I beg to move, That the Bill be now read a Second time.
I believe that the Energy Bill, with the measures on planning and climate change, has an important role to play in implementing our strategy for tackling climate change and ensuring secure energy supplies. We are all aware of the scale of the energy challenges that the UK and other countries face.
First, we need to take decisive and effective action to tackle climate change. The Climate Change Bill will establish legally binding targets for cutting UK emissions.
I am grateful to the Secretary of State for giving way so early in his speech. On decisive action, will he confirm that there have been at least 22 Green Papers, five White Papers and more than 100 consultations on individual energy issues since 1997?
I am not sure what point the hon. Gentleman is trying to make. I do not regard his comments as criticism of the Government—in a modern democracy, it is good to consult. Consultation has strengthened, not undermined, the Government's energy policies. It is not true that the Government have been inactive in introducing policies to tackle climate change and deal with the problems of energy security.
The hon. Gentleman said that he had interrupted my speech—I do not think that, technically, I had started to make it. Let me carry on from where I had reached—a little after the second line.
Changing the way in which we produce and use energy will have an important role to play in meeting targets that we have set ourselves. We must ensure that we have the widest possible range of cleaner, low-carbon energy sources and technologies. The Bill will help with that.
Secondly, we must maintain the security of our energy supplies as the UK makes the transition from being a net exporter to a net importer of energy. The transition requires new forms of energy infrastructure in the UK. For example, the UK requires more gas storage by 2020. We need to increase our gas import capacity by between 15 and 30 per cent. and we must ensure that we support investment in such important infrastructure projects. Again, the Bill will make a positive contribution.
Thirdly, beyond import and storage infrastructure, the UK needs investment in new generating capacity of between 30 GW to 35 GW in the next 12 years or so. We must create the right environment to encourage investment, which will not only maintain the UK's diverse energy mix, but—most important—make it increasingly low carbon. Again, the Bill tackles those concerns. A key part of delivering the new investment is giving the private sector confidence in our planning system. That is why we have introduced the Planning Bill, which will deliver a timelier and more efficient decision-making process for consenting to large-scale energy projects.
The policies that we introduce now will determine over the long term the investment decisions that the energy markets make and the new technologies that they develop. They will also enable our successful transition to a truly low-carbon economy, while helping to ensure continued energy security. There is no single answer to the multi-faceted problems that we face. No single technology is capable of solving all our problems. However, the solutions to the challenges go hand in hand with each other.
I thank my right hon. Friend for giving way. It is not like me to interrupt him so early in his speech, but will he explain to the people of this country exactly why we need a balanced energy mix, as he has just outlined?
Yes, I intend to make that point, which my hon. Friend is anxious for me to make, in a few moments. However, may I now thank him personally for the support that he has given Ministers as we have set about finding some of the answers to the highly complicated questions that we face?
It is for all the reasons that I have set out that the Energy Bill incorporates wide-ranging but complementary measures for cutting carbon emissions and improving security of supply. It will therefore help us to meet the energy challenges that we face.
I am grateful to the Secretary of State for giving way. He may know that an application for a wind farm in my constituency has just been turned down on appeal, to great local rejoicing. Now that the Government have finally found the courage to restart the civil nuclear programme, will he abandon the pretence that inefficient, expensive and ugly wind farms are any part of the solution in what is, after all, supposed to be an environmental policy?
I am grateful to the right hon. Gentleman for making that intervention. I have a strong feeling, however, that his comments would have been better addressed to his Front Benchers than to ours. I strongly believe that we need a balanced energy policy, which will include onshore and offshore wind as an essential component of dealing with the challenge of climate change and energy security. I am afraid that I will not jump on the bandwagon that the right hon. Gentleman has laid before me—
I will, Henry— [ Laughter. ] I meant Hooray Henry, of course.
I am grateful to the Secretary of State for giving way—he is obviously in a benign and helpful mood. Is he aware, however, that at least 500 wind turbines either are under construction or have permission for sites in the Wash or off the Norfolk coast? Bearing that in mind, does he agree that there is now no justification for small clusters of onshore wind farms, which do great damage to the environment and are highly unpopular? Surely they should now all be offshore.
I think that there will be an increasing move towards offshore wind generation, which would be a good thing. However, it would be quite wrong for me to prejudge individual planning applications, because that is not my role in the system. It does not help to create the balanced energy policy that the majority of people in the country want that every time a wind turbine application is shoved in, everyone opposes it but at the same time demands cleaner energy. Fundamentally, such nimbyism is not terribly constructive.
The previous two interventions illustrate exactly the problem that my right hon. Friend faces: everybody is against any alternative. What we need, however, is that balanced energy mix, which will give us security of supply. In cold winters, the old people in my constituency, for instance, will not be worried about the fine tuning; rather, they will want to know that they can turn the electricity on and that it will work.
I have a great deal of sympathy for my hon. Friend's point. On the issue of nuclear, which I shall come to shortly, one of the important points that we all need to address is not just how to face the low-carbon and energy security challenges, but how to ensure that we satisfy the base load energy challenge. Fundamentally, none of our constituents will thank us if, when the temperature drops and it gets dark, adequate and affordable power is not in place at the right time to heat their homes and enable them to go about their daily lives.
If we are to meet any of the challenges that I have outlined, change will be required—and that means change in some of our constituencies. I have wind farms in my constituency, for instance, and there is a multiplicity of views about such matters, as Mr. Bellingham will know. What does not help is the idea either that there is one technology—Mr. Heathcoat-Amory has made that argument in relation to nuclear power—or that we can successfully continue trying to delay, obstruct and, in the hon. Gentleman's words, hopefully reject proposals for renewable sources onshore. I am afraid that there are no easy choices, as my hon. Friend Tony Lloyd pointed out, but making no choice at all is not one of them.
I certainly agree with my right hon. Friend that we must look at the whole range of alternative and renewable technologies. In that respect, will he give me an assurance that the Bill will provide encouragement for the expansion of new technologies such as micro-power, and for incentives such as feed-in tariffs? I know the arguments that he is rightly putting forward, but will the Bill provide for the introduction of a new sector such as micro-power, if that were considered acceptable?
We have announced proposals, of which my right hon. Friend will be aware, on microgeneration and on providing additional renewable obligation certificates—ROCs—for micro. We will need to come back to the whole issue of distributed energy and microgeneration as we respond to the proposals that are due tomorrow from the European Commission on how EU member states are to meet the new obligations that the Heads of Government agreed at the spring Council for a greater proportion of the EU's energy to come from renewable sources. I am trying to reassure not only my right hon. Friend but Members on both sides of the House who want a balanced energy approach and reassurance that there is no belief on the part of Ministers in a single technological solution to our energy problems. I am giving my right hon. Friend that assurance. I believe strongly that, as he studies the Bill's provisions—and, perhaps, serves on the Committee—he will see exactly the kind of balanced approach that eschews the false choice of a single technology and instead pursues the realistic choice of different technologies.
These are matters that we are currently looking at very carefully. The Office of Climate Change is looking at these matters, and we are going to have to consider the issue of renewable heat sources as we respond to the challenge of the new European Union requirements. The Prime Minister has set out the broad timetable that we shall be following, and once we have the details of the Commission's proposals tomorrow, there will be a consultation. Philip Davies will probably be disappointed by that, but I believe strongly that that is the way to proceed. There will be a consultation in the spring, and we will announce further, more detailed measures that I hope will cover the issue that Mr. Jack has raised.
My right hon. Friend might have seen the National Audit Office report on energy consumption on the Government estate, which shows how difficult it is to reduce such consumption. That must be a common experience. In the light of that report, will he tell the House to what extent the Bill predicts and provides for a growth in energy consumption? Should we not perhaps pay more attention to the demand side?
There are no provisions in the Bill about the issue that my hon. Friend has raised. If he is asking me whether the Government could do more to promote energy efficiency on the Government estate, the answer is obviously yes. I am glad to say that my Department has quite a good record in that regard, and we will continue to try to improve on it.
There are parts of the Bill that address that concern, but I simply have not been able yet to reach them in my speech. The parts that will make the greatest difference will be the provisions relating to the reforms to the renewables obligation, and in particular to banding, which will allow us to encourage and bring to fruition those technologies that, at the moment, are slightly further away from making a contribution than they should be. I am thinking of sources such as offshore wind and tidal power. In the UK, we should be considering utilising our natural resources more efficiently and intelligently. I shall say more in a minute that I hope my hon. Friend will find reassuring.
I should like to make a bit more progress with my speech before I give way again. I hope that the House will allow me to do that.
Measures in the Bill to reform the renewables obligation will increase the amount of electricity that we get from renewable sources. Other measures will help to support the deployment of new nuclear power and to enable investment in carbon capture and storage and in offshore gas infrastructure. All of those will help cut carbon emissions, increase the diversity of our energy mix and improve our energy security—important goals that I hope will gain the support of Members of all parties.
The Bill also implements key parts of our energy White Paper strategy. It will update the legislative framework to achieve three particular things: first, to reflect the availability of new low-carbon technologies; secondly, to meet our changing requirements for security of supply infrastructure; and, finally, to ensure suitable protection for the environment and the taxpayer as our energy markets change.
The Bill is divided into six parts. Part 1 relates to offshore gas importation and storage. As the UK increasingly relies on international energy markets, our strategy for ensuring secure energy supplies must also evolve. Competition for energy supplies is increasing. The International Energy Agency forecasts that inter-regional trade in gas will more than double by 2030. The UK currently imports about 20 per cent. of its gas requirements, but as many hon. Members will know, that is projected to increase to well above 50 per cent. by 2020 as supplies from the UK continental shelf decline. Part of our response to that challenge must be to ensure that companies have a clear regulatory framework for investing in the new offshore storage and import infrastructure that our country requires.
Current offshore legislation was designed principally for oil and gas production or extraction. As a result, there is no single piece of legislation that covers the new kind of offshore gas infrastructure that we in the UK need. The current regulatory process is therefore complex and fragmented. It must be improved and streamlined if new investment is to take place in the time scale that we are discussing.
Through clauses 1 to 15, the Bill creates a new regulatory and licensing framework specifically designed for offshore gas storage and offshore LNG—liquefied natural gas—unloading projects. That will simplify the regulatory process and will, I hope, create greater clarity and certainty for investors. The Planning Bill, which I have already mentioned, will streamline the consenting processes for onshore gas projects. The Energy Bill will create a fit-for-purpose regime for offshore gas projects.
This part of the Bill also creates a new regulatory framework for offshore carbon dioxide storage projects. Fossil fuels will continue to be part of the UK's diverse energy mix for decades to come. On present policies, global energy demand could be more than 50 per cent. higher in 2030 than it is today. With a significant percentage of that being met by fossil fuels, energy-related greenhouse gas emissions could be around 55 per cent. higher than today. Finding a way to reduce the emissions from fossil fuel generation is therefore absolutely essential if we are to meet the challenge of climate change. That is why the Government are supporting a competition for the demonstration of carbon capture and storage. Clauses 16 to 34 will establish a licensing framework that allows storage of carbon dioxide under the sea bed. Without the new legislation, I do not believe that that demonstration project could proceed.
In addition to making provision on licensing, the Bill will also assert the UK's rights to store carbon dioxide beneath the UK sea bed and extend relevant existing offshore legislation—on the decommissioning of offshore gas installations, for example—to future facilities that might be used for carbon dioxide storage. That is a key part of enabling the long-term development of carbon capture and storage. Once constructed, the demonstration project, which we hope will be operational by 2014, will be one of the world's first commercial scale power stations with carbon capture and storage. Our aim is to drive forward the development of a technology that has the potential to reduce carbon emissions from fossil fuel power stations by as much as 90 per cent.
On the issue of carbon capture and storage and the much vaunted competition, first announced in 2005, has not the Government's dithering been so bad that not only has BP pulled out of the project to use Miller field, which was due to be decommissioned, but it was announced yesterday that the project is to go to Abu Dhabi rather than Peterhead? Referring to 2014 sounds great and the competition sounds wonderful, but has not the dithering lost BP's investment and the opportunity to use the Miller field?
I consider that a thoroughly miserable intervention from a member of a party that has absolutely diddly-squat to say about the United Kingdom's energy requirements. We will not take any lectures from the hon. Gentleman and his hon. Friends about how we meet the UK's energy requirements, given the stance that he has taken. We are not interested in that kind of niggardly comment. The hon. Gentleman has a vested interest in talking down the United Kingdom. What we must recognise is that the UK is one of the world's leading countries in the development of carbon capture and storage technology, although we would not have understood that from listening to the hon. Gentleman's whingeing and sarcastic remarks.
The Secretary of State's rather dismissive reply to Stewart Hosie ignored the fact that the BP project at Peterhead might well have been on line by 2010, thus possibly beating the competing project's time scale. Is there not a serious point to be made, namely that the Government's single-minded and rather ham-fisted approach to carbon capture and storage has damaged the prospects of UK industry?
I do not accept that either. The whole point of what we are doing is organising proper competition. If we had proceeded with the time scale of the project that the hon. Gentleman has mentioned, other equally promising technologies and solutions would have been automatically ruled out, and instead of hearing from him, we would have heard from many of my hon. Friends and other Members about why their particular projects had not been allowed to proceed. To be honest, I do not think we want to hear any more from the hon. Gentleman about these subjects. [Interruption.] The debate has taken rather a sour turn, has it not? I shall endeavour to be more cheerful on the subject of part 2.
Let me try to help my right hon. Friend in raising a key issue for Scotland. Under the levy requirements applying to the Scottish renewables obligation, there is a fund of £100 million waiting to be spent which has not been called on by the Scottish Executive. Will my right hon. Friend ask the Executive why they will not spend the money on renewables in Scotland?
I will gladly raise that question with Scottish Ministers, and I am sure that I will have my right hon. Friend's support in doing so.
We all have reasons to be cheerful now, because we have reached part 2, which focuses on renewable electricity. The Government are committed to an increasing role for renewables in the UK's energy mix, and part 2 makes a number of important changes to the renewables obligation.
First and foremost, it must be said that the renewables obligation has been highly successful. Since its introduction in 2002, renewable electricity has more than doubled, from about 2 per cent. to more than 4 per cent. of electricity generated in the United Kingdom. By 2020, alongside exemptions from the climate change levy, the renewables obligation will be worth about £1 billion a year in support of the renewables industry.
The changes in the renewables obligation include the introduction of a power to band the obligation to allow different levels of support for different technologies, and will help to promote a more rapid deployment of a wider range of renewable technologies. That will include more support for microgeneration—mentioned by my right hon. Friend Mr. Morley—and renewable combined heat and power, helping the UK's electricity from distributed generation sources to grow over the long term.
I know that some people, in the House and outside, believe that the renewables obligation should be replaced. They cite the success of feed-in tariffs, particularly in Germany, as proof that they constitute a more effective means of developing renewables. I think that we should be clear about the economics. Whatever the merits of feed-in tariffs in the context of other countries' energy systems, we need to consider what will work best here in the United Kingdom. Germany has benefited from a consistently supportive policy for renewables since the early 1990s, and it is paying dividends. That clarity and consistency of approach has been a big part of Germany's success, which we celebrate with our German colleagues.
UK renewables investors have highlighted certainty and consistency as two of the factors that will be crucial to continued and rapid growth and development of renewables in the UK. That is why our measures will build on and strengthen the renewables obligation. Our reforms are the result of more than 18 months of working closely with renewables investors and others to ensure that we got them right.
The Secretary of State has rightly praised Government clarity and consistency as a way of raising renewables. Is that why the UK is so low on European league tables—because this Government have not provided clarity and consistency?
Oh dear, oh dear. I think we have returned to the mood created by Stewart Hosie. That is simply not the case. As I said a moment ago, the renewables obligation has allowed renewable electricity generation to double in the UK. The hon. Gentleman's proposals would create a lack of the clarity, uniformity and confidence that investors want to see in the UK.
Our reforms will make the renewables obligation more efficient for renewables deployment from 2009 to 2015. As a result of our reforms, we expect the electricity generated by renewables obligation-eligible renewable sources to treble by 2015, and that will be only the first instalment of a major expansion in renewables over the years to 2020 and beyond.
Tomorrow we expect to hear the Commission's proposals on how the new EU target will be implemented and shared among member states. We have made it clear that other measures will be required once the detail of the EU target has been finalised. As I have said, I plan a public consultation in the summer leading to the publication of our renewable energy strategy in the spring of next year, once the EU directive has been finalised. In the meantime, I am convinced that the right next step forward is through the clauses in this Bill to strengthen the renewables obligation, maximise its effectiveness and help drive greater deployment of renewable electricity in the UK. I strongly believe, as does the industry, that the principal barriers to renewables deployment in the UK are not financial, but are to do with the planning and the grid connection regimes. That is why the Government are taking steps to address those issues in the Bill.
Stories are circulating that the EU might announce tomorrow that there will be a renewables trading option, so that, for example, if we have a renewables target of 15 per cent. we may deliver less if we pay credits to over-achieving countries. Will my right hon. Friend set his face against such an arrangement? At present, our proportion of total renewable energy stands at 1.75 per cent. as against the EU average of 7 per cent. and we ought to have a better bottom line.
The principal focus is on getting to the point where the EU sources 20 per cent. of its energy from renewable sources. That is the whole thrust behind the Commission's proposals and the decisions taken at the spring Council. I will not speculate today on the detail of the Commission's proposals, because that would not serve any helpful purpose as none of us has seen those details. Our focus should be on the position in the EU and here in the UK.
I know that my right hon. Friend is aware that communities in my constituency are keen for changes to be made so that they can have energy from renewable sources; they want to have a sustainable community and then to sell energy back to the national grid. However, they feel that they are stymied by current regulations. What comfort can they be given that those obstacles can be removed and they can get on with being a sustainable community?
The banding proposals that I mentioned for microgeneration will help, and the reforms of the renewables obligation process will encourage and stimulate that. We are looking carefully—as we will certainly need to do—at microgeneration as part of our response to tomorrow's proposals from the European Commission. Personally, I want us to see what more we can do on microgeneration, because I believe that it is an untapped resource and that we can do more to encourage it. We look forward to working with my hon. Friend and others to make sure that we do that.
I have referred on several occasions to the Planning Bill. The Energy Bill will help improve grid connection for offshore renewables by supplementing the current offshore transmission regime. The UK is now the world's No. 1 location for investment in offshore wind, and I want to ensure it remains so. At the end of last year, I announced proposals for a potential major expansion of UK offshore wind, with a draft plan that could allow companies to develop up to a further 25 GW of offshore wind by 2020. Ensuring that we have the infrastructure in place to transmit offshore renewable electricity effectively to the onshore grid is therefore crucial.
To help enable that, it is important that we establish a cost-effective regulatory regime for offshore transmission. That will involve a wide range of activities over the longer term. In the shorter term, the Energy Bill will add to existing powers so that Ofgem can run cost-effective and efficient competitive tendering exercises for offshore transmission licences. Introducing competition in that area will help avoid unnecessary delays and costs to the development of offshore renewable projects, ultimately reducing risks and therefore supporting investment. We have estimated that the new approach could save between £230 million and £400 million in the overall cost of delivering this crucial new infrastructure.
Before my right hon. Friend leaves the subject of offshore wind power, may I ask him something? He will know that the biggest of the planned wind farms—the London Array—will be located not far from my constituency and that we hope it will be constructed from the port of Ramsgate. If that comes to pass, east Kent, which is an area of high unemployment, could well become the leading centre of expertise in the construction of offshore wind projects. Will he undertake to do everything in his power to ensure that that wind farm is constructed from Ramsgate?
I shall certainly do that, and I am happy to work with my hon. Friend to bring that about. All the analysis and the discussion so far today has been about the energy implications of the things that we are talking about—security, climate change and so on—but we should not overlook the prospect that renewable technology and renewable energy sources hold out a good chance of bringing about the birth of a new generation of green-collar jobs in British manufacturing. We should focus on that, possibly not in this debate, but in the months and years ahead. I shall do all I can to work with him and hon. Members on both sides of the House to ensure that the UK extracts the maximum potential benefit from all such technology for our manufacturing base. We can, should and will do more.
I hope that this opportunity to restate the Government's ambitions for renewables is also timely for another reason. Today, I am publishing the terms of reference for the Severn tidal power feasibility study, which I announced in September. The Severn estuary has the potential to generate up to 5 per cent. of the UK's electricity, and the feasibility study is a hugely important project in ensuring that we understand all the environmental, social and economic impacts of a project of such size and scale. It is potentially another important strand of our efforts to increase renewables deployment. Earlier today, I laid a written statement before the House setting out the full details of the terms of reference, and we estimate that the study will cost about £9 million.
I shall give way first to the hon. Gentleman and then to the right hon. Gentleman.
The reason why we stood up is that my right hon. Friend represents Wells and I represent Bridgwater, and the project will affect our constituencies enormously. I cannot find reference in either the Planning Bill or the Energy Bill to the following point. This massive infrastructure project will cost billions, but have the Government given themselves enough leeway, through the Planning Bill or the Energy Bill, to help force it through to achieve their aims?
I certainly think that the Planning Bill will help. We must improve on the length of time it takes us to approve crucial national infrastructure projects, such as the Severn barrage—potentially. We simply cannot afford years and years of the sort of planning inquiries that we have endured recently. The science of climate change is changing rapidly and policy makers must respond to that. May I assure the hon. Gentleman, the right hon. Gentleman and other hon. Members whose constituencies could be affected if the project were given the go-ahead that it is important—this comes back to what the hon. Member for Shipley said—that the fullest possible consultation takes place? With the support of Mr. Liddell-Grainger and others affected by the project, I intend to convene a group of affected Members of Parliament, local authorities and others to ensure that the proper exchange of information takes place, so that we all know exactly what is happening and what progress is being made on the project.
The Secretary of State knows that if the Severn barrage goes ahead, it will start in my constituency. Will he therefore assure me that the study will assess the effects in the Severn estuary on not only the wildlife but the other species affected—homo sapiens, particularly those in the coastal area represented by my hon. Friend Mr. Liddell-Grainger and me? It will be the biggest civil engineering project ever attempted in this country and it will have enormous effects on our constituencies. Will the study assess those impacts in detail, and not simply address the environment of the estuary and the marine environment?
I can reassure the right hon. Gentleman that a decision has not yet been made about where the project will kick off or where precisely in the Severn estuary it will be located. Such decisions will be made later, so he does not need to worry so much about that right now. The whole point of doing the piece of work that I mentioned is to examine all the implications of such a project; it will include all the things to which he has referred.
I should apologise to Mr. Crabb for confusing him with the hon. Member for Shipley. I am sorry for that, but he looks and sounds very much like the hon. Member for Shipley.
My right hon. Friend has given me a reason to be cheerful, as progress will be made on appraising the possibilities of Severn tidal power. Many local Members of Parliament—including me—Greenpeace, the Severn tidal power group and others will welcome the announcement. On two occasions, my right hon. Friend has referred to a Severn barrage. Will he reassure the House that all feasible technologies for using tidal power will be appraised? I suggest that there is no disagreement among sensible people that tidal power is critical, but the technologies need to be appraised.
I apologise to my hon. Friend and to other hon. Members for not making that point clear. The appraisal will consider, for example, the potential power that we can generate from lagoons. I know that many hon. Members have an interest in that.
If I do, I hope that it will be the last time that I shall be asked to give way. I know that many hon. Members want to speak in the debate, and I am taking too much time.
I am grateful to the Secretary of State. I have some form on this matter, as 20 years ago I was on the feasibility group that considered the Severn barrage. I still believe that it must be the right sort of thing to do. Can I take it from the Secretary of State's comments that the precise location of the development—whether it will be in the upper or lower Severn estuary—and the technology to be employed are still to be decided? Can I take it that the feasibility study will consider not only the environmental and energy benefits and disbenefits but the possibility of providing some protection against flooding in the Somerset levels area through a barrage, or at least some form of barrier, in the lower Severn estuary?
I reassure the hon. Gentleman that no such decisions have yet been made. There would be no point in commissioning such a study if we had already made up our mind about all those issues. No decisions have been made and we need to consider all the issues that have been referred to. The study will be wide enough to consider the potential of other barrage schemes and other forms of tidal power around the UK, including in the Mersey and, closer to my constituency, in Morecombe bay. We should not rule out anything at this point. Our job is to maximise the potential contribution of renewable sources, from wherever they come.
Part 3 of the Bill covers the decommissioning of energy installations.
There could be reasons to be cheerful in part 3 if the Government can guarantee that the nuclear generators will take on the full costs of decommissioning and waste management. The nuclear White Paper, of course, honestly explains that in extreme circumstances the taxpayer will have to pay the bills for decommissioning and waste management. Will my right hon. Friend say whether the Bill defines those extreme circumstances? If not, will he give us an example of them?
I want to come on to that topic in a second. All Governments have a wider responsibility for public health and safety. If any threat to public health and safety should arise from storage or decommissioning it would be front and centre the responsibility of the Government to commit the resources of the emergency services, for example, to protect the public. I want to say something about how we will run the exercise and determine the costs of waste disposal and decommissioning. That is an important point. In such circumstances, Governments would have to intervene and commit public resources to safeguard public health and safety. We know of the toxicity of the materials that we are discussing and the overriding obligation must be on the Government to protect the public. It is our obligation under international law and treaty, anyway.
As I recently confirmed to the House, it is our view that new nuclear power has a role to play in the UK's energy mix. New nuclear power will contribute to the diversity of our energy supplies and help to reduce carbon emissions. It will also reduce the costs of meeting our energy goals. In a world of carbon prices and high fossil fuel prices, we believe that it makes commercial sense. Ultimately, of course, companies will decide whether they wish to invest in new nuclear power, not Ministers.
We have listened to the concerns about new nuclear power, including those about the costs of decommissioning and waste. We have made it clear that the developers and operators, not the Government, will have to fund, build and operate new nuclear power stations. That includes meeting the full costs of decommissioning and each individual operator's full share of waste management and disposal costs.
No, as I must make progress.
