Cunningham and my hon. Friend Mr. O'Neill made powerful cases in respect of future nuclear generation. If I have one criticism of the Bill, it is that it misses the opportunity to further the debate about nuclear energy. I take wholeheartedly what my right hon. Friend the Secretary of State said about the skills, particularly with regard to the framework for the nuclear decommissioning authority. However, other skills are also required for the development of a new generation of nuclear capacity. My fear is that we are falling behind in failing to take up and be transparent about our desire for future nuclear generating capacity. I accept the fact that the market has not developed any proposals for new nuclear capacity, but there is a need for further debate and we must not be put off from having such a debate by the sort of intimidation that we face from the anti-nuclear lobby.

Photo of Michael Clapham Michael Clapham Labour, Barnsley West and Penistone

I know that my right hon. Friend has worked hard for the energy industry overall. She makes a point about competitiveness and the cheapness of energy, but she will be aware that nuclear power is both inflexible and the dearest electricity on the wires.

Photo of Mrs Helen Liddell Mrs Helen Liddell Labour, Airdrie and Shotts

I know exactly where my hon. Friend is coming from and I take his point, but that does not necessarily mean that future generation will have that degree of inflexibility and high cost. My hon. Friend is a great champion of the coal industry. We should look further into the economics of clean coal technology as well.

My hon. Friend the Member for Ochil made a valid point about combined heat and power, as did Mr. Robathan. There are real anxieties about the future of CHP, and we are missing a trick in not paying more attention to the difficulties experienced in the CHP sector. I urge my hon. Friend the Minister to tell us in his summing up exactly where the Government are in respect of the future of CHP. I am very attracted to it from the point of view of energy efficiency, having seen it in very effective domestic use, particularly in Sheffield.

I greatly welcome the Bill's proposals for the nuclear decommissioning authority. That represents important recognition of the scale of nuclear liabilities and of the fact that there is a competitive marketplace with international opportunities for decommissioning. We should reflect on the Finnish experience. The Finns were very fast off the mark—partly due to necessity, because they are so close to old reactors from the former Soviet Union—and keen to get ahead with decommissioning. There is a great market for it, and we should be throwing up the skills, experience and expertise to participate in that market.

Photo of Lindsay Hoyle Lindsay Hoyle Labour, Chorley

Does my right hon. Friend agree that we have great skills in this country and that, especially in the light of problems in the former eastern bloc, failing to put them to good use on decommissioning is disappointing? Any Government who refused to support it would indeed be negligent. We are still the world leaders, even though many other countries are trying to catch up, and we must not lose those skills.

Photo of Mrs Helen Liddell Mrs Helen Liddell Labour, Airdrie and Shotts

I take my hon. Friend's point and I congratulate the Government on their vision in recognising that there are great opportunities.

One of the side-effects of the management of our nuclear liabilities has been completely to alter the picture for British Nuclear Fuels. I note that when the decommissioning plans were announced, the chief executive of BNFL talked about opportunities for the new BNFL. I hope that the Minister will give us some idea in his summing up of how he views the future of BNFL after its many different traumas in recent years. I hope that we have now reached a point where we can see some way forward for it far into the future.

I do not want to detain the House much longer. If I have one criticism of the Bill, it is that it is wrongly named. It is more an electricity Bill than an energy Bill, and huge issues of energy policy need to be debated in much greater detail—not least what is happening at the moment. The recent spike in oil prices will, because of the inter-relation of oil and gas prices, lead to an increase in gas prices, which will work its way right through the chain. Any competitive country concerned about energy policy should be looking in some detail at what is happening in international energy markets. I say that from two points of view—those of the United Kingdom as a consumer nation and as a producer nation. Increases in oil prices give a much more secure future to our North sea oil and gas industry as it moves into the third age. There are great opportunities before us, but there are also huge challenges that we must be prepared for.

I wish all who serve on the Standing Committee a great deal of entertainment and enthusiasm. I well remember the Utilities Bill Committee; indeed, one Liberal Democrat Member's wife had a child during its progress, and I was most disappointed that that child was not called NETA. I wish the Minister well with an energy policy Bill that is a start, although I have a feeling that there is such change in the world that we will find ourselves returning to the subject again and again.

Photo of Mr Richard Page Mr Richard Page Conservative, South West Hertfordshire 6:41 pm, 10th May 2004

I am no literary scholar, being more of a hit-it-with-a-hammer-and-hope engineer. I am, however, very much reminded by this Energy Bill of the words of William Blake's "The Marriage of Heaven and Hell". He wrote: "Energy is Eternal Delight"; the only problem is, Blake put those words into the mouth of the Devil. That is the problem: we all want energy, and we all want it to be eternal, but we also want it to be pollution-free, and there is the rub.

The White Paper and the Energy Bill are full of warm words. Various energy conservation bodies can be cited as saying how much they welcome it, but there are some gaping holes, and important issues are not tackled. The realities of life are avoided.

There is an energy that we on the Opposition Benches are prepared to mention but which the Secretary of State was not prepared to name, because the Government just do not have a policy. I can see the Minister busily looking through his notes and shifting in his seat, so I shall tell him that I mean the "N" word—nuclear. Where is the Government's nuclear policy? It is a simple question. How can the Government produce a Bill dealing with future energy without mentioning the future policy on 25 per cent. of today's production? I sense Government policy produced and dictated by focus groups. It is produced not by the reality of what this nation needs, but by focus groups. In American football terms, Mr. O'Neill did a splendid job of running interference for the Secretary of State by asking why she should be responsible for any power failures. If a Secretary of State does not grant the power capacity to generate electricity in this country and there is a power failure, then that Secretary of State will be to blame.

We have warm words, but they are a polite description for unrealistic alternative energy production. We have targets for wind farm production that are for the birds, because they have been plucked from the air. As a former Minister in charge of renewables, I favour them, but we cannot harness ourselves to a target that is unachievable. I shall not go through all the green energy sources, but unless there is a huge breakthrough in photovoltaics, such as those that cover the doubtless attractive roof of my hon. Friend Mr. Robathan, or unless we discover that the capital cost of wave power has been slashed, or unless we suddenly discover more efficient fuel cells, such targets destroy the credibility of the Government's other proposals, some of which I welcome.

My right hon. Friend Mr. Jack referred to fish-and-chip recycling, which gives us our biofuels. That is fine, but unless the Government give a commitment that they will give the biofuel obligation a couple of years or so, there will not be enough plants in place to take advantage of it, and we will not move towards improving on our targets. We will not have farmers starting to plant crops to use it, and we will not have enough plants to generate the fuel. We shall miss a golden opportunity.

Photo of Mrs Gillian Shephard Mrs Gillian Shephard Conservative, South West Norfolk

Does my hon. Friend agree that to have such a policy without putting proper structures in place would also encourage imports of biofuels, which has already happened in some degree?

Photo of Mr Richard Page Mr Richard Page Conservative, South West Hertfordshire

My right hon. Friend is quite correct. That is why I said that the renewable obligation should be put in place in two years to give home-grown industry a chance to get into place instead of our, once again, drawing in imports. The Government are really good at allowing that: they had the fridge directive and hundreds of thousands of our fridges had to go abroad to be decommissioned because we did not give our home industries time to do that. [Interruption.] That is, of course, a sideline, Mr. Deputy Speaker, and we must not get into it.

I welcome the fact that the Bill deals with various serious issues, such as the decommissioning of redundant nuclear generating plants and the disposal of radioactive waste, which have been of enduring concern to the House, the whole of Parliament and Governments over many years. I used to be Member of Parliament for Workington, and I am fully aware of the problems in that area. The words of Dr. Cunningham should be read and taken on board by the Minister and the Secretary of State, because they are the words of someone who knows what he is talking about. That will be difficult for the Secretary of State, but she must concentrate and plan for the future. Short-termism must be avoided.

I am equally clear about the need for a public body to oversee the process of decommissioning and disposal, which must be done on a UK-wide basis, although I do not mean to say that all the Bill's provisions are completely satisfactory. I shall not go into the Westminster/Scotland relationship, but if I am fortunate, or unfortunate, enough to be placed on the Committee—I am not sure which of those categorises it—I may wish to probe the arrangements. It is one thing to commit the Secretary of State to consulting Ministers of the Scottish Executive on the appointment of the chairman of the nuclear decommissioning authority, but quite another to ensure their assent. I make that point because the Government seem to make many assumptions about Scotland, particularly that the political map will stay unchanged for ever and that there will never be a Conservative Administration up there—[Laughter.] Hon. Members may laugh, but as with everything else, the wheel will one day turn, just as it has in the past.

Photo of Andrew Robathan Andrew Robathan Conservative, Blaby

To counter the rather foolish laughter from some Members, does my hon. Friend remember, with a sense of history, that within our lifetime the Conservatives had an overall majority of votes cast in Scotland in 1950?

Photo of Mr Richard Page Mr Richard Page Conservative, South West Hertfordshire

I am glad you remind me of that, Mr. Deputy Speaker, because I am far too young to remember anything of that nature.

Where I do agree with Ministers is on the importance of creating the civil nuclear police authority. They are right to place its jurisdiction and the terms and conditions of its senior officers and constables on a basis comparable with those of the other UK police forces.

No one will object to the principle of extending the scope for developing wind farms and renewable energy production beyond the current nautical limit of 12 miles. If this country and some of our European Union neighbours wish to do that, it will be absolutely desirable. If it can produce a reduction in fossil fuels, that will be desirable too. However, several hon. Members have already asked: what is the point of running down nuclear when there is no gain in CO2 reductions? We would just be swapping one thing for another. If the money and support going into wind farms were put into the nuclear industry, I wonder what the cost of generation would be, and there would be a stable base load that was not dependent on the strength of the wind at any particular time.

I also welcome the Bill's aim of drawing Scotland into the wholesale market for electricity that operates in England and Wales. I was fascinated by the contribution of Mr. Stunell on that point. He talked about the book that he has written, and I shall rush to the Library to read it, because I found what he said rather difficult to support and comprehend.

I hope that the powers that now control the market have realised the dangers of the cross-subsidy, where a generator, in conjunction with a distributor, can create acute financial pressures at one point in the process, to the discomfiture of a generator that does not have a distributor providing cross-subsidy. Hon. Members have already made the point that the cost from the generator has gone down, but the cost to the consumer has barely moved. That has been part of a process.

The security of electricity supplies across Britain is an important duty for the Government. Now that the hon. Member for Ochil is in his place, I can say that I commended him for his defence of the Secretary of State, but she will have to take the blame for a failure of supply if she has not authorised the capacity to maintain supply. Ministers should bear that very much in mind.

I welcome many aspects of the Bill, but it has some huge gaps and lacks realism. For example, do we have adequate energy reserves? France has reserves of some six to eight weeks. Over the years, we will see an increasing reliance on imports. By 2006, we will no longer be self-sufficient and will increasingly have to rely on energy sources from politically unstable countries, as my hon. Friend Mr. O'Brien said, and the UK is right at the end of the pipeline, at the point of maximum risk.

Photo of Denis Murphy Denis Murphy Labour, Wansbeck

The hon. Gentleman mentions energy reserves, but does he regret the part played by his Government in destroying Britain's mining industry?

Photo of Mr Richard Page Mr Richard Page Conservative, South West Hertfordshire

I remind the hon. Gentleman that in 1997 the Labour party gave a commitment at the general election that it would provide support and money for clean coal technology, so that the mining industry could be developed and the mining product would not be so polluting. I am still waiting to see that happen. I do not know how many mines the hon. Gentleman has been down, but having done so myself I really think that if someone came forward today with a new energy source that meant that people had to be sent underground to dig it out, many would feel that it was not a suitable job for human beings on health and safety grounds.

The Bill glaringly lacks a nuclear policy. In the future, our children's children will talk about us, saying, "Do you know that that generation actually burnt gas and oil for heating? How mad were they?" The feedstocks of those chemicals will be long gone. Some parts of the Bill are good and some are misconceived. The Government must look for further justification for policies than just "it seemed a good idea at the time."

Photo of Michael Clapham Michael Clapham Labour, Barnsley West and Penistone 6:54 pm, 10th May 2004

This is a large and important Bill, but it misses the point, in particular with reference to the coal industry. I see that part 1 refers to clean coal technology, but that is about the only reference to the coal industry. Mr. O'Brien referred to a black hole, but it was created by the Conservatives when they were in power. In the aftermath of the miners' strike, between 1985 and 1992, they closed down 120 collieries and, from 1992 onwards, a further 30 collieries. At present, we have just 13 collieries left.

Mr. Page was one of the Ministers involved in the privatisation of the coal industry and he will know that at the time it was below its critical mass. The privatisation was destined for market failure because no banker would invest in a coal industry below its critical mass. The privatisation made the industry reliant on Government support and, had it not been for the support provided by this Government, what is left of the coal industry would long since have disappeared. However, it would be possible to invest in the 13 mines that remain and make them profitable. That is because of the changes in the world energy market.

My hon. Friend the Minister will be aware that coal prices have started to increase because of the demand from China and from other Asian countries. For example, Malaysia has two new huge coal-fired power stations. The Malaysians have decided to diversify their energy economy away from gas, and consequently have invested in new clean coal technology. That has put pressure on prices and they have started to rise, to such an extent that the UK coal industry is approaching competitiveness.

I hope that my hon. Friend, even at this eleventh hour, will reconsider some of the decisions that have been made about the Selby complex of four mines and about the Hatfield colliery. I know that my hon. Friend Mr. Hughes, if he catches your eye, Mr. Deputy Speaker, will concentrate his remarks on the situation at Hatfield, but I hope that my hon. Friend the Minister will consider investment in those two colliery complexes. The Hatfield colliery leads into the country's largest reserves and if it is allowed to close, the industry will be on a slippery slope.

Much has been made of the technology that has been used to tackle pollution. The power industry has fitted flue gas desulphurisation systems to address the nitrogen and sulphur emissions that cause acid rain, and that is working successfully. However, we need a real commitment to investment in new clean coal technologies. My hon. Friend the Minister would no doubt say that there is a multiplicity of new technologies, but we should consider investing in and encouraging the use of two major ones: first, super-critical boilers, a new technology that could be retrofitted to existing power stations, making them much more efficient. After all, it is the efficiency of a power station that counts in cutting down CO 2 emissions. The second is the integrated gasification combined cycle system, and the owner of Hatfield colliery is prepared to invest in it. He has been able to put together a package for investment in that new clean coal technology, but unfortunately the colliery may close.

At present, the generators are sweating their capacity to squeeze out the Nth degree of profit, and we must encourage them to reinvest in new technologies. The current resources that the Government are making available for investment in clean-coal technologies are insufficient. We need more investment in clean-coal technology. The greater that investment is, the stronger the signal that will go out to the remainder of the coal industry to enable it to continue in the future.

Photo of Paddy Tipping Paddy Tipping Labour, Sherwood

Before my hon. Friend leaves the powerful case that he is making for the coal industry—that coal can be economic, but environmental constraints cause problems—will he ask the Minister about the large combustion plants directive? If that is not implemented properly, it will kill the British coal industry.

Photo of Michael Clapham Michael Clapham Labour, Barnsley West and Penistone

I am grateful to my hon. Friend for prompting me about the large combustion plants directive, which indeed relates to the Bill. The directive will become operative from 2008, and currently two options have been put forward. One option is the national plan approach, and the second is the emissions limit value approach. The national plan approach can be visualised as a bubble over the whole country, while the emissions limit value approach would be a bubble over each power station.

There are people in the industry who say that to adopt the national plan approach would close the British coal industry, because it would encourage generators to bring in low-sulphur coal from places such as South Africa, Australia and north America. If we adopt the ELV approach, generators will be encouraged to invest in their plant, which would be beneficial to the UK coal industry because UK coal could be burned in power stations. It is important that the Minister make the right decision. I understand that he is on the verge of making that decision, and that officials from his Department have inquired into the situation. Will he tell us whether he will adopt the ELV approach and avoid the national plan? That is very important.