The new legislative framework in clauses 41 to 63 in part 3 will ensure that all operators have in place a robust financing arrangement, in the form of a funded decommissioning programme, before operation of a power station commences. The Bill will require every operator to have a fully costed technical plan for each new nuclear power station that sets out in detail how the station's nuclear waste will be dealt with safely, and how the station will eventually be decommissioned. The Bill will also require all operators to have a financial plan that describes how they will provide the necessary funds to meet those costs. Both plans will form a funded decommissioning programme that will be subject to approval by the Secretary of State.
There will be powers to enforce compliance with the funded programme. The Bill will make it a criminal offence to operate new nuclear power stations without having an approved programme in place. Failure to comply with the programme will also be a criminal offence.
As a provision outside the clauses in the Bill, the Government will ensure investor confidence by establishing a fixed price for disposing of new nuclear waste. That will be based on expected costs, with a significant risk premium built in to safeguard the public purse. Further details of how the system will work will be available later this month, but it is wrong to suggest, as some have, that a system based on fixed costs will mean a taxpayer subsidy for new nuclear power. It will mean no such thing: as I have said, we will build a significant contingency into pricing proposals to guard against public subsidies, in a wide range of possible circumstances. The Bill will also ensure that, in a number of situations, including insolvency, the Government will have the power to seek additional funding from parent and other associated companies. In that way, we will be able to ensure that operators meet their financial obligations.
The regulatory structure that the Bill puts in place, combined with the work to determine waste and decommissioning costs and the other facilitating measures announced in the nuclear White Paper earlier this month, constitute an important package of measures. Those measures will ensure that nuclear power is available as an investment option to companies, alongside other low-carbon technologies. At the same time, however, they will, as I have said, ensure that the Government are free to act to discharge their international responsibilities.
This part of the Bill also strengthens the decommissioning regime for offshore renewables and for oil and gas installations. Developers already have an obligation to ensure that redundant offshore installations are decommissioned properly, to protect the marine environment and to ensure the safety of other industries, such as shipping. New provisions in the Bill will strengthen the regime and put in place suitable protections for the public purse and the environment. They will also ensure that funds put aside for decommissioning are expressly protected for that purpose, even in the event of insolvency.
What will happen is that there will be no new nuclear power stations in Scotland. As the hon. Gentleman knows, planning is a devolved matter for Scottish Ministers to determine. I think that the Scottish Executive are making a huge mistake. As I have said before, I think that they are playing politics with the situation, and that is regrettable. In the UK context, it is really important that the various devolved Administrations work together constructively. I am happy to say that that is what happens with Wales and Northern Ireland; sadly, Scottish Ministers have not engaged with the matter sensibly or intelligently.
I will give way, for the final time, to my hon. Friend the Member for Pendle.
We set out in the White Paper a lot of the detailed arithmetic and economics in connection with decommissioning and waste disposal, and I am happy to refer my hon. Friend to that. If there is to be a renaissance for nuclear power in this country—and I very much hope that there will be—it is important that we establish new ground rules that comply with the existing energy market principles on which this country operates. That is why the provisions in this part of the Bill have been brought forward. This is a new and different era. The Central Electricity Generating Board is no more. We need a regime that is fit for an energy market that operates effectively in the United Kingdom, and that is why, if we are to go ahead with new nuclear, the clauses are essential.
I will not.
Given the concerns of my hon. Friend the Member for Pendle about new nuclear, I would hope that he would engage constructively with at least this part of the Bill, which is designed to protect the public from any covert—or, indeed, overt—subsidy for new nuclear. I am sure that he and I share that aim.
Part 4 covers several issues relating to the oil and gas industry. A strong market-based approach to domestic energy production will help to ensure that we have diverse energy supplies. The UK still meets about two thirds of its energy needs from the UK continental shelf, but clearly our ability to continue to maximise domestic production economically will depend on the way in which we manage the regulatory framework to incentivise production. By working together with, for example, PILOT—the high-level oil and gas forum for Government and industry—we have successfully sustained interest in investment in the UK continental shelf through several initiatives, such as the fallow exercise and the promote licence. Last year, total expenditure on the UK continental shelf was more than £10 billion. We continue to work together on a range of projects, including that to examine the potential west of the Shetland isles.
The Bill will make minor amendments to the oil and gas regulatory framework to reflect the evolving commercial environment, including the growing number of smaller players on the UK continental shelf. The measures in the Bill—I am glad to say that they are supported by the industry—will help to ensure that we can continue to manage the UK continental shelf efficiently and effectively, and will remove some of the potential risks that are inherent in the existing system. To that end, we are making minor changes to the oil and gas licensing regime, including by taking the power to revoke a licence partially in the event of, for example, the insolvency of one but not all of the parties to that licence. That will be an important new flexibility in the regulation, and it will benefit consortiums of smaller companies when one party defaults but the others are perfectly able to continue. In addition, to enable fair access by all parties, we are extending the coverage of the upstream oil and gas infrastructure third party access regime.
The Secretary of State mentioned the west of Shetland. Does he believe that anything in the Bill will help to take forward the taskforce for the west of Shetland? How optimistic is he that we will unlock the gas and oil to the west of Shetland, given that the best thing for our security is to maximise the use of what we have in our own waters?
No legislation is inhibiting the development of west of Shetland resources in any way, so we do not need provisions in the Bill to tackle that problem. The hon. Gentleman will be aware of the detailed discussions that are taking place. I have met the operators and the oil and gas companies in Aberdeen to discuss their concerns. I have also been offshore to see many of the people who will be critical in making the project come alive. I hope that a way forward can be found, but it is the economics, rather than legislation, that must be addressed. I do not believe that anything in legislation prevents the development of those resources.
Part 5 deals with several more minor aspects of legislation, including rationalising energy policy reporting requirements and aligning them with the new requirements that are being introduced through the Climate Change Bill.
The Bill updates the regulatory framework for nuclear security to ensure that we have stronger sanctions to prosecute people who attempt to steal the most sensitive information from specific designated sites. The recent restructuring of the industry means that sensitive information relating to uranium enrichment may be stored away from licensed sites, such as research facilities. The provisions in the Bill will mean that no matter where such sensitive information is held, it will be protected through the availability of appropriate sanctions.
We must all face another reality: as global energy demand increases and the competition for supplies intensifies, worldwide energy prices are likely to continue to be high. Of course, we cannot isolate ourselves from such global market trends, but we can adopt the right measures to ensure that the UK is as energy-independent as possible. The Bill will help us to ensure that that objective can be better realised. Of course recent price rises are a concern for all of us, but our competitive market works. For more than a decade, our market has consistently delivered prices to UK domestic consumers that are lower than those in the vast majority of other countries. A growing number of consumers are also actively using the market to their advantage, switching suppliers and saving money.
We have introduced a number of important measures to help people meet the costs of keeping their homes warm in winter, including the winter fuel allowance, and there has been growing support for home insulation. The energy companies are working closely with my Department to address the energy needs of consumers on low and fixed incomes. We will meet the companies again soon to discuss their continued commitment to assisting their customers through a range of activities.
Many people are interested in the issue of energy prices, which my right hon. Friend just mentioned. May I draw his attention to research by Cornwall Energy Associates suggesting that some companies, such as British Gas, are much more committed than others to making social tariffs work? Will he address that issue, and does he accept that when he deals with that matter, and with the scandal of energy prices, he will get a lot of support?
I am grateful to my right hon. Friend for making that point. I hope that it is some comfort to him that we will continue to monitor closely the situation that he describes. We do not rule out the need for legislation on social tariffs at some point in future, but legislation should be a last resort and must not act to restrict the innovative practices that some energy companies have been developing, including on help with arrears, which could help consumers even more directly.
Taken together, the measures in the Bill will play an essential part in ensuring that our country has access to safe, secure and sustainable energy in the years ahead. I hope that the wide range of measures will ensure that our legislation plays an effective role as we work through the tensions and complexities of the challenges that we face. The Bill deserves the support of Members of all parties, and that is why I commend it to the House.
I am grateful to the Secretary of State for his introduction to the Bill, but what he outlined is not so much a complete energy policy as a set of technical amendments to existing rules and laws. Many of them are important measures, but the House will view it as a missed opportunity to tackle the full range of energy challenges that the country faces. Legislatively, there are elements on emissions relating to the Department for Environment, Food and Rural Affairs, a Planning Bill that sets out a framework for infrastructure decisions, the Energy Bill that we are considering, which addresses a hotch-potch of issues such as gas storage, carbon capture, the renewables obligation and decommissioning, and a so-far elusive Bill on handling nuclear waste.
In addition, tomorrow the European Union will publish a package of measures designed to reduce carbon emissions and increase energy efficiency across the region. It includes a commitment to establishing an ambitious renewables target of about 15 per cent., not just for electricity but for all energy. The Government's attempts to disguise their incoherence on renewables with targets set far ahead in a fantasy future are now unravelling.
Even today, in an answer to a written question asked by my hon. Friend Charles Hendry, the Minister for Energy has watered down the Government's target of obtaining 10 per cent. of our electricity from renewables by 2010. He now says that the figure might be as low as 8 per cent. Now that the arithmetic is clear, we see that we have an almost insurmountable rock to climb. Given the way in which the Government have delayed for the past five years, the UK is not likely to meet the target by cleaning up; we will meet it only by buying our right to be dirty. That is like someone bribing a doctor for a sick note when they are too lazy to go to work.
The challenges that confront the United Kingdom are twofold. First, for our own environmental integrity, and to secure even a hint of global leadership on the issue of tackling climate change, we must cut our carbon emissions. Secondly, we must ensure that while we move to a low-carbon economy, we do not compromise our security of supply.
We must produce approximately 40 GW of power a year. We are likely to need more energy in future as our economy and population grow, yet over a third of our generating capacity will go out of service over the next 20 years. We therefore face two unpalatable options: a dash for foreign gas, tying us into the always unpredictable and often combustible state of international politics or, worse, an energy shortfall that will simply blow Britain's fuse. Our response must be immediate, radical and realistic. Non-carbon-emitting technologies may well be the most effective and efficient way of powering domestic households, but in the management of peaks and troughs in the intensive use of a chemicals factory, for instance, renewables may not provide sufficient consistency and horsepower. This is a serious "get real" moment for the Government.
Underpinning all the policies in the Bill is the need for an effective carbon regime, which is the basic instrument with which to stimulate investment in the green market. The EU emissions trading scheme is not an effective system. We have seen wild fluctuations in the carbon price, from €30 to virtually nothing, and up again to €25. Under phase 1 of the EU ETS, which ends this year, only 5 per cent. of the initial allowance was auctioned. We face an almost obscene paradox: because oil prices are high, the most carbon-emitting companies have enjoyed a £9 billion windfall. We are rewarding the dirtiest, not the cleanest, producers. For phase 2, ending in 2012, the number of auctionable permits has increased to only 10 per cent. Very little is known about phase 3.
The system is in disarray yet, paradoxically, the Government want a proper carbon regime to underpin their carbon capture, renewables and nuclear policies. There are no measures in the Bill, however, to strengthen such a regime. We want the EU ETS to operate as effectively as possible, but we believe, too, that investors in green technologies do not have time to wait for reforms to the ETS, so we urge the Government to look into our proposal to underpin the system with a carbon tax.
The hon. Gentleman's analysis is very interesting. The Environmental Audit Committee has looked at the EU ETS, and I agree that billions have been made in windfalls for electricity generators. Given the immediacy of the problem that we face, does he agree that a windfall tax on those generators is an ideal way of raising money, which could then be hypothecated for renewable generation?
That could destroy the investment climate for future energy investment. I do not want to make any precipitate comments about such taxation decisions, except to say that if we are to have a sensible energy policy, a constant climate for investment is required. One of the worst things that we can do is chop and change, and pounce on people who do well. We need a regime that does not have perverse outcomes, and I shall come on to that issue in a few minutes.
The challenges that we face are immense, and we have to set aside party political biffing. We must work together whenever we can to work towards an era of safe, clean, reliable energy.
The hon. Gentleman will know of two decisions made by the Conservative Government in 1992 and 1994 that created the crisis that we now face. In 1992, his Government decided to close the world-leading clean coal technology centre at Grimethorpe colliery, and in 1994, after butchering the coal industry, they privatised what was left, when it had gone beyond its critical mass, so its demise was built in. Had those two decisions not been made, security of supply in this country would be sound.
There may, for the hon. Gentleman, be a delicious historic point. In 1987 I was the Conservative candidate for Barnsley, West and Penistone, and I gloriously increased a 10,000 Labour majority to a 14,000 Labour majority and still made it look like a success. The real lesson, I would say to the hon. Gentleman and some of his parliamentary colleagues who sit on the same Bench, is that we must look forward and stop looking back. We cannot just look back and say what was. We have to look forward and work out what we can do for the good of the country in the future.
We recognise that companies are being asked to make investments that will last for a generation or more, and they need to know that their politicians are taking the issues seriously and, I would say again to the hon. Gentleman, are working together. We should acknowledge the great interest that the subject has generated outside the House, and we should thank those who have sent all of us the submissions that we need to study today in order to reach our conclusions on the Bill and on the issue as a whole.
Greenpeace, for instance, says that nuclear is a distraction from focusing our real energies on renewables. I do not entirely agree, but it is a legitimate view. WWF says that we should not build any more fossil fuel installations without carbon capture technology. Friends of the Earth champions our support of feed-in tariffs. Energywatch says that we need to ensure that energy companies offer social tariffs for those trapped in fuel poverty. The Energy Saving Trust and the Energy Retail Association both support our call for mandating smart meters to improve energy efficiency. The Renewable Energy Association makes a range of submissions to strengthen the Bill's incentives for renewables, including developing a sustainability remit for Ofgem. No doubt all those will be debated in Committee in a sensible and open-minded way.
The Bill first addresses the storage of gas. The recent shift in the UK's status from producer to net importer of gas means that our need for storage facilities has become a very high priority. Because gas is piped and not shipped, it is either on or off. Ships can be redirected, but pipelines cannot. Being exposed to this on/off decision leaves us vulnerable. If we can store gas, that represents a significant antidote to energy vulnerability. If the proposals enable energy companies to buy in the summer and sell in the winter, and pass on to consumers the financial advantages of doing so, it is a no-brainer.
Given that some people have a perfectly rational fear about the security of long-term import dependency, the Government should be committing themselves to developing more capacity for strategic reserves, ready to be called upon in a national or international emergency.
The Bill also establishes the regulatory framework to explore the potential of carbon capture and storage. We strongly welcome the fact that the Government are finally beginning to take real action on CCS in the UK. We are already seeing the exciting results of such experiments in Norway and the United States. With our large offshore oil and gas presence, the UK is uniquely equipped to take the lead with this technology and cut our own emissions while providing an industrial base for CCS manufacturing and design.
Regrettably, as Stewart Hosie said, the dithering over the past three years has set back our ability to deploy CCS in the UK by up to even a decade, I would argue. We were warning the Government for months that the lack of an adequate regulatory and financial framework risked derailing BP and Scottish and Southern's joint venture at Peterhead. Only an hour after the 2007 White Paper was published, as we predicted, the project collapsed. Had CCS qualified for the renewables obligation, the plant would undoubtedly have been able to go ahead, but as the former Secretary of State for Trade and Industry, now the Chancellor, informed me after the publication of that White Paper, CCS is not included in the renewables obligation because it is not renewable. Perhaps not, but it does capture carbon, which fulfils the same objective.
We still have concerns. If, for instance, 90 per cent. of carbon is captured, will the emissions count as zero or is there a proper formula for making a calculation? Perhaps the Secretary of State or the Minister can point me towards a proper explanation, amid the Government's various tranches of energy policy statements, of what would happen to the economics of the operating company if CCS were successful.
The hon. Gentleman has just made a point about whether carbon capture and storage should benefit from the renewables obligation. Of course CCS is low-carbon technology, but so is nuclear power. Does the hon. Gentleman propose that the renewables obligation should extend to nuclear technology as well?
There was a crucial moment when the development of CCS technology was very important to this country, and the Government goofed—big time. We were ahead and now we are behind; we were way ahead of the pack on CCS and now we are not. That brings me to my next point, which is about the climate change levy. As the Secretary of State has just said, nuclear power is not carbon-emitting—so why is it subject to the climate change levy, which is effectively a tax on carbon? That illogical taxation structure has to change if the Government are to give a proper structure to their energy policy.
In a press release that accompanied the Government's competition on CCS, we were informed that the winner would be chosen by the end of June 2009. However, it is clear from the small print that the Government have already pretty well picked the winner by supporting one small post-combustion project rather than opening the competition to all the other CCS technologies. At the time, the Secretary of State noted that post-combustion was the most relevant technology, considering that, as he may well have seen for himself in the past week, China opens an average of one coal-fired plant every four days. However, that misses the point: a number of companies, including Centrica and Scottish and Southern Energy, have proposals for more advanced—and arguably, cleaner—pre-combustion CCS projects, which have now been put in jeopardy.
With so much of our current capacity due to be decommissioned, the UK should not be confined within the mindset of only retrofitting. China, India and other heavy coal addicts will look for retrofit CCS, but the real future and potential for CCS is in making it integral to the original power plant design. We must ensure that we can also use the technology at home to minimise the carbon impact of any new fossil fuel capacity planned for the future. Given that tomorrow the European Union will publish its proposals for expanding CCS technology in Europe, we have concerns that the Bill merely sets out a framework for its own CCS competition rather than attempting to stimulate wider investment across the market.
Moreover, it is not clear whether the Bill establishes provision for liabilities. The permanence and safety of the CO2 stored in geological reservoirs need to be independently monitored and verified by a competent third party to check for leakage. We have anxieties that such safeguards are not in the Bill. Like many of the Government's proposals, the Bill leaves a lot to secondary legislation.
CCS is all well and good, but it is not a limitless solution—it is only as good as the capacity of the hole in the ground to take the CO2. We must turn to the renewables industry to find a safe, clean and reliable energy source.
Does the hon. Gentleman accept that concerns are being expressed about the nature of the competition to see who will have monopoly ownership of the rights to put carbon dioxide in the ground? At this stage, the competition would include only those companies that have previously enjoyed monopoly ownership of the oil beneath the ground. British universities are working on carbon reclamation. Does the hon. Gentleman believe that it would be appropriate for the competition to consider all possible uses of carbon dioxide, including the prospect of separation so that oxygen and carbon were released to be reused?
That is an interesting comment. I am not so concerned by the ownership of the CCS technology as by the scope that the Government are giving for all such possible technologies to flourish. It is natural that a company that extracts oil and gas happens to own the porous rock into which the CO2 can then be put. I am worried that the Government have narrowed the options for CCS when they should have been widened to the maximum.
As Alan Simpson realised, I was turning to renewables. Let me first welcome the feasibility study on the Severn barrage, which we have been calling for. We might as well know the facts, know them properly and have a serious study of what the options are, given that the Severn barrage is potentially such an enormous contributor to our generated electricity. The issue of renewables is covered in part 2. Our understanding is that the Bill aims to improve the effectiveness of the renewables obligation by banding the technologies depending on the level of investment that each technology requires. At the moment, the RO requires electricity suppliers to source a specific and annually increasing percentage of the electricity that they supply from renewable sources. Generators can claim one renewables obligation certificate for every 1 MW per hour of renewable electricity generated. Suppliers present their certificates, pay into the central fund, or both.
The scheme has had some success—since it was introduced, there has been a definite upsurge in renewables development—but it also has some serious flaws. Over 50 per cent. of renewables electricity sourced under the RO has been from biofuels, while almost 30 per cent. has been from onshore wind. The RO would have had a much greater impact on UK renewables capacity if it did better in supporting technologies for which a great deal of public resistance did not exist and for systems with fewer perverse outcomes. We welcome the Government's introduction of banding technologies, which we hope will remove that undue bias. We also acknowledge, given the recent report on biofuels by the Environmental Audit Committee, that the Bill appears to include proposals to ensure that the Government will keep a close eye on biomass operators to ensure that their activities are sustainable.
However, there is a central problem with this part of the Bill. Tomorrow's announcement from Brussels is expected to set a renewables target for the UK of at least 15 per cent. by 2020. As we heard earlier, the current approach will not get us there. We will certainly not reach 15 per cent. even with the Government's shiny new Bill. The whole country is looking for a step change, and on that step the Government have stumbled. We have consistently spoken in favour of feed-in tariffs—"familiar arguments", the Secretary of State said when we last met him at the Dispatch Box and basically repeated today. It is familiar because we think that it is the right policy and that now is the right time to implement it. It was particularly promoted by the Prime Minister's own climate change policy guru, Sir Nicholas Stern, in his report published in 2006, which stated:
"Comparisons between deployment support through tradable quotas and feed-in tariff price support suggest that feed-in mechanisms achieve larger deployment at lower costs."
The economics of feed-in tariffs is proven; the ethics of feed-in tariffs is certain. We must begin to make that move towards decentralised energy and microgeneration, not only to help to address our energy challenges but to stoke people's imaginations and to increase their awareness of energy consumption and generation. The current policy is not ambitious enough. The renewables obligation excludes microgeneration technologies and, crucially, excludes heat; it also excludes any reward of energy efficiency in the home. Feed-in tariffs provide a potent response to those challenges, so we will fight for their inclusion in the final version of the Bill.
I have looked through the Bill, the explanatory notes and the new White Paper, and I am disappointed to observe that there is still no clear statement on waste disposal. Such an approach is irresponsible. It risks jeopardising future investment and, just as importantly, it risks jeopardising public confidence.
The hon. Gentleman alludes to waste disposal. Many hon. Members and the population as a whole are looking at the wider issue, but also at the crucial matter of waste disposal. Is not that the matter that needs the most attention from the Government? It needs to be resolved in order to allow us all to come to a conclusion about the Energy Bill.
I say "Hear, hear" to that. We are doing our best to help to facilitate investment in nuclear, but I am afraid it is becoming clear that we cannot yet trust the Government to resolve the problem of waste disposal.
We all understand the distinction between legacy waste and new waste. There is a process to manage the former, overseen by the Nuclear Decommissioning Authority, but what concerns us is the Government's approach to the latter. In late 2006, the Government decided to re-establish the Committee on Radioactive Waste Management, commonly known as CoRWM, with new terms of reference, as a permanent independent body to provide advice and scrutiny on the Government's Managing Radioactive Waste Safely programme. The first meeting of this new body took place on 28 to
"make provision about the management and disposal of waste" when the Government are planning future legislation to deal with the disposal of waste.
It is our understanding that the Bill demands that each energy company wishing to invest in nuclear power will have to submit a funded decommissioning programme to the Secretary of State for approval, laying out how hazardous material will be treated, sorted, transported and disposed of, crucially,
"during the operation of a nuclear installation".
That clause oddly appears to neglect to provide a strategy for waste after the plant is operational. The White Paper makes it clear that the Government intend to consult on what guidance such funded decommissioning programmes should contain. Again, the terms of the Bill are completely dependent on future consultations and actions. Moreover, given that the Government have still made little or no progress on establishing a lasting waste regime, it seems extraordinary to demand a thorough financial assessment from industry when a giant radioactive question mark continues to loom over the back-end costs. How can the Government invite companies to invest in nuclear power stations without giving them such certainty?
I concur with my hon. Friend's observations about the lengthy process through which the Government have gone to determine a long-term solution to the question of nuclear waste storage, but does he agree that in new generation nuclear power stations it is feasible for waste materials to be dry-stored on site for a reasonable length of time while long-term problems are ultimately resolved?
My right hon. Friend is absolutely right to say that it is feasible, but if nuclear power companies are to guarantee knowingly that they will cover all the costs up front, they will not know what the costs of long-term disposal will be. My right hon. Friend is suggesting that that interim position is somehow okay for investment decisions, but the full picture needs to be known if investment decisions are to be made honestly. My concern is that all the documentation contains hidden suggestions that the interim status that my right hon. Friend identifies could last as long as 50 or 60 years. I do not believe that it is right to pass on to not only the next generation but perhaps the second or third generation responsibility for taking the ultimate decision. We are knowingly foisting that on them in the decisions that we make today.
I am confused by the hon. Gentleman's position. He rightly argues that there are enormous problems with disposing of nuclear waste and that disposal of the previous generation has not yet been resolved. However, is it the Conservative party's position that, if the economics can be made to work, it is prepared to support nuclear power? If so, where will it put the waste?
If the economics is totally known, the answer is yes. In that sense, our policy is similar to the Government's: all the economics should be known; all the building blocks should be in place; and, within that regime, companies are entitled to build new nuclear power stations.
Surely Mr. Jack is right. The costs of interim storage and disposal of radioactive waste are well understood by the sector, the Government and those who wish to invest in a new generation of nuclear power stations.
I, too, have some reservations about what we do with waste. It is important to specify where it will be put, but that does not get away from the problem of energy security in future. Does the hon. Gentleman agree that we should perhaps take the reprocessing route and introduce MOX power stations, whereby we can get rid of 90 per cent. of the waste and spread it through the system? Reprocessing would tackle many of the problems that he envisages with the long life of high-level waste.
The country would be further ahead with waste disposal if the previous Conservative Government had not pulled the plug on their plan on the day that the 1997 general election was declared. However, is not the real question whether the generators, in paying their full share, pay the appropriate share of the capital cost of the repository, not only the cost related to building an extension to a repository to house their waste? What is the Conservative party's view on that?
There is bound to be deliberate and wilful confusion between repositories that house old and new waste. The division of economics between those categories is important. However, I can fairly put that question to the Secretary of State and say that we are seeking exactly that sort of clarity on the economics of waste. When we get it, he can honestly and fairly say that investing companies have all the facts that they need to make a total, honest and complete assessment of their costs and the subsequent investment decision.
The hon. Gentleman has made the case that, without much greater certainty about the disposal of nuclear waste, it would be invidious to encourage nuclear generators to go ahead with building a new generation of nuclear power stations. Does he accept that a decision to replace any nuclear power stations that are going out of commission by 2025 has to be made by 2010 at the latest? Does he therefore rule out new nuclear power stations for the next 20 years or so or until his policies on waste are implemented? If so, does he suggest that the next generation of power replacement should be wholly renewable?
The irresponsibility—if that is what it is—does not lie with me, in being asked whether I rule something out; it lies with the Government, who are in office, in not taking a decision that should be taken now and that would give the complete picture now, rather than dumping the problem on future generations.
I am intervening reluctantly, but my hon. Friend Dr. Whitehead has asked exactly the right question, which the hon. Gentleman must be able to answer today; otherwise, I am afraid that his pro-nuclear policy will be open to substantial criticism. Is the hon. Gentleman saying that he would not approve a new nuclear power station until or unless a geological repository was established and open? He must answer that question today, because if he does not, the nuclear industry will understand that he is changing his position.
I am calling on the Secretary of State to honour his stated policy, which is to ensure that investment decisions can be taken without subsidy, with honest economics and with the factors being known. Quietly and by stealth, the Secretary of State is banishing one of those ingredients from his calculations, in the hope that nobody will notice. It is for him to come clean about what the total picture for a nuclear regime would be.
When the Secretary of State talked about having a fixed price for disposal in his opening speech, did he not say, in effect, that the public sector would be taking on a risk from the private sector? The very fact that the public sector is offering a fixed price to the investors means that there is a transfer of risk from the investor to the public sector.
Our policy calls for honesty and certainty. What we have learned today is that a massive air of mystery surrounds the regime that will govern nuclear waste. All generations over the past 40 years have had concerns about the nuclear industry not being able to handle waste. Of course, the situation in the '40s was different from the situation today. However, now that we know and understand more, and are potentially on the edge of embarking on new investment for a new generation of nuclear power stations, we need to know the whole truth and nothing but the truth. That is our policy, and it is purportedly the Government's policy, too.
I shall try to re-establish the consensus that I thought was ruling in the Chamber, but which both sides appear to be wobbling over at the moment. The Government's White Paper is reasonably clear, actually. It talks about the energy companies being prepared to pay a substantial risk premium, over and above any realistic estimate of the cost of disposal. That is good, but there is one worrying sentence in the White Paper:
"These costs will include a proportion of the fixed costs of building a geological disposal facility."
That is the issue that the Government must resolve. My hon. Friend is right to tease away at this one, because the crucial question of what proportion of the costs industry will have to bear is not clear. I hope that the Government will make that clear when—I hope shortly—they produce their further proposals. I encourage my hon. Friend to continue teasing on this one.
I do not want to torture this analysis to death, but the hon. Gentleman has dug himself into a big hole today and I invite him to get out of it. He needs to do so; otherwise, there will be a big question mark over his position. Will he answer the question that I asked him a few minutes ago about whether it is now his policy not to give consent until a repository has been constructed? That is the import of his remarks. May I also reassure him that during the Public Bill Committee we shall publish more detailed proposals on the costing mechanisms, which will address the point raised by the Chairman of the Select Committee? However, in order to maintain the consensus, I invite Alan Duncan to answer the question that I have put to him clearly and unambiguously.
The question that really matters, as the right hon. Gentleman is in the Government, is the obverse of that one. Is he prepared to go ahead with a new fleet of nuclear power stations without a regime for nuclear waste being in place? That is the question, but he is casting doubt over it in all his contributions today.
I shall move on, if I may. I have spoken for long enough, and I know that many other Members wish to speak.
Alongside feed-in tariffs and an adequate waste regime, the Bill also lacks a third key element: energy efficiency. Last year, the Minister for Energy himself said that the era of cheap energy was over. The price rises of recent weeks have seen that prophecy come true. In that context, it is shocking that the Government should introduce an Energy Bill that offers no comfort to the 4 million people who are now in fuel poverty.
I shall move on, if I may. I am sure that the right hon. Gentleman will be called to speak, as he is a great expert on this subject.
Despite considerable clamour from energy companies and the independent regulator, there is no mandate in the Bill for smart meters. Smart meters would not only make people more aware of the levels of energy that they consume; they would also give much better information to suppliers, to enable them to manage the peaks and troughs. The Energy Saving Trust has estimated that each household could make savings of up to 5 per cent. of their consumption through using such a meter.
Does the hon. Gentleman agree that smart meters must empower the citizen, and not just the companies? That empowerment has to involve the ability to read energy that is fed in by the consumer as well as that used by the consumer, and to read gas inputs as well as electricity inputs.
I agree with the hon. Gentleman. The whole point of smart meters is that they represent the first step towards giving people more power to generate their own electricity and to get paid for it. That is why I believe that they are of great value.
The Energy Bill does not yet contain all the crucial components of a coherent energy policy. There is a fundamental question at the heart of the Bill. It is simply unacceptable that the Government intend to leave the radioactive legacy of their new nuclear programme in such a state of uncertainty. That will paralyse the economics, undermine public confidence, and pass the responsibility on to future generations and future Governments. We do not accept that nuclear power should be allowed to go ahead without a guaranteed regime for handling nuclear waste.
I am just finishing.
As well as that piece of unfinished business, our main concern, as I have outlined today, is that these policies are neither broad enough nor deep enough to make the vital changes that we now need. We will table a series of amendments today, and we will continue to press the case for the Government to accept more radical suggestions in Committee. If we remain unhappy with the end result, we will be unable to vote with the Government. If they give us an honest and clear picture, we are with them. If they leave anything in doubt, we are not.
I am grateful to be called to speak in the debate. I have been a long-term supporter of the benefits of nuclear power as part of a balanced energy policy, and I would like to concentrate my remarks on that aspect of the Bill. I should also declare an interest, in that British Energy has recently decided to relocate its corporate headquarters to my constituency, bringing with it more than 200 high-quality managerial and engineering jobs. I also would like to make clear from the outset my support for other forms of renewable energy, as I believe that we need a diverse energy mix if we are to meet the challenge of massively reducing carbon dioxide emissions in the UK.
I do not think that any serious supporter of nuclear power in this country is wholly against the renewables sector. The converse does apply, however, in that there are some who want to see an energy mix without a nuclear component. I believe that those who take that position are wrong, and that they are placing the economic future of the country in jeopardy.
I believe that there are four main pillars on which our energy future should be based: a policy framework, an investment framework, a thriving science, engineering and technology base, and cohesion between the regulatory enablers, industry and the Government, all focused on the same objective. I believe that the Bill provides the policy framework for the years and decades ahead. More development is necessary within it, but I am sure that that will happen, as my right hon. Friend the Secretary of State made it clear that it will be developed in Committee. I welcome everything he said in opening the debate.
I believe that a sound and cohesive framework for investment in infrastructure is paramount in ensuring that all elements deliver our requirements. It is clear that all sectors within the wider energy market now have increased confidence about future and projected needs as well as Government support to achieve those objectives. It has long been argued by those opposed to nuclear power that, leaving aside other issues about waste, it is uneconomic and the market could not or would not take the risk. Thankfully, that has now changed as a result of the Government's approach to the issue.
As the Secretary of State has said elsewhere—he made further comment today— he is confident that there is a long-term solution to waste disposal. Others will clearly touch on that, but I am encouraged by the way in which my right hon. Friend dealt with that vexed issue. It is difficult, but a solution has to be found in respect of legacy issues and future demand. I believe that he has been realistic and positive on all those matters.
Does my right hon. Friend agree that part of the necessary waste reduction could be achieved through MOX-type nuclear power stations, in which high-level waste could be reprocessed and reused for fuel?
I am prepared to take any technological or scientific examination of the issue, but at the end of the day, the market must determine how it wants to invest. If there is a solution through that type of magical way, I am sure that the market will find some way to approach it.
No, we are all pressed for time in this debate; let me make a few more comments and I will see what I can do.
The Government are seriously tackling the planning framework, which has been long overdue under successive Administrations. We are creating a more constructive and less destructive approach to help us move forward without undue hindrances on the big issues that affect our national interest.
I would like to ask the Minister for Energy to clarify in his summing up how confident he is that the transmission and distribution network for all power sources, wherever located, will be robust and sustainable, and will attract the right and necessary level of investment to match power output for a new generation of power generators. As he knows, there is a vital synergy between generation and distribution, and I would welcome his comments on that point.
There is no question but that a new strategic approach to energy policy by the Government can act as a catalyst to reinvigorate our national science, engineering and technology base. That is particularly true of the commitment to new-build nuclear stations. Industry has welcomed the announcement, and universities the length and breadth of the country have welcomed the Bill. Imperial college London, the universities of Leeds, Bristol, Cardiff, Manchester and Strathclyde, the Open university and many others are seizing the opportunity to bring the UK to the leading edge of nuclear research and development. No one can question the fact that tens of thousands of jobs will be created and sustained on the back of such a new-build nuclear programme. This is an area in which the UK has excelled in the past, and I believe that we are on the threshold of moving once again into a new period of excellence. It will stimulate further research in the field of nuclear physics and nuclear engineering, and will have additional spin-offs for the supply chain.
Let me provide just two examples. The Institute for Energy and Environment at the university of Strathclyde has embarked upon two major research and training initiatives in partnership with industry, while the British Energy advanced engineering centre will deliver strategic research and consultancy in the areas of condition monitoring, data analysis, diagnostics and decision support. The work done under that initiative alone, while important in the current context, will also put Strathclyde university at the leading edge of the future needs of the nuclear industry.
The other important project is the GSE Systems power station operation simulator. That facility will provide the necessary training environment and programmes to combat the lack of trained nuclear personnel in the United Kingdom, while also providing a multi-million-pound opportunity for the university in the areas of nuclear education, training and research. It is a pity that the SNP-led Administration at Holyrood, led by the First Minister—who is also Mr. Salmond—would like to strangle those leading-edge initiatives at birth.
The fourth pillar of a successful energy strategy depends on co-operation between regulatory enablers, industry and Government, all focused on the same objectives. We must seek to avoid a regulatory framework that inhibits development. Clearly the framework must be robust and independent, but there should be a commonality of interest between regulators, industry, academia and Government. The Government are to be congratulated on their attempt to create that commonality of interest through working parties. If we are to achieve our objective in tackling the challenging emissions targets, all those elements must work together in a degree of harmony. There has been too much negativity on this policy issue for too long, and I believe that that has affected our energy balance and mix.
As I said at the outset, I welcome the Bill and the Government's approach. Let me end by expressing concern about the position in Scotland. I believe that the present Scottish Administration are out of step with Scottish public opinion, out of step with the opportunities available to industry—especially the science, engineering and technology base—out of step with the bulk of trade union opinion in Scotland, and not merely out of step but marching in the wrong direction to meet the energy needs of Scotland in the decades ahead. They have turned their face against the hard logic that every other major economy is now facing up to. Nuclear power is part of the future, and I find the Scottish Administration's approach somewhat perplexing.
I have only a short time left.
I am old enough to remember, only too well, the brown-outs of the 1960s. I remember the three-day working week, when power stations were closed down. The then Tory Administration initiated a "switch off and save" campaign. I think it is time to save Scotland and sack Salmond.
Let me begin by striking a brief note of consensus in agreeing with Alan Duncan that the Bill represents a missed opportunity. It might almost have been called a "Big Energy" Bill.
I am grateful to the hon. Gentleman for giving way to me, especially as I shall not be able to stay for most of the rest of the debate. He will recall that during a recent debate in Westminster Hall, there was some ambiguity in the official Opposition's approach to Ofgem. Does he accept that the Secretary of State was granted powers under section 4 of the Gas Act 1986 and that subsequently Ofgem was given a duty to speak for consumers, especially low-paid consumers? It has not asked for that responsibility to be changed in any way. Will the hon. Gentleman join me in asking Ofgem to exercise it?
The right hon. Gentleman has raised two important points with which I hope to deal later. I pay tribute to him for his work on fuel poverty, and I agree with him that the regulator's role needs to be addressed.
The Secretary of State and I have crossed swords a couple of times and he tends not to follow my way of thinking, but in a rare lapse, I agree with one of his comments. We do need a diverse range of energy sources; I do not think there is any dispute about that. As I began to say earlier, this is a "Big Energy" Bill reflecting the spirit of the old Department of Trade and Industry, the utilities, and the business way of looking at things. I am Liberal Democrat spokesman on the environment with responsibility for energy, and I view energy policy very much through the window of the environment. From that point of view, the Bill is profoundly disappointing. It contains very little on matters such as energy efficiency. Surely an Energy Bill should legitimately deal with that, but where is it? There should be so much more about energy conservation—in the home, for example. Where is all of that? Where is the serious material on microgeneration and distributed power? The Bill should have addressed those matters; it had the opportunity to be visionary instead of, essentially, being about big energy and more of the same.
I want to address three main areas: the policy on renewables and its failure to date; the issue of new nuclear; and the omissions from the Bill.
As the hon. Gentleman and his party are so keen on small energy, can he tell us why 75 per cent. of wind farm applications in Liberal Democrat council areas are turned down?
The hon. Gentleman raises a perfectly fair point about the process by which we determine the suitability of individual applications, but an approach that is supportive in principle of renewables of all sorts does not dictate that any individual application should be guaranteed success—unless the hon. Gentleman's position is that those who support renewables should say yes to every application. That would be nonsense; each application should be judged on its merits.
While I am on the subject of renewables, I am glad that the Secretary of State is still present, because it means that I can give him another chance to answer the question he declined to answer when I intervened on him. Why is the United Kingdom 22nd out of the EU countries on renewables? It is a simple question, but we have no answer. I would be happy to give way; I would be happy for the Secretary of State to interrupt my flow and tell the House why we are so poor. We have had 10 years of a Labour Government, who could have done something about this. What we hear from Ministers is the "jam tomorrow" renewables strategy: "It's going to be great, and there'll be a bright new dawn." We should have seen the evidence of that by now, but we simply have not.
We only have to look to Germany. If we cite places such as Scandinavia people sometimes say, "Well, that's very different," but Germany is comparable to us in many respects, yet it has achieved huge things. For example, it has achieved 200,000 green-collar jobs, as it calls them, in the renewables industry sector. That could have been a huge opportunity for this country. The Secretary of State said that great things can be done when a Government are consistent, give a lead over a long period, and are supportive of renewables—and he is right, so why have we not done that? As well as the 200,000 green-collar jobs that have been created, solar technology investment in Germany has increased from €450 million in 2000 to €4.9 billion in 2006. That is vision; that is achievement. We have not had that from this Government.
We have heard the Government of Germany's interpretation of the reasons why that has happened. They are, to quote in translation,
"support programmes from national and state governments" and
"a legally fixed payment for electricity fed into the public grid."
That is what has driven what has happened in Germany, and that is what we have lacked.
When we are particularly enthusiastic about renewables, people sometimes say, "You'll never get anything on the scale that's needed." Yet Greenpeace has calculated that if the UK had done what Germany has done—if we had achieved its level of renewables development—18 per cent. of our energy would today be coming from renewables. That is being delivered in comparable countries; why can it not be done here?
As the Secretary of State said, the delay in getting renewables moving is partly caused by the delay in getting grid connections. Interconnection with the grid is an important issue. As the hon. Member for Rutland and Melton said, quoting the Stern review, feed-in mechanisms are a good idea if we can get connection into the grid working. However, the Secretary of State sounded like a passive onlooker—"Oh, there's a bit of a problem with renewables, in getting connection to the grid." Well, who has been in charge for the past 10 years? Who could have done something about that, if there had been the political will and commitment to do it? Yet he stands up today, after 10 years in power, and says, "Oh, we've got a bit of a problem getting connections into the grid." Whose fault is that? Is he not responsible?
Would the hon. Gentleman like our nuclear generating capacity to be replaced by renewable generating capacity—and if so, what effect does he think that would have on our CO2 emissions?
As I have said to the Secretary of State, our strategy is for a breadth of input, including renewables, energy conservation, energy efficiency, and carbon capture and storage for gas and coal. Such a breadth of strategies would be much more effective in reducing CO2 emissions than waiting for new nuclear power to come on stream in 15 years' time. Those are things we could be doing tomorrow, rather than waiting for jam tomorrow, which is the Government's strategy.
I welcome the announcement of a feasibility study on the Severn barrage, as my constituency borders the Severn estuary. I also welcome its scope, because it includes tidal lagoons and the other technologies—but we have been here before: this will not be the first feasibility study. I consulted the most reliable source known to modern politicians—Wikipedia—and found that a Severn barrage was first mentioned in 1849. I do not think that a Labour Minister made that reference, so this is not a re-re-announcement, but this issue has been around for a long time.
The feasibility study was announced at the Labour party conference, but we only learned of its terms of reference four months later. I have read the written statement. It says that the feasibility study will take two years, and if the project is approved a lot more detailed work and analysis will need to be done. How much longer must this process last? We could have started the work 10 years ago but we did not, because the political will was not there. This is a huge missed opportunity, and today's statement represents yet more delay, and the project again being put on the back burner.
Does the hon. Gentleman not think it important that we examine seriously the environmental concerns about the Severn barrage? There are good reasons to support the project, but we also need to examine the negatives.
The hon. Gentleman is right. However, the environmental impact of a barrage has not changed substantially in the 20 years since the previous study was done, yet another study is to be done and there will be a further delay.
The hon. Gentleman is coming out with the usual sort of soundbites masquerading as an energy policy. My hon. Friend Paddy Tipping asked him a perfectly fair and reasonable question, but he is not answering it properly. He must take into account, as we must, the fact that since the previous feasibility study, significant new European legislation has been introduced. That changes the dynamics of the project, yet he is suggesting that we should just go ahead and build the barrage without doing any feasibility work. That is a totally irresponsible—and therefore an entirely Liberal Democrat—policy.
I notice that the Secretary of State's irritation is in direct proportion to the pertinence of our points.
On the Severn barrage, evolution in the economics and the environmental legislation will always occur, so is the right hon. Gentleman saying that every time something changes, there will be another delay, a further study will be done and another decade will go by? When will the Government make a decision? We hear about nothing but continued delay. The study could have been started 10 years ago—the Secretary of State could have had his two-year study, the detailed work could have been done, and the thing could have been producing electricity by now—yet they are only just getting round to it. That delay is typical.
Renewables technology is moving on incredibly rapidly and there are huge potential gains to be made as the technology develops. The Department's own website says that
"wind costs have declined by over 80 per cent in the last two decades".
The feasibility and attractiveness of renewables can quickly change dramatically, which is one of the reasons for my concern.
That brings me on to the nuclear section, because if we as a nation lock ourselves in to a technology that we will be lumbered with for a century, and if renewables technology moves on as rapidly as it is doing, we may end up having to bail out uneconomic and undesirable nuclear facilities because we made commitments that we must honour, instead of being creative and encouraging the fast-moving, modern, forward-looking technologies that many renewables and energy efficiencies allow.
I understand the point that the hon. Gentleman is trying to make. The Government's point—the whole issue about energy—is that we must have a balanced energy policy so that we do not put ourselves in one little box and end up stuck with what we have done. Should the Government not therefore be commended for what they are trying to do? The hon. Gentleman is not commending us at the moment.
No, because new nuclear power is a one-way track. We cannot decide in 10 or 15 years' time that it was a bad idea and we do not want it, because the companies that are now being asked to invest expect guarantees. They will not invest their money unless they know for certain that they will get a return, and if in 10 or 15 years' time that is not the right part of the required mix strategy, we will be lumbered—we will be stuck. They will expect a return over 40 or 50 years, so we will be buying into a technology that will give us no flexibility.
Is not the myth that the Government are peddling based on the argument that the new energy policy is balanced? They have back-tracked on the hydrogen economy, and carbon capture and storage, and they have failed miserably to put in place the correct connectivity charge regime to get the electricity from offshore into the grids, so their focus is deliberately in one direction—towards nuclear power. They do not care about balance. All they want is nuclear stations.
If the other policies—greater energy efficiency, greater energy conservation and more encouragement for renewables a decade ago—had been more effective, nuclear power might not have been needed, even according to the Government's analysis.
There are a number of concerns about new nuclear capacity. It might surprise some hon. Members to hear that in my constituency there is an active operating nuclear power plant. It is not self-evidently politically wise for me to stand up and say that I do not support new nuclear. However, having considered the evidence and the arguments, that is the conclusion that I have reached. We need to set out why.
First, to echo the words of a former Secretary of State for Trade and Industry, new nuclear initiatives risk distracting us from renewables and energy efficiency. Ms Hewitt, when she was Secretary of State, said:
"It would have been foolish to announce"— that the Government would support new nuclear—
"because that would have guaranteed"— that is a strong word—
"that we would not make the necessary investment and effort in both energy efficiency and in renewables."—[ Hansard, 24 February 2003; Vol. 400, c. 32.]
She was right then—and that approach is right now. The danger is that if we go down that track and invest time, effort, legislative time and, undoubtedly, public money in new nuclear, that is bound to sidetrack us from energy efficiency and renewables.
The Secretary of State said in his statement that he was not mandating new nuclear plants, but inviting them. What happens if industry does not come forward? How will the gap be met? If new nuclear investors judge that it is too risky, or that the economics do not add up, for whatever reason, what is plan B?
I am more than happy to give way if the Secretary of State wants me to. He said that he had made the way clear for new nuclear plants. Are the Government assuming that they will go ahead? If not, when will we know? What will the Government do? Surely they need a strategy, rather than assuming that the private sector will do something that it might not.
May I help the hon. Gentleman? It seems to me that as the technology stands, if no nuclear technology were forthcoming—given that we are considering base load electricity, which cannot be supplied by renewables in any circumstances, because of their intermittent nature—the alternative would be high-carbon gas or coal. I do not know what the hon. Gentleman would say to that.
Funnily enough, the hon. Gentleman repeats a common misconception about renewables. Although an individual wind turbine in one place might provide an intermittent supply, in managing energy demand we are interested in the aggregate of all renewables over the economy. First, there are few times of day without wind, sun or waves. Secondly, tidal power is—surprisingly enough—incredibly predictable centuries ahead.
We need to be able to predict the aggregate of renewables. I agree that it will not be level throughout a 24-hour period, but neither is energy demand. We do not need inflexible sources that are simply on all the time, and that we are stuck with. We need flexibility to meet the fluctuations of demand through the day. We would be lumbered with the nuclear input and obliged to use it, whereas we need flexible sources such as gas-fired stations with carbon capture or renewables, which can to some extent be stored and used at later points. Let me use the Severn barrage as an example: although the tides are predictable, there are ways in which the water can be pumped when there is excess energy and used when it is needed. There are more flexibilities than are commonly understood.
If we are discussing plan B—leaving aside electricity generation and considering total energy use—it is on page 164 of the nuclear White Paper. The analysis from the UK Markal-Macro model shows that without new nuclear, we would need to decrease emissions from car fuel by 13 per cent. I would not have thought it took rocket science to achieve that.
The hon. Gentleman makes a good point. There are many ways in which we could make progress on this agenda without tying ourselves into a large inflexible long-term strategy. It is not as if there will be no cost for the public sector, as the Government claim; clearly there will be such a cost. The Nuclear Decommissioning Authority is already declaring historic costs in excess of £70 billion; it is steadily increasing its estimate of the clean-up costs for historic waste—and we have no idea of future costs.
As the Select Committee Chairman, I try to be open-minded and even-handed, but the hon. Gentleman would try the patience of even the most amenable of men. The liabilities that he is talking about stem largely from military use, and the material was stored in an appalling way, with no thought for the future. We now have a much clearer idea of what the costs actually are, and he should not confuse the House, and the public, by mixing up the legacy issues with those involving future waste.
Two questions arise from that intervention. First, if the technological problems of waste disposal have been resolved, why is waste not already in deep storage? Why is it still stored on the surface, which is highly inadvisable—and not ideal in the context of a possible terrorist attack, or in any other context. We have not resolved the problems involved: we do not know where the waste will go, or how it will be dealt with.
Those elements remain uncertain, but my second question is about something referred to earlier by the hon. Member for Rutland and Melton. The Bill provides that companies must pay their share of "the cost"—but what share of the total cost will be allocated to the first nuclear entrant to the market? Will it be 100 per cent? Or will the Government say, for example, "We think there'll be three entrants, so we'll charge you a third of what we think the cost will be"? But then, if nobody else comes in, will they then say, "Actually, on second thoughts, you've got to pay the whole cost, because there's no one else incurring it"? How is the Government to know what the future cost will be? That is the point that I would make to the Chairman of the Select Committee. Companies entering the market cannot know what their share of the future cost will be, because they cannot know how many entrants there will be.
The nuclear lobby seems relatively strong in the Chamber this afternoon, but does the hon. Gentleman agree that its representatives should visit the new nuclear power being built in Finland? It has been under construction for just under two years, but it is already two and half years late. Some 1,700 safety failures have been noted, it is already 25 per cent.—perhaps €1 billion or more—over budget, and work has not even begun on the storage facilities yet.
The hon. Gentleman makes a good point, and it is one that I plan to come on to.
The Secretary of State said that if a company went to the wall, the money for decommissioning would be ring-fenced. However, I presume that all the money would not have to be put up on day one, and that further contributions to the decommissioning pot would be made as profits came in from the generation of nuclear power. What will happen if a company goes bankrupt before that pot of money has reached the necessary level? Who, I wonder, will make up the shortfall? I think that we all know the answer to that question.
The Committee on Radioactive Waste Management has been mentioned already, and its chairman, Professor Gordon McKerron, has said of the Government's strategy that
"we have an apparent government commitment to the essential role of nuclear", but that there
"is a real risk we may get the worst of both worlds, where nuclear investment stalls under a risky investment climate while markets hold back from other investment in the expectation that nuclear is just around the corner. Then we really might have a capacity gap and an even bigger risk of the lights going out".
That is one Government adviser describing how investment in nuclear could crowd out other investment, but Sir Jonathan Porritt of the Sustainable Development Commission, who was put in place by the Government to look into these matters, has said:
"What is disturbing is that the Government is failing to understand the more urgent that dealing with climate change becomes, the less relevant...nuclear power is."
Nuclear power is presented as the friend of climate change, but the chairman of the SDC has said that it is the opposite. He added:
"Solutions have to be found on waste, cost, and decommissioning. They have not been found on any of those issues. It reveals how poor is the understanding by government of the importance of climate change".
The Bill would have been very different if it had come from the Department for Environment, Food and Rural Affairs. I hope that energy will be handled by that Department one day, rather than by the Department with responsibility for the utilities and heavy industry.