I return to the Bill and its proposals to set up a nuclear decommissioning authority. That is important because, as my hon. Friend Mr. O'Neill made clear, it is necessary to have a co-ordinated, uniform approach that would be better for the industry and the safety of the country. I hope that the Minister will tell us whether the nuclear decommissioning authority will be responsible for all the liabilities. As he will be aware, there are three areas of liability in the nuclear industry: spent fuel, radioactive waste and the decommissioning of sites. Do I take it that the decommissioning authority will be responsible for the entire remit relating to waste left by the nuclear operation?

It is important that the Minister should not abandon the UK coal industry at this point, as it requires only a modest amount of finance to survive. As I have already pointed out, it is approaching competitiveness. It would be a shame indeed if that industry were to disappear because of the lack of a small amount of finance. Coal's advantages are so great that the Minister should consider ring-fencing an element of the UK energy market. Coal is cheaper and more flexible than other sources, such as gas or nuclear. Some pundits have suggested that if we continue along our current route, we may well end up importing 75 per cent. of our energy needs by 2020. We need to avoid that situation.

In conclusion, I believe that the Bill sets out the route to ensuring the energy future of the UK. I hope that the Minister will consider in Committee what might be done to make more resources available for clean-coal technology. That technology is not just a matter for the coal industry. It is important to manufacturing industry because it would allow us to produce the sort of wares that would enable us to transfer technology in order to tackle the CO 2 issue in countries such as India and China. It is important that the Minister take the issue on board and make resources available for clean-coal technology.

Photo of Mrs Gillian Shephard Mrs Gillian Shephard Conservative, South West Norfolk 7:06 pm, 10th May 2004

I am extremely pleased to have the chance to contribute to the debate, and I particularly welcome clause 128, to which I shall address my remarks.

The clause enables the Secretary of State to introduce a renewable transport fuel obligation that would require specified sections of the road transport fuel industry to demonstrate that a specified proportion of their aggregate fuel sales were "renewable transport fuels". Its wording is perhaps over-gentle. It is not as strong as we should expect, given the Government's self-imposed environmental commitments, not to mention current, rising fears about fuel supplies and their costs. Nevertheless, it is welcome.

The Secretary of State was deeply cautious about the clause. When asked to expand on what she intends, she said she was "still looking at it". However, the Minister for Energy, E-Commerce and Postal Services may be cheerier in his concluding remarks—I hope that he will be.

Part 1 should encourage those such as me and all other hon. Members who support the development of a UK biofuels industry. Clause 1 places on the Secretary of State the

"duty to ensure the integrity and security" of energy supplies, and clause 2 specifically mentions energy derived from biomass and biofuels. Subsection (3) requires the Government or Government agencies to

"develop effectively sources of energy enabling the UK to avoid undue reliance on imports".

The lack of cheering or optimistic news about the likelihood of imports will strike the Government during the passage of the Bill. So far, they do not seem to have a clear notion of the opportunities missed by the Bill.

What contribution would the UK biofuels industry make to the aims set out in part 1—if the Government ever encouraged such an industry to develop? It would clearly contribute to security and sustainability. It would also contribute to the development of alternative markets for UK-produced crops, and its environmental contribution would be impressive. According to the Government's research from Sheffield Hallam university, the reduction in CO 2 emissions from bioethanol would be up to 70 per cent. That should be important to the Government. They have signed up to several environmental targets such as the Kyoto protocol, and have adopted a national goal of a 20 per cent. reduction in carbon dioxide emissions from 1990 levels by 2010. Their energy White Paper, which I assume informs the thinking behind the Bill, states:

"The UK should put itself on a path to a reduction in carbon dioxide emissions of some 60 per cent. from current levels by about 2050."

For good measure, the energy White Paper adds that

"fuels made from biomass represent an important potential route for achieving the goal of zero-carbon transport, creating new opportunities for agriculture in the UK, as well as globally."

I hope that the Minister is aware of the support in the House and the other place for biofuels. The Government should be aware of the cross-party support—illustrated by all the early-day motions, debates, questions and, indeed, delegations—for further encouraging biofuels. They should also know that, outside Parliament, a developed biofuels industry is supported by the CBI, the British Chambers of Commerce, the Institute of Food Research, the university of East Anglia, British Sugar, Friends of the Earth, the National Farmers Union, the Country Land and Business Association and so on.

I make those points to this DTI Minister because, although they have been made myriad times to his colleagues in the Treasury, DEFRA and other Departments, it is not clear that the Government have a sewn-up, cross-departmental attitude. There is every kind of incentive and support from inside and outside the House for the Government to give more encouragement to biofuels, but, so far, there has been little action. I hope that the Minister can dispel the unfortunate impression given by the Secretary of State that, even as a result of the Bill and the inclusion of clause 128, there will be more of the same—in other words, she is still looking at things.

The debate about the need for Government support for domestic biofuels production has been going on for some time, without it reaching a firm conclusion. Last September, the Environment, Food and Rural Affairs Committee published its report, in which it said:

"Government bio-fuels policy still seems muddled and unfocussed. It has expressed support for bio-fuels but the mechanisms used to promote their use have had little effect so far."

Quite so. Our biodiesel industry, although valiant, is tiny and, as has been said several times, uses used cooking oil as its raw material. No bioethanol is produced in this country for transport purposes. That is the reality, despite the aspirations and hopes.

Things are, of course, very different in other nations. Spain has recently tripled its bioethanol production. France already produces 344,000 tonnes of biofuels a year, and Germany produces 130,000 tonnes. An immediate effect is that rape seed produced in the UK is exported by road and sea to Germany and France, where it is made into biodiesel, and it is then brought back to this country by road and sea. How sensible, environmentally or in any other way, is that?

It would be churlish not to recognise that a little progress has been made. In the Budget, the Chancellor announced the introduction of the 20p duty rate derogation for biofuels in 2005, so that the industry would have some certainty to plan investment; but, of course, it would have helpful if enough fiscal or other encouragement had been given at the same time to make the industry want to invest—a point made by my hon. Friend Mr. Page. The consultation exercise announced in the Budget by the Department for Transport has only just been launched—rather late, given that the findings have to be produced by July this year. However, one of the options to be commented on is the principle in clause 128: a renewable transport fuel obligation.

I would welcome hearing more information from Ministers about whether clause 128 will move the UK further towards a biofuels policy, how they intend to proceed and what the timetable is. Hon. Members who share my enthusiasm for this cause—there are many—have, as I have already said, raised it with Ministers from the Treasury, DEFRA and the Department for Transport. Today, it is the turn of Ministers from the DTI. Will they be able to assure us that they mean business by including clause 128 in the Bill and that taking action on it will produce a secure, sustainable domestic source of fuel supply, provide a lifeline to the rural economy and fulfil the Government's environmental targets? We look forward to hearing from the Minister later this evening.

Photo of Bob Blizzard Bob Blizzard Labour, Waveney 7:14 pm, 10th May 2004

I have followed and participated in energy debates for some time now, and it is not hard to notice a pattern: many of those who speak promote their favourite energy source and oppose other sources. I will promote mine tonight, but I do not think it sensible for any hon. Member to put down the other energy source that he or she does not like, because the real challenge for any Government is, as has been said, to keep the lights on and, even with a strong commitment to energy saving, we might well need all the energy sources that we can find.

The Government's key priority, therefore, must be security of supply. The fact is that gas will be the mainstay of electricity generation for many years to come. We will rely heavily on gas—some say too heavily. Of course, we must first maximise the recovery of the gas that this country produces, but we will soon become a net importer of gas.

Some of the fears are exaggerated. People are concerned about the politics of some of the countries from which we propose to buy gas, but history shows that those countries need the revenue from gas as much as we need the gas. There are also concerns about terrorist attacks on pipelines. That is a risk, but there could easily be terrorist attacks on nuclear power stations or any other generator, and an attack on a nuclear power station might be worse than one on a gas pipeline. We clearly need to develop energy sources other than gas, not only to achieve a balance and to enhance the security of supply, but to achieve our targets and obligations on CO2 emissions. That is why the part of the Bill that will provide the framework for the development of renewables is so important.

In preparing for the debate today, I considered what happened in the House of Lords, and I was perplexed by what I can only call the breathtaking attack on wind energy by the Conservative party in the other place. Baroness Miller, who led for the Conservatives, said that wind power

"can provide only a minute fraction of our power needs. The environmental impact of the giant windmills, both on land and offshore, gives rise to no less controversy than do nuclear powers stations." —[Hansard, House of Lords, 11 December 2003; Vol. 655, c. 839.]

Lord Monro said:

"Wind power is inherently unreliable".

He also said that

"we do not seem to care about what we are doing to the beauty of our country by putting up these wind farms, which produce such a minimal amount of power."—[Hansard, 11 December 2003; Vol. 655, c. 906.]

He seemed to forget that the Bill is basically about offshore wind power. Lord Jenkin went further and likened wind farms to something from the old Soviet Union; but, of course, the real agenda of such people is to promote nuclear power, and we have seen that in the House today.

Photo of Pete Wishart Pete Wishart Opposition Whip (Commons), Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Environment, Food and Rural Affairs), Shadow Spokesperson (Transport)

Does the hon. Gentleman accept that when we signed up for the renewables targets, we in fact signed up to exclusively onshore wind targets? Does he believe that we need a mixture in those targets? We must have wave power and biomass production; otherwise we will continue to have wind farms in inappropriate locations.

Photo of Bob Blizzard Bob Blizzard Labour, Waveney

I agree with much of what the hon. Gentleman says, and I shall deal with it as I proceed with my speech.

The end result of all the vitriol in the House of Lords against wind power was that some almost wrecking amendments were aimed at offshore wind farms. Those amendments impose extreme restrictions and a one-sided view of the balance between offshore wind farm sites and navigation. There was also pressure to impose more onerous and demanding decommissioning plans on wind developments than on nuclear, gas or coal generators. Nuclear energy seems to have become the Conservative party's obsession. It seems to want to charge headlong into a new generation of nuclear power stations now, just as they promoted and misrepresented nuclear power before. That is one reason why part 1 is necessary to clean up and put right that which was not properly thought through in the past.

The energy White Paper is right. The Government are right to keep nuclear power on hold and right to leave the possibility open, but they are also right not to charge headlong into more nuclear power generation. The Government have created a five to 10-year window of opportunity for renewables, especially now that the renewables obligation has been extended to 2015. If the nuclear option were taken now, it would stifle or even stop investment in renewables—most notably, wind energy.

The Conservatives seem to want wind energy to be a birth-strangled babe. In fact, I wonder whether their purpose is to try to create uncertainty among those looking to invest in wind energy so that, if the Tories looked like winning the election, the uncertainty would increase and the investment would not be made. There would be no future at all for wind energy under the Conservatives.

Photo of Mr Richard Page Mr Richard Page Conservative, South West Hertfordshire

I gave the rounds on the non-fossil fuel obligation my maximum support, and what the hon. Gentleman says is completely wrong. Our objection is to the unrealistic targets set by the Government and not to wind energy per se. We do not think that it will reach the target of 10 per cent. and there will be a gaping hole in our energy supply. That is our problem.

Photo of Alan Haselhurst Alan Haselhurst Deputy Speaker and Chairman of Ways and Means

Order. Before Mr. Blizzard responds to that intervention, I should point out that we seem to be having a little trouble with the clock. It is adding double the extra time for each intervention. I do not want to be too hard on the hon. Gentleman, but it would be helpful if he could curtail his speech when one minute is showing.

Photo of Bob Blizzard Bob Blizzard Labour, Waveney

I am glad that you, Mr. Deputy Speaker, have offered guidance so I know how much time I have left.

I can half understand the point made by Mr. Page, but I do not understand why it is necessary to be as anti-wind power as was suggested in the other place and by some of the comments made here tonight. I was talking about the creation of uncertainty in investing in wind energy, lest it were thought that the Conservatives might win the election. Thankfully, people are still investing in wind power.

The case for wind energy is strong and irresistible. The wind is there, the technology is proven and it would be irresponsible and bad husbandry of natural resources not to harness the wind, especially when we face the challenge of global warming. After all, we are the windiest country in Europe, and not to maximise the use of the wind would be incredible.

Another Member of the other place, Lord Gray, with whom I get on very well, observed:

"This year . . . There has been low rainfall, much sun, little wind."—[Hansard, House of Lords, 11 December 2003; Vol. 655, c. 863.]

We often accuse politicians of being London-centred, but I invite people to Lowestoft where they will find plenty of wind at Britain's most easterly point.

What has held back wind energy most of all is the uphill struggle that it has had in securing onshore sites in the face of a planning system combined with the great British "nimby". Perhaps we should see that as an advantage and as a chance to take the lead in offshore wind energy. We are already set to make more use of offshore wind than most other countries, and the Bill will enable us to go further. We have experience of, and expertise in, offshore installation work from our oil and gas industry and leading institutions, such as the Centre for Environment, Fisheries and Aquaculture Science, which is an executive agency of DEFRA and a world leader in the environmental assessment, monitoring and research that is needed to develop offshore wind.

Intermittency does not make wind energy unfeasible. The implications of operating a network with 20 per cent. wind energy have been examined. There are extra balancing costs, but they are not prohibitive. Added to that is the possibility of using demand-side management more actively and employing better wind prediction. Both can help to mitigate the impact of intermittency. Some of us visited Schleswig-Holstein a couple of years ago, where 40 per cent. of the electricity is generated from wind. Yes, there is an extra cost to wind energy, but the cost of not making use of it in the face of global warming could be greater.

Photo of Bob Blizzard Bob Blizzard Labour, Waveney

No, because, unfortunately, I do not think that any more time would be added on.

Offshore wind is popular even among those who dislike onshore wind. There are signs in my area saying, "Offshore not onshore". We should harness offshore wind's popularity.

The great news is that offshore wind energy is happening. Right now, turbine columns and blades are sitting in Lowestoft harbour and they are being assembled and taken out to the Scroby Sands wind farm development. In fact, most of the turbines have already been erected, and this is only the start of a new industry in my part of the country. I am pleased that Lowestoft can claim to be at Britain's leading edge when it comes to offshore wind and offshore energy experience, as a brand new brochure makes clear.

The geographical position of Lowestoft is ideal. It is Britain's most easterly point and is a port surrounded by areas from the Wash to the Thames estuary designated for wind farm development. That is good for a town that has long suffered economic disadvantage from its location. We have expertise from the offshore sector, from firms such as SLP Engineering, and we are also the national headquarters of CEFAS. In short, offshore wind is my constituency's great hope for the future. The Bill will pave the way for further offshore renewable energy by establishing the comprehensive legal framework.

My constituents will be amazed by the Conservatives' opposition to wind farm energy that we heard in the House of Lords and tonight but, as has been said, offshore renewables are not just about wind. They are also about the excellent resource that we have in the tidal current. Tidal current is reliable and predictable, and the CEFAS institution in my constituency that is working on it tells me that we are on course to have a commercial demonstration project within five years. That would be another opportunity for this country to lead in the world. However, the Norwegians are working on it, too.

We have to pursue all those options, but they alone will not be enough to secure the low-carbon future described in the energy White Paper. There may well be a need for nuclear, but we should consider other options as well. One such other option is the near-zero emission option of carbon capture and storage and enhanced oil recovery, which capture the CO 2 emitted from power stations and bury it in depleted oil reservoirs and aquifers deep below the floor of the North sea. Because of long lead-in times, if we are going to take that option forward, we must take it now. I am told that the Government have allocated £2 million for CCS and £4 million for nuclear fission. I think that the figures should at least be equal.