Finally, I want to touch on a few things that should have been included in the Bill. Earlier, I mentioned home energy efficiency and conservation. We are told that in a decade all new homes will be zero carbon, yet three quarters of the houses that we will be living in in 2050 have been built already. The Bill was a chance to do something about energy efficiency, but what real action in that regard does it promote? A quarter of our country's CO2 emissions come from housing. The figure for Sweden is 5 per cent., yet that country is a lot colder than ours. Why are we in this situation? It is because these things have been neglected time and time again by the energy Department, which is not the environment Department.
A second important omission from the Bill is anything on fuel poverty and social tariffs. One of the most shameful things that the Government have done is not only failing to meet their targets on fuel poverty, but going in the wrong direction, with fuel poverty soaring. The Bill could have made sure that energy companies provided social tariffs to low-income customers.
The energy companies say that tracking down all the poor customers is very expensive, but the Government have a big computer, and they know who they are. Why do the Government not give a certificate of entitlement to the people who receive key benefits so that they can send that to their fuel supplier to qualify for a social tariff? Rather than British Gas trying to guess which of its consumers are on pension credit, why do the Government not simply give benefit recipients an entitlement to social tariffs? Such a system would be a much more efficient way of tackling fuel poverty, so why does the Bill not provide for it? Instead, poor people are presumably supposed to surf the net to compare all the companies' tariffs, which change all the time anyway, and judge the best tariff for them. With the best will in the world, the evidence shows that low-income households, lone parents and unemployed people are much less likely to switch tariffs than anyone else, yet they account for many of the people who are most likely to need social tariffs. Leaving this to be dealt with by the market and, as I said in response to the statement the other day, through quiet chats with the energy companies, is simply not delivering, as the fuel poverty statistics demonstrate.
We have heard from the Conservatives about smart metering. While there is a bit in the Bill about metering, there is practically nothing about smart metering. Given that we will eventually replace every meter in the country, at a cost of billions, we need a framework to get on with that. However, yet again we have missed the opportunity to use the Bill to do that.
There is nothing in the Bill about decentralised energy and combined heat and power, either. There are many aspects to this. We need a diverse strategy, yet the Bill is trapped in an old way of thinking.
There has been mention of Ofgem and its remit. I cannot put it better than the Sustainable Development Commission, which said:
"We would like to see"— as would the Liberal Democrats—
"Ofgem's primary duty changed so that its central focus is on creating a sustainable system that costs as little as possible, rather than making a low cost system as sustainable as possible."
The opportunity to change the priorities of the regulator has been missed. There can be a forward-looking and diverse energy policy of the sort that I have described, but, regrettably, it is not in the Bill.
I want to put forward a rather different case from that made by Government and Opposition Front Benchers. In the last analysis, the Government's case for nuclear was that it was needed to keep the lights on and to help Britain to meet its climate change commitments. The Government also said that that could be achieved without any public subsidies—that was repeated today—and that the waste problem would be perfectly manageable. Sadly, it is clear from the evidence that all four of those statements are very far from true.
First, nuclear power cannot keep the lights on because reactors take too long to build. The Government's consultation conceded that even under their accelerated procedures, it would take at least eight years for construction to start. The consultation then assumed a five-year construction period. Optimistically, the earliest time at which a new nuclear power station could operate would be 2020, but that would be too late because, by then, there will be an energy gap in the order of 20 GW, which is the new electricity capacity that will be needed to replace obsolete nuclear and coal plants.
No nuclear station has been built on time or on budget in recent times. The average reactor takes three times as long to build, and costs twice as much, as was planned. My hon. Friend Colin Challen referred to the plant in Finland, which is the only plant to have been built in Europe in a decade. It is already two years late—there has only been two years' building—and it is something like £1 billion over budget, even with substantial subsidies from the Finnish and French Governments. It is not true that nuclear will keep the lights on when it is needed to address the energy gap between 2017 and 2020.
Secondly, it is false to claim that the only way in which we can slash our carbon emissions while delivering energy security is by building nuclear power stations. Nuclear cannot do that because half our energy demand is for heat, which is mainly gas-based, and the next biggest demand is for transport, which is mainly oil-based. Electricity generation, which is where nuclear comes in, represents the smallest component of energy demand, and new nuclear would be a small portion of that. At present, nuclear supplies only 3.5 per cent. of our total energy and that figure is falling.
Thirdly, the Government say that there will be no hidden subsidies. Well, I wish that were true, but it is clearly not the case. Paragraph 3.73 of the White Paper indicates that the Government intend to put a cap on the cost of decommissioning for nuclear operators and then to provide a mechanism for the taxpayer to meet the cost. Paragraph 3.52 is the real give-away when it says:
"If the protections we are putting in place through the Energy Bill prove insufficient, in extreme circumstances the Government may be called upon to meet the costs of ensuring the protection of the public and the environment."
Those circumstances will not be extreme because the costs of decommissioning after 150 years—the time between the start of a new nuclear plant and point at which the waste is finally put in a geological repository—cannot be estimated. Those costs could increase exponentially. The bill for decommissioning and dismantling existing plants is more than £70 billion and, according to the Nuclear Decommissioning Authority, a further £20 billion will be required for the disposal of waste. I remind hon. Members that those figures together are the equivalent of 7 per cent. of our entire gross domestic product.
Even those sums leave out two important liabilities for the public purse, one of which is what happens if a nuclear plant goes bust. That is not a figment of the imagination because let us not forget that when the nuclear holding company British Energy went bankrupt a few years ago, the taxpayer had to pay £5 billion to bail it out. The other liability arises because the Government and the taxpayer will always remain the last-resort insurer in the case of a large nuclear incident. Again, that is not a figment of the imagination, because paragraph 2.66 of the White Paper admits that
"we cannot dismiss the risk".
In the light of all that, it is frankly disingenuous to suggest that there are no hidden subsidies.
My right hon. Friend is talking about risks and hazards. Does he agree that my right hon. Friend Mr. Ingram and the hon. Members for Rutland and Melton (Alan Duncan) and for Northavon (Steve Webb) were rather short in listing the hazards? Does he agree with this comment, which was made yesterday by a very well known politician:
"Around the world we are already seeing new interest in nuclear power as a source of energy supply and this increased interest in civil nuclear power also brings with it increased risk of proliferation for military purposes"?
The source is absolutely impeccable. The truth is that one can touch on only a few items in eight minutes. The risks of nuclear proliferation and of cancer and leukaemia clusters around nuclear power stations—of course, that is much disputed—are present, but I do not have time to deal with them. However, I am grateful to my hon. Friend for raising that point.
Fourthly, the Government made the case in the consultation that the waste problem was manageable, but that is really pushing it. There are already 10,000 tonnes of long-life radioactive toxic waste in this country. According to the Government's figures, there will be 500,000 tonnes by the end of the century. The Committee on Radioactive Waste Management still has not come up with any solution. In fact, there has been no progress at all since the last Conservative Government finally abandoned the search for a nuclear dump in 1997. Where will the waste go? Let us not forget that that was one of the criticisms in the previous High Court ruling.
The industry makes the case that the quantities of waste will be considerably less this time. I am sure that that is true, but it is not the point. That waste will still be additional to the existing overload and, given the design, it will be more radioactive and hotter, which will make it more difficult to manage. The waste problem has not been solved. Regrettably, there is no movement towards a solution.
Colin Challen mentioned Finland and said that the waste had not been dealt with but, about four years ago, I went to Finland and stood in the repository. Intermediate-level waste had certainly been dealt with; I stood underground next to it. At the time, a high-level waste underground repository was being built. We should not confuse the lack of possibility with the lack of political will.
Nuclear has been around for 50 or 60 years, so there have been plenty of opportunities to find a satisfactory, affordable and workable solution but as far as I know, no place in the world has succeeded in doing so. The Americans intended to put their waste under Yucca mountain, but they are withdrawing from that proposal. There is great uncertainty and a real problem.
The Government's case does not stand up to examination for the reasons that I have given, but there is one other consideration that fundamentally alters the energy equation. As has been said, tomorrow the EU will announce mandatory targets for each EU country, so that we can achieve an overall target of 20 per cent. of EU energy coming from renewable sources by 2020. We do not know the UK target but it is widely predicted that it will be 15 per cent. The crucial point is that we are talking about not just electricity generation but fuel for transport and heating. The contribution that renewables make to transport fuel is next to nothing, and their contribution to heating is relatively small, at least at the moment. The implication is surely that the UK will be required to generate 30 to 40 per cent. of its electricity from renewable sources by 2020. That is an eightfold increase. That means delivering on the promise to provide 33 GW from offshore wind power—a promise that I was pleased to hear my right hon. Friend the Secretary of State make recently—as well as kick-starting a range of measures.
There is not one simple panacea. There is a range of technologies, including renewable and decentralised technologies, in which Britain can lead the world; I am thinking particularly of wave and tidal power. Meeting the targets means building power stations that use combined heat and power, and which achieve an efficiency of 90 per cent. plus, as has been done in Scandinavia. It means being able to burn cleaner fuels such as biomass, as well as fossil fuels. It means switching from the renewables obligation certificate system to feed-in tariffs that give fixed prices, not variable support—a point on which I agree with the Opposition spokesman. Such tariffs have proved massively successful in Germany. There must also be an enormous improvement in energy efficiency.
If we do all those things, we will not need any nuclear power stations, but the crucial point is that we have to do those things if we are to meet the mandatory targets. The irony of this debate is that even if the Bill receives its Second Reading tonight, it will have to be subject to major revisions tomorrow, when the—
What is intriguing about the debate so far is how little of it has related directly to the Energy Bill. It has instead been about energy policy. That highlights a problem for the Government. It would have been much better if we had had a proper debate about the energy White Paper published last year. We have not had that debate. One can see that the House is bursting with enthusiasm on this important subject, and rightly so. It is a shame that we have to squeeze a policy debate into a debate on a narrow, technical Bill that is not that interesting or controversial, although the issues on which it touches clearly are.
Next week, I will have the advantage of seeing the Minister for Energy when he comes before the Business, Enterprise and Regulatory Reform Committee to discuss fuel prices and energy security—that is, to discuss keeping the lights on—so I will have the opportunity to go beyond my eight minutes with him then. However, it is a great shame that we are restricted to such a short debate on such a complicated, important subject, and on such a curious Bill.
Fuel poverty is growing as a result of fuel price rises. I am not sure what our response to that should be. It is interesting to explore why prices are rising. The energy gap is bearing down on us. I did not agree with everything—in fact, I agreed with hardly anything—that Mr. Meacher said in the early part of his remarks, but towards the end of his speech he said some interesting and important things about how we will fill the looming energy gap. I think that there is a real possibility of life-extension for nuclear power plants, which would help. The Government clearly hope that the Bill will help them massively to expand renewables production, but if it does not, the looming gap would be filled by gas and coal. It may well be that there will be no gap in the market for new nuclear investment, and the right hon. Gentleman might then get his wish, for reasons that he would not endorse—a massive increase in as yet unclean hydrocarbon generation. It is a shame that we cannot debate the issues at more length and that we did not get the chance to discuss them sooner.
I suppose that the big policy change in the Bill—it was heavily signalled, and announced in the White Paper—is on the renewables obligation and its banding. I understand why the Government made that change, but until now, the obligation has been a technology-blind mechanism to encourage renewable power, and I tend to prefer it when Governments are technology-blind. It used to be left to developers to determine the most cost-effective way of building new sources of renewable energy. Given that renewables are quite an expensive way of cutting carbon emissions—we should not forget that; nuclear, however, is a cheap way of doing so—that was the right approach. It turns out that developers chose onshore wind, which is controversial, and biomass co-firing. We are now going for an approach that favours specific technologies, including wave, tidal and solar. That might suggest the direction that the Government's thinking will take on the Severn barrage and the Severn tidal energy sources.
My concern is that the renewables obligation process is hellishly complicated. It is not at all straightforward; it is a difficult system to work. One leading expert in the field said to me last week, "It's almost a parody of a piece of regulation now." When we add the complexity of banding and the grandfathering of existing rights, heaven knows what kind of mess it will be to operate. The renewables obligation certificate process is difficult, and it is made more difficult by the Bill. The Government say that the changes to the process will bring forward more renewable energy and a broader range of technologies. It probably will do the latter, because it will increase the subsidy for expensive technologies, but I do not see how it will bring forward more renewable energy.
One of the virtues of the system is that the cost to consumers is predetermined. The overall amount of subsidy from consumers is known—and it is citizens, not as taxpayers but as consumers, who pay for the renewables obligation process. If we are to shift the way in which the money is spent—if we move the deckchairs around—how will it lead to more rapid development of the total contribution that renewables make to our electricity needs? I just do not think that it can. In fact, it is likely to lead to a slower rate of contribution to our total energy needs for renewables.
I am nervous about Governments picking winners; they often make the wrong decisions. The Mayor of London has made the wrong decision about whether hybrid cars should pay the congestion charge. I do not think that they are the most environmentally friendly way of reducing carbon dioxide emissions. Instead, there are new diesel technologies. When Governments pick winners, we get into difficulties.
Feed-in tariffs have featured extensively in the debate. We all think that they are a good thing, and we all cite examples from around the globe of their contributing to decentralised energy generation. We all think that they are marvellous. However, when my Select Committee undertook its report on decentralised energy last year, it hedged its bets on the issue. I think that the jury is out on feed-in tariffs; I am open-minded on the subject. The issue is really who pays for feed-in tariffs. My real worry is that it is the early, middle-class adopters who will get the benefit of such tariffs. When the price goes up for electricity as a whole—as it will, because someone has to pay for the scheme—the risk is that poorer people will find that the price of their electricity goes up. They cannot afford the generating technologies that allow them to take advantage of feed-in tariffs. We have to be careful about the assumption that feed-in tariffs are a good thing, and I remain open-minded on the subject.
The debate inevitably became passionate on the subject of nuclear, but in fact there is not much in the Bill on the nuclear issue. The Bill forms a narrow, technical but important part of the Government's progress towards providing a new generation of nuclear reactors. There was a big debate between the Front Benchers on the issues of waste management and costing. I think that the Government's heart is in the right place, but I hope that they will move towards greater clarity soon, because at present we do not know what the phrase "full share" really means. I disagree with the right hon. Member for Oldham, West and Royton about the practicalities of nuclear waste management. However, making sure that the payment process is transparent and that there is no hidden subsidy is a big problem, and the Government must move fast to clarify their position.
On the issue of permitting a new generation of nuclear reactors, there is something else of huge importance that the Bill does not cover—the staffing levels of the nuclear installations inspectorate, which has just six people available for the task. Approval of the Sizewell B design approval took 270 man years of the then regulator's time, so it would take six people 40 or 50 years each of their entire working life to approve a single reactor design, never mind the three or four proposed for the new generation. I therefore hope that the Minister will repeat the Government's assurance that the nuclear installations inspectorate will learn from extensive international experience. It is not just one reactor in Finland that is being built worldwide—there are reactors being built around the globe, some of them extremely successfully. I hope that we will learn from that experience, and not reinvent the wheel. I rather hoped for an intervention, so that I would gain an extra minute.
One subject on which the hon. Gentleman has not touched is the welcome introduction of initiatives on gas storage. Does he not think that if we are to sort out the gas price, it is not just the problem of gas storage that we must crack but the problem of having the same regulatory regime throughout Europe?
I am happy to endorse that observation, as the problems remains a key issue in the future of our energy market. The Committee is shortly going to Brussels, subject to the Whips' permission, to explore progress on it, because it is the single most important question in the workings of the market.
It is great that the Bill does a lot to create a regime on carbon capture and storage, but we still do not have a workable commercial demonstration or project. The Bill's provisions therefore do not amount to much, as we need reassurance that the system is going to work. The big thing missing from the Bill is the smart meter question. I have seen evidence from the industry, including Centrica, in which it says that it would like a mandate in the Bill for smart meters. Centrica has proposed a system for rolling out regional franchises, and I believe that a competitive energy market would deliver smart meters to both the business and private sectors, because meters provide an enhanced service to people whom companies supply with energy. That is not happening, so the Government must make sure that their approach—I accept that an Ofgem study is under way—will deliver smart metering. I do not think that intermediate display technology is a sensible way forward, as it runs the risk of disincentivising investment in smart meters. I have undertaken a rapid rush around the issues. We look forward to the Minister's winding-up speech and to hearing what he says to the Committee when he appears before us next week.
It is a great pleasure to follow the Chairman of the Business, Enterprise and Regulatory Reform Committee, Peter Luff, who, while surveying the issues, made some poignant points.
I am pro-nuclear, pro-renewables and pro-energy efficiency, and I do not see any contradiction in those beliefs. I should like to add a Welsh dimension to our debate, as I do not think that there are any other Members from Wales in the Chamber. [ Interruption. ] I apologise, Mr. Crabb is here. However, I am the only Welsh Member with a nuclear power station in operation in their constituency. Many of my colleagues from Wales, including Labour Members, are against nuclear, and I shall address their fears.
I support the Bill, as well as the energy and nuclear White Papers. It is about time that we moved forward on nuclear, as we have been talking about it for some time. We had the worst of all worlds in the last review, which was neutral on nuclear: the review did nothing for either side, and left the question hanging. The industry could not move forward, and it is important that we do so now. Before I tackle the question of nuclear and carbon capture, I should like to deal with the renewables obligation, which many people in industry find confusing and bureaucratic. I hope that the banding proposals will eliminate that confusion and help companies to invest in renewables. I shall therefore be interested to hear the Minister's reply, and I hope that when the Bill returns to the Floor of the House on Report it will include measures to make the banding system efficient and less bureaucratic.
We are discussing this important Bill at a time of rising gas and oil prices, and increases in utility bills. The Minister will know that I have campaigned for some time to improve the gas network in the United Kingdom, and it is appropriate to discuss that in the context of the Bill and increasing gas prices. Many people in my constituency and, indeed, in constituencies across Wales and the United Kingdom, are not connected to a gas main, and their alternatives are even more expensive than mains gas.
We have campaigned on two issues: first, if people do not have a choice, they should not have to use expensive alternatives; secondly—and this important point has been touched on by other hon. Members—we must tackle fuel poverty. Many of the semi-rural and rural areas that I represent suffer from that problem, and it is compounded by lack of access to a gas main. I am not talking about isolated properties but about small towns and large villages close to a gas main. The regime operated by Ofgem does not help the situation—it hinders it—and makes it expensive to use gas in such places. I hope that the Government and the gas companies are trying to find formulas to get gas to those people. There are many customers in constituencies around the country who want access to gas mains. There is a missed opportunity in the Bill, so I hope that the Minister can help me.
Many people want a nuclear-free Wales. They say so, because of the perceived risks of nuclear. In my constituency, hundreds of highly skilled jobs derive from the nuclear industry. If a nuclear-free Wales went ahead, and England went ahead with new measures on nuclear, particularly in the south at Hinckley, Wales would suffer the perceived risks without having any of the economic benefits provided by the industry. Many people from my area, which has a history and understanding of nuclear as well as a high skills base, would gravitate to other parts of the United Kingdom. Colleagues who are dogmatic in their opposition to nuclear should therefore consider all the options.
Another great institution in Wales is the Centre for Alternative Technology. Has my hon. Friend had an opportunity to read the report that it published last year on zero-carbon Britain—I think that the centre coined the expression—which projects the possibility of a massive reduction in our dependency on fossil fuels, without resorting to nuclear? If he has not read the report, I shall gladly send him a copy.
I should be interested to receive that report. I have visited the centre. Indeed, its members gave evidence to the Welsh Affairs Committee. Some of the founders of the centre were pro-nuclear, as they believed that nuclear was a green energy. However, some of the centre's present members deny that that is the case. I believe that nuclear is a green energy, which will help us to achieve the low-carbon economy to which we all aspire.
I am genuinely pro-renewables and other alternatives as well as nuclear. In my constituency, we have a number of wind farms as well as a nuclear power station. Indeed, we have a licence to produce gas. My constituents and I, therefore, do not think that energy should be produced elsewhere. I was interested to hear Steve Webb say in response to an intervention that 75 per cent. of planning applications are turned down. Indeed, the Liberal Democrats in Wales oppose many such schemes, and I am afraid want windmills to be sited in areas where the wind does not blow and where they would not be very efficient.
A proposal has been made to develop the Gwynt y Môr wind farm in north Wales into one of the biggest wind farms in the country. The Conservatives in the area oppose the proposal to develop that wind farm off the north Wales coast. If the Liberal Democrats will not allow wind farms to be built in windy areas on land, and wind farms are not allowed to be built offshore either, I do not know how we will achieve that rich mix that they talk about.
We have to grapple with the issues: technology in the nuclear industry is moving on, but waste is a massive problem that has been fudged for far too long by successive Governments. It is time that we dealt with it, and we are moving towards a solution. I was intrigued by the suggestion from Alan Duncan, who appeared to be very confused and dug himself into hole. One cannot be a little pro-nuclear: one is either pro-nuclear or anti-nuclear. It is a bit like being pregnant: one cannot be a little bit pregnant. I therefore think that the Conservatives' position is a bit of a cop-out.
If we are in favour of nuclear, we must do what is best to get rid of nuclear waste. The legacy waste as well as the new nuclear waste must be dealt with properly. We hear about various estimates of the amount of waste. Depending on whom one listens to, we are told that there is enough nuclear waste to fill X number of Albert halls, but much of the civil nuclear waste and even the military and medical nuclear waste is intermediate or low level. The volume of high-risk waste is considerably less.
When people think about waste and legacy waste, they should think about the past waste legacy of other sources of power, such as coal, which we have to manage. Copper mines and tin mines, too, have scarred areas of the United Kingdom. Waste management is important, but how many Albert halls or Millennium stadiums could be filled with the carbon that is killing the atmosphere? We must deal with the waste properly.
I am unsure whether the technology is coming on stream quickly enough to deal with carbon capture, and I am a little worried. I am glad that we are putting the mechanisms in place. I agree with my hon. Friend Alan Simpson, who spoke about separation.
In conclusion, I am pro-nuclear, pro-renewables and pro-energy efficiency. For the 21st century we must be mature enough to grab all those and move forward with the technology to achieve the stable and affordable supply of electricity that we need for high-intensive industries across the United Kingdom. If we do not, other nations will develop nuclear, and we will be importing nuclear electricity to keep the smelter works in my constituency and other parts of the United Kingdom going. The Bill is technical and deals with some of those difficult issues. The time has come to be pro-nuclear and positive about the future.
I endorse everything that I have just heard from Albert Owen, who made a balanced and sensible speech with regard to the nuclear industry.
Three years ago I had spent two years studying energy as the Conservative party spokesman on the subject, which does not make me an expert— [Interruption.] Perhaps hon. Members should wait to hear what I say before they disagree. Studying energy gave me an insight into the subject and an interest in it. It became clear to me that in this country we need a mix of primary sources of energy.
There are problems with all the sources. There are problems with coal, and as the son of a former miner, I can speak with some authority about that. It is a pollutant. I cannot remember how many outstanding claims there are from miners who were injured down the pit, but we must take that human tragedy into account when we discuss electricity produced from coal, which is increasing as a percentage of the energy mix.
There are also difficulties with gas. Our gas reserves are running down—not depleted yet, but running down—and we will become increasingly dependent on gas from abroad which, as anyone in the part of the world that receives gas from Russia would testify, is not a secure position. That is why the Finns decided to build a third nuclear reactor. As I said in an intervention, contrary to what we have heard in the Chamber this afternoon, they also have a repository to deal with the intermediate-level waste. I have been underground inside it, which is proof that it exists. At the time the Finns were also starting to build a repository for high-level waste. It can be dealt with. The fact that it has not been dealt with in the United Kingdom is not due to any geological problems or to the fact that it cannot be done. It is due to a lack of political will. We should not confuse that with the issue itself.
If we do not build a new nuclear base, and if we increase renewables up to 20 per cent. by 2020 and we lose our entire nuclear industry, we will have made no progress at all on carbon. It is unbelievable that hon. Members are shaking their heads. I am not sure about their maths, but my calculation is that if nuclear provides about 18 per cent. of the United Kingdom's electricity now, and if we lose that and go up to 18 or 20 per cent. from renewables, roughly the same amount of carbon would be emitted, so we would have gone nowhere.
I am not pretending that there are not issues in the nuclear industry, and my hon. Friend Alan Duncan spoke about finance.
If the hon. Gentleman compares the amount of generating capacity at 70 per cent. capacity value from nuclear with what is already in the pipeline for offshore wind at a generating capacity of 35 to 40 per cent., he will see that those two figures almost exactly match.
I am a firm believer in renewables. If we have renewables and a nuclear industry, we will be going places with regard to carbon. On a very cold, very still day, we would get no electricity at all from wind power. Let us not forget that on the coldest days in the United Kingdom, which are very still, there would be no wind and therefore no electricity, so we should not depend on that source to a greater extent.
On the financing of the industry, my hon. Friend the Member for Rutland and Melton is right. However, if it is not attractive for companies to bid to build nuclear power plants, they will not do it, so I do not see that there is a great fuss to be made about that aspect. The Government have invited bids, which they could have done 10 years ago, but they have not said that there will be a new generation of nuclear power plants. They can improve and speed up the planning process and perhaps encourage the processes to go ahead in areas that already have nuclear power plants, such as Sizewell and Sellafield. That would be sensible. I am glad that the Government have said what they have, although they have not actually said, "We are going to build a new generation of nuclear power plants."
Steve Webb, who spoke for the Liberal Democrats, is no longer in his place and I do not wish to be unkind, but in what I considered a rather politically naive speech he made a good point when he asked what would happen if no one came forward to bid. The same would be true if no one came forward to bid for the Severn barrage. As an MP whose constituency is bordered by the River Severn, I have looked into the matter closely. I have also visited the barrage at La Rance in Brittany, which was built 40 years ago. It is probably a tenth of the size of the potential of the Severn barrage, but it was well worth visiting to see how it works—and it does work. When it was built, there was tremendous disruption to fish life and to bird life, and it has taken quite a long time for that to recover. I was told by people there when I visited that if they built it now with new technology, they might do it differently and it might not cause the same disruption.