I welcome the Bill. We must follow through on wind energy and we need to decommission and clean up the nuclear sites. Although gas will continue to be the mainstay of our electricity generation—we must maximise recovery of our gas reserves—and although we must make much more use of the crops that can be converted into biofuels, we must pursue all ways of reducing emissions, including tidal current and CCS as well as offshore wind.

Photo of Michael Weir Michael Weir Shadow Spokesperson (Trade and Industry), Shadow Spokesperson (Environment, Food and Rural Affairs), Shadow Spokesperson (Health) 7:27 pm, 10th May 2004

We in the Scottish National party and Plaid Cymru find the Bill to be very much a curate's egg. There are elements in it that we are keen to support, but there are others that we have concerns about and that we shall wish to consider at later stages.

The Bill is very important for Scotland because, despite what has been said about the future of electricity generation in the United Kingdom as a whole, we are a net exporter of electricity. We generate on average 26 per cent. more electricity than we need at peak capacity. We have a clear diversity of supply with ample natural resources, but we also have nuclear power.

The establishment of the nuclear decommissioning authority is welcome in principle, but we have concerns over the particulars of the arrangements. Overriding these concerns is the fact that the Bill contains no statement on the agency's environmental principles. We believe strongly that environmental principles should be at the heart of the agency's operations, but we note that clause 12(2) states that the NDA must adhere to certain principles, including promoting competition and securing value for money. However, the clause states that the agency must only have regard to

"the need to safeguard the environment".

That provision is not strong enough.

It seems to us that money and competition will be at the heart of the agency, while environmental concerns will be a mere add-on. That seems to be the wrong way round. A set of environmental principles should be enshrined in the Bill. Indeed, the protection of the environment and the health and safety of the population should be the Bill's central plank as it undertakes the clean-up of our nuclear sites, many of which, I remind the House, have a less than glorious record on safety and, indeed, on keeping records as to exactly what nuclear waste is stored where.

We are also concerned about how the Bill relates to Scotland. It merely says that the Secretary of State will be required to consult Scottish Ministers. Perhaps the Minister will elaborate on the Executive's powers. What will they be able to do if there is an attempt to establish a new nuclear waste site within Scotland? Would that be part of the agency's work or would it be covered by previous legislation?

We also have concerns about whether the Bill would have the effect of allowing new nuclear build. The wording of the provisions relating to the Government's obligation to pick up the bill for British Energy's liabilities may allow for future private nuclear companies to be bailed out for their waste and decommissioning liabilities. That could provide an incentive for new nuclear build, something that is completely off the agenda at the moment because of the huge costs and risks to any commercial developer.

In an intervention on the Secretary of State, I asked specifically about the thinking behind clause 82. The explanatory notes refer to

"circumstances where British Energy has sold one of its nuclear power stations to a third party, the acquisition of the power station from that third party and subsequently operating it."

In other words, the Bill gives the Government the power to use taxpayers' money to buy and operate nuclear power stations from a third party. There is little difference between that and nationalising a nuclear power station. It seems to fly in the face of the Government's steadfast refusal to countenance clause 1, inserted in another place.

The point is important because there is a danger, as has been mentioned, that the UK faces an energy gap if we do not do more to ensure that alternative energy resources work and provide the claimed amount of electricity. We are opposed to nuclear power, but we must be aware that the UK Government have a target—perhaps I should call it an aspiration—of producing 20 per cent. from renewables by 2020. The Scottish Executive have a target of 40 per cent. There will have to be a much more serious plan to invest in renewable resources, and the serious investment to go with it, if we are to have a chance of meeting those targets.

We have to be completely honest and recognise that much of the argument about renewables is theoretical. What is not entirely clear is whether such systems can produce enough energy and whether it is economically viable. It seems to us that those questions can be answered only when we are in a position to test much larger systems and when many of them are on line. That will happen only if there is a considerable increase in investment in such energy.

Scotland's supplies of gas and oil give it an immense advantage and opportunity that we can utilise while building up renewables, although it might also mean—I have to be honest about this—backsliding on the Kyoto agreement until renewables are on line. Scotland has a huge opportunity to be at the forefront of the expansion of renewable energy. In a report for the Scottish Executive—"Scottish Renewable Resource 2001"—Gerry Hassan said that Scotland has 25 per cent. of Europe's potential for renewable energy, and the potential capacity to produce 75 per cent. of the UK's electricity needs from renewable resources. That is a tremendous opportunity, but only if the investment is in place.

It has been explained that almost all energy from wind and wave is generated from onshore wind farms. It is quite clear, as has also been mentioned, that those methods are met by a great deal of opposition from the general public. It is clearly not realistic to propose that all wind farms be allowed planning permission irrespective of local conditions, size and positioning. It is also quite clear that onshore wind alone has no chance of meeting renewable targets.

There is an enormous potential for other forms of renewable energy in Scotland. Hydro is one example. When it was first introduced in Scotland after the second world war, it was said that it would be too cheap to metre. That never came to pass, and we should not make ridiculous claims for any form of energy. To put that into perspective, although offshore wind farms are being built—we have heard about one or two of them—Scotland has only one wave-generation plant, which is a small-scale project on the island of Islay. The year 2020 is not that far away, and if we are serious about renewables we must be prepared to invest not only in the plant itself, but in the grid required to transmit the energy. Much of the potential for wind and wave power is in relatively remote areas where the national grid does not run or does not run at a sufficient strength. I suspect that our target can be achieved only by public investment. We should not shy away from that. Public investment built the grid in the first place, and massive amounts have gone into nuclear energy.

The Bill establishes a framework for offshore wind farms, which is welcome, but costs will become a serious issue. I draw hon. Members' attention to an article in this week's Scotland on Sunday under the headline "Green will Make us see Red when power bills soar". The cost of energy from renewables will become a serious problem. We must ensure that we address that problem and the costs that have arisen from nuclear energy. We must be clear that there is a huge environmental cost if we do not go down the renewable route, although in the short term there may well be an increase in costs to the consumer.

The last part of the Bill deals with BETTA. We have also heard much about the new electricity trading arrangements. The Public Accounts Committee said that residential customers have not seen much benefit from NETA, and there is much fuel poverty in Scotland and elsewhere in the UK. That will have to be addressed before we can go down that route completely. There are concerns about the postage-stamp principle for consumers in remote areas, such as the highlands and islands, because of the cost of transmitting electricity there. Clause 180 partly addresses that concern, but only for a short time. The problem could become huge in rural areas throughout the UK if BETTA goes ahead. We must consider that matter in Committee to ensure that rural consumers are protected. There are also concerns about access to the grid from generators, and the costs involved. Those, too, can be pursued in Committee.

Photo of Gwyneth Dunwoody Gwyneth Dunwoody Labour, Crewe and Nantwich 7:37 pm, 10th May 2004

Any energy Bill that concerns the House of Commons is obviously a matter of great urgency, but it is clear from the breadth of the debate that there are concerns within the UK about our energy policy. Will we have security of supply? How can we address the problems of renewables? Are we concerning ourselves enough with the amount of research that needs to go into new technology? We have heard about the possibilities of renewing the coal industry. We know about renewables from biomass. We also know that there are many things that the Government can do to secure the future of the electricity supply. However, I want to draw hon. Members' attention to a much narrower, but to me a rather more important, point. I hope that I am forgiven if I get straight down to the practicalities.

The Bill contains provisions for wind farms offshore. That is not a new subject and has been considered ever since the Harold Wilson Government when Professor Zuckerman did an enormous amount of interesting and important research. The Secretary of State told us that there had been many hours—75, I think—of debate in another place. However, throughout that time there was no acknowledgement of one simple fact: if we build very large turbines and give permission for the development of very large turbines throughout a large site of a number of nautical miles—in one case, in the second round, a site as large as the city of Nottingham—we are creating an instrument of some importance. I was therefore astonished first, that the Department for Transport was not involved in the steering group that produced the policy, and secondly, that when the steering group was set up, it was some time before the Maritime and Coastguard Agency was consulted, and many other important sectors of the shipping industry were not even allowed to contribute to the development of the plans.

The Transport Committee was so concerned that it looked urgently at that matter. We discovered that a number of practical problems presented themselves immediately. It is clear from the maps for the first round of wind development that the areas are quite small and are nearly all within the 12-mile limit. The second round is nothing of the kind: it is permission for the wind industry to move in on very large sites. Interestingly, the Department of Trade and Industry appears to be reproducing mistakes made by the Department for Transport. When the Strategic Rail Authority simply said to people in the rail industry, "This is the kind of area that you should be looking at", but did not make it clear which particular part, it caused considerable difficulty. The second round of bids for wind farms appears to be the same thing.

We said that we could not understand why the two most important bodies, the Department for Transport and the MCA, did not insist on being represented on the steering group. Our other concern was that

"every one of the strategic areas is on the approach to a major port or ports."

We were told that the London Array site on the Thames

"blocks one of the three access channels into the Thames. It goes right across the mouth of the Fisherman's Gat".

One of the sites in Liverpool bay will disrupt the ferry service between Heysham and the Isle of Man, imposing delays of half an hour on each crossing and considerable extra fuel costs. The best point, however, was in the evidence from the National Union of Marine, Aviation and Shipping Transport Office—NUMAST—given by a master who had been at sea for over 30 years. He said that the proposed site in the Humber was

"located at a very busy junction where there are three vessel traffic separation schemes converging for traffic entering or leaving the Humber along with coastal traffic making their routes north and south."

Perhaps we could just take on board what that means: it is a convergence of routes. The Humber at Immingham, for example, is the place from which, every day, we export many thousands of cars on very large container ships. If anyone is unsure what I am talking about, let me make it quite clear: when one is standing on the quay, some of those container ships are 300 or 400 ft above one's head, so I am talking not about a small vessel but about one that could get into very real difficulty if wind and wave power such as exists already manages to slam it into a pylon. I may be unduly being a Cassandra, but it might be a matter of considerable concern if Christmas day were enlivened by a news broadcast announcing that at least one large container ship was wedged between two or three pylons in the North sea, yet as far as I can see the shipping industry was told, "Don't worry. We will look at your problems but we are not necessarily going to take any notice of them."

The problem goes further: the structures interfere with radar. They interfere not only with the RAF's aircraft systems but with ground-based systems used for security purposes, so there is a very real problem. We might not know who is approaching our shores in difficult situations. The structures also pose problems for vessels at sea, as they can distort their controls.

Let us be clear what we are talking about. We need details in the Bill about the procedures to be followed in the event of a collision between a vessel and a wind farm. We must remember that some vessels are crewed by people whose qualifications and experience were not gained in the United Kingdom. The Committee believes that at some point a major problem such as a collision is inevitable, and we must have plans in place to deal with that.

We think that it is important to consider the creation of safety zones around every one of these pylons and to have particular identification of sites that will not compromise the integrity of the consent process. We are astonished that the DTI is talking about all this in a very relaxed way, and we think that any installation that goes ahead must be shown not to compromise the safety of navigation. Why were Trinity House and the General Lighthouse Authorities not consulted much earlier? Why have we heard the suggestion, even tonight, that opposition to the practical difficulties is based not on knowledge from the shipping industry but on some extraordinary hang-up about the development of alternative fuels?

I want to see this country capable not only of securing its supplies for the future, but of securing them from such a wide selection that we are able to ensure that we never again have the situation that existed after the last war, when we frequently lost power. When one thinks of the number of developments in manufacturing and domestic affairs that have occurred, one sees how important that is. But the Department has to take this seriously: the Select Committee report is not an amusement; we did not write it to entertain ourselves. If we ignore these matters now, the results could be horrendous.

Photo of Robert Key Robert Key Conservative, Salisbury 7:46 pm, 10th May 2004

I support the Second Reading of the Bill. We will no doubt go into the detail in Committee.

What makes Britain unique in energy terms is the variety of sources available to us as a nation. We need to start a debate such as this with a discussion of the national energy objectives. We might put them in a different order. I think that the most important one is to meet UK energy demands safely and at optimum price. Close behind that is ensuring the security of supply, achieving our environmental objectives, relying on a balanced range of alternative sources and encouraging the efficient production and consumption of energy. All of us here have a responsibility in everything that we say to bear it in mind that we need energy efficiency both in generation and in transmission. We also need efficiency in industrial use and consumption. If we wish, we can all make a difference, by switching off unwanted lights and so on.

I have often wondered why the Liberal Democrats simply cannot see what is obvious, but following the speech of Mr. Stunell I now understand: it is only the Liberal Democrats who will put out the lights when they enter a dark room.

We need to optimise the contribution of renewable energy sources—wind, wave and solar. That is a given. However, we also need to recognise their limitations. They can never provide the base load generation that an industrial nation such as ours requires. We need a new generation of nuclear fission plants, possibly leading to fusion, and I think that we could then move into the hydrogen economy, which, although it may not prove to be the holy grail, could certainly be real progress for our nation. Of course, no Government, and therefore no taxpayer, will build another nuclear plant. If such plants are built, they will all be regulated private sector investments.

I particularly welcome chapter 1 of part 2, which introduces the nuclear liabilities fund and creates the nuclear decommissioning authority. That is extremely important. It is for me a great irony that, as I well recall, back in 1976 when I was a teacher of economics, the royal commission on environmental pollution produced a report saying that no nuclear power stations should be built without first dealing with long-term waste, but within days the Labour Secretary of State for Energy, Mr. Tony Benn, ignoring that, went ahead anyway. It is appropriate that this Labour Government are implementing something that they should have done in 1976. Until now, no Government have addressed properly the issue of nuclear waste. We have failed to address the need for a new generation of nuclear plant. We will put that right.

I was very heartened by the debate in the other place on 6 May when Lord Sainsbury said:

"It is not easy to predict the best combination of those factors for the future. Therefore we have stated clearly that we will consider new nuclear build as one of the options for the future."

He went on to say:

"We cannot predict the future exactly, but the steps the Government are taking form a sensible response in order to reverse the situation we had when we came to power, which was one where the whole area of nuclear research had been closed down. We have been turning that right around so that if a decision on new nuclear build comes through, we shall be able to seize that opportunity."—[Hansard, House of Lords, 6 May 2004; Vol. 660, c. 1271.]

That is probably the most optimistic thing that the Government have said about nuclear power for a long time. We should all remember that although nuclear waste remains a risk for hundreds of years and it seems inconceivable that radioactive half-lives can be engineered down to short time scales, the half-life of carbon dioxide in the atmosphere is also measured in hundreds of years and burning coal, oil and gas creates long-term wastes as well, so that to take the latter route is to bequeath to future generations a much hotter climate and less biodiversity.

I strongly support clause 128 on the renewable transport fuel obligation. There will be enormous opportunities, not only for the environment and for our nation, but for the farmers in my constituency and throughout the United Kingdom, when oilseed rape can be used for biodiesel, wheat and sugar beet can be used for bioethanol mixed with petrol, and set-aside land can be used to grow fuel. I acknowledge that the Government have made the right noises so far, but bioethanol needs more than the 20p a litre fuel duty reduction—that is insufficient to encourage major investment in bioethanol production. What we need is a duty reduction of about 30p a litre, or equivalent support in the form of capital grants. I hope that the Government will not seek to delete clause 128, which was inserted during proceedings in the other place after being proposed by a Labour peer who happens to be a distinguished Wiltshire farmer.

We should not neglect a further aspect of the Bill, which has not so far been mentioned: chapter 3 of part 2, which creates the civil nuclear constabulary. In 1986, I served on the Standing Committee that considered the Ministry of Defence Police Bill. That Bill was but the start of the tinkering with Britain's police service. We in this country have always accepted that policing is by consent and that control lies with local police authorities, which have at least a democratic element to them. However, we have seen the emergence of a number of national police forces—four of them, with perhaps more to come—which are in the direct control of Secretaries of State, are answerable to the House of Commons only indirectly, and are not answerable to local people. They are answerable only to various fairly disembodied boards.

There is one glaring and extraordinary omission from chapter 3, in that the UKAEA constabulary is to have its jurisdiction reduced from 25 km to 5 km, and its officers are allowed to go beyond that only in pursuit of stolen nuclear or nuclear-related goods. Furthermore, they are specifically disallowed from assisting the civil constabularies—the Home Office police—in an emergency. That is bizarre—so bizarre that it runs contrary to the Government's recent actions in giving additional powers to, for example, the British Transport police and the Ministry of Defence police, which they have integrated more closely with Home Office constabularies, to the great advantage and protection of communities throughout the country. I hope that we can address that problem; I shall certainly pursue it in Committee.

The Bill seems also to reflect an assumption on the part of the Secretary of State for Trade and Industry that the officers of the UKAEA constabulary are not properly trained police officers. They are. All training for their officers is Centrex approved and all detectives, chief police officers and counter-terrorist search officers are Home Office trained. We should have complete confidence in them. The UKAEA police have full constabulary power, but that is to be limited and, indeed, reduced. That is absolute nonsense. I am grateful to Mr. Barry Wright, secretary of the Atomic Energy Police Federation, for drawing the matter to my attention. It needs to be pursued in Committee.

I shall end my remarks at that point. A great deal of work needs to be done, and I am grateful to have had the opportunity to set out my modest agenda at this stage.

Photo of Mr Kevin Hughes Mr Kevin Hughes Labour, Doncaster North 7:54 pm, 10th May 2004

When the Secretary of State opened the debate, she said that three themes run through the Bill. I think that there are four, and one of them is clearly that of missed opportunities. Everyone who has spoken after her has mentioned a missed opportunity. Energy is not really one of the other three main themes. We have to rely on part 1, which was inserted through amendments made in the other place, not only to provide a debate on energy in connection with this Energy Bill, but to set out clearly the important issue that we should be discussing: this country's energy requirements and security of supply. For what it is, the Bill is pretty good and worth supporting, but to call it the Energy Bill stretches the imagination a little too far. If it was on sale in a corner shop, someone would get done for misrepresentation or for offences under the Trade Descriptions Act 1968.

None the less, part 1 deals with important issues, on which I shall focus this evening. Important though NETA, BETTA, the NDA and Ofgem are, I shall stick to security of supply and the country's energy requirements. The Bill does represent a huge missed opportunity. To be frank, it beggars belief that any Government are prepared to leave our energy requirements entirely to market forces. I do not understand how we can do that. The Secretary of State's cunning plan appears to be that we will import 80 per cent. of our energy requirements and generate 20 per cent. using renewables by 2020. Presumably, we will be importing all our gas, oil and coal, we will have no nuclear energy, and all we will be left with in this country is a bunch of windmills that only work when the wind blows. The fact is that they work only about 30 per cent. of the time. I do not think that that is very efficient.

My hon. Friend Mr. Clapham mentioned Hatfield colliery, which is in my constituency. Although I do not want to rehearse the arguments about why it closed, it is important to state that the colliery is closed. There are steel caps on the shafts. Some of us had hoped that the adjoining colliery at Thorne would form a super-pit with Hatfield to access the 100 million tonnes of UK coal that is there, but I learned today that plans have been started to fill in the shafts at Thorne. It seems that there is no longer a possibility of running the Hatfield and Thorne collieries together, which is a crying shame, because the opportunity available at Hatfield colliery was second to none. Many people write off the coal industry, but the new technology that my hon. Friend discussed—the integrated gasification combined cycle system—offers the opportunity to reinvent the coal industry, to use one of our greatest natural resources, and to generate electricity in abundance without the toxic emissions that we normally associate with burning coal. The IGCC technology does not burn coal in the traditional sense, and it is possible to capture CO2 emissions during the process. In fact, we can pump the CO2 down into our oil wells in the North sea and enhance the recovery of our oil wealth there.

I know, because it has been investigated, that were we able to keep Hatfield colliery open, a planning application under section 36 has been agreed. An IGCC power station at Hatfield would make it possible to pipe that CO2 up to the Scottish oilfields and enhance the recovery of the oil, so it has a dual function. But it is better than that—nitrates can also be captured during the process, which as we all know are used in the chemical industry. It gets even better—most of us understand that the way forward for energy is probably hydrogen power, and the IGCC process can also capture hydrogen.

Under the plans for Hatfield, which are there for anyone to see, to capture the hydrogen and produce the energy cells, enough hydrogen would be captured at that single plant to run the whole public transport system in south Yorkshire. That is a pretty huge amount. Unfortunately, that opportunity has been missed, because the Government are worshipping market forces. They believe that we can leave everything in the energy industry to market forces. I am sorry, but we cannot. The Government need to pump-prime some of that new technology. Allowing Hatfield to go under, as it has done, was a tragedy.

This Government put a lot of money into trying to secure the future of Hatfield, and my hon. Friend the Minister spent a lot of time with me trying to do so. Because it is left to market forces, and because of the problem to which my hon. Friend the Member for Barnsley, West and Penistone referred of accessing funds from banking for private industries, the bottom line is that it is difficult to access the type of capital required for that kind of project. Private industries would be expected to raise £30 million to £45 million to access the 100 million tonnes of coal available at Hatfield. Given what the Government published in the White Paper, and the looming large combustion plant directive, people in the City are hardly filled with enthusiasm for lending £30 million to £45 million to somebody who wants to exploit the coal reserves at Hatfield. Consequently, at present those plans are on ice. I am still hopeful that the present owner, Richard Budge, who is well known in the coal industry, will keep trying to access funding to open Hatfield colliery again, and to get the IGCC technology up and running.

The Government cannot sit on the sidelines wringing their hands. Our energy needs are at stake, and they need to get involved. Sometimes, that means putting in some money, pump-priming this technology and capital investment. I urge them to do that, because it is not yet too late. Certainly, it is not too late for the project at Hatfield.

Photo of Michael Jack Michael Jack Conservative, Fylde 8:04 pm, 10th May 2004

We have heard many interesting views, but I want to pick up on some comments made by Mr. Hughes, because he and I share one part of a common agenda: security of supply of energy in this country is vital. I also want to pick up on an observation by Paddy Tipping. In a telling intervention, he effectively agreed with a line that I have taken in previous debates: effectively, we cannot have a cheap energy policy in this country and, at the same time, energy security.

Other right hon. and hon. Members who have spoken have rightly said that this might be a debate for enthusiasts, each of whom promulgate their chosen source of energy, to which they or their constituency are committed. For my part, I remember as a boy, in 1956, reading in my "Eagle" comic about the arrival of Windscale nuclear power station, and a wonderful cutaway drawing promising limitless forms of energy in the future. That had an influence on me, and when I became the Member of Parliament for Fylde, and discovered that nearly all Britain's nuclear fuel was made in my constituency, I thought that the world has an unusual way of coming full circle.

There is another way in which we need to tackle arguments about energy security. Most of our remarks in this debate have been about security in the physical sense: about what happens if one system goes wrong, and whether others have enough capacity to replace the missing energy. I also want us to develop a policy of security in the economic sense.

One of my worries about the policy partly espoused in this Bill is that we are still wedded to a hydrocarbon economy. We may get the gas through a pipeline from wherever—it may be delivered by sea—but soon we will find that at least 70 per cent. of our electricity is coming down somebody's pipeline, and the cost of that will be determined by the world energy market. By definition, therefore, with the removal of coal, the rundown of nuclear, and the questions raised by others in this debate about how much electricity can come from renewable sources, we have surrendered the amount of the energy price over which we have any real influence to the world energy market, which is volatile, as we have seen in recent events.

I therefore draw a simple conclusion: whatever the outcome of the Bill, it must be about having the balanced energy portfolio that has served this country extremely well. I want to associate myself with the remarks made by Dr. Cunningham, Mr. O'Neill and Mrs. Liddell, who encapsulated in their own way many of my views about the future of the nuclear industry. The workers in my constituency have a remarkable safety record in the manufacture of nuclear fuels, and with the new investment in the fuels plant at BNFL at Springfield, effectively, no human gets near the manufacturing process. It is safe to make, safe to operate, and it has tremendous potential. Unless decisions are made, however, about the shape and scope of the future of Britain's nuclear industry, the fuels side of the business will not effectively be able to prepare itself.

What is the future of that fuels business? I hope that the Minister will be able to say something about that. My hon. Friend Mr. Key commented on remarks of a positive nature in the other place, but I want the Minister to tell us a bit more about the future of BNFL's fuels division, which, under the new landscape of BNFL, is part of the Westinghouse division. Between 1,200 and 1,500 jobs in my constituency are still involved in the manufacturing of nuclear fuel, and those workers want a much clearer view of the future of the industry.

The Bill deals with the establishment of the new decommissioning authority, but there is a yawning omission. The Minister is right to establish a body to put into safer terms what is effectively a large nuclear dustbin at Sellafield—all the bits left over from the military programmes, which are dumped in those silos—and anyone who has visited it leaves thinking that something must be done with it. Having said that, the missing element relates to what the Government will do to speed up the process of consulting about what will be Britain's long-term nuclear repository. Without that solution, the new agency's work will be stifled before it begins. It has its bureaucracy in place, it works out how it will do its job; then where does it put the fruits of its labour? At present, the Government are still consulting on how to consult on the ultimate disposal of nuclear waste in this country. Finland, meanwhile, is just getting on with it.

Rather than trying to find a solution for ever and a day, will the Government not at last adopt the Nirex approach? That means saying, "If we can get something safe and recoverable, it will do for a century." New technologies come along, but at least we have an answer to the age-old question of what we should do with the leftovers of Britain's nuclear industry, while giving hope to a new nuclear power generation industry that affordable disposal of its waste materials—albeit in smaller quantities, given the new designs of nuclear reactors—can be accommodated.

My Select Committee also dealt with the question of biofuels. Like others who have spoken, I welcome clause 128. As I said in an earlier intervention, its objective mirrors views that I expressed during debates on the Finance Bill and in the Select Committee's report. I believe that a target that blends with both the diesel and the petrol ends of the road fuels business gives the Government an opportunity to replicate mechanisms that they have approved in the context of the renewables obligation. It is vital that they take that route, at least in terms of giving some decent pump-priming economic assistance to the industry.

I realise that the 2 per cent. and 5.75 per cent. road fuels directive is indicative rather than mandatory, but if we are to meet its requirements we shall have to have bioethanol in this country. We talk a lot about biodiesel and the use of waste fats. Helpful as that may be, we cannot achieve our objectives with petrol-driven vehicles without bioethanol.

As the Minister knows, there are other benefits. Apart from the use of output from the 300,000 tonnes of set-aside land, there is a potential benefit in the disposal of rubbish in this country. The lignocellosic part of the use of biofuels gives the Minister access to a waste-stream source consisting of wood, old materials and anything that produce sugar. Once the sugar is there, the fermentation that produces bioethanol can take place.

British Sugar has made it clear that if that industrial process does not start now, it will invest in Poland and we shall end up importing the bioethanol that we need to meet our target. At present, the Department is playing a leading role in World Trade Organisation talks that will ultimately lead to the reform of the European Union sugar market. It has been too long unreformed, but something must be done with the investment that will provide the feedstock for bioethanol. In parallel, something must be done about biodiesel. We must kick-start a UK industry that uses UK-grown oilseed rape. At present, bizarrely, we are exporting raw material feedstock to Germany and France so that they can make biodiesel when we should be doing it ourselves.

I hope that the Government will now take a lead and sort out the mess that is our biofuels industry. We have DEFRA saying how good it is for jobs in the rural economy, we have the Treasury setting the fiscal regime, we have the DTI presenting an energy policy—we even have the Department of Transport running a consultation exercise on the level of the biofuels obligation. Please can the Government get their act together, help the rural economy, and help themselves meet the carbon dioxide reduction targets by means of a UK-based biofuels processing industry?

Photo of Brian Iddon Brian Iddon Labour, Bolton South East 8:14 pm, 10th May 2004

It is a great pleasure to take part in an energy debate in the main Chamber. Since my election, most energy debates have taken place either in Westminster Hall or here on Fridays, via the mechanism of private Members' Bills. It is rather sad that most of the advances—albeit small—in energy policy have been made in that way.

Most developed countries are engaging in a serious debate about energy—rightly, in my view. The Science and Technology Committee visited Japan during its study of non-carbon fuels. One of the memories with which I left Japan was of a very mountainous country. From Mount Fuji the land goes straight down to the sea: there is no continental shelf surrounding the islands. That rules out offshore wind, because there is nothing to which to anchor the turbines. Tidal power is ruled out as well.

The Japanese have obviously thought carefully about their energy policy. They have their old enemy, China, facing them, and they are conscious of the implications of bringing in oil and liquefied gas via the sea. They have decided to invest heavily in nuclear power as their main base load, but also to invest heavily in photovoltaic cells. We saw roofs being lowered on to houses—roofs that had been preconstructed in factories, manufactured entirely from photovoltaic cells. Inside the houses were other energy-saving devices. The Japanese have thought through their domestic energy policy, and are also investing a great deal in fuel cell technology. I would say that in those two technologies theirs is the leading country in the world: it is probably ahead of us and even America.

A large amount of public subsidy is going into photovoltaic technology. Photovoltaic energy is not yet able to beat all other energy processes, so the Japanese Government are subsidising householders to fit photovoltaic cells in existing properties, while all new properties are being provided with photovoltaic roofs.

Finland has also been having a serious debate about energy policy recently. It has been upfront with its public about the possibility of building more nuclear plants and providing its base load through nuclear energy. In fact, that is what it has decided to do. Its public debates have been far more successful than ours on, for instance, genetically modified crops. It has persuaded the people that the only way to secure its energy supplies for the future and to develop as it intends to, is to build nuclear plants. It is also solving—with the help of the public—the problem of disposing of existing nuclear waste from nuclear generating plants, which is a problem that faces us as well.

Within three years we will be a net importer of gas, and within seven we will be a net importer of oil. As others have pointed out, by 2020 we will be at least 70 per cent. dependent on imported energy. Indeed, it has been suggested that our dependency will be as high as 90 per cent. I cannot, on behalf of my constituents, endorse a policy that allows us to rely on so much imported energy. If I were to design an energy policy—and I suggest that the Government act along these lines—it would involve two important concepts, security of supply and diversity of supply. The thought of gas coming from anywhere in the world, even Norway—especially if it came through an above-ground pipeline—terrifies me. I think that "terrifies" is the right word, because, as we have seen in the middle east, it is easy to blow up such pipelines, not just at one point but at several points.

Let us imagine what could happen if we were 70 to 90 per cent. reliant on imported energy, mainly gas, and there were one or two explosions on the pipeline. They might happen in the Russian states, from which we will probably import, or in the middle east, from which we may import. For how many days would some of our major cities and towns be without energy? No Government can afford to develop a policy that allows us to depend so much on imported energy.

I am all in favour of renewable energy. We should be developing all forms of such energy, including the stuff that comes out of fish and chip shops. I was rather worried to hear Mr. O'Brien say that the exhaust coming out of those cars smelled like almonds. Any chemist will tell him that the smell of almonds is like that of cyanide, so there is a bit of a worry there. I am not suggesting that hydrogen cyanide was coming out of the exhaust, but it may have been.

We must consider the base load. There is no way we can have an intermittent supply of energy—wind energy, for example—to produce the base load. We must have something that we can instantly switch on and off. Gas is the best form of energy in that respect, so we cannot rule out the use of gas. In recent years, there has been a dash for gas because it is cheaper and faster to build the plants. The returns for the investment are much greater for companies. There must be public investment in energy. I am all in favour of building new, cleaner nuclear plants that produce only 10 per cent. of the nuclear waste that existing plants produce.

There is no such thing as a safe method of producing energy. Think about the Piper Alpha disaster in the North sea, the thousands, probably world wide hundreds of thousands, of miners who have been killed in methane gas explosions or other accidents. Energy comes at a cost.