The appraisal, which is at least 10 years late, is welcome. I want to ensure that it takes an independent look at the prospects of a Severn barrage, with all that that means. It is probably fairly easy to calculate the amount of electricity that would be generated from it. That has to be good—it is secure and it is green. I want the wider aspects of the environment to be considered when the appraisal goes ahead.
My constituency was badly hit six months ago by the terrible floods, as were a number of other places. The past couple of weeks have been extremely worrying for people there, who are not even back in their homes after six months and are some months from being so. They are extremely anxious about further flooding. The appraisal must also consider what impact a Severn barrage would have on flooding in the area. I do not have the technical knowledge to say whether it would be good or bad for flooding. I want the appraisal to take an independent look at that.
I have some enthusiasm for the project, which deserves very serious consideration for the reasons that I have given. We have to find a way forward in respect of secure and green energy supplies. However, I hope that the appraisal will be objective and neutral; I am a little concerned that the people running it are by and large linked to or from the Government. I understand that they will take evidence from outsiders, but I would have liked the running of the appraisal to have been better and more balanced. Nevertheless, we are where we are and I hope that those involved will take into account the points that I have raised.
It is important that we move forward with projects such as the Severn barrage, because of the importance of security of supply and green issues. However, we also have to move forward with the balanced energy policy that I mentioned at the beginning. Unlike the hon. Member for Northavon, I do not accept that nuclear energy would take our eye off the ball; only a small-minded person would allow that to happen. We must have nuclear and renewables and we will have to continue with coal and gas for some time yet. Having one source of electricity does not mean that we cannot have another one. We must have a balanced approach to energy; putting all our eggs in one basket would be dangerous, and I hope that we do not go down that road.
Colleagues will probably know that I began my career as a radiation biologist; I am an environmentalist by training and early profession. I spent the early part of my professional life living around and working on nuclear reactors of one sort or another. Indeed, I became friendly with my right hon. Friend Mr. Ingram, who spoke earlier, when I was doing my PhD on a reactor right in the middle of a residential area in his constituency. When it was there, the people in the town did not even know it; I doubt whether they even knew when it had been decommissioned and taken away.
Nuclear energy has no fears for me. I have been advocating it for the past 10 years. Having listened to this debate, I think that the issue comes down to what we think about carbon, not what we think about nuclear power. If we believe that putting carbon into the atmosphere is the most serious threat that we face today—because of its impact on climate change or its creation of respiratory diseases around the world—we have to prioritise energy sources that can remove carbon or are low-carbon.
We should not rule anything out; we should put all low-carbon forms of energy production on the table. I am not sure that colleagues who have so vehemently and passionately argued against nuclear power are prioritising the battle against carbon. If they are, I do not think that they are taking seriously enough the difficulties involved. I am not the first to come to that conclusion. In 2006, Patrick Moore, co-founder of Greenpeace in the United States, wrote in The Washington Post:
"In the early 1970s when I helped found Greenpeace, I believed that nuclear energy was synonymous with nuclear holocaust, as did most of my compatriots...Thirty years on, my views have changed, and the rest of the environmental movement needs to update its views, too, because nuclear energy may just be the energy source that can save our planet from another possible disaster: catastrophic climate change."
Patrick Moore's name was prayed in aid last week, during the statement. Somebody kindly sent me a copy of the Electrical Review, volume 240, No. 4. An article in it states that Dr. Moore
"wrote last year to the Royal Society arguing there was no 'scientific proof' that mankind was causing global warming".
Was that the kind of statement to which my hon. Friend referred?
Earlier, my hon. Friend was happily offering letters and articles to my hon. Friend Albert Owen; I shall send my hon. Friend Colin Challen a copy of the article from The Washington Post. It makes it clear that Patrick Moore does believe that climate change is man-made.
May I offer the hon. Gentleman a more reliable quote from 2006? Along with 40 other leading climate and energy scientists, Keith Barnham, professor of physics from Imperial college, London, wrote to the former Prime Minister:
"Nuclear new build will be too little, too late, too expensive and too dangerous."
I certainly agree that nuclear can be only a little part of the solution and that it is too late. Ten years ago, when I first entered Parliament, I was arguing that we should resume our nuclear build. However, nuclear can still make a significant contribution. If we are quoting climatologists at each other, let us not forget the founder of the Gaia movement, James Lovelock, who wrote in The Independent:
"When, in the 18th century, only one billion people lived on Earth, their impact was small enough for it not to matter what energy source they used.
But with six billion, and growing, few options remain; we can not continue drawing energy from fossil fuels and there is no chance that the renewables, wind, tide and water power can provide enough energy and in time."
I do not think that there is a single more important figure in the whole environmental movement.
Very briefly, does my hon. Friend share my dismay at the fact that every time an eminent scientist comes out to support the nuclear industry, the environmental movement moves en masse to discredit his entire scientific record?
I agree entirely. The dogma exists because people do not regard nuclear power as safe. They still have a view of some huge accident record. Even last night as I was talking about the issue with a colleague, who is not here today, Chernobyl was raised. I asked him how many people actually died at Chernobyl. "Thousands," he said. The truth? According to the United Nations—not just one section of it, but the environmental groups within it, the World Health Organisation and the International Atomic Energy Agency—62 people died and that includes 15 children living in the area who died from thyroid cancers. That is a disaster—
No, I cannot. I accept that that was a disaster, but compare it with the WHO's estimates of how many people die every year as a result of carbon being put into the atmosphere. I am not talking about climate change, but about respiratory diseases related to carbon. Three million people die from them every year, but colleagues in the House are telling me that it is green to oppose a technology that in 50 years has led to the deaths of fewer than 100 people. Are we instead to rely on an energy source that kills that many people every 20 minutes of every single day of the year? That is nonsense. All low-carbon technologies need to be put on the table.
Like my hon. Friend the Member for Ynys Môn, I am also a firm supporter of renewables. Indeed, I would be mad not to be—London Array, the biggest wind farm currently planned, is to be constructed off my constituency. Conservative Members were saying that they opposed onshore wind farms and wanted them all to be offshore. I remind them that a Conservative council in Kent delayed the start of London Array's construction—by objecting not to the offshore wind farm, but to planning permission for the onshore substation for the wind farm. That is the extent of their opposition to any building of renewables plants.
If we can go ahead with the development of the London Array and of the Warwick Energy wind farm, the other field off my part of the coast, and have them constructed from the port of Ramsgate—if the manufacturing of the wind farms can be done in east Kent, as I think possible and economic—we can become a centre of expertise around the world for wind farm construction. We could help everywhere else in the country with the construction of wind farms; perhaps we could get a little close to hitting the 15 per cent. target that people speculate we will have to achieve in the short term. However, all that does not mean that we should overlook the benefits that nuclear energy can deliver. We should consider all the low-carbon technologies.
Yes, we should also carry out the study into the Severn barrage but, I say to Members on both sides of the House who are obviously excited about its possibilities, let us wait and see the science and see what the environmental impact will be before we make our decision. Taking energy out of water changes the environment in the water. If one takes energy out of rough water, one gets smooth water; if one takes energy out of the tide, one gets flat water. The sediment in the water settles and the things that used to live in that ecosystem cannot live there any more. Recently developed new technologies can help with that, because they do not take out all the energy and can use different types of construction rather than the old barrage system that we used to talk about, and which, if the Liberal Democrats had had their way, we might have started to build 10 years ago. We have gone beyond that. Perhaps there are solutions to building the Severn barrage that will not have those environmental consequences, but we cannot rely on them and we have to wait for the science. In the meantime, we must plan an energy mix that guarantees our energy security into the future and ensures that we focus on the key enemy that we face today—carbon.
Let me relay one further story. A few years ago, I had a conversation with a senior official from the Russian embassy. I said, "What is your energy policy?" He replied, "Our energy policy is that we're going to produce our energy from nuclear power and hold on to the gas until we control it and control the price, and then we're going to sell it to you."
I enjoyed listening to Dr. Ladyman when he was a Minister, but I welcome him back to his Back-Bench position because he always brings sound science to our debates. I agree with the line that he has taken. Like Albert Owen, I find myself in the category of a supporter of the nuclear power industry as well as of renewables and energy efficiency.
I looked to the Bill to give me a sense of direction and a sense of policy, but the long shopping list that it represents did not provide me with that, so I thought that I would try to find some words that summed up what an energy Bill at this stage in our Parliament should be about, and decided that it should be described as a Bill to secure low-carbon sources of power and heat bolstered by an efficient energy efficiency policy. That illustrates one important drawback to debating energy in a climate change vacuum. It is a pity that we could not be debating one piece of legislation combining energy and climate change. The various White Papers that the Government have produced in the past 12 months did not achieve that objective so it is important that we do, and the contributions by all right hon. and hon. Members have brought together all aspects of energy policy.
In my earlier intervention, I expressed sadness that the Bill does not say anything about a renewables heat obligation. Given the European Union targets for renewable energy that are likely to come out tomorrow, aiming at anything up to 20 per cent. coming from renewables, and with a third of our emissions in this country coming from heat sources, it is disappointing that the Government have yet to resolve their position on a renewable heat obligation, because it will clearly be an important part of our energy policy in future.
As my constituency of Fylde is the home of nuclear fuel production, I am sure that the House will not be surprised to learn that the nearly 1,700 workers in that industry have welcomed the Bill, as I do. However—the Bill is silent on this point, but perhaps the Minister can give me some reassurance—they are worried that in enabling the United Kingdom to use its nuclear expertise, particularly in the field of high-quality, safe production of nuclear fuel, the arrangement that will exist between the Nuclear Decommissioning Agency and Toshiba Westinghouse, which operates the site at Springfield, near Preston, should retain the skills and excellence of our fuel manufacture and capture the benefits of the energy security that indigenous fuel production will give us while making certain that we do not introduce other forces—perhaps other opportunities for people to run the site at Springfield—which would dissipate the enormous gains in productivity and safety in manufacture that have been built up over the years. A reassurance from Ministers would do a great deal to help to secure the retention and skills of the people in the work force at what could be the home of future nuclear fuel production in the United Kingdom. Clearly, we have to sort out the issue of nuclear waste, but that should not be a showstopper as regards the activities that the Government have started in order to enable bids to go ahead and enable design approval to be given to a new nuclear generation of nuclear power stations.
I accept it in principle. We touched on the definition of "all" earlier in the debate, and the Government have yet to crystallise precisely what that would mean. It is often forgotten that our existing advanced gas-cooled reactors already have to make provision for their decommissioning costs and are still able to produce competitively priced electricity. Certainly, the public must have confidence that they will not be left with a legacy cost for new nuclear build.
I want to move on to energy efficiency. I am disappointed that the Bill does not contain more about smart metering. I had a meeting with representatives of Scottish and Southern Energy, who came to talk to me about the report by the Select Committee on Environment, Food and Rural Affairs, where, in our climate change citizens' agenda analysis, we described the benefits that could come from smart metering. They said that proper smart metering, which would provide appropriate tariff management and control of the use of electrical equipment in the domestic situation, would make it possible to save up to the capacity of two power stations-worth of generation. The Bill refers to meter accuracy. I accept that the Government are undertaking trials, but we do not want to miss a golden opportunity to maximise the use of our existing sources of electrical generation without moving forward. Perhaps the Minister might be able to make an announcement on that during the course of the Bill's progress.
That opens up the question of decentralised power. We have heard a discussion about domestic generation of energy. When the Select Committee visited Freiburg and Stuttgart in Germany, we saw for ourselves the potential of the German feed-in tariff. I wish that Ministers would stop misleading the public to the effect that this is the product of some giant German subsidy or that it is costing Germany energy users an unaffordable amount—it is not, as the average figure is €2 per household per month. If one is prepared to accept that customers currently pay for the existing energy efficiency commitment and for the renewables obligation certificate, it should be possible for customers to pay for a feed-in tariff system in this country.
It is not a question of seeing Britain's roofs covered by photovoltaic cells. Without the feed-in tariff, decentralised community-based systems are inhibited from being developed. It has been left to the market leader, Woking, to pioneer combined heat and power—a decentralised system that puts money in the coffers of the local authority, as well as providing local authority buildings, a hotel, two blocks of flats and an entertainment centre in Woking with the ability to produce their own power and electricity. That local authority could do more, but there is nothing in the Bill about private wire capacity and nothing to change the trading arrangements to enable such a local authority to sell on a much wider basis its skill and expertise in decentralised local electricity generation.
Such a revolution could mean that we could have the best of all worlds—a guarantee of safe base load through nuclear, generation through the exploitation of renewables in the way that the Government want, and a proper decentralised energy-efficient system for the consumer, properly monitored by a smart metering system. That is how we should be looking to have a balanced and secure energy portfolio. Unfortunately, however, the Bill does not provide for that optimal use of the skills, technologies and knowledge that exist in Europe and in the United Kingdom.
Given that challenges are coming from Europe, perhaps in the next few hours, I urge the Government to be more ambitious with the Bill, even at this late stage, and to exploit all the opportunities to develop a true low-carbon and secure source of energy for this country.
The two drivers of energy policy have traditionally been security of supply and the challenge of climate change, but there is a third important pillar, which is affordability.
In reality, the liberalised energy market has served us well. In comparative terms, energy costs in the United Kingdom are still relatively low. But all householders are facing increases in their bills, in some cases by as much as 29 per cent., which has real implications for the Government's target of eradicating fuel poverty by 2010. There are 4 million households in difficulty at the moment, and every 1 per cent. rise in energy prices adds roughly another 40,000 to the number. There lies a real challenge, and the Government need to think about it. It is not just a question of a commitment; there is a legal requirement to meet that target.
One of the things that could be done is to increase the Warm Front contribution. Secondly, fuel poverty should be treated as a social issue. A great deal of information is held on the number of people who are vulnerable, which needs to be shared with the energy companies. It is also clear that many who are entitled to help are not getting it. With regard to social policy, we need to ensure that we take those fairly simple measures.
In the Chamber today, and in future, there will be a debate about social tariffs. Some energy companies are performing well. Energy companies are offering £56 million in support this year, but the situation is diffuse and confusing, and we need to revisit it. I am glad that the Secretary of State has told us that the idea of legislation on a compulsory tariff is still under review. I say to the Minister for Employment Relations and Postal Affairs that this matter will be pursued vigorously during the passage of the Bill.
It has been made clear, particularly by Mr. Jack, that smart metering can have an important effect on fuel poverty. There is plenty in the Bill about meters, but there is no provision at all about smart meters, despite the fact that the Government are committed to introduce them. The last energy White Paper included that commitment, and the Prime Minister has recently reinforced it. It is a big task: 45 million meters have to be changed. A successful pilot scheme is going on now.
Of course we could, and it is important, as my hon. Friend Alan Simpson said earlier, to have the right sort of smart meters—those that measure input as well as output—as a move towards microgeneration. Smart meters are relevant not just to electricity, but to gas and water too. I hope that the Government will think hard during the passage of this Bill, not about introducing detailed regulations, but about taking enabling powers under the Bill. The detail can follow later, but we need to move on from a discussion in principle to a discussion about how we will do it. It is an important step for technology, and there is much in the Bill about technology.
Other hon. Members have spoken about carbon capture and storage. I represent a coal-mining constituency; collieries are still operating in Nottinghamshire. Miners in the UK are the most efficient miners in Europe. We can handle the economic challenges, but unless we can burn coal cleanly, the environmental consequences will destroy the coal industry. That is why clean coal technology and carbon capture and storage are so important. Eight replacement coal-fired power stations are being talked about at the moment—or at least, they were being talked about last summer. A number have dropped out, because people do not believe in the Government's commitment to clean coal technology. It is astonishing that Japan spends more on clean coal technology research than the UK, given that Japan does not have any indigenous coal. It is important for such competition to succeed. It is also important to discuss post-combustion technology as well as pre-combustion technology. We are able to burn coal cleanly—and we need more than one demonstration plant operating by 2015.
Does my hon. Friend agree that another technology needs to be exploited—underground gasification? As he will be aware, since the industrial revolution—going back to 1760—we have used about 9 per cent. of our coal reserves. Most of those reserves are deep, and if we were able to instigate the burning of those seams, we could pump out methane that would replace much of the gas that we use.
My hon. Friend is a distinguished commentator on the coal industry, and he is clearly correct. Coal offers us flexibility and an opportunity for security of supply. It is one of the most flexible ways of providing electricity, so we clearly need to consider gasification. All I say to the Minister is this: if we believe that coal—including indigenous coal—has a future, we should not argue about the economics of the matter, but find solutions that involve burning coal cleanly in an environmentally sensitive way.
That brings me to carbon pricing. The carbon market is all over the shop at the moment. The European Union's emissions trading scheme is in its infancy, and until investors in future planning have clarity about the price of carbon—a high and stable price, into the future—we will not see investment. I have nothing against nuclear power in principle. There is a case for replacing nuclear with nuclear, but I have worries about the practicalities and whether it will happen. Energy companies have had the opportunity and the ability to make new nuclear proposals for many years. We could do more with planning and licensing, and ensure that the nuclear installations inspectorate has a sufficient number of people working for it, but unless the economics of nuclear power are right, we will not see the certainty necessary for investors to invest in the new nuclear industry.
I think that the Government accept that. I was particularly struck by the conclusions after paragraph 2.66 in the nuclear White Paper:
"The Government is committed to working to strengthen the EU's Emissions Trading Scheme...and to building investor confidence in a long-term multilateral carbon price signal."
We can all agree with that, but the following sentence is revealing:
"We will keep open the option of introducing further measures to reinforce the operation of the EU ETS in the UK should this be necessary to provide greater certainty for investors."
What does that mean? I think that it means that if the ETS does not work out, the Government are prepared to offer a guarantee for carbon, to ensure that there is a hedge price for it. That does not sound to me like a market operating in traditional terms. I hope that we will have the opportunity to examine that issue in Committee.
It is right that the Bill makes the nuclear industry internalise all the costs of nuclear energy. However, does it not follow that the carbon price should be such that carbon producers, too, pay the full costs? That would make not only nuclear but carbon capture—and, therefore, coal mines—more economic.
Of course, I agree. However, the White Paper is uncertain on that point. We need a high and stable price for carbon. The White Paper acknowledges that we do not currently have that, and suggests that the UK should introduce it. It is also clear that the costs of decommissioning have not yet been worked out. As the White Paper acknowledges, unless there is certainty about that, investment will probably not be made in further nuclear plant.
There is much to be done. We face an energy crisis in a decade. The time for talking is finished, and the time for producing a framework for investment is now.
I declare an interest, in that my husband has undertaken some IT consultancy work for Utilita, a small energy company.
I am delighted to follow Paddy Tipping, who focused on smart metering and fuel poverty. As we are supposed to be mindful of fuel consumption and waste, and the Government have expressed a keen desire to alleviate fuel poverty, I am especially concerned because the Bill misses an opportunity to eradicate fuel poverty and increase our national energy efficiency. The Secretary of State mentioned such concerns, and said that how we use energy and tackle climate change is vital. That is why the Bill represents a missed opportunity.
It has been acknowledged that production from the UK continental shelf is declining, and it is anticipated that we will rely on imported gas by 2020. Higher gas prices mean that it is even more vital for poorer households to be helped to become energy-efficient.
Energywatch has been mentioned many times during the debate. It has drawn attention to the Bill's shortcomings, stating that it represents a missed opportunity to introduce important provisions. That is especially true at a time of high fuel prices. Why is the Government's laudable aim of alleviating fuel poverty absent from the Bill? I do not believe that that was their intention. That aim should be added to the Bill in Committee.
"Reliance on the market to deliver adequate packages of support voluntarily is not sufficient. This is clearly demonstrated by the disparity in the levels of assistance that energy companies offer to their fuel poor customers."
Earlier, the Secretary of State said that legislation should be the last resort. I am worried that that means there will be no legislation to tackle fuel poverty. Such legislation is needed, because fuel poverty, which is defined as when a household spends 10 per cent. or more of its income on gas and electricity, is a large and growing problem. It is shocking that 4 million homes are in fuel poverty, and that the problem is increasing rather than decreasing.
Is it not the case that the families to whom my hon. Friend refers are also the sort of people who do not have access to the internet? People who get the best deal on energy are often those who can use internet search engines, which enable them to negotiate a good deal.
My hon. Friend makes a valuable point. People need not only access to the internet but to be savvy enough to negotiate their way around many of the offers. People switch their energy providers, but as my hon. Friend says, it is often the more intellectual or thinking user who manages to switch most frequently and get the most benefit.
The population of St. Albans includes a high proportion of people with degrees. We are known for being an educated population. St. Albans is perceived as being affluent, but it has areas of genuine deprivation. It is estimated that 16 per cent. of my residents in affluent St. Albans—some 7,500 households—live in fuel poverty. That is above the national average. The problem therefore affects all areas, not only the more obviously poor communities. National Energy Action estimates that the national figure could hit 3 million by 2010. Fuel poverty should therefore be a key feature of the Bill.
In October 2007, I met the Energy Retail Association because of my concerns about the poorer communities in St. Albans. The association was formed in 2003 and represents Britain's suppliers of electricity and gas to the domestic market. I understand that it is working closely with the Government, which I welcome, to ensure that there is a co-ordinated approach to tackling key issues. All the main energy suppliers are members, and the meeting in October showed that they were worried that there was some sclerosis in the Government's introduction of smart metering, which would help fulfil their commitment to alleviate fuel poverty.
Smart metering has been mentioned often in the debate. The Secretary of State knows that the ERA is calling on the Government to provide a mandate for the energy retail industry to roll out smart meters. We are talking about 45 million households; it is a massive project, along the lines of introducing chip and pin. We must think big, and I am not sure whether the Government will do that. Support for smart metering constituted a clear commitment in the energy White Paper, and the Secretary of State said that the Bill should implement key parts of that document. Smart metering was in the White Paper, so why is it not in the Bill? I do not understand the logic. If the Bill provides no mandate, the industry will get cold feet. We have heard examples of the industry getting cold feet about other projects, and the last thing we need is for the industry to worry that the Government have no genuine commitment to smart metering.
The Under-Secretary of State for Environment, Food and Rural Affairs, Joan Ruddock, attended a meeting of the Select Committee on Communities and Local Government in December. When I raised energy companies' comments on smart metering with her and the Minister for Housing, the latter stated:
"We are expecting to respond to the consultation around Smart meters in the New Year."
We are in the new year now. How far have we progressed?
How far have we progressed with the Ofgem trial? The hon. Member for Sherwood said that it was successful. If so, is there a commitment to smart metering? I do not believe that there is, because at the Select Committee meeting, the Under-Secretary went on about electricity display devices—EDDs. They are a method of examining what we use, but not of tapping into fuel tariffs, which would relieve fuel poverty the most. I asked her about fuel poverty, but her reply, which is in the transcript of the evidence, skirted around EDDs without focusing on smart metering. If we are to regain our focus on smart metering it needs to be included in the Bill, or the energy industry will not believe that we intend to act.
The £60 EDD is a sticking plaster, not a solution. It taps into electricity only, not gas. If the Government are to focus only on EDDs, let us have some clarity and honesty. They should admit that they are abandoning the commitment, which the Prime Minister reiterated, to proper smart metering. If every household is to have smart metering in the next decade, provision must be made in the Bill and we need to buy into it. An early-day motion has been signed by 128 Members, calling on the Government to push forward on this. That shows that not only the energy industry but many hon. Members are willing the Government on, so I ask them please not to drop the ball at such a late stage.
As I have said, fuel poverty affects an increasing number of households. I should therefore like the Government to explain why, when they said that they were concerned about it, they have not included the aim of alleviating it in the Bill. Many people, including 16 per cent. of households in my constituency, face a choice between heating and eating this winter. That is not good enough. I believe that, for all of us who are committed to alleviating fuel poverty, the Bill represents a missed opportunity if it does not include that aim. I urge further consideration of that in Committee.
I begin by declaring an interest as the Member of Parliament for Sellafield or, perhaps more accurately, for 17,000 individual interests. That is the number of jobs that depend on the plant in my part of the world.
The Secretary of State rightly said in his opening remarks that no single generating source can solve the problems of climate change that now face us. Obviously, I shall concentrate on the Bill's nuclear element, which, in my view, is overdue, necessary and welcome. I want to pick up on the comments of my hon. Friend Dr. Ladyman about the tone that has characterised the debate so far. It appears to be becoming a constrained debate—almost an intellectual straitjacket—in that many hon. Members are concentrating on how to stop the nuclear industry rather than on how to fight climate change. Surely than cannot be right and should be avoided.
The Government consultation on the nuclear option has been thorough, lengthy and detailed. Nobody can doubt that everybody who wants to have their say on the nuclear issue has had every opportunity to make their views known. It is a matter of regret that certain groups with what I can only describe as a pathological hatred of the industry have chosen to withdraw from the consultation, no doubt as part of their strategy of taking the Government to the High Court yet again, in order to try to thwart the will of a democratically elected Government who are seeking to address the civilisation-threatening phenomenon of climate change.
Such opposition is as inexplicable as it is predictable and illogical. People of my generation, for which I make no claims to be a spokesperson, cannot understand how groups that claim to care so much about our planet and our environment can seek to thwart the necessary steps that will give us our best chance of preserving our environment and our life within it. Those groups have no absolute or sole right to term themselves environmentalists; indeed, I consider myself an environmentalist. The label, which is often misappropriated by the anti-nuclear brigade, serves only to undermine a lot of the good work that environmentalists have done for decades in this country.
None the less, the nuclear element of the Bill marks a spectacular renaissance of an industry that until recently—until two or so years ago—was dead. In fact, the Bill represents a resurrection more than a renaissance. Either way, it is of real and material importance to communities such as mine up and down this country. The Prime Minister put it best in his foreword to the White Paper when he wrote:
"More than ever before, nuclear power has a key role to play as part of the UK's energy mix. I am confident that nuclear power can and will make a real contribution to meeting our commitments to limit damaging climate change."
With that in mind, I want to stress that, like my hon. Friend Albert Owen, I am an enthusiastic advocate of renewable energy, assuming that the developments are situated in the right places, that they actually work and that they are worth going ahead with. We all know that, objectively, not all of them are. It is for those reasons that I support the unprecedented subsidies, totalling billions of pounds, that the Government are putting into renewable technologies.