The nuclear industry in this country has a fine safety record. Okay, there have been problems in the Irish sea, but the very small trace amounts of radioactive material that get into the Irish sea do not bear any comparison with what used to happen. We have made great steps forward.

I used to work in a department of chemistry that trained a lot of people for the nuclear industry. We had one of the largest radioactive suites in Europe, where we trained people to handle highly radioactive materials. Therefore there were departments who trained such people. Our courses were mainly degrees in chemistry or applied chemistry but they always had a module to train people for the nuclear power industry. The hon. Member for Eddisbury said that there are no undergraduate courses in that anymore. That is probably true, but there are modules on that in undergraduate courses. He failed to mention that there are still postgraduate university courses to train people in nuclear power. However, there are by no means enough. The nuclear power industry says that it does not have enough young people coming in to replace the people who are retiring.

Energy costs are rising. The cost of the Phoenix gas company's supplies of gas in Belfast and the surrounding area has gone up by 11 per cent. in the past 12 months. A 20 per cent. increase in October is on the cards and is causing controversy in discussions across Belfast.

If we have a 10 per cent. rise in gas or electricity prices, it puts 500,000 people back into fuel poverty. My right hon. Friend the Secretary of State said that 750,000 people have been lifted out of fuel poverty. Rises in energy costs, which are inevitable, will put a lot of people back into fuel poverty if we do not counteract that in some way. I do not think that there is any way of avoiding rising costs.

Driving down costs of energy has had a downside: there has not been enough investment in research and development throughout the energy industry. It is therefore not all good news when the costs of gas, electricity or any other form of energy are driven down—the downside is a drastic reduction in research and development. We will feel that in future.

Photo of Nigel Evans Nigel Evans Conservative, Ribble Valley 8:24 pm, 10th May 2004

I am grateful to be able to participate in the debate and to follow Dr. Iddon, who spoke a lot of common sense, particularly when he referred to the fact that if we rely on imports of energy, anything could happen, particularly in the light of the rise of terrorism. It would be completely stupid for any Government to have a policy that was based on that.

This is an important debate because 100 per cent. of the Lancashire Conservatives have spoken in it. Sadly, there are only two of us at the moment but, following the next general election, no doubt there will be more and we will not be able to get 100 per cent. of the Lancashire Conservatives speaking in a debate of this importance.

I speak as an environmentalist. I represent Ribble Valley, which is a beautiful, glorious, very rural constituency. I hasten to add that, to my knowledge, I have one wind turbine in Ribble Valley, and I hope to keep it that way. A British Wind Energy Association map shows where all the 1,100 wind turbines are in the United Kingdom. The map looks pretty crowded now, and if we carry on as we are we will add another 5,000 to 10,000 wind turbines to it. It will be absolute lunacy if we go down that path, for reasons on which I hope to expand.

The Bill talks about the security and integrity of energy being vital. The Secretary of State for Trade and Industry is responsible for that. It is an important role.

Mr. Hughes said that the current policy seems to be a free-market one. If that were the case and it were left just to the free market, I suspect that we would not have a single wind turbine in this country. If it were not for the subsidies, it would not be worth putting them up. It is important to get that right. If it were not for the amount of money that British taxpayers are paying for the erection of wind turbines, we would not be going down that path.

In 20 or 30 years' time, when some sanity comes into energy policy, and a father and mother are driving their family around and one of the children points at a wind turbine and asks, "What is that?" the parents will reply, "That is an example of the folly of the late 1990s and early 2000s, when the Government thought that it would be the answer to all our problems. They invented targets that they had to meet, and they thought that wind turbines were the answer." We all want the Government to meet targets that mean that we rely less on carbon energy, but, sadly, one will not have to drive far to see examples of such folly—they will be all over the place. They are all over Scotland, Wales and large swathes of the south-west and the midlands—there is one coming near you now if we carry on with that policy.

I want to rely not on my prejudices—I declare my interest as president of the Country Guardians, which opposes industrial furniture in the countryside—but on those of some other people. James Lovelock, the founding historical and cultural leader of environmentalism for environmentalists around the world, said:

"I was asked to open the windfarm at Delabole. At that time nobody was talking about a gigantic programme, getting 15 or 20 per cent of the country's energy from wind turbines. It was a kind of nice green gesture. I think, now that I know as much as I do, I wouldn't have touched it with a bargepole."

The second person is Sir Martin Holdgate, the now-retired chairman of the Renewable Energy Advisory Group, which in 1992 advised the Government to set out on an alternative energy path. He strongly favoured renewable technologies, he said, but in the right place and on the right scale. He was attracted to the idea of solar panels on roofs and said:

"The trouble with wind farms is that they have a huge spatial footprint for a piddling little bit of electricity. You would need 800 turbines to replace the output of a coal-fired power station."

I am not an expert, so I rely on those who know all about it. My third expert has an honorary degree from the university of Central Lancashire. He said:

"My main thing against them is that they can only work, if you are very lucky, for 30 per cent. of the time. Going by the ones in Denmark it is about 17 per cent. of the time. So how are people going to be able to boil their kettles, or how are we going to power our hospitals the rest of the time? It means that we have got to keep our other stations running, spinning in reserve, inefficiently and pouring out carbon dioxide and sulphur dioxide and the like."

That person was David Bellamy; no one could say anything against his environmental credentials, and he is someone with huge credence in the country.

We know that the demand for power will rise tremendously over the next 10 to 20 years and we need a policy to deal with that.

Photo of Mr Brian White Mr Brian White Labour, North East Milton Keynes

The hon. Gentleman implies that the only renewable technology is wind power. Does he recognise that there is a panoply of renewable technology and that we ought to make sure that that wide range of renewables is encouraged?

Photo of Nigel Evans Nigel Evans Conservative, Ribble Valley

I absolutely agree. Part of the problem is that we are reliant on one kind of energy but not on all the others mentioned in part 1 of the Bill. There are so many alternative energies that could be getting part of the subsidy that disproportionately goes to wind power. A lot of other technologies and renewables do not get a look-in for all sorts of reasons, and I hope that that will be addressed in Committee.

There is a one-sided debate, as we have heard this evening: everybody loves wind turbines, which provide free energy and look nice—one cannot say anything against them—but nuclear power is nasty and horrible. One has to decommission nuclear plants. A wind turbine can be decommissioned for £12.50, but nuclear power will cost billions to decommission. The arguments are one-sided and, for whatever reason, Governments of different persuasions have been slowly hooked on wind technology. It is now time we got off that hook.

The subsidy going to wind technology is enormous—about £400 million. The myths need debunking. I do not have a wind turbine in my constituency and I will keep fighting against it, as will a number of other people. That is why I intervened on Mr. Stunell to say that the Liberal Democrats were in favour of wind technology generally but against individual applications, which they know will lose them votes. People do not like wind turbines, which reduce the value of people's property.

Photo of Alan Whitehead Alan Whitehead Labour, Southampton, Test

Will the hon. Gentleman talk about offshore as well as onshore wind? He states that he does not have a turbine in his constituency, but appears to forget that we are talking today about turbines that are far out to sea and not in his constituency.

Photo of Nigel Evans Nigel Evans Conservative, Ribble Valley

At one time, I thought that because people always said nice things about wind turbines I should not hit them too hard. I knew that they were completely inefficient, produced a piddling amount of energy and were noisy. I knew that people did not like huge farms in their area and that such farms were a scar and a blot on the countryside. I knew that they hit tourism.

If we shove them out to sea, we can pander to those people who think they are being environmentally friendly. We can put them on rigs out in the sea; it is hugely expensive, but who cares? We must pander to the green lobby somehow, despite the fact that it would give a small percentage reduction in carbon emissions. But, as Mrs. Dunwoody said, there are a number of downsides to that scheme as well.

If we are looking at efficient ways of producing energy, we should spend a small percentage of the amount that we are ploughing into wind technology on energy conservation. If so, we would not need the wind turbines in the first place. There is hardly a mention in the Bill of energy conservation, which is remarkable. We spend money on lagging roofs and insulating doors and windows, and Ribble Valley council accesses Government grants to ensure it is able to do that. But why do we not do more? Why do we not invest more money to ensure that more people get access to cheaper lights that use less energy? They are expensive now, but why do we not bring the price down for everybody? Everyone could then get energy conservation bulbs, which would help a little. We could be doing all sorts of things on the conservation front, such as roof insulation, doors and cladding, which we are currently not doing.

Photo of Andrew Stunell Andrew Stunell Shadow Chief Whip (Commons), Shadow Spokesperson (Environment, Food and Rural Affairs), Liberal Democrat Chief Whip, Liberal Democrat Spokesperson (Environment, Food and Rural Affairs)

May I warn the hon. Gentleman that he is coming dangerously near to propounding Liberal Democrat policy? I remind him that we have just spent £243 million propping up British Energy—money that should have gone into energy efficiency.

Photo of Nigel Evans Nigel Evans Conservative, Ribble Valley

I am old enough and wise enough to know that almost anything that I say comes close to propounding the Liberal Democrats' policy one way or another, because one of them will be saying it to some group of people. If only they had a coherent policy, at least we would know where they stood. They are in favour of and against certain things at the same time, which is part of the problem.

On the need to ensure that we preserve the countryside, and the ways of doing that—perhaps the Minister could address this point when he winds up—tourism is one of our fastest growing industries, with thousands of jobs reliant on it, so to scar the countryside with yet more wind turbines is a grave mistake. Even to push them out into the sea, at disproportionate cost, is a grave mistake. Let us look at all the alternative supplies mentioned in the Bill, and ensure that sufficient funds are going into research and technology at the university and industry stages, so that we can work out what to do.

Let us not turn our backs on nuclear energy, either. As my right hon. Friend Mr. Jack said—I suspect that I, too, have about 100 constituents working at Springfields—France is reliant on nuclear energy, which produces well over 70 per cent. of its total. We are prepared to import that energy from France, but turn our backs on it here, as though it were not in our backyard. I must tell hon. Members that France is in our backyard. To import energy from there, at the same time as denying that source here, is completely disingenuous. We should get a grip on that issue.

Photo of Desmond Turner Desmond Turner Labour, Brighton, Kemptown 8:36 pm, 10th May 2004

At least the Conservatives are even-handed—they say, "Not in anybody's backyard", whereas the Liberals stick to their own backyards.

To be a little more serious about energy policy, our problem here tonight is that we are discussing a Bill that should be the launching pad for an energy policy that makes a serious contribution to the future survival of the world, in terms of climate change. All that it is, in fact, is a set of housekeeping measures, which does not do anything seriously to promote renewable energy. The White Paper gave us all hope when it identified and set in lights the 60 per cent. target for CO 2 reduction as a prime policy driver. Since then, the threat of climate change has been reinforced and emphatically stated from many sources, including the Pentagon and the Government's chief scientist, all of which have made it clear that climate change is the most serious threat to the security of the planet.

The problem with climate change is that we cannot start too soon to try to do something about it. Even if we achieve the 60 per cent. target by 2050, of all the climate change scenarios even the most moderate is still quite extreme, by comparison with current circumstances, and anything else starts to move into the apocalyptic. Energy, therefore, takes centre stage. Virtually all the CO 2 output is derived from energy use, so it follows that we should be concentrating on moving away from the habit of burning fossil fuels. That has to be the ultimate driver.

Although this might not be the Secretary of State's fault, to have a Bill that starts out by imposing a duty on her to keep the lights on, which she already has, is laughable. Even George W. would understand that one. We need to do a little better than that, and CO 2 reduction has to be the prime driver. There is now probably general agreement on both sides of the House, and with everybody in the industry, that the present aspirations for renewable energy generation in this country will not be met—and, sadly, the Bill does nothing to correct that. We have to ask ourselves why. What is wrong?

For me, wind turbines are definitely not the be-all and end-all of the renewable energy industry. New technologies coming on stream could be far more potent, especially in the United Kingdom. How fast they are exploited is another question. As everybody probably knows by now, my favourite candidate is tidal power, closely followed by wave power. Between them, those two natural resources have the inherent capacity, if exploited, to supply twice as much electricity as this country now generates and consumes. That massive potential has to be worth exploiting.

Not only can those sources generate that huge amount of electricity, but tidal power can supply base load as well, because tides are totally predictable, to the minute. We know exactly when they will flow and exactly how fast, and the times change around the country, so if we locate our generation sites strategically, we can have constant predictable baseline power, with no CO 2 emissions and no serious environmental consequences. That must be a goal well worth pursuing.

We have seen the advantages that Denmark and Germany have gained from wind power, for all its problems. Denmark is a world leader in producing wind turbines, which provides thousands of manufacturing jobs in a small country and is a very significant contributor to its economy. We have that opportunity with the marine technologies, if we can exploit them fast enough. There are fantastic export opportunities.

We have worried about the industrialisation of the developing world. What if China, India or the whole Pacific rim were to industrialise by burning coal? They do not have to do that, because there are magnificent tidal opportunities in the Pacific rim. Anywhere there are islands, there are tidal power opportunities. We still just have the world lead in this technology, and we could have a fantastic export industry, creating 50,000 jobs—or perhaps 100,000, or more. If we do it right, the sky is the limit. We cannot afford to miss that. Why are we not doing it more quickly?

The example of our near neighbours Germany and Denmark shows how determined Governments, without massive expenditure, can promote the introduction and deployment of a technology. We must do that too, yet the sad thing is that the Bill does nothing about it.

I have here a report by the Select Committee on Science and Technology. I probably do not have time to talk about its recommendations in detail, but it supplies the policy that is lacking, and if its advice were followed the funding would be supplied, through a carbon tax and carbon tax credit system. CO 2 -producing technologies would be taxed, and renewable technologies would get a credit. That would solve the problem that technologies other than wind power, which is already there and is readily deployable off the shelf, have in attracting investment. The current system of ROCs—renewables obligation certificates—is too small and too uncertain to attract investment. But if we are to get a new technology into the marketplace, it needs support. By definition, it cannot possibly come in straight away at a commercial price, because the early machines do not have absolute design optimisation and economies of scale. That is why new technologies need guaranteed entry prices. Germany has achieved such things through its renewable energy legislation. Whether or not one likes wind power, we should note that Germany has deployed it several times faster than we have, or even plan to.

The report also clearly sets out grid companies' obligation to connect new generators to the grid—we will have to rewire Britain completely—and how that will be paid for. We could do this. For example, our Committee proposed a renewable energy authority. We are to have a nuclear decommissioning authority, which I totally support, but promoting renewable energy is at least as important to our future. We could derive enormous benefit from such a body taking over the functions currently exercised by the Department of Trade and Industry, the Carbon Trust and other bodies that, frankly, are not as effective as they might be, and from its producing as concentrated an effort in developing renewable energies as the UK produced in developing nuclear power after the second world war.

There are possibilities out there, but the Bill does not reflect them. It is not too late to incorporate some of these principles.

Photo of Norman Baker Norman Baker Liberal Democrat, Lewes 8:46 pm, 10th May 2004

The good news, if I may say so in a spirit of generosity, is that the Government's energy White Paper is almost coherent in setting out the way forward; the bad news is that the so-called Energy Bill does not implement the White Paper. This is becoming a serial fault of the Government. The Waste and Emissions Trading Bill, which should have produced an holistic view of how we deal with waste, was simply the "landfill directive implementation Bill". The Water Bill was a series of small, unconnected measures that failed to recognise the water framework directive, which was being implemented at the same time through regulation. As hon. Members have said, this Bill is not simply a missed opportunity, it is a worrying sign. There is a window of opportunity to get this issue right, but the Government are missing it.

I agree with those hon. Members who said that security and diversity need to be key drivers in energy policy. Of course, a third driver is minimising environmental impact, yet the Bill contains virtually nothing on energy efficiency or energy conservation. Labour Members rightly talked about the impact of high energy charges on their constituents, and the way in which people have been taken out of fuel poverty. I admire the desire to get people out of such poverty, but the best way to deal with the problem is to conserve energy: to reduce the cost of energy by reducing the amount that people have to buy, through energy conservation and energy efficiency measures. That would help individual constituents and reduce the impact on the environment, yet we hear nothing about that idea in this Bill; nor did the Secretary of State say anything about it in her opening remarks. That is another missed opportunity.

The Government also need to look at transmission losses. We have long transmission lines, and as a recent parliamentary question of mine demonstrated, we lose more of our energy between the point of generation and the point of consumption than other European countries do, probably as a result of the transformer arrangements. It is a big issue that the Government have not even begun to address.

The second failing is in respect of renewables. I, too, believe that renewables should and will provide the bedrock of our energy generation requirements in the years ahead. They will do so through diversity of supply, rather than through onshore wind power alone, as Mr. Evans—he has disappeared from the Chamber—would have us believe. As Dr. Turner suggested, there are a number of alternatives, which are listed in the Bill. But the Bill does not set out how to promote them, other than to wish and hope for the best.

The Government fail to intervene in the energy market in a meaningful way. The days when the Department of Trade and Industry would intervene before breakfast, lunch and dinner—when Michael Heseltine was Secretary of State—have long gone. It is now a matter for market forces, but the idea is taken to a ludicrous degree. Some of us had lunch today with the senior environment official in California, who told us that the land of the free is intervening to get its energy policy right and making sure there is pump priming for renewable technology and low-interest loans for private sector companies to make sure that technologies are developed. Targets are being set for photovoltaics on 50 per cent. of homes in California. What are our Government doing about that? I am tempted to say something unparliamentary, but the diplomatic way of putting it is "Not very much".

Much more could be done, and we have a window of opportunity in which to get things right. There will undoubtedly be increasing uncertainty over fossil fuel supplies. We are seeing the run-down—rightly, in my view—of the nuclear industry. We must make sure that we start actively to fill the gap, and we must do it now. We can do that, first, by reducing energy demand, and then by having a big renewables programme. We are not seeing that happen.

Of course, it suits some people very well to pretend that there is no renewable energy industry able to meet the gap and that we must therefore fall back on nuclear power. It suits some people so well that wind power and other renewable energies are being talked down so that people are encouraged not to invest in them. That is what is being said from the Conservative Benches, and there is a spectrum of views—to put it kindly—among Government Members. The Secretary of State for Environment, Food and Rural Affairs believes that renewables are very important and that nuclear power has no future. Lord Sainsbury, on the other hand, believes that nuclear power is the best thing since sliced bread and that we should be investing in it as fast as we can. The Secretary of State for Trade and industry is stuck somewhere in the middle, which is why the door to nuclear power has been left open. It would be helpful if the Government finally settled on a view and implemented it, rather than hoping that market forces will dictate. That abdication of responsibility means that renewables will not have the support that hon. Members on both sides—particularly on the Labour Benches—want for that industry. The way things are going, we will not see that.

Conservative Back Benchers have told us that nuclear power is the solution, and their Front-Bench spokesmen—I hope that Mr. Robertson will do this—should have the decency to say, if they believe in nuclear power, that it is their policy to have new build. They cannot honestly carry on articulating a need for nuclear power while saying that they have an open mind on whether nuclear new build should occur. New build is a respectable policy; I disagree with it, but if it is their policy, they should say so instead of pretending that they are stuck in the middle, like the Government. They do not want to offend the green lobby or someone else, but they should advocate the policy they believe in.

There are three good reasons why nuclear is not the future and why it would be wrong to go down that road. First, there is security, which is a real issue in the age of terrorism. Nuclear installations and nuclear fuel present a threat and a target, and we should be careful not to exacerbate that. The Government should minimise the exposure of the nuclear industry. For example, they should be minimising transport movements of nuclear material, but they are not. Movements of radioactive material are a matter, they say, for British Nuclear Fuels Ltd. or for British Energy, or for anyone apart from them. In fact, according to answers to my parliamentary questions of last year, unless they have changed their mind since, the Government even allow nuclear material to be carried, in theory at least, on passenger ferries and through the channel tunnel. That is the Government's official position, and if I am wrong on that, the Minister should stand up and say so. That is what his predecessor said in answers to me about a year ago.

The second issue is cost. Hon. Members, now absent, have berated the cost of wind power. We were told it would be £400 million, and how terrible that is, if it is correct—and I must say that the figure varies from day to day. But there was no mention of the £48 billion that we are being asked to find from the taxpayers' purse to decommission the nuclear industry. That is an enormous sum, and far more has been given over the years to the nuclear industry than to renewables. Parliamentary answers demonstrate that while renewables have been given a pittance—pennies here and there—shovels full of cash have been thrown at the nuclear industry.

Photo of Laurence Robertson Laurence Robertson Shadow Minister (Treasury)

No matter how much is put into wind power, it will provide electricity only for a small percentage—perhaps only 30 per cent.—of the time. That is the difference. The nuclear industry provides 22 per cent. of all our electricity without failing us at all.

Photo of Norman Baker Norman Baker Liberal Democrat, Lewes

There are a number of problems with that. First, we are back to wind power as the only renewable source of energy. Secondly, we are not yet clear whether nuclear new build is Conservative policy—perhaps we should assume that it is. Thirdly, other countries manage to generate much more than 22 per cent. of their energy from renewable sources. I am afraid that that is "three strikes and you're out" for the hon. Member for Tewkesbury on his intervention.

Photo of Michael Weir Michael Weir Shadow Spokesperson (Trade and Industry), Shadow Spokesperson (Environment, Food and Rural Affairs), Shadow Spokesperson (Health)

Equally, there is the point that nuclear energy can be interrupted. In fact, Torness in Scotland shut down for a considerable time because of mechanical problems.

Photo of Norman Baker Norman Baker Liberal Democrat, Lewes

That is absolutely true and the point should be borne in mind by those who advocate nuclear power. Unlike gas and coal generation of electricity, nuclear power cannot be switched on and off: it has to be kept running.

The third problem with nuclear power is nuclear waste. We have gigantic amounts of it in this country—

Photo of Norman Baker Norman Baker Liberal Democrat, Lewes

The hon. Gentleman shakes his head, but we do. I could quote him parliamentary answers from successive Ministers. Furthermore, the Government's own "Consultation Paper on Proposals for Intermediate Level Radioactive Waste Substitution"—a catchy title—means that we will get more waste. The Government will increase the amount of nuclear waste in this country—that is what the consultation paper actually says. One would think that they would at least stop reprocessing, which increases the amount of nuclear waste. I asked the Secretary of State for Environment, Food and Rural Affairs whether she would stop reprocessing and to outline her views. The Minister for the Environment replied:

"Decisions about whether to reprocess spent nuclear fuel depend on the commercial judgment of the operator concerned."—[Hansard, 23 February 2004; Vol. 418, c. 146W.]

The commercial judgment of the operator? Where is the Government's bold policy on that? Do we or do we not want more nuclear waste? Do the Government not have a view on that? Is it simply a matter for some company somewhere to decide that they can land the taxpayer of the future with an environmental and a financial liability? That appears to be the Government's abdication of responsibility, so far as the nuclear industry is concerned.

When the Minister sums up, will he comment on The Sunday Times story—I hope that he will take note of it; he is obviously not listening—that appeared last Sunday, which suggested that 20 kg of radioactive material had gone missing from the midlands? Will he say whether it is true and what the Government are going to do about it? As the Minister is not listening, perhaps the Whip will tell him that I have raised that point and asked him to comment on it when he responds this evening.

This country needs a proper nuclear policy and a proper energy policy. Energy policy should be based on minimising, through energy conservation and energy efficiency, the amount of energy consumed and having proper investment pump-primed by Government intervention to get the renewables industry going. It should not be just an odd wind turbine here and there, or a pilot plant somewhere else. I mean a proper policy to get renewables up and running to meet the Government's target and beyond.

We should be looking even further to the coal industry to establish how coal generation could be made more acceptable. In another parliamentary question, I asked about the gasification of coal. Labour Members who represent mining constituencies might be interested to hear the answer. I asked

"what percentage of power was derived from gasified coal in 2003."

The Minister for Energy, E-Commerce and Postal Services replied:

"Currently in the UK there is no power produced through coal gasification."—[Hansard, 6 May 2004; Vol. 420, c. 736W.]

Why not? What have the Government been doing over the past six years to help the coal industry to ensure that our indigenous supply is used while at the same time meeting proper environmental standards? What has happened in the past six years? The Government need an energy policy, and they need it now.

Photo of Alan Whitehead Alan Whitehead Labour, Southampton, Test 8:58 pm, 10th May 2004

We have had a rather odd debate about this important Bill. Claims have been made that wind power is the only trick in the magic box, that the Government claim that it will solve everything and that we should also examine other sources. As far as I am aware, the Government and Labour Members have never claimed that that is the future for renewables. Indeed, page 55 of the White Paper includes a timeline for a whole variety of renewables coming on stream over a period, which will create the mix of renewables that hon. Members have spoken about.

We must emphasise, however, that it is a race against time. We cannot just say that we should have a good think about various alternatives and discuss the best option over a period without taking any decisions. As my hon. Friend Dr. Turner explained, we are producing ever-increasing amounts of CO 2 , which is causing enormous and possibly irreversible damage to our environment. The question is whether we start the movement towards renewables now, with the technologies that we have and bring others on line later, or talk about the technologies that we would like to have and do nothing. If we are not careful, we will be here in 50 years talking about what sort of renewables we would like. However, we will not be here in 50 years if we carry on business as usual in terms of energy use, because this building will have been flooded.

The White Paper is ambitious and I was proud to have it published. I was proud that the Government emphasised a long-term aim of a 60 per cent. reduction in carbon emissions by 2050, but that is of course a target and not actual energy reduction. The changing picture of UK energy production requires huge action. It has been estimated that to meet the Government's target of 10 per cent. of energy from renewable sources by 2010, some 3,500 to 5,000 wind turbines would be required. That would fulfil only the wind element of the target of some 7 per cent., with the remaining 3 per cent. met by other renewable energy sources. That could involve a variety of systems, which could contribute to a secure and reliable system. As hon. Members have already mentioned, wind is intermittent, but other renewable sources—tide, wave and biomass—are not. It is a failure of the imagination to think that the only way to secure a baseline of power—and a different arrangement for the distribution of power—is by continuing to churn out power in the centralised way that we always have.

The DTI has said that the potential resource for wind in our territorial seas comes to 200 GW, or three times the present UK generating capacity. If we went beyond territorial waters, a further 130 GW, or twice the UK's present generating capacity of 68 GW, would be available. That estimate excludes any conflict with oil exploration or production, with aggregate extraction or with shipping lanes.

We have heard today that we need to replace nuclear capacity, and I agree with Norman Baker that it is time that Conservative Front Benchers admitted, "We would like to build lots of nuclear power stations. Can we start tomorrow because that is our policy?" It is not tenable for the Conservatives to continue their patsy game.

Photo of Laurence Robertson Laurence Robertson Shadow Minister (Treasury)

I have tried to resist intervening on this topic, but I must point out that no Government would write a cheque for the building of new nuclear power stations. We believe in the market and it would be up to the market. Our point is that it is up to the Minister to create the economic conditions that will encourage investment to achieve security of supply. The coal industry is under environmental threat, gas will have to be imported from long distances and we struggle to meet renewables targets, so it is up to the Government to say how security of supply will be achieved.

Photo of Alan Whitehead Alan Whitehead Labour, Southampton, Test

That clears that up, then. The hon. Gentleman and his colleagues have already said that they do not have a policy, but they do not agree with wind power or with encouraging renewable sources as the Government suggest. The Conservatives have implied that it would be a good idea to go down the nuclear route, but they will not come out and actually say that. Indeed, the hon. Gentleman has just confirmed that.

Even if we did replace the entire present nuclear capacity with wind turbines—I do not anticipate that that will happen—we would need some 10,000 to 15,000, and some people think that that is an unachievable target. Germany already has 14,000 wind turbines in operation and the country is not covered with them. Nor has Germany failed to make progress in wind turbine technology, because it has begun to install them over the past 15 years.

Capacity could also be derived from biofuels, as hon. Members have mentioned. About 5 per cent. of arable land, much of it currently fallow, would be needed to meet EU biofuel targets of 6.7 per cent. Tidal power, which has already been mentioned by my hon. Friend the Member for Brighton, Kemptown, could provide twice the UK's generating capacity. The truth is that there is the capacity, both in base-load generation and intermittent generation, to produce a large proportion of the UK's energy supply through renewables.

Realistically, the choice is between business as usual, renewable technologies that are coming on stream—and ensuring that those work well—or simply going nuclear. Real licences and real generation are needed now. We have to overcome a number of hurdles. Hon. Members have already mentioned shipping lanes and the objections of the Ministry of Defence. I do not think that those are insuperable objections; they can be negotiated and discussed.

We must sort out the matter of renewable obligation certificates. The design of the renewable obligation system should not cause the system to come close to collapse because certain firms go out of business and do not meet their obligations. We must have a more stable system that produces a more stable price.

However, those are matters of detail. It is vital that we make use of all the renewable technologies we can, and make greater use of CHP. If the Government want to resist clause 120, I would suggest that they convert its provisions to a power for the Minister, so that it can remain in the Bill, along with clause 128.

Overall, I think the Bill is to be welcomed. It is part of a jigsaw, as my hon. Friend Mr. O'Neill said, but it represents real progress towards the 20 per cent. target for renewable energy by 2020. Wind power will not solve the problem, but the Bill will go a considerable way towards reaching that target.

Photo of Mr Calum MacDonald Mr Calum MacDonald Labour, Na h-Eileanan an Iar 9:07 pm, 10th May 2004

As my right hon. Friend Mrs. Liddell said, I have a very important constituency interest in the Bill and the topic of meeting the Government's renewable energy targets. As many hon. Members have pointed out, the targets are very demanding and ambitious. After many years of neglect of renewables by previous Governments, the Labour Government, in pursuing their policy, have to break through what seems to be a wall of scepticism—or at least a great deal of uncertainty—among people in industry about the viability of meeting those targets.

That atmosphere of uncertainty will be added to by the various contributions from Conservative Members during the debate, in which they revealed once again their long-standing hostility towards the development of renewables. If the Government are to overcome that scepticism, and break through that uncertainty, they have not only to announce targets, but to encourage and push industry to meet those targets. To meet even the 2010 target, we shall have to build about 1,000 turbines each year in the run-up to that date. Sadly, each development comes up against a wall of obstructions and objections of various kinds, and threats of legal action that could take years to settle.

It is unfortunate that, sometimes, some of those obstructions are thrown up by various Departments, quangos and Government agencies that seem not yet joined up to the central thrust of the Government's renewables strategy—notably the Ministry of Defence, but also arm's-length agencies such as the Civil Aviation Authority, the air traffic control system and environmental agencies such as Scottish Natural Heritage.

It is understandable that some of those public sector bodies will have points of view about the development of wind farms—they have legitimate remits to deliver—but we need to remember that each of them is, in essence, the equivalent of a single-issue pressure group; they have a narrow focus on the renewables issue. If the renewables strategy is to be delivered, it is important that the Government pull together the different strands to achieve some joined-up government between those Departments and the various agencies.

Mr. Blizzard pointed out in his excellent speech that the United Kingdom has the best wind and wave resources in Europe. The best resource in the United Kingdom is to be found in the highlands and islands, especially in the outer islands of the Western Isles and in Orkney and Shetland. The average efficiency of wind farms has been mentioned during the debate. The percentage figure given was somewhere in the high 20s, but I am told by AMEC—the leading developer—that the efficiency of wind turbines is between 40 and 50 per cent. in the outer islands of Scotland. The nation needs to harness that huge resource to meet its renewables targets in the run-up to 2010. Indeed, if we look beyond 2010, as we move into the hydrogen-based economy, that huge resource could produce perhaps one of the most cost-effective sources of hydrogen in the United Kingdom and, indeed, in Europe.