I should add that it is a matter of fact that the subsidy works. It is also a matter of fact that energy utility companies would not touch renewables without the renewable fuels obligation; indeed, they have told me so, as I am sure they have told many other hon. Members. Moreover, without the renewable fuels obligation, the consumer—we have heard a lot of wise talk about fuel poverty—would not touch renewables either.
With my support for renewables clearly established, I return to the issues surrounding nuclear, as these have been the most significant points of debate and argument on the Bill so far. There are perhaps 10 principal myths about nuclear. They have been raised today and will be raised again over the coming hours, weeks and months in this place, in the media and, I expect, in the High Court—I refer to them as myths, but they might be more accurately described as lies.
The arguments postulate that the UK should not retain nuclear generation because of the following issues. The anti-nuclear lobby claims that we do not know what to do with the waste, but that is not true. There are no technical or scientific obstacles to radioactive waste disposal, as we have heard; rather, the obstacles are principally political, and in some cases legal.
The second claim is that nuclear is not a low-carbon technology. That is not scientifically true, by any objective measure. Much is said about nuclear power's hidden CO2 emissions, caused by uranium mining, transportation and so on. However, the Organisation for Economic Co-operation and Development has stated that nuclear power's operating lifetime emissions are not only lower than those of coal and gas, but lower than those of wind turbines.
Thirdly, it is claimed that nuclear power is expensive. Again, we know that that is not true and that the economics of nuclear continue to improve, as oil and gas prices continue to rise. Currently, nuclear generation is cheaper than gas electricity generation.
The fourth lie is that the decommissioning of new nuclear reactors would be expensive. However, it is neither fair nor accurate to compare the decommissioning of new nuclear facilities to the current decommissioning of nuclear facilities. As Peter Luff said, the principal legacy cost comes from our military programme.
It is claimed that there is insufficient uranium in the world to satisfy global demand. This is not true. There is as much uranium in the world today as there is tin. Both the International Atomic Energy Agency and the OECD have estimated that there is 500 years' worth of supply. However, I concur with my hon. Friend John Robertson, the chair of the all-party group on nuclear energy, that reprocessing is key. We must reprocess, and I commend the Government for keeping the reprocessing option open.
It is claimed that building reactors takes too long to have any effect upon climate change. That is one of the myths currently circulating that needs to be nailed right here and now. The people responsible for building and designing reactors claim that from first pour to criticality—that is, to reactors coming online—can take three years. People will say, "We've heard these promises from the nuclear industry before," and they would be right to say that. However, Atomic Energy of Canada Ltd has built six reactors since 1991. The longest took AECL six and a half years, while the quickest took four years, so I am optimistic about that.
It is claimed that new nuclear reactors will lead to weapons proliferation, but in fact the opposite is true in the western world. New nuclear reactors can solve our proliferation problems. By way of an example, tens of thousands of tonnes of uranium oxide are stored at the Sellafield site in my constituency, with something in the region of 100 tonnes of plutonium oxide. Anyone who has read the recent Royal Society report will have noted the recommendation that that should be turned into fuel, which can then be burnt in nuclear reactors to produce CO2-free electricity. That is an eminently sensible solution.
It is claimed that wind and wave power technologies are more sustainable. They clearly are not.
Briefly, before my time runs out, there are two more arguments, but when I hear these hoary old chestnuts, I know that the game is well and truly up for the anti-nuclear lobby. One is that nuclear reactors are a terrorist target. However, the fact is that the nuclear industry has existed since the end of the second world war, through a series of international crises. Nuclear facilities are among the safest facilities known to mankind.
I will not give way, as I have only 15 seconds left.
The final issue is to do with public health. I would act if there were significant public health issues to do with the nuclear industry, but after decades of independent, exhaustive study there is not a shred of evidence to suggest that that is the case.
I wonder whether Mr. Reed thinks that nuclear reactors are more or less safe than skyscrapers, which did not represent a terrorist target until recently. However, that is an aside.
I said in my intervention on the Secretary of State that, 20 years ago, I was a member of the feasibility study for the Severn tidal power group. I retain my enthusiasm for tidal power and I hope that the Government will move quickly to put something together to harness the power of the tides in the Severn estuary.
I am afraid that this will inflame the considerable number of pro-nuclear colleagues present, but I was also leader of the Somerset county council that led the opposition in the 1980s to the pressurised water reactor of Hinkley C. By deploying arguments that were based not on the bad science of the time but on sound economics, by exposing the then bogus economics of the nuclear industry and by examining the issue of waste, we succeeded in having a moratorium placed on the building of new nuclear power stations for 20 years. I am proud of that, and I do not resile for one moment from the case that I made then and that is still relevant now.
We have to keep returning to the issue of waste. Until there is a satisfactory solution to the disposal of waste, I am afraid that there will be a serious question mark against nuclear power. I noted the convolutions of Alan Duncan, who dug not so much a hole for himself as a geological repository, in trying to avoid the question that the Secretary of State quite properly put to him. I know where the Secretary of State stands and where my hon. Friend Steve Webb stands. However, I have no idea where the hon. Member for Rutland and Melton stands, other than perhaps in a position from which he can give two opposing answers depending on whom he is speaking to—whether it be Zac Goldsmith or his hon. Friends in this place.
I do not want to pursue that issue, however, because I want to put one narrow point to the Minister for Energy—I am glad that he is in the Chamber, because I want him to take notes and listen carefully. My point is about micro-hydro power, about which he knows I am enthusiastic. Micro-hydro power is a growth sector in my constituency, where we are bringing old mill buildings and water wheels back into use with new hydro-turbine capacity. That will be enormously valuable in environmental and social terms. It will make a genuine contribution. We now have several well established groups doing this.
A particular issue relating to the Bill and to the renewables obligation consultation is the way in which micro-hydro is treated in terms of the allocation of double ROCs—renewable obligation certificates. Double ROCs are going to be made available for water turbines and other renewables with a declared net capacity of 50 kW or less. There is a gap between that declared capacity and the capacity of 100 kW or more at which commercial capacity begins. That will create a perverse disincentive for people who are installing such turbines.
I want to explain this to the Minister. My constituent Anthony Battersby has recently installed water turbines in his mill at Tellisford. It is a very successful installation. Its declared net capacity is 55 kW, which is very inconvenient in the context of the Government's proposals. It will generate about 280,000 kWh per year, for which the income, including its single ROC, would be about £26,600. A similar site with a declared net capacity of 50 kW—5 kW less—would generate about 231,000 kWh per year, for which it would have a double ROC and earnings of about £33,500. It does not take a mathematical genius to work out that the station generating 17 per cent. less electricity will receive 26 per cent. more money. That does not seem to be a sensible incentive.
The problem is that that arrangement will discourage new entrants into this area of microgeneration. I know at least six more mill owners in the Frome area who would like to install this kind of micro-hydro arrangement. The maximum capacity would be about 55 to 60 kW, producing a total of about 1,500 mWh per year. However, under the new rules, it is unlikely that any of them will install to the full capacity, which would result in a loss of 400 mWh a year of renewable capacity. That does not seem to be good or sensible policy.
I think that Ofgem has a policy that all types of microgeneration should have the same definition in relation to capacity. Perhaps the Minister can enlighten me on that. That does not seem to make sense when comparing photovoltaics, which have a maximum capacity, with water turbines, which have a slightly higher capacity. I understand that micro-hydro in Northern Ireland and Scotland is defined as having a capacity of up to 1.25 mW, which is different from other microgeneration forms in those areas. That suggests that there is a discrepancy between Northern Ireland and Scotland, on the one hand, and England and Wales on the other. I think that England and Wales have got it wrong. Will the Minister look carefully at this, to see whether it could be changed before the Bill comes into force, so as not to provide a perverse disincentive to a valuable part of the microgeneration spectrum?
I want to make two main points in the brief time that I have tonight. One is on energy policy, and I want to relate that to the present situation. In doing so, I want to express my concerns about the nuclear option. I believe that there is an alternative, to which I shall refer.
Mr. Jack said that he had looked at various documents and could not find where the Government's energy policy had come from. Had he looked at the energy White Papers and the energy review, he would have seen quite clearly where it had come from. The Government's energy policy is based on four planks. The first is to reduce carbon dioxide emissions and to help to reverse climate change. The second is energy security. The third, as my hon. Friend Paddy Tipping said, is to ensure that heating and lighting can be provided to residents at reasonable prices. The fourth is to ensure that we can provide British industry with energy at prices that will enable it to retain its competitiveness. That is a commendable energy policy.
The Bill will provide an energy mix that could serve those four goals. However, the nuclear option in that policy gives me cause for concern. There is an alternative, but I realise that we are looking at energy in a market context. The markets suggest that the energy gap is going to occur well before any nuclear capacity can be provided. It will occur between 2012 and 2015, because of the simultaneous run-down of nuclear and coal-fired power stations. Unless the Minister is prepared to consider capping the gas market, we are likely to see another dash for gas, as a result of the gas coming in from Norway at realistic prices. At present, 40 per cent. of our electricity is provided by gas, but we are likely to finish up with that figure being around 60 per cent. by 2020 unless he is prepared to act.
I reminded the Conservatives earlier of two decisions that they made in the 1990s that had had an impact on the present situation. A third decision that they made, in 1989, was to implement the decision to lift the restriction on the burning of gas in power stations. In 1990, there was not one gas-fired power station in the UK. By 1999, 40 per cent. of our electricity was provided by such stations, using up enormous quantities of premium fuel. Consequently, we are now facing a crisis, and the Government have decided, in their energy policy, to tackle it by using the nuclear option.
I believe that the nuclear option is wrong. It gives me great cause for concern. One of my concerns relates to carbon dioxide. We have heard a great deal about how nuclear power would reduce CO2 emissions, but the Government's own figures suggest that 10 nuclear stations would reduce those emissions by only about 4 per cent. I see the Minister looking at me as though those figures are new to him, but they come, as he knows, from the Sustainable Development Commission. We know that those 10 stations will not be producing electricity together until 2025, which will be well after the energy gap has occurred. We therefore need to act quickly, and to consider the alternatives.
I suggest to the Minister that, to reduce CO2, we could take action to ensure that more freight travelled by rail. Every tonne of freight moved by road generates 12 times as much CO2 as a tonne moved by rail. Transferring more freight to rail would result in a greater reduction in CO2 emissions than the establishment of a fleet of nuclear power stations.
My second concern about nuclear power stations is the enormous cost. There is a legacy from the previous generation of nuclear stations of £72 billion. To that we can add the £5.2 billion spent on bailing out British Energy. In addition, the likely cost of the depository is more than £20 billion, so we shall be starting with a £100 billion bill. The Minister must also be aware that building nuclear power stations uses an enormous amount of energy. He will also know that not one reactor has been built on time—the average delay is six years—or within budget. Finland's new reactor is now nearly two years behind schedule, and is already £1 billion over budget. It has squeezed out the renewables.
The options that I think we should be considering for base load are carbon capture and storage, along with combined cycle technologies. They are much more flexible than nuclear for providing base load and, at the same time, they would move us away from a centralised energy system. We have heard much about what will be required, including flexibility, for the future and we will need to ensure that renewables of every type are available.
Let me quickly say to the Minister for Energy that we need to look further into location. In my constituency, a number of windmills that are to stand 100 m high are being considered. On account of the visual pollution that comes with them, they are a cause of some concern to the local community. That is why location needs to be considered carefully. At the same time, we need to find other technologies that can help to deal with the four planks of our energy policy. It is right to concentrate on carbon capture and storage for base load, using clean coal technologies. He should perhaps also consider investing more in exploring underground gasification, which could provide us with enough methane gas to take us well into the future. There are alternatives, which is why, even at this 11th hour, I ask the Minister to pay more attention to them.
It is a great pleasure to follow Mr. Clapham. Speaking as a former colleague on the Trade and Industry Select Committee, I know that he is always worth listening to on account of his great knowledge of the subject. I hope that the Minister will take his views into account. I have since been thrown off that Select Committee in the Government's downsizing of scrutiny of their industrial policy.
I notice that it is getting rather late. If I were at home at this time, I would usually be telling my seven-year-old son, Tom, a story—so let me tell the House a story about the confused MP for Wellingborough. A few months ago, I needed to replace my car, so I paid Saab Stratstone in Northampton a visit. People there observed that the leader of the Conservative party seemed keen on solving global warming and was very concerned about the environment, so they asked me whether the subject of the environment was now at the top of the agenda. I said, "Yes, my right hon. Friend has indeed made that issue a priority." Actually, what really happened is I went into the showroom and they said, "Isn't Dave, your leader, keen on the environment?"—but that roughly translates to what I previously said. They then asked me whether I would like to buy a biofuel car, because it reduced energy demands and the CO2 emissions were much less. I have to declare an interest in that I did buy that car. I thought how good it was that at the local Morrison's store, Wellingborough had one of only 19 E85 biofuel pumps in the country. I could happily fill up with biofuel and save the world. I continue to drive along in that car—doing very well, as it seems to be the way forward.
Unfortunately, however, the Whips intervened and put me on a Delegated Legislation Committees to consider the renewable transport obligation. I thought, "This is good; I can talk about my new biofuel car", but as I listened to that debate, I suddenly realised that I was responsible for destroying the rain forest and putting up the price of food. Instead of saving the world, I was destroying the world! I was confused, but it still seemed the right thing to do.
Then, lo and behold, as I drove around Wellingborough, a huge protest movement broke out. "What's the problem?" I asked. "There is a plan to build a biofuel site in Rushden and everybody is up in arms about this disgraceful site", I was told. People were right, as it was clearly in the wrong place. The object of my story is to show that the issue is not straightforward. I acknowledge that I should perhaps have done a little more investigation of the issues, as it is clear that there are both pros and cons.
The problem with biofuels at the moment is sustainability. We must use second-generation biofuels from local sites where no disruption is caused. For example, a biofuel site off a main road, which is using waste material that would not be used for anything else, would be a good thing. Equally, however, there are some huge problems with the current system of biofuels.
Is the hon. Gentleman aware that a senior scientist at the United Nations recently described the setting aside of arable land to grow crops for biofuel use as "a crime against humanity"?
I am grateful for that intervention, which again shows that sustainability is the crux of the matter.
Another problem, if we are serious about encouraging people to drive biofuel cars, is doing something about pricing. When I investigated buying my vehicle, I looked into the fuel performance charts, which said that a petrol car would get 35.8 miles to the gallon for combined urban and motorway travel. When I looked into the biofuel car performance, the same figure of 35.8 miles appeared, so I thought that there was no difference between the two. However, when one drives along the road using biofuel, it is easy to see the needle drop—the car does only about 19 miles to the gallon. I thus asked Saab why the literature highlighted the same performance for biofuel as for petrol. I should have guessed who the culprit was—the European Union. Apparently, there is no standard by which to distinguish between biofuel and petrol. The petrol figures had to be entered because, as we all know, we can drive our biofuel cars with petrol in them.
Another interesting aspect is the generational dimension. When I stop my car to put petrol in it, my seven-year-old son will say, "Daddy, why aren't you buying biofuel?" I have to explain that not every station has it, but it is interesting to see how the message that we must do something to save the planet is getting through to the younger generation. I seriously congratulate my party leader on changing the Conservative party in that respect. We heard the hon. Member for Barnsley, West and Penistone mention all the terrible things that the Conservatives have done that did nothing to save the planet, yet we are now leading the debate on that front— [Interruption.] I am pointing out the reasons why we should not have biofuels, highlighting the issue of sustainability, about which Mr. Reed made a good point.
British Sugar at Wissington provides an interesting example. Its production plant uses waste sugar beet product and guarantees a reduction of at least 60 per cent. in CO2 emissions in comparison with equivalent fossil fuel production. The plant creates biofuel from sugar beet, which is grown locally in the UK and is surplus to the needs of the food market. It can be done, so we should look in that direction for more sustainable biofuel plants in this country.
I would like to put a few points to the Minister for Energy; I hope he will have the opportunity to deal with some of them in his concluding speech. If we are serious about biofuel pricing, we must reduce the duty so that it costs the same as petrol. Otherwise, we are not really serious about it. I do not know how many cars in the Government fleet are either biofuel or flex fuel, but if we want to reduce CO2 emissions, we should surely move in that direction.
The congestion charge is also relevant. When I rang to find out whether my car was exempt from it, I found that there was no class for biofuel at all. We must look into these issues more carefully. It cannot be right that there are only 19 E85 pumps in the whole country. If the Government are serious about improving the position, they should tell petrol suppliers that half the stations in the country must provide flex fuel. I believe that the Government are trying to tackle the issues constructively, but they have not yet done enough work on biofuels. I would like to see them make more progress on that front.
I want to make some points about fuel poverty, which will be similar to those made by my hon. Friend Paddy Tipping and Anne Main. The background to our debate is the fuel poverty suffered by one in six families in the country: 4.4 million families, 3 million in England alone and many of those in my Halifax constituency. According to the consumer group Energywatch, fuel poverty is when people spend more than a tenth of their income on utility bills. Meanwhile, British Gas has announced a 15 per cent. increase in its bills, and others suppliers—EDF and npower—have raised their prices by 27 per cent. That is unacceptable, but the unaccountable nature of those bodies means that they can get away with increases that hit the sick, the elderly and the poor most. A constituent wrote to me last week to ask
"When was the last time my salary increased by 27 per cent.?"
I fear that these price increases will send many of my constituents into fuel poverty. We need action to bring the utilities into line. We cannot sustain circumstances in which two thirds of British households are paying more, and many vulnerable groups are afraid to heat their homes. I must remind Ministers that there is a real danger that we will not be in a position to eradicate fuel poverty by 2010, which—as was pointed out by my hon. Friend the Member for Sherwood—is a legal obligation.
May I make a plea? First, we should adequately fund the Warm Front programme which provides grants for poor households to insulate their homes. Secondly, we should ensure that utilities have an obligation to make their customers aware of social tariffs. Thirdly, we need a wide-ranging Government inquiry into the home energy market.
What upsets me most about the Bill is that, unlike the 2003 energy White Paper, it makes no reference to how we can begin to end fuel poverty. That is a lost opportunity, and one of which I and other Labour Members will doubtless be reminded when we are campaigning on the doorstep. It seems to me that energy companies are placing more importance on maximising their profits than on a willingness to offer subsidised tariffs to poorer households to help with their bills. That issue affects Halifax today. We need action now to ensure that another generation of people are not sucked into fuel poverty. I call on the Government to make social tariffs compulsory if the reluctance to agree them voluntarily continues. I find it grotesque that the companies to which I have referred made £2 billion in six months last year.
Did my hon. Friend see a report in The Sunday Times a week ago last Sunday, which alleged that six energy companies were meeting to set prices to ensure that they stay high?
Did my hon. Friend also see the Energywatch report on social tariffs? It claimed that, at best, British Gas contributes 0.18 per cent. of its revenue to such tariffs, while at the other end of the spectrum the poorest performer contributes 0.003 per cent. of its turnover. In the light of those huge profits, is that not obscene?
It is absolutely obscene, and our Government must do something about it. What message does it send to the families in Halifax and other constituencies who are spending 15 per cent. of their incomes on energy? What message does it send to the parents who have said that their children must do without basic items such as food, clothes and a warm home in winter? I must say, with regret, that this energy strategy appears to be paying lip service to the poor, the vulnerable and the environment.
My party in government has done many good things to help families out of fuel poverty. During the last 10 years, many of my constituents have benefited from its policies. However, the message that I am now receiving loud and clear from my postbag is that more needs to be done. At a time when a Labour Government's intervention in failing markets does not seem to be out of fashion, I call for a radical look at how energy markets operate before we condemn thousands more to fuel poverty.
Winter fuel payments, tax credits and many other policies of this Labour Government have helped to lift people out of poverty in the last 10 years. It would be very regrettable if we sat back and allowed the greed of private utilities that put profit before people to condemn a generation to the trauma of fuel poverty.
I intend to focus on some of the provisions that are actually in the Bill, particularly those dealing with gas import and storage infrastructure. If I have time, I shall say a little about the reforms of the renewables obligation.
In our energy debates in the House, much of the background noise—which has been heard at several points this afternoon—relates to the theme of energy security and, specifically, reliance on energy imports. The phrase "over-reliance on imports from unstable regions", or variations on it, is heard time and again in the House when we discuss energy policy. We also see it in early-day motions in which various Members promote their pet policies or projects. It is wheeled out to justify everything from reinvestment in deep coal mining in the United Kingdom to renewables projects to the requirement for a new generation of nuclear power plants. I do not dispute that there may be valid reasons in favour of all those, but so often when the phrase is used the implication is that energy independence equates to energy security. Obviously indigenous sources of fuel and energy have a role to play in a balanced and secure energy policy, but it is simplistic to say that complete reliance on those sources will guarantee energy security.
Partly as a result of short memories and partly because of our 30 years' experience of the abundant blessings of North sea oil and gas, we in Britain have a peculiar and somewhat irrational fear of energy imports. What is happening in the United Kingdom now and will continue to develop in the next 10 or 20 years is, in fact, no different from what many successful industrialised countries have faced for years: reliance on countries overseas, outside their borders, for a large proportion of their primary energy requirements.
What is happening to oil and gas as a result of the decline in production from the UK continental shelf is similar in some respects to what has happened to coal. Although last year coal became a more significant producer of electricity even than gas, 75 per cent. of our coal supplies are imported from countries all over the world at economic prices. It is, I think, difficult to argue seriously that there has been a diminution in the security of coal supply in the United Kingdom because we have become a heavy importer of coal. I believe that something similar could happen in the case of natural gas, as long as the necessary gas import and storage infrastructure can be constructed and brought on stream in a timely way. The Bill seeks to answer part of the question involved in that.
Whatever criticisms may be made about delays in energy policy over the past 10 years and an overload of consultation, it should be recognised that thanks to a well-functioning liberalised gas market and the exemption on third-party access to gas infrastructure, the private sector has been able to present new project proposals that will create flexibility and diversity in Britain's energy system. That is what I believe energy security is all about. I hope that the Bill will encourage the industry, and provide a framework within which it can produce even more project proposals that will create further options and flexibility in the system, particularly in the area of liquefied natural gas.
The technology for LNG is not new, but its recent emergence as one of the energy solutions for the early 21st century represents an exciting development. LNG provides a means of releasing stranded gas supplies and transporting them economically to world markets where those supplies are needed. Many Governments around the world are currently either investing in LNG infrastructure or studying proposals to bring that on stream in their countries.
Being an island nation, the UK is particularly well placed to offer a wide variety of suitable locations for both offshore and onshore LNG unloading facilities. Already in the UK in recent years, there has been huge investment in LNG facilities on the western and eastern seaboards. In Milford Haven in my constituency, two major LNG projects are under development: the Dragon project which is a tie-up between Petronas and British Gas, and the large South Hook LNG project involving ExxonMobil and Qatargas. There are other projects as well, such as those in the Isle of Grain and Teesside. These projects often utilise redundant refineries and other facilities.
One of the Bill's aims is to create the right regulatory conditions to bring forward even more of this type of infrastructure, particularly offshore LNG infrastructure. I have heard people question whether there is a need for even more LNG infrastructure and whether we are entering a scenario of over-supply, especially given the investment that there has been in pipeline capacity to serve the UK. However, I believe that a more relevant question than whether there is over-supply is what is going on in the marketplace: is there an appetite in the marketplace for more investment in LNG capacity, and are artificial barriers at work creating disincentives that prevent that investment? From studying the responses to the consultation of the Secretary of State and Minister on this issue, it is clear that the mood in the industry is very much that a disincentive is at play preventing the right level of investment in new infrastructure. The Bill tries to go some way towards rectifying that.
Although I am generally relaxed about Britain becoming a major importer of gas, as long as certain conditions are fulfilled, one area that does concern me is the need for much greater provision of gas storage facilities to provide a buffer against potential supply interruptions and to smooth demand peaks. In previous parliamentary questions I have tabled and in points I have raised in previous debates, I have tried to establish whether the Minister and his Department believe that there is an appropriate level of gas storage infrastructure that we need to reach, given the projected level of gas import reliance. He has the figures to hand, but I have still not been able to tease out of him whether he thinks there is such a level. I think everyone would recognise that there is nowhere near enough gas storage infrastructure in the UK. There is an appetite in the industry to create new storage infrastructure, but there are various barriers—the Bill seeks to address them. There is an important wider point to do with the regime that will govern gas storage in the UK in future. Might there be an EU-wide stocking obligation? Might something similar to the crude oil stocking obligation be at work? I would certainly be interested to learn of the Minister's thoughts on the correct level of storage infrastructure.
I have run out of time, Mr. Deputy Speaker.
Order. I hope I shall be forgiven, particularly by the hon. Gentleman, for what I am about to do, but under the powers that I have I intend to increase the time limit for speeches by one minute to nine minutes. A number of Members have withdrawn so the timings are slightly awry, and if I take this step it will mean that there is a better balance between the Front and Back Benches. I hope that I will not incur the wrath of those who have spoken if I do this in favour of those who have been patient enough to wait until towards the end of the debate.
Thank you, Mr. Deputy Speaker. I feel a little relieved about that, as I have intervened quite a lot today, so I have added to the time of some Members who have previously spoken.
I would like the record to show that the Labour Members present for this debate outnumber the combined Opposition Members by more than two to one, which attests to the greater interest that Labour Members have in the subject.
The Bill that we have been presented with today is, of course, brilliant. It hits all the right buttons in every single regard.
Order. May I just say that the move I have made will be considerably undermined if every Member takes two interventions from now on? I hope that that will be borne in mind.
I will certainly obey that instruction, Mr. Deputy Speaker.
I disagree with what the hon. Gentleman says: the Opposition Members are just as divided as us. The fact that we are more interested and more persistent is what drives our numbers up.
As I have said, the Bill we have been presented with today is a brilliant masterstroke. It covers all the points and presses all the buttons. I am of course referring to my Climate Change (Sectoral Targets) Bill, which I presented earlier this afternoon. If anyone would like to know more about it, then please get in touch.
I would like to tell the son of Mr. Bone a story, although perhaps later in his life. It is the rather more frightening tale about Dr. Jekyll and Mr. Hyde, which somewhat personifies the debate this afternoon. On the one hand there is a Dr. Jekyll, a kindly doctor who brings his renewable balm to his patients and cures them of their diseases. I was about to say that he did not need to use bandages as he could just use banding, but if I were to try to crack such a joke obviously it would fall a bit flat. On the other hand, there is Mr. Hyde, who is a boastful, swaggering person, and who personifies the nuclear lobby. He makes a great number of accusations against his detractors. In this Chamber, he has, so to speak, described them as sneerers and liars, and as unbalanced—we have heard it said this afternoon that to criticise nuclear power is to be unbalanced. It is unfortunate that that bad spirit has entered into the debate, as we should be looking at the facts of the matter. We should be considering it from all points of view, especially the climate change point of view, which I think I can speak for and on which we need urgent remedies.
Would nuclear crowd out renewables? To answer that, we must look at the record. It is difficult to get precise figures, but the estimable German analyst and leading MP in the Bundestag, Hermann Scheer, has recently written a book on energy autonomy and he goes into this in great detail. He has shown that the OECD countries' spend on research and development on nuclear between 1974 and 1992 was $168 billion. In the same period, the spend on research and development on renewables was £22 billion. He reckons that the total spend on nuclear research and development globally to the present day is about $1 trillion, and that over the last 30 years—which I know is not quite the same time scale—the total spend on renewables is $40 billion.
It seems evident from that that the nuclear industry has claimed a great deal of expenditure, and yet it has not delivered its promise. Mr. Scheer also goes on to quote International Atomic Energy Agency figures. In 1974, the IAEA predicted that by 2000 4.45 million MW of nuclear would have been installed worldwide. By 1976, the same agency, which exists to promote nuclear energy, dropped that prediction to 2.3 million MW. By 1978, the figure was down to 800,000 MW. Today, it reports that total nuclear capacity is a meagre 300,000 MW. For all the expenditure, which has increased and increased and increased, we have seen less and less and less for our money. Indeed, one is reminded of the increasing costs and the unpredictability of the whole situation.
I will, perhaps, give way for one intervention, to any Member who wishes to object to what I am saying or question my figures. Two years ago, we were told that the cost of dealing with waste would be £56 billion. Now the figure given is £72 billion. I bet anybody who is pro-nuclear one day's pay that they cannot tell me what the figure will be in two years' time. Will it still be £72 billion? I suspect not.
As a good Methodist, I shall refuse the opportunity to bet. My hon. Friend mentioned the economic estimates done by a German economist on the amount of money spent on nuclear technology and nuclear research and development. Are we talking principally about the civil nuclear sector? Is the military nuclear sector also included? He also mentioned the IAEA. It does not exist to promote the nuclear industry; it exists to give it some kind of international regulatory framework.
I understand that Herr Scheer was referring to the civil sector. I accept my hon. Friend's point that there has been a lot of blurring of the lines between the civil and military sectors. That could not possibly happen again, but let us just watch what happens in Iran and learn a few lessons from it.
I have a great deal of time for Herr Scheer, who has helped to pioneer the German approach. Let us consider time scales. I utterly reject the claim that those who are concerned with climate change are forgoing this golden opportunity. The intergovernmental panel on climate change says that by 2015 carbon emissions must have peaked and must then be reduced. There is not a great deal that any new technology could do to meet that demand, but Germany's renewables Act, which was introduced a decade ago, propelled, to a great extent, by Hermann Scheer, has delivered so much in 10 years—one just needs to examine the figures to see that. If we had approached even 5 or 10 per cent. of the German effort in 10 years, we would be taking a rather more sanguine view about that 2015 target. Thus, I reject the accusations being made in this place that anyone who speaks against nuclear power is somehow complicit in the continuing tragedy of climate change. It must also be said—some hon. Members have mentioned this—that in that period of time the Germans have created 300,000 jobs and an export industry in renewable technologies worth €2 billion a year. They have also saved €5 billion on avoided fossil fuel imports, so there has been a net benefit to the German economy of €7 billion.
My hon. Friend Mr. Reed mentioned the role of the IAEA. At the Bali climate change conference last month, I was compelled to attend an IAEA seminar, not least because its title was "Nuclear power and sustainable development". I wondered how it would be able to explain that oxymoron. It was hosted by that august organisation, which at the time said that it was its job to arrange such things; it not only regulates but promotes. A map of Africa, the poorest continent on the planet, was displayed, and we were told that those countries were apparently queuing up to purchase nuclear power. People were in there trying to sell the damn thing.
A Dr. Ferenc Toth—not toff—from the IAEA gave us a rundown of the 11 reasons why it thought that nuclear power had suffered so much in the past 20 years. In the order that he gave them, the reasons were that nuclear power had been hit by the following: economic restructuring; increased energy-efficiency measures after the oil shocks; slower demand; excess capacity; liberalisation and privatisation; the oil price collapse—if the price goes up, nuclear collapses, but if the price goes down, it also collapses; the dash for gas; the Three Mile Island disaster; and high interest rates. Tenth on the list was the little word "Chernobyl". Finally, he said that nuclear had been hit by the break-up of the Soviet Union.
It seems that any kind of economic uncertainty or economic condition could lead to the downfall of nuclear power. I ask the proselytisers for nuclear power to explain how they anticipate a stable economic period when these nuclear power stations can be delivered, given the current economic circumstances. I cannot foresee such a period myself.
As has been mentioned, the UK has a low ranking—in the EU only Luxembourg and Malta are behind us—on the amount of renewable energy that it contributes to its energy requirements. Our figure is 1.75 per cent. of our overall contribution, which is rather less than the EU average of 7 per cent. The German figure is far higher. We must be careful not to crowd out renewables, as the figures demonstrate has happened in the past. As I have said before, the timing for renewables is still within the window of opportunity to tackle climate change.
Speaking from the packed Liberal Democrat Benches, may I say that the Government have failed to grasp the scale and pace of change in energy policy necessary to protect us against environmental disaster? The first and easiest route to begin closing the energy gap is, of course, energy efficiency. Various hon. Members have pointed out that the Bill is a missed opportunity to move efficiency forward radically at household level. Mr. Jack, in particular, pointed out the very high potential for smart metering to reduce carbon emissions.
I agree with Centrica, which says that it is
"disappointed that the Energy Bill contains no provisions to mandate the roll out of smart meters...Without a mandate from Government it is highly unlikely that energy suppliers would be able to facilitate a roll out to 45 million UK households in the timescale envisaged. A mandate would give the industry the 'green light' it needs to initiate a coordinated and managed roll out programme."
Just as with BP's carbon capture project, the private sector was ahead of the game and had put the work in, only to be tripped up by the Government.
I am afraid to say that the same is true of renewables. Every time I meet business people who are involved in the renewable energy sector, I see people straining to unleash the potential of wind power, geothermal power, solar-thermal power, photovoltaics, combined heat and power, microgeneration of various kinds, sustainable biomass, wave power and tidal power of various kinds, not only in the Severn estuary but around the UK.
Alan Duncan, the Conservative spokesman, seemed to denigrate renewables, implying that they would make an inconsistent contribution to base load electricity supply. I do not think he realises that promoted on a large scale, with diverse technologies in diverse locations and on diverse scales, renewable energies become some of the most secure and reliable energy sources of all. As my hon. Friend Steve Webb pointed out, tides are, after all, pretty predictable. Also, it is a much tougher job to bomb 100 windmills than one nuclear power station.
The Government are determined to include nuclear power in their plans to plug the energy gap, instead of adopting the more sensible combination of energy efficiency, renewables, and carbon capture and storage. Various Labour Members, including the hon. Members for South Thanet (Dr. Ladyman) and for Copeland (Mr. Reed), thought that the only consideration was that nuclear was a lower-carbon technology than current fossil fuel energy generation. Although true, that is not the only consideration.
In an intervention on the hon. Member for South Thanet, I cited one of the 40 leading energy and climate scientists who warned the previous Prime Minister against nuclear power in 2006. Those scientists also said that nuclear waste would have to be isolated from the environment
"for timescales which dwarf that of human civilisation."
We have no concept of what generations far into the future will make of the poisonous legacy that we are leaving them through nuclear power, and we still have no plan for what to do with the previous generation of radioactive waste.
The Conservative spokesman seemed to think that this was essentially an economic problem, but I do not think that it is. I think that it is an ethical problem. Because it leaves these problems, about which we cannot know anything, for future generations, nuclear newbuild is not only unsustainable, unaffordable and unsafe, but will be positively immoral.
The hon. Gentleman mentioned that both my hon. Friend Dr. Ladyman and I had only one consideration with regard to new nuclear construction—climate change through carbon emissions. That is not true, because we also mentioned security of supply, and the trifling matter of 100,000 British jobs.
On the subject of British jobs, if we became a world centre for renewable energy—for example, in carbon capture and storage, for which we are uniquely positioned to have the first-mover advantage—there would be enormous potential to replace any jobs that might be lost in the nuclear sector with jobs in clean technologies.
Better by far than nuclear is carbon capture and storage. It is an important transitional technology. Stern suggested that it could constitute 28 per cent. of carbon mitigation worldwide by 2050. It could inadvertently offer encouragement to the gas and coal generation industries that they could stave off the replacement of fossil fuel technologies with renewables, so it is vital that in parallel we offer sufficient incentive to use renewables. Carbon capture and storage still creates a waste product that remains a threat to our planet, even if it is captured and stored. Nevertheless, carbon capture and storage is enormously preferable to unclean fossil fuel generation and to nuclear power. It is disappointing, therefore, that the Government's approach to carbon capture and storage has so far been pretty clumsy.
I was not convinced by the Secretary of State's reply to my earlier intervention on the BP project, and on why such technologies were excluded from the competition announced in the 2007 Budget, which was restricted to post-combustion coal-fired technology. That pulled the rug from under BP's Peterhead project, which was about extracting CO2 from natural gas and pumping it into the Miller oilfield, and from about half the other carbon capture and storage projects that were then under development. The BP project could have been online by 2010; that was a major own goal by the Government.
WWF has pointed out more inconsistency on carbon capture and storage in the Bill. Why is the Department for Business, Enterprise and Regulatory Reform responsible for the carbon stored? We are dealing with a dangerous waste product that should logically be the responsibility of the Department for Environment, Food and Rural Affairs, not least because DEFRA proposed exactly that for its marine management organisation in the White Paper on the marine Bill published last March. That highlights the urgency of getting on with providing adequate protection for our marine environment.
The best option of all is renewables. We have the powerful example of German support for renewables by guaranteeing a price for energy generated from them—the so-called feed-in tariffs. In his opening remarks, the Secretary of State said that whatever the merits of feed-in tariffs, we needed to consider what would work best in the UK. I waited with anticipation for an explanation of why wind and heat in the UK were somehow different from wind and heat in Germany, but instead we simply heard praise for the clarity and consistency of the German Government. I agree, but no substantial arguments were produced against feed-in tariffs. I look forward to hearing some from the Minister for Energy when he winds up.
The truth is that the reason why Germany reached the target of generating 10 per cent. of electricity from renewable energy before we reached 5 per cent., although Germany has fewer natural resources, is that the Germans adopted feed-in tariffs while we stuck doggedly to a renewables obligation regime that has not really come up with the goods, especially in bringing forward new renewable technologies. The percentage of the renewables obligation met by buy-outs has gradually increased, suggesting that the obligation has increased faster than renewable capacity, and has not really worked. Meanwhile, we have a catastrophic hotch-potch of grants programmes.
We are probably all aware of the low-carbon buildings programme, which was cut back for households to the point where it ran out within hours every month. It has now been suspended, and has not been replaced. Hon. Members may be less aware of the community energy programme, which provided a few tens of millions of pounds, supposedly to support small innovative projects with local government. That was a worthy initiative, but unfortunately it was wound up in March last year with no prospective replacement.
Support for renewable energy at local and community level has been a real mixed bag. The Bill makes some important provisions for future energy supply and energy security. It also represents a missed opportunity, increased nuclear liabilities and botched plans for carbon capture and storage, and it has failed to promote renewable energy adequately at national, household or community level.
As other hon. Members have said, the debate has been well attended—on this side, at least. The important national topic before us today has been well debated, too. I want to congratulate my right hon. Friend the Secretary of State on seizing the issue and making the decision on nuclear power that we must shortly decide on together. It cannot be simply left to wither on the vine, and a decision has to be reached. It was encouraging to hear the almost acceptance of the need for nuclear power, with some caveat that I could not quite follow, that came from the Tory Front-Bench spokesman earlier.
I see that that spokesman, Alan Duncan, is in his place now. I could not quite grasp the point that he was trying to make about the storage of nuclear waste. Was his point about the cost, or do we need to make a decision on where it will be located—and start to drill the holes to put it in—before he will commit his party to support the Government's decision? The Government have decided, at least in principle, to embark—if the private sector can respond to the market—on a new generation of nuclear power stations. That is the bottom line, and the most important explicit decision in the Bill.
I am happy to assure the hon. Gentleman that we do not intend to vote against the Bill. We are being responsible by saying that there remains an open-ended part of the calculation about investment in new nuclear power that needs to be clear. Clarity and honesty are essential if a proper decision is to be made. What decision does the hon. Gentleman think that the Government will take? The Government's view is that new nuclear development is an option that potential investors can take rather than a decision for the Government.
The Government are not going to set out and build the reactors, as Governments did in the past with Magnox. All they can do—as they have rightly sought to do—is to create an environment in which they will positively back proposals for nuclear power if they can be carried out within the tight constraints of financial self-stability, or, to put it simply, without subsidy.
I think that the hon. Member for Rutland and Melton is trying to say that sooner rather than later we will need a decision on where such developments will be located and what the costs will be. Indeed, someone asked earlier what proportion of the total costs of any given site will be ascribed to the first company that builds a nuclear power plant. I am pleased to hear that the hon. Gentleman will not vote against the Government on those grounds this evening. I do not think that it is reasonable to ask the Government to answer those questions right now. They have answered the big question by saying that they will co-operate with and make possible the building of a new series of nuclear plants if that can be accomplished within the tight financial constraints that have been set out. That seems to be the right decision, on balance.
Some of my hon. Friends who have spoken have a loathing for nuclear energy—I would not say that they all had a pathological hatred of it, which was the phrase used by my hon. Friend Mr. Reed—that can be shared by others. However, those of us who, on balance, favour nuclear energy—it is a balanced decision—say to them that it is not about charge and counter-charge, or suspicion about lies or misrepresentation.
The simple fact is that the hazards and uncertainties that surround renewable sources, such as tidal power, and carbon capture and storage, in this country—they are almost unique to this country—are at least as great in their uncertainty as nuclear power. Let us take the example of tidal power from the Severn estuary: no one knows yet what the cost or time scale for that might be. However, it is clear in all areas where we have embarked on positive Government action—in particular with wind farms, offshore and onshore energy—British industry, consumers and generators have not responded. Barely 2 per cent. of our energy needs are supplied by renewables, compared with the better progress in Germany.
In a moment. I am mystified as to why we have had so little take-up and so little success—as my hon. Friend Colin Challen must be, too—when the Government have had such good will towards renewable methods. Renewable energy has received a huge subsidy, which has made it far more expensive than gas-fired or coal-fired energy.
I must say that I do not loathe nuclear energy. I have visited nuclear power plants and seen them for myself. Germany has come up so many times because, as the Secretary of State said, the Germans took a single-minded approach to renewables at the same time as they decided against nuclear power. Does my hon. Friend think that any country could afford to do both at the same time?
The two most important requirements are security of supply, and for energy to be low in carbon emissions. Security of supply can be guaranteed only by diversity, which has two aspects—diversity of the type of energy source used, and of its point of supply. We must meet those criteria, which means that nuclear must inevitably have an important role in meeting our energy needs.
If security of supply is so overwhelmingly important, how can the hon. Gentleman prefer nuclear? It relies on imported fuel, whereas renewables are diverse and use power that comes literally out of the sky.
We have had success with onshore wind farms, but problems still exist with offshore facilities. All hon. Members have a direct interest in the jobs that the energy sector provides in our constituencies, but if it fell to me to secure energy supply over the next 10, 15 or 20 years, I do not think that I could say, with my hand on my heart, that our energy needs could be met by a diverse range of renewables. History shows that that is not possible, even with the streamlined planning powers that we now have. The biggest delays to the development of renewables have been caused by problems with the planning process, and the culture of our island—our traditions and pattern of resistance to investments of that sort—means that we will not be able to resolve those problems.
That is why I believe that it is inevitable and necessary that we embark on the proposed nuclear programme, and that we should continue to develop renewables at the same time. I urge those of my hon. Friends who oppose nuclear so strongly—I know that they believe that they have good reason—to accept that those of us who see nuclear as an inevitable and necessary component of our future power supply support the development of renewables just as strongly as they do.
We want the Government to do more in that regard, and that is why we welcome the full-scale pilot project for carbon capture and storage—although I am not sure that that project is not evidence that we are indulging in the sort of recidivist tendency for picking winners to which there seemed to be a pathological aversion when I was in the Treasury. I hope that we get it right, and that others will come forward to challenge the orthodoxy—or whatever we choose to call it—that the Government embark on when the results of the competition are announced.
However, the plant in question will not come on stream until 2014, so we are left with the questions posed by my hon. Friend Mr. Clapham: will there be an energy gap between 2010 and 2018—or 2020, or even 2015, come to that—and how big will that gap be? If a gap does open up, from where will our needs be met?
Coal-fired plants were supposed to be phased out back in 1997 and 1998, when I was at the Treasury. The energy policy at the time was that such plants should be got rid of, but last year they produced more energy than any other source of supply. The lifetime of coal-fired plants, and of existing nuclear plants, could no doubt be extended. Is that the Government's intention, or are we embarking on what amounts to another dash for gas? Is the purpose of the powers that the Government are taking greatly to increase our gas storage capability and the number of connections to the gas grid? It would be helpful if the Minister who responds to the debate could clarify that.
Finally, several Labour Members have mentioned fuel poverty and asked why the Government have not used the Bill to tackle it. I have some experience of imposing windfall taxes on the utilities, and I do not recommend that as a solution to the problems that we are experiencing just now. However, massive increases in profits for the energy supply companies are matched by massive increases in the cost of energy for our constituents, who are its consumers. The average price increase must be well into double figures in percentage terms, so if every percentage point rise leads to 40,000 more people suffering from fuel poverty, the effect of the latest rises means that another 600,000 people will be forced into that category.
In the debate, various figures from Friends of the Earth, Energywatch and other bodies have been quoted. Those organisations have done a good job, and my right hon. Friend the Secretary of State said that he was in discussions with the energy supply and utility companies in a bid to resolve the problem. I hope that he will remember that—faute de mieux, and if all else fails—the possibility of imposing a windfall tax does exist. If he bears that in mind in his negotiations, it might be a very useful tool for him.
It is a pleasure to follow my hon. Friend Mr. Robinson. It would appear that the arrogance of Mr. Hyde, who was mentioned earlier, is not reserved for those who are pro-nuclear. No one has a monopoly on correctness: we should listen to all the arguments, and all contributions should be heard with a degree of humility.
As my hon. Friend Mr. Reed said, I am the chairman of the all-party nuclear energy group. As such, I accept that I might be said to be pro-nuclear, but I also support renewables and clean coal technology. I am willing to try anything that will ensure that this country and the people who live in it have a sustainable energy supply. I am willing to listen to all the arguments, and to support options other than nuclear—as I have done on many occasions in the past. It is important to remember that the debate is not about nuclear versus renewables.
I was once asked why I had become so involved in nuclear energy, given that I come from Glasgow and that there is no nuclear power station on my doorstep. All that is true, and not even one constituent of mine is an employee of the nuclear industry, so how did I get involved? The fact is that my friend Bill Tynan, who used to be the MP for Hamilton, South, was short of numbers for his all-party group and asked me to go along to a meeting. That is what happens with most hon. Members who join all-party groups—we are doing someone a favour.
I went along to the meeting and, although I cannot now recall what was discussed, I had an open mind about nuclear. I have never been a unilateralist, and I was willing to listen to the arguments, even though I had reservations about nuclear energy. What I heard was not quite what I was expecting, so I went to other meetings and gathered more information. Eventually, I knew a bit about the nuclear industry and had some understanding of how it could be used for good.
At the time, my party was not exactly in favour of nuclear power. Indeed, I am quite taken by how many pro-nuclear contributions have been made from these Benches. That would not have happened when I came into the House seven years ago, and I am pleased that people are listening to the argument. Some of the contributions in support of the Government's proposals have been made by people who were anti-nuclear in the past. I hope that they have taken on board what has been said and that they have changed their minds for all the right reasons, and not just because many of their constituents are employed in the nuclear sector. I worry about the people employed by such power stations and the communities that those power stations help to provide for, and it is important that we do so.
I want to talk about security of supply. Mr. Crabb—unfortunately, he and all the other Conservative Members are no longer in the Chamber—said that there was an unjustifiable fear about the supply of gas to this country. He asked why we had to go down the road of nuclear when we could get gas in fairly cheaply. I remind the hon. Gentleman of what has happened in relation to oil and gas. Twenty years ago, would we have forecast the oil problems with Iran and Iraq? Would we have forecast the ongoing cuts to oil production in Nigeria? Would we have realised that the Russians would be suppliers of gas and that they would cut off the gas to their neighbour to make the point that they wanted money? Would we have realised that the pipeline coming from Russia through the Caucasus would be attacked by people who were rioting? We did not know those things, but we know them now. That was why the Government took on board the need to look at a balanced and sustainable energy policy for this country. One problem with renewables is that we cannot guarantee supply. I hope that that will be possible in the future, and I believe that we will meet our targets if we work hard at it. However, we must have a core supply, and I believe that nuclear must form part of that.
There must also be investment in clean coal technology. That could be a winner for this country, and we could make a lot of money by supplying such technology to other countries. We must be at the sharp end of that technology's research and development, and I hope that that will bring money back to this country.
Security of supply and service is the most important thing that the Government must address. No one would forgive any Government who allowed the lights to go out, whether that happened in 10 or 20 years' time. If we do not make the commitment now, we will not be able to get rid of our dependency on gas. Opposition Members were right to say that we will need to import more gas in the years to come. We have been building lots of storage tanks because, during the cold spell two years ago, we talked about the fact that there might be a shortage of energy due to a lack of gas supplies. Let us hope that the liquid gas storage points that we have been building will help us to overcome any problems that might be caused if we were to be held hostage to a foreign country.
There are a few questions that my hon. Friend the Minister for Energy should answer in his winding-up speech. Many hon. Members have mentioned smart meters. Why are we not doing something about them, and can we raise that important matter in Committee? Fuel poverty and social tariffs are important and have been mentioned by several hon. Members. However, I will not talk about them in any detail because I will just be raising the same old questions.
More than 100 tonnes of plutonium are stored at Sellafield, and I mentioned in a few interventions the MOX reprocessing system that could be built. I have seen what the MOX station in France can do, and I believe that we could go down the same road. That would certainly reduce the waste that we produce because we would be able to reuse fuel rods from nuclear power stations. My hon. Friend the Minister should be looking at the proposal much more carefully, and he should talk to my hon. Friend the Member for Copeland to find out what could be done in his constituency to get the reprocessing unit up and running. That could also give back money to the country in general.
Hon. Members have raised aspects of the Government's support and asked where the money will come from. They have asked whether companies want to invest in our nuclear industry. As chair of the all-party group on nuclear energy, I can tell the House that plenty of companies are lining up. They come to see me every other week and try to use me to get to Ministers so that they can attempt to get their power stations on line.
It is true that the Finnish power station is overrunning, but it is a new station and one of its kind. It has nothing to do with the repository, which is separate—it just happens to be on the same site. Anyone who has seen the medium-level waste repository in Finland will have been more than a little impressed. If Finland is going down such a road, as Canada will—the Americans have already decided to do so, but need to get over legal problems—we in this country should do the same thing.
I am a little surprised that we have spent so much time talking about nuclear power when we are considering a Bill that will, I hope—one way or another—put us firmly on the road towards dealing with the challenges that are immediately ahead of us. Whether one thinks nuclear power is great or terrible, if we consider the energy debate facing us up to 2020, it is completely irrelevant in this country. That is because by 2020 we will have had to replace between 20 and 25 GW of our installed capacity for electricity generated power. We will have to replace 8 GW of capacity currently generated by coal-fired power stations, and 3GW generated by oil-fired power stations by 2016 under the EU large plant directive. By 2020, some 7 GW will be lost when nuclear power stations are decommissioned; it is unlikely that their lives will be extended, because of cracking in their cores. We will probably have to consider building 5 GW of additional installed capacity to cope with additional demand. Between 2020 and 2030, a further 7 GW of power will go out of commission and will need to be replaced. To put that in context, the UK's overall installed capacity is something like 76 GW.
Within that installed capacity, we have to keep a running reserve, so that the lights stay on if everybody switches on their kettles at half-time in the cup final. That running reserve only comes on stream occasionally, when there are peaks in demand, but there will be bids to provide it if the system makes it possible for those bids to work when demand for electricity is high enough. Consequently some of the reserve will be provided by uneconomic power stations that are online for perhaps only a few hours a year but that none the less serve to keep the lights on.
Because we have a bidding system, we know who has to bid the least: nuclear power. It cannot make top-end bids because it is a form of power that cannot be switched on and off; it has to be at the bottom of the ladder. We are in a market-based energy supply system. One reason why energy suppliers are being invited to build new nuclear power stations without subsidy is that if there were a lot of subsidy, it would wreck that energy market, and it would not be possible to continue with the bidding process. Therefore by enabling one form of power to keep the lights on, we would probably be switching the lights off in a number of other areas over time. That is the position as regards the energy gap and the way in which the market is used to keep the lights on.