To realise that potential the Government must ensure that two things happen. First, a genuinely national, UK grid must be constructed which links the generating capacity of the north of Scotland with the markets of the south of England. Scottish and Southern Energy, which owns the grid in the north of Scotland, as well as supplying customers in the south of England, estimates that it would cost £200 million to upgrade the grid to connect the highlands to the central belt—a project that it hopes to begin building early next year—but that a further £500 million would be required to connect the three main island groups to the mainland and to harness their resources for the good of the whole nation. Those are large sums, but they are well worth spending.

Three separate wind farm developments have been proposed in the Western Isles—planning applications will be made during the year—and, taken together, they will have an installed capacity of more than 1,000 MW. That is a huge resource for the nation, but its development will obviously bring massive economic benefits to those remote and economically marginal communities. The development of renewables could end 100 years of low growth and economic underdevelopment in the outer islands of Scotland, and transform them into an economic asset for the whole nation. That double benefit—for nation and for region—should be in the front of Ministers' minds when they talk to Ofgem about the need to upgrade the grid in the coming months.

The second big obstacle, which must be overcome, is the creation of a level playing field, so that all generators across the UK are equally able to gain access to the grid. There is serious worry and concern that, compared with generators elsewhere, those in the north of Scotland will end up at a disadvantage under the BETTA rules when the new, British-wide electricity trading arrangements get under way. I am delighted that the Government have responded to those concerns in clauses 175 and 176 and especially in clause 181, but we are still far from seeing the details—the flesh on the bones—of how that new fair and level playing field will be established, and I look forward to hearing more about that during the Bill's consideration.

Photo of Paddy Tipping Paddy Tipping Labour, Sherwood 9:14 pm, 10th May 2004

This is an important Bill, because it helps to deliver the aspirations in the Government's energy White Paper. By itself, it will not deliver those aspirations, because the White Paper is a step change from the past to the future—from a fossil-dominated economy to a carbon-free economy. Achieving 60 per cent. carbon reductions by 2050 is extremely challenging, and becoming a net importer of energy in just a few years' time is a matter about which the Government should be seriously concerned.

Climate change has hardly been mentioned in the debate, but it is the big political issue of our time. If we are to achieve the White Paper's targets of 10 per cent. of energy from renewables by 2010 and 20 per cent. by 2020, we must work quickly, because we start from a very low base.

There has been a good deal of discussion in the debate about wind power. It is clear to me that wind power by itself—particularly onshore wind power—faces real difficulties. The Government are committed to offshore wind power, and the first field at North Hoyle came on stream just last year. Offshore wind power has remarkable possibilities, but there are difficulties, and my hon. Friend Mrs. Dunwoody outlined some of them. We need to go further than the Bill and consider a marine environment Bill to consider the conflicts in the marine environment. I am not confident that we have joined-up government on the issue.

If we do not reach the renewables targets, we will face great difficulties in the mid-term. Security of supply has been mentioned throughout the debate, but I would be very worried if by 2020 or 2025, 70 per cent. of our energy needs were supplied from abroad, 90 per cent. of which were gas. The events of 11 September have changed the world. The war in Iraq has shown that diplomacy cannot solve everything. We will face difficulties if our renewables targets are not met and if we are so heavily dependent on gas. Hon. Friends have pointed out that there are other sources of renewables, but wind power will drive our renewables forward in the mid-term.

If we do not meet our targets, what else would need to be done? It is absolutely clear that the nuclear option needs to remain open. There is no prospect of the market or the private sector replacing nuclear with nuclear just now. We need to look further afield.

Many of my hon. Friends have made a strong case for coal. I find it astonishing that Japan, which has no indigenous coal industry, spends more on research on clean coal technology than we do. We need to move harder and faster to bring investment into new forms of clean coal technology. We need a more stable market and a place for coal in the energy market to encourage private sector investment. That will not come in by itself. We need to consider carefully how the Government can take the prospects for clean coal technology further. Coal burn will increase across the world, and we can develop the new technologies. We are in a strong position to exploit them.

I have previously discussed the large combustion plant directive with my hon. Friend the Minister, and I will not pursue the point today. However, I will remind him that coal mine methane is a real problem. I hear stories coming from his Department that the study into coal mine methane advocates its flaring and burning. Let me make it clear to my hon. Friend that that would not fit well with our White Paper commitments.

A number of hon. Members have talked about biofuels. In the short term, they are the only way of reducing carbon emissions in the transport sector—a sector in which emissions are increasing. It is important that we use the renewables obligation to encourage our indigenous industry. There is a danger that our needs will be sucked up abroad.

I conclude with something that I raised in an intervention. I am extremely worried about the future cost and price of energy. We have been fortunate to have had relatively low energy prices in the past two decades, but the cycle has turned, as the White Paper acknowledges. I think that there will be sharply increasing energy prices in the next decade. Many little additional bills will be created by the White Paper. The renewables obligation has been mentioned. The emissions trading scheme will also add to costs. We need to rewire Britain, and there has been a consensus on that. If we are to have sources of renewable power, will they come from peripheral supplies, because the cost of rewiring Britain will be fairly steep?

The big demand for energy conservation measures will also add to costs. The White Paper is clear on that: it predicts that energy prices will rise by 5 to 15 per cent. for the householder and by 10 to 25 per cent. for the industrial user. I think that those figures are on the low side and energy prices will increase rapidly. Conceptually, that is not a bad thing. We should charge more for activities that harm our environment, but if we accept that energy prices are to rise, we need to think through much more carefully the social, economic and political costs of that. I hope to have the opportunity to explore all those issues in more detail in Committee.

Photo of Mr Brian White Mr Brian White Labour, North East Milton Keynes 9:22 pm, 10th May 2004

One of the disappointing things about the debate in the Lords and the Chamber today is the way in which different energies have been set up against each other. We have had a rather sterile debate in which energy A is better than energy B. The renewables versus nuclear debate is false and I hope that we move away from it in Committee.

As little time is available, I shall not talk about nuclear energy, energy zones or security of supply. I suppose someone has to welcome part 1, and given that many of its clauses use the original wording of the Sustainable Energy Bill, my private Member's Bill of a year ago, I should probably be the one to do that. If the Government are minded to remove those clauses, and I understand why they might, perhaps I can remind them of the Minister's response in Committee. The issues that the clauses address will not go away, and he needs to have a transparent response to people who advocate their removal. The strategy for dealing with their removal must be clear.

I was a member of the Committee that considered the Utilities Bill; indeed, someone once called me a refugee from that Bill. One issue that arose was how NETA was implemented. Warnings were given about its impact on small companies. I moved amendments that would have allowed us to avoid some of the problems encountered by combined heat and power, but Ministers were sceptical. We need to return to the lesson of how NETA was introduced and ensure that the mistakes made then are not replicated when we introduce BETTA.

We also need to recognise that we have lived in an era of overcapacity and low prices and that that era is over. We need to consider how the issues apply in an era of rising prices. There is also an issue to do with how we deal with CHP in that scenario.

We have been promised a review of the renewables obligation in 2005, but I think that we ought to use the opportunity of the Bill to address the problems of the CHP industry now, rather than waiting until 2006. Ministers are well aware, from representations from companies such as Conoco Philips, of the problems that the industry is having. It is important that we address some of those serious concerns when we come to discuss clause 120.

I understand that the DTI has several objections to CHP, but many of those stem from the scale of new CHP technology that is likely to be introduced. My concern is that the Cambridge model that the Department has used is fundamentally flawed. I question the robustness of that economic modelling, which predicts that 284 MW of new build is likely to result from the renewables exemption. Even the Department accepts that there is uncertainty about that. There is a lot of discussion about the impact on renewables, but many renewables companies say that removing the obligation on CHP will not affect their investment decisions. We need to discuss those issues in Committee because they, rather than the clause, point the way forward. If Ministers do not it rule out, removing the obligation would be a better way forward than removing the clause.

The operation of Ofgem under the new arrangements is critical, particularly to the role of smaller companies. In the short time available to me, I want to welcome clause 129 on microgeneration; it is very important and has not been highlighted enough tonight.

The measures in the Government's statement following the energy efficiency review need to be implemented as quickly as possible. I urge the Minister to use not only this Bill but the spending review to do that.

Opposition Members were absolutely right to talk about bioethanol. We could blend biofuels into petrol, which would solve the problems caused by Customs and Excise requiring 100 per cent. duty on the use of biofuels, which requires new build, rather than allowing the use of 70 or 60 per cent. biofuels and charging duty pro rata. I will go into the issues concerning bioethanol in more detail if I am lucky enough to be on the Committee.

My hon. Friend Dr. Turner referred to fuel poverty, which in an era of rising prices will not go away; it needs to be addressed. We will touch on that issue again tomorrow when we discuss the Housing Bill. As the lead Department on the matter, the DTI has played its role very well so far, but in future its commitment to eradicating fuel poverty will be critical.

The investment climate has not really been discussed tonight. The Bill highlights the question of how we give the City certainty without long-term investment in energy needs, particularly in renewables and CHP but also as new arrangements are introduced. It is important that we stimulate the markets. Points were made earlier about how a market can come to maturity. The Bill does not cover that, but again I am sure that the debates in Committee will.

In conclusion, we are at a critical stage in developing our energy policy. The role of Finland has been mentioned a couple of times tonight. Given that the President of Finland is visiting the UK tomorrow, I am sure that she would be interested to hear some of the comments that have been made about how well the country has dealt with its energy policy, and how it had a mature debate about whether to return to nuclear energy. We can learn a lot from what Finland has been through.

The concerns that have been expressed today, particularly about CHP, the industry renewables and the regulatory barriers for small companies, need to be addressed, and I look forward to doing that in Committee if I am lucky enough to be a member.

Photo of Laurence Robertson Laurence Robertson Shadow Minister (Treasury) 9:29 pm, 10th May 2004

This has been an interesting debate. I have counted 24 speakers so far, and I hope to be forgiven for not mentioning each and every contribution. The debate has ranged widely. When one speaks with the various interests in the power industry, one hears many different views expressed, so it does credit to the House of Commons that different views have been expressed by hon. Members during this good debate on an extremely important issue.

When people wake up in the morning, they might not think about the energy supply until they flick the light switch and the light does not come on; then, it becomes an very important matter. Of course, it is important, because the first thing people do when starting their day is use one form of energy or another. I am grateful to all who have participated in the debate, but I shall be forgiven for mentioning in particular my right hon. and hon. Friends.

My hon. Friend Mr. Robathan spoke of his personal experiences of renewables—

Photo of Laurence Robertson Laurence Robertson Shadow Minister (Treasury)

I do not know. The winding-up speeches have started a little sooner than anticipated, but perhaps my hon. Friend is on his way. He spoke about his solar panel and his windmill in his back garden. My hon. Friend Mr. Page made his usual considered and sensible speech, and my right hon. Friend Mrs. Shephard spoke knowledgeably about biofuels. My hon. Friend Mr. Key made a broad-based and interesting speech, and my right hon. Friend Mr. Jack broadened the debate still further, speaking not only about the security of physical supplies, but about economic security. He did not go so far as to say that the world would be troubled were a gas producers' equivalent of the Organisation of Petroleum Exporting Countries to arise, but I am sure that that is the sort of thing he had in mind. Given the recent increase in oil prices, we have to consider that possibility.

My hon. Friend Mr. Evans made a passionate speech. He tended to focus on windmills, but he was speaking from experience. It is wrong of Labour Members to accuse some hon. Members and members of the public of being nimbies. There is little wrong with being a nimby if it means that one defends the area in which one lives and wants to preserve its beauty and economic prosperity, as people in the lake district want to do.

I hope that Members representing other parties will forgive me for not going through every one of their speeches, but some very interesting contributions were made. Dr. Cunningham spoke with his customary knowledge. I was in Sellafield fairly recently—I hope that I wrote to him at the time to inform him, but fear that I might have been a day late in doing so, and postal strikes do not help. It must have been in the second delivery, which never arrived. [Laughter.] When I was there, I saw how crucial the nuclear industry is to the area. It was noticeable that support for the industry cut across the political divide—

Photo of Laurence Robertson Laurence Robertson Shadow Minister (Treasury)

No, not the Liberals. I shall not name the people I met, but the industry appeared to command great support from the Labour party, from the trade unions whose representatives I met, and of course from the Conservatives.

There were many other interesting speeches, including from hon. Members who are concerned about the coal industry. As the son of a former miner, I can certainly sympathise with the sentiments that they expressed.

This is an interesting time to be having this debate, an interesting time for the Minister for Energy, E-Commerce and Postal Services to be holding his portfolio, and an interesting time for me to shadow him. We in this country have enjoyed 30 years of security of power, which has benefited not only those who use power, but the Exchequer. That, of course, is now changing, and we must recognise that. Indigenous gas and oil supplies are running down, there are strong—nobody should underestimate them—environmental challenges to the coal industry, and renewables are struggling to keep pace. It will be a challenge, in which I hope that the Government will succeed, to meet the targets set for renewables. As my hon. Friend Mr. O'Brien said in an outstanding opening speech, in less than 20 years' time, unless nuclear power plants are extended, nuclear will be reduced to providing just 2 per cent. of electricity in this country. Some Labour Members—not all by any means—might welcome that, but those who do must explain how the remaining 20 per cent. will be made up. As has been explained, if it is made up from renewables, we may replace that capacity, but in terms of carbon emissions, we will have gone nowhere. We must bear that in mind.

In terms of financing of new generation and the direction of energy policy in this country, we are at a crossroads. As has been said, we want to avoid an over- dependence on any one form of energy, including nuclear, coal and gas, if that gas must come not only from Norway but all the way from Russia. As has been said, we are at the end of a very long pipeline, with all the implications that go with it. We might ask the people, "Would you like to be dependent on imported gas from countries such as Russia?" As for honouring commitments, by and large, it does so, but Lithuania and Belarus might not agree, because both have recently had their supplies cut off by Russia for political reasons. Let us bear that in mind. Were we to ask people whether they wanted to be in that situation, in which the vast bulk of our gas was imported, they would say no. We must think again.

The White Paper, on the back of which this Bill has been introduced, raises some commendable objectives: security of supply, reduction in carbon and reduction in the numbers of fuel-poor consumers. We would all say that those three are worthy objectives. The problem is that they are conflicting. They are made more difficult by the changing atmosphere and circumstances in this country. I have been in the Chamber for the whole debate apart from one speech, and I apologise to Dr. Iddon for missing his. When I nipped out, however, I caught a news item in which the chief executive of Powergen, Paul Golby, said that a 20 per cent. rise in prices of electricity over the next decade is possible, and that a massive amount of investment is needed in the industry—between £50 billion and £70 billion—to secure supply. That is an awful lot of money, and the suggestion is not from someone who is ignorant of the facts.

Given the White Paper, and the difficulties to which the White Paper has perhaps drawn attention without pointing the way to a solution, we generally welcome the Bill, especially as it has been greatly improved, as my hon. Friend the Member for Eddisbury said, by the sterling work carried out in the other place, principally by Conservative peers, although occasionally—I am sure it was a mental aberration—they were supported by the Liberal Democrats.

Photo of Laurence Robertson Laurence Robertson Shadow Minister (Treasury)

I knew that I should not have said that. Can the hon. Gentleman be quick, as I do not get time added on?

Photo of Laurence Robertson Laurence Robertson Shadow Minister (Treasury)

Perhaps we will save the details for the Committee stage.

This debate is taking place in an atmosphere different from the one which would have existed before privatisation. Great advances have been made in the industry, but the whole House would agree that we need to go beyond this Bill. It is a start, and we welcome much that is in it, so much so that we will seek to hang on to quite a few of the amendments passed in the other place. I do not understand why the Government are having such difficulties with the amendments on combined heat and power, for instance. When I met representatives of the Combined Heat and Power Association recently, I was told that it had generating capacity that was not being used.