We face replacing many of our power stations by 2020; some 30 to 40 per cent. of our installed capacity will be replaced. As for the best estimates of when nuclear power will come on stream, even if everything went right and a nuclear power station were built ahead of schedule—that would be unparalleled in the world—even if the permissioning regime for a new power plant were fired up and there were lots of new officers, so the process was very quick and even if the planning process were relatively short, there would probably not be a single new nuclear power station on stream by 2020. Just conceivably, 1 GW of power might be generated by then, and 2018 is the earliest possible date; that would be possible if everything went right and a number of processes were carried out in parallel, rather than in sequence. It is more likely that it would be the early 2020s before any new nuclear power went on stream in the UK.
The real energy challenge for the next few years is how we replace on-market principles without being able to demand that any of our power stations be replaced. Indeed, we may well be unable to demand that any nuclear power stations be replaced. We have to replace all our capacity—and on a low-carbon basis, because as we heard earlier this evening, the EU is coming up with mandatory targets for the percentage of power that will come from renewables by 2020. That will require 15 per cent. of the country's energy to be renewable and that means that 25 to 30 per cent. of our electricity must be produced from renewable sources. Similar mandatory EU targets on carbon emissions will be imposed by 2020. That power must be replaced, without any intervention from nuclear power, on a low-carbon basis, and that must be done in a reliable fashion so that the lights can be kept on and the market can keep running.
As things stand, the most likely way of achieving that is by gas generation, but that would result in our missing all those EU targets, as well as all our climate change targets. The challenge is to make sure that, over that period, the vast majority of the gap is made up either by renewables or by sustainable forms of energy, carbon capture and storage or—and this is my personal choice—energy initiatives such as making sure that any new gas power station is not only combined heat and power enabled but is attached to CHP distribution networks, so that its carbon footprint is half what it would otherwise be.
That is how the renewables obligation banding will move centre-stage. Regardless of whether we think feed-in tariffs would be a better idea in the first instance, it is important that we give the industry certainty and a forward look at how we will replace those forms of energy. To do so, we must introduce a renewables obligation banding system that will develop initiatives on CHP, biomass, mixed fuel and waste co-generation of power. Achieving a different mix of nuclear and sustainable power on the basis of a known, forward, reliable system of underwriting should be our priority. That is probably the key way in which we will bridge the energy gap by 2020 without any new nuclear power coming on stream.
The Bill is important, given its proposals on renewables and the renewables obligation certificates. Those systems will cause the market to ensure that we invest in renewable and sustainable energy. I therefore hope that the Bill completes its Second Reading. I endorse many other things mentioned by hon. Members, including the need to ensure that we encourage microgeneration by installing net meters alongside smart meters. Overall, we have to make an effort now on renewable and sustainable energy: to coin a phrase, there is no alternative.
As other Members have said, there is an immense potential for renewable energy in the UK. Our geographical location and features give us resources, particularly in wind, wave and tidal power, that few other countries enjoy.
Unlike some hon. Members, I recognise that the Government's policies have helped us to begin to tap the potential for renewable energy. It is disappointing that only 5 per cent. of electricity is produced by renewable generation, but that is five times as much as was produced when the Government came to power. When one starts from a base of 1 per cent., it is not surprising that it takes a while to reach a higher figure. Practical steps have been taken by the Government. By contrast, some of those who criticise the Government's record on renewables were not supportive of renewable energy when they were in local government and had to decide whether or not to support renewable energy projects. We should bear that in mind when considering their sincerity in promoting practical forms of renewable energy.
There is no doubt, however, that we could do a lot more with renewable energy, as is underlined by the example set by some of our European partners. They have set us an ambition to which we should aspire. As the Secretary of State said in his opening speech, that is not merely a matter of energy policy or environmental policy. There is a real opportunity for green jobs—a massive number of jobs on a long-term secure basis. For example, the wind industry worldwide is worth £12 billion a year and is growing at 30 per cent. a year. There are also opportunities in the developing renewables technologies. I have in my constituency the headquarters of Pelamis Wave Power, which is a pioneering wave turbine technology company. That is already bringing jobs to my constituency and others in Scotland. We need to do more in the UK to draw from such potential.
The test for the Bill is whether it helps to advance renewable energy in the UK and whether it helps to bring about a step change in the take-up of renewable energy in the UK. The mechanism for bands for renewables obligation certificates, if applied in an imaginative way, can help to release the potential of the new pioneering technologies in renewable energy. I note, for example, that the British Wind Energy Association strongly supports changes to the renewables obligations system and the introduction of a banded system, even though that is likely to benefit technologies other than its own.
I recognise that there are questions about whether the renewables obligation certificate route is the best way to tap the potential of smaller producers and of microgeneration. If I may modestly refer to my private Member's Bill a year and a half ago, that included provisions which required the Government to consult the industry to encourage it to bring forward proposals for microgeneration by domestic producers. If that does not result in the industry presenting practical proposals to promote microgeneration, the feed-in tariff is a mechanism that should be available, and it should apply particularly to small scale and domestic producers.
I was a little concerned that the Secretary of State suggested that the promotion of renewable heat was some way down the agenda for major shifts in Government policy. Again, I refer modestly to my Bill, which more than a year ago placed a specific obligation on the Government to promote renewable heat. I would not want to encourage the Minister's friends in Friends of the Earth or Greenpeace to go to the courts again and demand even more judicial reviews, but there is a policy to oblige the Government to promote renewable heat, which I am sure the Minister will bear in mind.
Some of those involved in renewable energy suggest that there is a need to make it a specific primary duty of Ofgem to promote both renewables and energy efficiency. It would have been good to see that in the Bill. Perhaps it can be inserted at a later stage of the Bill's passage through Parliament.
On energy conservation and energy efficiency, it would be good to get an update from the Minister on our efforts to get the EU to allow us to reduce the rate of VAT on energy-saving appliances. That was mentioned in the Budget last year and it would be useful to know what progress we are making.
Promoting renewables offers a more effective and quicker way of meeting our energy needs than would a new generation of civil nuclear power stations. I do not have time to enter into that debate, but I have not been persuaded that we need to go along the road of civil nuclear power. Like others who have spoken, I have looked at the example of Finland, whose new nuclear power station is well over budget and behind time. Despite the rigged pricing mechanism and subsidies to make it possible, it is still not meeting the objectives claimed for it by those who supported its development.
Finally, I shall touch on an issue that has been mentioned a number of times in the debate and in Parliament over the past few weeks: fuel poverty. In the past few days, we have again seen more increases, which have hit some of the most vulnerable in our society. I recognise that the Government are having meetings and discussions, but we need action now to respond to the damage that the increases could cause to hundreds of thousands of people in this country. That damage is taking place now and will take place in the next few weeks; we cannot leave the issue for discussions, however urgent, that will not result in specific policies until later this year.
We can address fuel poverty in a number of ways, but a comprehensive policy to encourage the take-up of social tariffs is part of the answer. There is clear evidence, already referred to today, that there could be a much better take-up of such tariffs if there were a more co-ordinated policy. There is certainly a case for mandatory minimum standards for social tariffs; such standards should have been in the Bill, and I hope that the Minister will introduce them during its passage.
There is a real crisis affecting some of the poorest in our communities, and we have to treat it with the urgency that it deserves if we are to address not only the financial consequences for those who suffer from fuel poverty, but the health effects on them. In extreme cases, fuel poverty can have life-or-death consequences for those who cannot meet their own needs as a result of the sharply increasing prices that we are seeing at the moment.
The most controversial thing about the Bill is the elements that are not included in it. The Bill makes no mention of feed-in tariffs for electricity or gas, nor of renewable heat. It does not really address fuel poverty issues. It does not mention any imposition of regulated social tariffs. No clause addresses the urgent need for Ofgem to be restructured and the Bill does not honestly address the issue of who will pick up the costs of the disposal of waste.
To be fair to them, the Liberal Democrats were right to say that as it stands the Bill is a big-energy rather than a coherent-energy Bill. I hope that in Committee and on Report all its sins of omission will be brought forward in new clauses so that it is strengthened into a Bill that is genuinely appropriate to our time. Let us be clear about the time in which we are living. The intergovernmental panel on climate change warned the Bali climate change conference that the world has a window of opportunity of perhaps no longer than six to eight years in which to make profound changes to the nature of our energy systems. If we do not deliver those changes within that period, we are stuffed, because the feedback mechanisms of the planet are likely to outstrip any of the intervention measures that we put off until after the period has elapsed. Within the same big-picture scenario, petroleum experts argue about when we will hit peak oil and when oil output will start to decrease—will it happen in 2011, or not until 2015? The argument is now about when rather than whether.
Several Members have raised their concerns about the 15 to 27 per cent. increases in energy prices charged to UK consumers today and about the fact that the 70 per cent. increases in energy charges in the past three years have reversed the progress that was being made in the Government's fuel poverty eradication programme. At one stage, the number of households living in fuel poverty had got down to just over 1 million; now we are back to 4 million. My hon. Friend Mr. Robinson was right to say that as soon as the latest round of price increases kicks in, at least another half a million households will be added to those who are going back into fuel poverty.
At the same time, the Prime Minister rightly signs Britain up to the European Union target of 20 per cent. of our energy supplies being from renewable sources by 2020. If, for practical purposes, we set the target at 15 per cent., that will probably mean that between 25 and 30 per cent. of that will come from renewable electricity by 2020. Our starting position is that 1.75 per cent. of the UK's energy needs are supplied from renewable sources. I have a diagram setting out the European league table, which shows the UK ahead only of Malta—a record of leadership that makes our recent submissions to the Eurovision song contest look positively inspirational. We are leading from the back in this process, and the question is how we get out of the position that we find ourselves in.
I want to spend a little time on nuclear. I do not think that a single nuclear power station will be built. The House should remember that Margaret Thatcher promised to build 10 nuclear power stations and ended up building one. In the past eight years, the world collectively has built one new nuclear power station. The problems in Finland, where the power station programme is two or three years behind schedule, reflect the fact that over the past two years there has been a 300 per cent. increase in the costs related to nuclear construction. There is a six-year waiting list for coolant pumps for nuclear reactors, and only two places on the planet produce the reactor vessels needed for nuclear power stations. It is just not going to work. When people start to see the disposal costs and who has to pick them up, the Government of the day will conclude, given the other problems that we have on our plate, that there are only so many lost causes that we can support. The nuclear programme will not materialise, but it will distract us from the more serious choices that we need to make in terms of renewables and fuel poverty.
My hon. Friend the Member for Coventry, North-West asked why the renewables obligation has not worked. I might be the only Member—or one of the few Members—who generates clean energy from my home and who is entitled to claim RO certificates, and I have to tell the House that it is a bloody nightmare to try to do so. I have been unsuccessful in making my way through the morass of regulations. In the assessment of the Audit Commission and the EU, the renewables obligation is a phenomenally expensive way of doing things inefficiently.
By comparison, the German system of feed-in tariffs works so much better. It would be immeasurably better for me and my neighbours if we knew that, as in Germany, we would be paid four times the market price for clean energy that we supplied for a guaranteed period of 20 years. If one talks to people in any of the German cities that are pioneering Germany's drive to double the EU 2020 commitment, they will say that it is citizen-driven. It would be an act of political suicide for any German political party to talk of revoking that legislation.
Germany's difficulty is in keeping up with the momentum; ours is in finding a momentum. I hope that we will do that in building a serious engagement with renewables. That must, however, include the notion of renewable heat and gas. I went to see a plant in Munich where people take domestic or crop waste and put it not into incineration plants but biodigesters, where they harvest the methane and then use the existing network to pipe the gas back to provide energy to the estates from which they collected the waste. They are credited for that as having contributed to a closed cycle of taking a problem and turning it into a solution, which they were able to do by changing the nature of the energy market. That is the significance of the feed-in tariff system—it shifts power from corporations receiving subsidies to citizens—and the driving force behind the 50 countries worldwide that have opted for feed-in tariffs, not a renewables obligation.
Let me race quickly through my two remaining points. The first is the need to change Ofgem. When we asked Ofgem where it stood on social tariffs and enforcement, it said that it was shining a light on the problem. I think that it meant shining a light in those areas where the sun never shines, because it does absolutely nothing in that respect. We must ensure that Ofgem puts at the forefront of its energy policy the duty to pursue demand reduction and to address and deliver on the targets for fuel poverty, renewables and cuts in carbon emissions.
Germany has reduced its carbon emissions by 97 million tonnes a year through its feed-in tariffs. In doing so, it has been able to tackle issues that relate to the poor. That is my final point. We know that 4.5 million households live in fuel poverty, but what does that mean in practical terms? Last year, 24,000 people died in this country of illnesses relating to fuel poverty. If we are to have an energy policy worth its salt, the poor have to be able to live to be part of it. If we fail in that, we have failed in everything.
I am not going to devote any of my precious minutes to the nuclear question for the very simple reason that, as my hon. Friend Alan Simpson said, it is quite irrelevant to the scale of the challenge facing us. Even if they are built, not one single kilowatt-hour will be provided from a new nuclear station to address the coming energy gap, or to help us to meet our climate change demands.
Enough of nuclear—it is renewables that seriously matter at the moment, for various reasons. My right hon. Friend the Secretary of State, in opening this debate, put the issue fairly in the context of climate change. He made that the central issue, and it is a yardstick by which the Bill must be judged. I have to say that when I opened the Bill I was painfully disappointed at its lack of promotion of renewable energy. It has essentially only one provision relating to that matter, and I am afraid that I want to argue about it. Having said that, I guess it is not such a bad Bill, provided that it is very significantly amended. But without significant amendment, it is a feeble Bill that does not address the real issues.
The EU renewable energy target is 20 per cent. of total energy, not just electrical energy. That figure translated into British terms means, according to various estimates, that between 37 per cent. and 47 per cent. of our electrical generation will have to come from renewables by 2020. We are struggling badly enough to meet our existing renewable electricity generation targets. We will miss the 10 per cent. target—there is no doubt about that—and 20 per cent. by 2020, if we continue on a business-as-usual basis, is looking pretty sick. Now is the time. There is a need, an absolute imperative, to make a commitment to make a step change in our energy policy. Now is the time to address that issue in the Bill, but it is not there. I find that deeply strange, deeply worrying and more than a little disappointing.
Let us talk about some of the possible prospective changes. I shall jump into the renewables obligation certificates versus feed-in tariffs argument as well. I am not just following—the records will show that I have been advocating feed-in tariffs, as opposed to ROCs, for years. The ROC is just about the most inefficient, expensive and administratively cumbersome way of promoting renewable energy that anyone could possibly think of. It is very British. One just has to look at the comparison between the German experience, with its feed-in tariffs, and our own. The Germans have deployed about 10 times as much renewable energy in the same time for no greater public cost. Therefore, per gigawatt of renewable energy deployed in Germany, the feed-in tariff system has been much cheaper to the public purse.
I know that the Government are concerned about investors. They want to protect existing investors, and they do not want uncertainty, but the ROC system has uncertainty built into it, in that the value of a ROC is not certain. With a feed-in tariff system, the values are certain and investors can invest with confidence and certainty. Whether one goes ahead with the ROC system and bands it or uses feed-in tariffs, grandfathering arrangements must be made to protect existing ROC holders. Does it therefore matter whether one is grandfathering for a banded ROC system or a feed-in tariff system? I am confident that, if we take the opportunity to move to a feed-in tariff system now, we will have a much greater chance of succeeding in our objectives than if we do not. It is worth doing and will get us more gigwatts for the buck.
I want to consider Ofgem. During the passage of the Energy Act 2004, I tabled an amendment in Committee to give Ofgem a primary responsibility for promoting renewable energy. It was passed—the first time, as far as I know, that a Government had been defeated in Committee since the Rooker-Wise amendment approximately 30 years ago. I was very popular with the Chief Whip. Of course, the amendment was overturned on Report, but, as the Bill progressed through the House of Lords, Ofgem was given a secondary duty towards sustainable energy.
Has that made any difference to Ofgem's performance? I cannot find anyone in the industry who has noticed it. Ofgem pays serious heed only to its primary responsibility. If we are to get more out of Ofgem, we must make sustainability a primary duty. In the modern context, sustainability is far more important than Ofgem's current obsession with security of supply. There is no need to worry about security of supply if we operate a proper energy policy. We must amend Ofgem's remit.
Ofgem has not performed impressively on consumer protection. Did it succeed in stopping the energy companies making billions in windfall profits as a result of the failings of the first phase of the EU emissions trading scheme? No. Is Ofgem succeeding in protecting consumers in any way from the oil price increases that are fed straight through by the energy companies to consumers, putting, as my hon. Friend the Member for Nottingham, South reminded us, another 500,000 people into fuel poverty? No, it blatantly is not. Has Ofgem managed to help with grid connections, over which it has a great deal of influence? No.
However, Ofgem was seriously influential in forming our current British electricity trading and transmission arrangements, which include transmission charges, based on location. The further a generator is from a notional centre just north of Birmingham, the greater the charge. Where are the renewable resources in this country? They are as far as possible from that centre in Birmingham. That must be revisited.
Time is against me. I have a list of prospective amendments, which my hon. Friend the Minister for Energy will receive in due course. We have an opportunity to make a difference. The Bill in its current form will not, and it must therefore be seriously amended and improved.
I would like to discuss many different aspects of the matter that we are considering. However, given the amount of time I have, I will focus on renewables, especially our potential for using wind power.
Britain could be the Saudi Arabia of wind power. I understand that we have about 40 per cent. of Europe's wind, which we could use to improve our country. It is said that there is no point in relying on wind power, because what do we do on the day the wind does not blow? However, according to the UK Energy Research Council,
"intermittent generation need not compromise electricity system reliability at any level of penetration foreseeable in Britain over the next 20 years."
For those of us who do not have an engineering degree, I should perhaps go over some of the basics, because some of these things were beyond me. For those who think that a gigawatt is the brother of the Jabberwocky or something from a comic, it means roughly this. One kilowatt-hour of electricity is enough to power an electric bar fire for about an hour. One megawatt-hour will power 1,000 electric bar fires, while 1 gigawatt-hour will power 1 million electric bar fires for an hour. I will not make my whole speech in terms of electric bar fire units, but I hope that the House gets the idea, because that certainly helped me.
The Minister for Energy said this morning that we need a sevenfold increase in renewable energy by 2020. Most of that will need to come from an increase in renewable electricity, which means an increase from 5 per cent. of electricity coming from renewables to between 30 and 40 per cent. How are we going to do that in 12 years? It sounds like a fantasy, but it is possible. That is what the Labour party is about—we are about achievable goals and we can do it, as long as we are bold. Denmark got up to 20 per cent. of renewables from a standing start a few years ago, and we can do as well as that.
However, we need to make some difficult decisions and remove some of the obstacles that we have put in our own way. I am glad that the Government have already set about getting rid of some of them. First, we have created a market for renewables and established the renewables obligations—obligations on energy companies to provide a proportion of their energy from renewable sources. Introducing banding will mean that 1 GW of energy produced by offshore wind, tidal or wave power will create more renewables obligation certificates than the equivalent from onshore and other renewables.
Secondly, we have conducted two rounds of bids, in 2001 and 2003, to identify offshore sites for wind energy, amounting to 8 GW in total. Projects such as the London Array, the biggest wind farm in the world, have now been given the go-ahead through that process. In December, the Secretary of State extended the ambition for offshore wind, by announcing potentially 25 GW more in possible sites.
Thirdly, the committee on climate change, to be created by the Climate Change Bill, will set out measures to allow us to hit our aim of a 60 per cent. cut—I hope an 80 per cent. cut soon—in carbon emissions by 2050. The committee will give much-needed guidance and advice, in order to ensure that we push the renewables agenda forward. Finally, the independent planning commission, contained in the Planning Bill, will play an important role in ensuring that applications for wind energy are dealt with swiftly and efficiently.
However, we still have too many self-imposed obstacles in our way. The sites for offshore wind that were identified in 2001 and 2003 are taking too long to come to fruition, and no wonder when one considers all the hoops that applications have to jump through. First, the Government identify the areas. Secondly, the Crown Estate is given these and asks for bids for development. Thirdly, companies make bids. Fourthly, the Crown Estate gives exclusive rights to develop. Fifthly, the developers conduct an environmental assessment, which covers everything from bird migration and navigational routes to seals and the fishing industry, and so on.
Then the developers put together their plans for development and another application is made to the Department for Business, Enterprise and Regulatory Reform to build. After that, permission to install and build is given. Only then can companies finalise their connection to the grid, so that the necessary equipment can be procured and work planned. Companies then need time to get their financial package together, which can slow down the time it takes to start building. Then building can start, but before that happens, there must be further planning permission for transmission, hence the lag. From what I understand, the problem is not just the putting up of the poles and wires—that also needs planning permission—but the building of substations and the reinforcement of lines where necessary.
Ofgem needs to relax its policy on investment in the national grid, to allow a predict-and-provide approach, so that wind farms that are ready to go are not held back by a lack of capacity to get on to the grid. Ofgem's role needs to be examined, to give it stronger direction and ensure that we focus on sustainability, either by directives from the Secretary of State or by changing its objectives in statute. We also need to put an end to the ludicrous situations in which an offshore wind farm application has jumped through all the hoops only to be held up by an individual onshore council's planning committee, which is probably Lib Dem.
The proposed independent planning commission will have an important role to play in making the passage of applications for major infrastructure projects quicker and easier. However, as I understand it, its role will be limited to 15 big projects or 25 smaller ones. Given that there are currently more than 200 applications for generators over 50 MW or for large pylons under sections 36 or 37 of the Electricity Act 1989, the IPC will surely need to have a larger capacity in order to help the development of wind farms to motor on.
The present system is not working; 95 per cent. of applications for wind farms are not decided within the statutory 16-week period. Normally, 70 per cent. of planning applications are decided within 16 weeks, but for wind farms it is only 5 per cent., and most of those applications are rejected. So we need to ensure that the IPC has more capacity. Concern has also been expressed that the marine management organisation envisaged in the proposed marine Bill might give permissions on a different basis to that used by the IPC. Consistency is obviously important to the industry, if it is to develop properly.
There is currently 7.5 to 8 GW of wind power stuck in the planning system, half of which is being held up by the Scottish Executive. That is not good enough. If we really want to push on with renewables, we need to have a strong heart. We need to be radical, and we must not be afraid. We can do this, and if we do, we might well find that the policy initiative to build new nuclear capacity will be seen to be a cul-de-sac. We do not need that nuclear power. If we do renewables properly, we will be able to fulfil all our needs. Let us also think of the good that it will do for us and for our industry.
The Prime Minister said in November last year that we need vision and determination. He went on:
"If Britain maintains its share of this growth there could be over a million people employed here in our environmental industries".
Building a low-carbon economy will enable us to create thousands of jobs, and Britain is exactly the kind of country that can do that. We have the capacity and the skills to build planes for our defence forces, and we have a huge amount of wind potential in this country. We just need to take away the obstacles that we have put in place ourselves. Let us concentrate on doing that. Let us be bold and radical. Let us lead the fourth technical revolution. Let us get on with it.
I am tempted immediately to invite interventions, because of the brilliant timekeeping and discipline shown by all my colleagues. I want to speak in support of the Bill. The Government are to be congratulated on the way in which they have dealt with these extremely difficult issues. They are no longer kicking them into the long grass. However, I also want to endorse the comments made on both sides of the House about what is not in the Bill. I hope that as it passes through the Committee and into its Report stage, we shall see more about fuel poverty and social tariffs, and particularly about rising tariffs, which are one of the most effective means of dealing with fuel poverty and assisting energy conservation. We must also investigate feed-in tariffs, which have proved so successful in Germany.
I was struck by the earlier comment by Mr. Jack about the disconnect between the Energy Bill and the Climate Change Bill. He raised the question of whether they should have been combined. He asked whether the Bill dealing with the problem should be linked with the Bill offering some of the solutions. I would go further and point out that if we had a Department of Energy and Climate Change, we would have a completely different kind of Bill. Had we had such a Department 10 years ago, we would already have made far greater progress on renewables and energy efficiency. That is something to ponder.
I also want to point out a superb irony in the context of the nuclear debate, on which I want to focus my remarks. The chief lobbyist for the expansion of nuclear power and the creation of a new generation of nuclear power stations is the chief executive of EDF, a company whose nuclear power stations have been built entirely on the back of the French taxpayer in a state that is doing its utmost to prevent the liberalisation of the market. Yet Mr. de Rivaz comes here and tries to tell our Government that he can now build nuclear power stations without taxpayer subsidy in a completely liberalised market. At the same time, however, our Government—who, like every Government in the world, have no experience whatever of regulating nuclear power stations built or operating without subsidy—are assuring the nuclear lobby that there will be no subsidy in the future.
We have a kind of twin conspiracy here, whereby the nuclear industry is pretending that it can build these stations without taxpayer subsidy, the Government are pretending that there will be no taxpayer subsidy, but at the same time everybody knows that nuclear can expand only on the back of open-ended taxpayer subsidy. I point that out because I really want to move on from whether we are pro or anti-nuclear, which is no longer the best way to approach the problem.
The real issue now is whether nuclear is relevant to climate change, whether it is cost-effective and whether it is timely. It seems to me that a number of my colleagues, particularly my hon. Friend Dr. Whitehead, have produced extremely logical arguments to explain why nuclear is not relevant to the urgent issue of climate change. It also seems to me that if we accept climate change as the imperative for energy policy, we have to focus far more intensively on the growth of renewables and energy efficiency policies to achieve the cuts that will have to be made by 2020. The Stern report was absolutely unequivocal that if we are to avoid dangerous climate change, deep cuts have to be made before 2020 to set us on the right trajectory to make the longer-term cuts by 2050.
I commend the nuclear White Paper, as it was an extremely honest document, but the time scale in it shows, as others have pointed out, that there will be no nuclear build until at least 2018—and even then, only if everything goes to plan. In respect of that time scale, therefore, nuclear cannot contribute to the need to have deep CO2 emissions cuts before 2020. Let us also remember that if there is nuclear build before 2020—or, as is hoped, 2018—we are talking only about one nuclear power station. There will not be a new generation of them producing electricity at that time. As the Minister said at Question Time last week, one new 1.2 GW power station will contribute 0.8 per cent. to total energy usage. The fact remains that the contribution of each power station, or even a new generation of 10 new power stations, is marginal in the face of the urgency of the threat of climate change.