There is an interesting amendment concerning micropower, and as Mrs. Dunwoody pointed out, there are navigation amendments. There is also a biofuels amendment. We shall look at all those closely, because we think that they improve what was rather a bland Bill.

The Secretary of State said that clause 1, which began as an amendment, was superfluous. It relates to the security of supply. We look forward to seeing how the Government manage to wriggle out of their duties in that regard.

Unfortunately, in this industry we do not have the free market that everyone assumes, or claims, that we have. Perhaps the Minister will tell us what will happen to British Energy when the NDA is established. Is it intended that the NDA will take over some of British Energy's liabilities? If so, will the Minister tell us whether he has taken legal advice from the European Union? I understand that a recent report—it may have been published only yesterday—suggested that such intervention might infringe EU rules. I do not say that to be awkward; I feel that it should be considered, although we support the establishment of the NDA.

We have heard a great deal about two aspects of electricity generation. One is wind—there has been a lot of hot air about that—and the other is the nuclear industry. I do not want to spend too much time discussing those two issues, but I should point out that we are not for or against one form of energy or another. What we are in favour of is security of supply.

At present, 22 per cent. of our country's electricity is generated from renewable sources. If that is to be allowed to decline, it is up to the Government of the day to tell us where they will find the extra electricity to replace it. Are we to have wind farms or windmills all over the country? They are intermittent, and building and maintaining them will be costly. Thankfully, they will not need to be maintained for very long because they do not last for more than about 20 years. Given those factors and the cost of the electricity they will produce, it will be up to the Government of the day to explain why so much energy is being focused on the development of wind power to the exclusion—seemingly—of other forms of renewable energy such as thermal and solar power, and possibly fusion—my hon. Friend the Member for Eddisbury mentioned that possibility.

It has been a privilege to take part in such an interesting and crucial debate. I hope that the Minister will answer some of my questions, and, more important, the many questions asked by Members in all parts of the House and representing every possible energy interest.

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness) 9:43 pm, 10th May 2004

I agree with Mr. Robertson that this has been an interesting debate, featuring a range of constructive contributions from Members in all parts of the House. That reflects a growing interest in energy matters throughout the country, which I welcome.

I pay tribute to my noble Friends Lord Whitty, Lord Davies and Lord Triesman for their work on behalf of the Government. A number of improvements were made to the Bill in the other place, although I should add that not all the changes constitute improvements. We shall look carefully at some of them in Committee.

I was pleased by the general welcome to the Bill given by the hon. Members for Eddisbury (Mr. O'Brien) and for Tewkesbury. I shall return shortly to some of their specific criticisms. First, however, let me remind the House of the four goals for energy policy proposed in last year's energy White Paper. The first was putting ourselves on a path to cut UK carbon dioxide emissions by 60 per cent. by 2050. The second was to maintain the reliability of energy supplies. The third was to promote competitive markets. The fourth was to ensure that every home was adequately and affordably heated. It is important that we achieve all four together. We are not looking to give up on one to achieve another. The package is designed to be, and needs to be, delivered as a whole.

We can point to excellent progress on implementing the White Paper, as the first annual report, which was published a couple of weeks ago, shows. The Bill puts in place key parts of the jigsaw to enable that progress to continue.

We now have scientific consensus that climate change is for real, that carbon emissions are causing it and that it poses an immense threat to all of us. My hon. Friends the Members for Brighton, Kemptown (Dr. Turner), for Sherwood (Paddy Tipping) and for Southampton, Test (Dr. Whitehead) were right to draw that to the House's attention. That consensus extends to the National Academy of Sciences in the United States. Mr. Robathan was right to draw attention to the recent scientific contribution from the US—hoping that climate change will go away is not an option. The challenge of climate change requires an urgent and serious response. The Bill's provisions—for example, those on offshore renewable energy—are a key contribution.

Energy security considerations are also vital. Over the next few years, the self-sufficieny in energy that we have enjoyed thanks to North sea oil will end. In itself, that is not a worry. Among the G7 countries, only the UK and Canada are self-sufficient in energy, so we will move to a position that is the norm among industrialised countries. It is a transition that we can manage successfully, but we will need to ensure that we have sufficient diverse sources of gas. We also need to look for new sources of electricity generation under wholly UK management. For that reason, too, the Bill's provisions on renewable energy are vital. The wider issues of security will be an important theme of debates on the Bill.

A number of other provisions in the Bill are aimed at underpinning secure and reliable supplies: for example, part 4 on the special administration regime for energy network companies, and the arrangements for interconnectors in part 5. In addition, as we have heard, the Bill puts in place vital new arrangements, which have been widely welcomed, for setting up the nuclear decommissioning authority to get to grips with the challenges of our nuclear legacy. The NDA will drive work on clean-up, provide the long-term strategic direction that is needed and help to deliver long-term efficiency savings to the taxpayer.

The hon. Member for Eddisbury made the point that the security of supply clause—I think these were his words—is not a prelude to interventionism. That is not how the industry has read it, as I think he will know, and the industry is right. It is no good him telling the House that he did not mean to imply that, because the views of the industry have been clear. My right hon. Friend the Secretary of State quoted Mark Clare of British Gas. The hon. Member for Tewkesbury quoted Paul Golby of Powergen. Powergen's brief makes the point that the clause as currently construed could undermine the independence of the regulator, make ad hoc Government intervention in the markets more likely and add to investors' perceptions of risks, making investment more difficult. The Chemical Industries Association has pointed out that more central planning inevitably has to be paid for by consumers. So it goes on. The provision would represent a huge shift backwards to state intervention, in which the Conservative party is not normally in favour.

I will be happy to talk to the hon. Member for Eddisbury about a way forward. He and his colleagues in another place were right to draw attention to the importance of security of supply. A shared way forward other than the one currently in the Bill may be available. Perhaps the hon. Member for Tewkesbury was alluding to that, too.

There have been a couple of references to the interesting PricewaterhouseCoopers survey. The head of the utilities at PricewaterhouseCoopers said that a consistent and stable regulatory environment is required to make the sector more attractive to investors. That is the point, and that is what we have to deliver.

I welcome what sounded to me like the hon. Member for Eddisbury's adoption of the White Paper policy on nuclear energy: that of keeping the options open, a position his party has strongly criticised. In fact, Mr. Page strongly criticised it again today, presumably not having noticed that his hon. Friend had said that it was now his party's policy. It would also have come as something of a surprise to a number of his noble Friends in the other place. Nevertheless, I welcome that change of heart, if that is what it is.

We sometimes hear that if only the Government accepted the need to build new nuclear power stations, the twin challenges of carbon emissions and energy security could be readily resolved. We may well need new nuclear capacity, but I have yet to meet anyone who wants to invest in new nuclear power stations in Britain at the moment. My hon. Friend Mr. Brown made an important point along those lines. It is the same in the United States, where there is a strong pro-nuclear policy, but getting people to make commitments has been extraordinarily difficult. It will be a considerable time before there are new nuclear power stations in the USA, let alone in the UK. We need that dose of realism in the debate and I welcome the Conservative party's change of heart.

Photo of Laurence Robertson Laurence Robertson Shadow Minister (Treasury)

It is noticeable that the Minister excluded Finland from his list of examples. It decided that it needed a new nuclear reactor because it did not want to be over-dependent on imported gas from Russia. It also has a consortium of businesses to invest in the building of that new nuclear reactor, on the promise that the electricity it produces will be bought.

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

The hon. Gentleman is right to draw attention to Finland, as did my hon. Friend Dr. Iddon. There are important lessons to be learned there, but I repeat that I have yet to meet anyone who wants to invest in new nuclear power stations in the UK. The position may well change in future, in which case we will consider that, as the White Paper made clear.

My right hon. Friend Dr. Cunningham paid tribute to his constituents and those of other hon. Members who work at Sellafield, and I endorse that.

On wind energy, every megawatt-hour of electricity generated from a wind turbine is nearly 200 cu m of gas that does not need to be burned. It is important that the UK plays a leading role in the move to a more sustainable energy economy.

My right hon. Friend the Member for Copeland was right to draw attention to the employment importance of nuclear industries for his constituents. I was concerned to hear what he said about difficulties in the supply chain among his constituents. We have wanted to do everything we can to ensure that the supply chain is kept informed of work on the Sellafield near-term work plan. There have been three supplier forums recently on that, but if there are particular problems I should be grateful if my right hon. Friend dropped me a line and I will be glad to take them up.

Photo of Dr Jack Cunningham Dr Jack Cunningham Labour, Copeland

I can do better than drop my hon. Friend a line; I can repeat what I said earlier. There are already, I regret to say, real problems in the supply chain of support industries in west Cumbria because of the hiatus that has been caused by the proposals to create the nuclear decommissioning authority and because of BNFL so far refusing to bring forward its near-term work plan. That is threatening jobs in the west Cumbrian economy now.

Photo of Stephen Timms Stephen Timms Minister of State (e-Commerce & Competitiveness)

I am grateful to my right hon. Friend and I shall certainly look at his point. He would agree that his point underlines the importance of securing the timely enactment of the Bill so that we can press ahead with establishing the NDA on the timetable that has been announced and thus ensure that any hiatus is minimised.

Mr. Stunell talked about the annual report on energy efficiency. I hope that I was able to make the position clear; we expect carbon savings from energy efficiency overall—household plus business—to be greater than they were in the White Paper because of the greater contribution from businesses. I can give him a firm assurance that we will hit our Kyoto targets—the UK is one of only a handful of EU member states to be in that position. Indeed, our target is to go further and achieve savings of 20 per cent. in UK carbon emissions by 2010.

My hon. Friend Mr. O'Neill made some important points, as did my hon. Friend Brian White, on combined heat and power. My hon. Friend the Member for Milton Keynes, North-East referred to the Cambridge study, which indicates a central projection of 8.1 GW of good quality CHP capacity by 2010, in a range of 7.7 to 9.4 GW. I know that he was critical of that study, but we have to add to that an expected contribution from the European Union emissions trading scheme. We have said that we will review the support for CHP alongside the review of the renewables obligation next year, but I caution against a view that we can somehow use the renewables obligation to deliver what we want on CHP as well. That would fatally undermine the renewables obligation just at the time when we are at last starting to see the momentum behind the investment that we need. My hon. Friend the Member for Milton Keynes, North-East has been a strong advocate of CHP, not least through his private Member's Bill, and he will know that quite a lot of work is going on to support CHP. I take his point, however, about the challenge that remains.

I pay tribute to my right hon. Friend Mrs. Liddell for her work as my predecessor in this role. I agree with her about the benefits of competitive pricing that BETTA will deliver to her constituents. She also made important points about skills in decommissioning, and clean coal. My hon. Friend Mr. Clapham, too, drew attention to the importance of clean coal, as did other hon. Members. The technology programme for clean coal that we are taking forward will continue until the end of 2006, with a fourth and final call for proposals being made at the end of this year. That will involve some £4 million. We expect to announce the successful projects at the end of the year, and, in addition, the new carbon abatement technology strategy will identify programmes to replace the existing cleaner coal technology programme. That is expected to receive similar levels of Government funding.

My hon. Friend the Member for Sherwood, like my hon. Friend the Member for Barnsley, West and Penistone, raised concerns, which I well understand, about the large combustion plants directive. I have listened carefully to the concerns that he and the coal industry have expressed. He will know that other parts of industry have diametrically opposed views, so we are looking very carefully at the analysis that we have commissioned.

My hon. Friend Mr. Blizzard, in an excellent speech on the importance of wind power, rightly welcomed the extension of the renewables obligation to 15.4 per cent. by 2015–16. I look forward very much to visiting Scroby Sands next week.

My hon. Friend Mr. MacDonald underlined the important point that in many areas of the country there is strong support for making progress on wind energy. The Western Isles is one area where that is very much the case, and he was right to draw attention to what he called the huge resource for the nation that is available there.

My hon. Friend Mrs. Dunwoody raised concerns reflected in the recent Transport Committee report on navigational hazards and the Energy Bill, which we have welcomed. We see that report as an important contribution to consideration of how offshore renewables and shipping industries can co-exist. There have been discussions with shipping interests, and I have met representatives of the Chamber of Shipping, following that up with a letter. I can tell my hon. Friend that Government consents will not be given to any wind farm developments that would be a danger to navigation. She mentioned the idea of safety zones, which the Chamber of Shipping has raised, and which I welcome.

We have had an excellent debate and I commend the Bill to the House.

Question put and agreed to.

Bill accordingly read a Second time.


Motion made, and Question put forthwith, pursuant to Orders [28 June 2001 and 6 November 2003],

That the following provisions shall apply to the Energy Bill [Lords]:


1. The Bill shall be committed to a Standing Committee.

Proceedings in Standing Committee

2. Proceedings in the Standing Committee shall (so far as not previously concluded) be brought to a conclusion on 24th June 2004.

3. The Standing Committee shall have leave to sit twice on the first day on which it meets.

Consideration and Third Reading

4. Proceedings on consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.

5. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on the day on which proceedings on consideration are commenced.

6. Sessional Order B (programming committees) made by the House on 28th June 2001 shall not apply to proceedings on consideration and Third Reading.

Other Proceedings

7. Any other proceedings on the Bill (including any proceedings on consideration of Lords amendments or on any further message from the Lords) may be programmed.—[Charlotte Atkins.]

Question agreed to.


Queen's recommendation having been signified—

Motion made, and Question put forthwith, pursuant to Money resolutions and ways and means resolutions in connection with bills">Standing Order No. 52 (Money resolutions and ways and means resolutions in connection with bills),

That, for the purposes of any Act resulting from the Energy Bill [Lords], it is expedient to authorise—

(1) the payment out of money provided by Parliament of any expenditure incurred by the Secretary of State under or as a result of—

(a) any option under which he or his nominee may acquire an undertaking or property from British Energy plc or a company that is or has been a subsidiary of British Energy plc, or

(b) any agreement entered into for the purpose of giving effect to the provisions of such an option, or of continuing or modifying their effect,

(2) the payment out of money provided by Parliament of any expenditure incurred by a Minister of the Crown or the Treasury in respect of the acquisition of securities of a company to which transfers authorised by the Act are made or in respect of the acquisition of rights to subscribe for such securities,

(3) the payment out of money provided by Parliament of any expenditure incurred by a Minister of the Crown for or in connection with the carrying out of any of his functions under the Act, and

(4) the payment out of money provided by Parliament of any increase attributable to the Act in the sums payable out of money so provided by virtue of any other Act.—[Charlotte Atkins.]

Question agreed to.


Motion made, and Question put forthwith, pursuant to Standing Order No. 52 (Money resolutions and ways and means resolutions in connection with bills),

That, for the purposes of any Act resulting from the Energy Bill [Lords] ("the Act") it is expedient to authorise—

(1) the making of provision for the purposes of corporation tax, capital allowances, stamp duty and stamp duty reserve tax,

(2) the making of provision in connection with the responsibilities of the Nuclear Decommissioning Authority (as established under the Act) for—

(a) requirements for payments to be made to the Secretary of State, and

(b) the levying of charges by the Nuclear Decommissioning Authority,

(3) the transfer of property and rights to the Secretary of State or the Nuclear Decommissioning Authority,

(4) the making of payments under the Act to the Nuclear Decommissioning Authority in connection with benefits received in respect of the use or disposal of interests or rights in installations, sites and facilities,

(5) the imposition, by virtue of the Act, of charges under licences issued under the Electricity Act 1989 or the Gas Act 1986,

(6) the levying of charges under the Act in connection with powers and duties conferred or imposed on the Secretary of State by or under the Act or other enactments or provisions of Community instruments, and

(7) the payment of sums into the Consolidated Fund.—[Charlotte Atkins.]

Question agreed to.