With permission, I would like to make a statement on the new Department of Energy and Climate Change. The new Department brings together the Government's work on three long-term challenges that face our country: ensuring that we have energy that is affordable, secure, and sustainable; bringing about the transition to a low-carbon Britain; and achieving an international agreement on climate change at Copenhagen in December 2009. Those are our goals, and the new Department recognises that when two thirds of our emissions come from the use of energy, energy and climate change should not be considered separately, but together.
Some people will ask whether we should retreat from our climate change objectives in tough economic times. In our view, it would be quite wrong to row back, and those who say that we should misunderstand the relationship between the economic and environmental tasks that we face. Of course, there are choices to be made, but there are also common solutions to both—for example, energy-saving measures for households, such as those announced by my right hon. Friend the Prime Minister in September, which cut bills and emissions; or investment in new environmental industries, which both improves our energy security and reduces our dependence on polluting fuels. What we know from the Stern report of 2006 is that the costs of not acting on climate change are greater than the costs of acting on it. Only if Britain plays its part will a global deal in Copenhagen to cut carbon emissions be possible, so, far from retreating from our objectives, we should reaffirm our resolve.
Over the summer, the Secretary of State for Environment, Food and Rural Affairs, to whom I pay tribute for his work and leadership on climate change, asked the independent Committee on Climate Change to review the long-term target for Britain's emissions. Based on a Royal Commission report in 2000, the target had been set at a 60 per cent. reduction in CO2 emissions. Since then, independent reports have added further to our knowledge. Arctic sea ice has melted faster than expected, global emissions have grown faster than expected and the impact of each degree of climate change is known to be worse than expected.
Last week, Lord Turner wrote to me with the committee's conclusions, which have been placed in the Library of the House. His report found that to hold global warming to 2° above pre-industrial levels—commonly accepted as the threshold for the most dangerous changes in the climate—global emissions must fall by between 50 and 60 per cent. by 2050. Lord Turner concluded that to play its proper part, the United Kingdom should cut its emissions not by 60 per cent. but by 80 per cent. He concluded that the target should apply not just to carbon dioxide but to all six Kyoto greenhouse gases. He also concluded that while there were uncertainties about how to allocate emissions from international flights and shipping, they too should play their part in reducing emissions.
The Government accept all the recommendations of the Committee on Climate Change. We will amend the Climate Change Bill to cut greenhouse gas emissions by 80 per cent by 2050, a target that will be binding in law. I hope that Members on both sides of the House will support that move. Indeed, let me say that I want to create as much of a consensus as possible on climate change. However, as we all know, signing up to an 80 per cent. cut in 2050, when most of us will not be around, is the easy part; the hard part is meeting it, and meeting the milestones that will show we are on track. For us in Britain, the milestones will be shaped by the recommendations of the Committee on Climate Change, which will advise us in December on the first 15 years of carbon budgets. That means national limits to our total emissions, within which we shall have to live as a country. We will report next year on how we will meet them.
We are also determined to ensure that the signal and the commitment come not just from Britain but, as the Prime Minister has been making clear in recent days, from Europe. That means an agreement by the end of this year on strengthening the European Union emissions trading scheme, and on the targets for 2020: that Europe should reduce greenhouse gases by 20 per cent. unilaterally and by 30 per cent. as part of a global deal—targets that I reaffirm today—and that the EU should confirm its renewable energy target.
Earlier this year, we published our draft renewable energy strategy. Having examined the issue, I can say that what is clear to me is not only the scale of the challenge, but the urgency of getting on with the delivery. The renewables obligation has tripled supply in the past five years, and we are making further changes in its structure, in planning policy and in access to the grid. However, having heard the debate on the issue, including what has been said by many colleagues on both sides of the House, I also believe that complementing the renewables obligation for large-scale projects, guaranteed prices for small-scale electricity generation—feed-in tariffs—have the potential to play an important role, as they do in other countries. Having listened to the views that have been expressed, including those expressed in the other place, we plan to table an amendment to the Energy Bill to make that happen.
I believe that renewable power can play a bigger role not just in electricity but in heating. Heating produces almost half Britain's carbon emissions, and cleaner sources of heat can help us to meet our target in 2050 and the milestones on the way. I recognise that we need to make rapid progress on that issue as well, and I will make further announcements soon.
Our objective is a climate change policy that is fair and an energy policy that is sustainable. The present structure of the energy market was designed in a world of abundant supply, British energy self-sufficiency, low commodity prices and an emerging debate—but not a settled consensus—on the issue of climate change. Today, all those assumptions have changed. There is international competition for resources and a need for new investment in supply; there are structurally higher energy prices; and there is urgency about carbon emissions. To respond to this new world we need a market that secures future supply, which must include investment in nuclear power and carbon capture and storage. We need a market that provides incentives for cuts in emissions and does more to help homes and businesses.
Those are the big issues that we need to address for the future, but today I want to signal a direction of travel on affordability. Last week the energy regulator, Ofgem, highlighted what it believed to be unjustified higher charges for 4 million electricity customers in areas not connected to the gas main. It also believes that, even when account is taken of higher costs facing companies from customers with pre-payment meters, many homes that use them are being overcharged.
Unfair pricing that hits the most vulnerable hardest is completely unacceptable. I made that clear to the representatives of the big six energy companies when I met them yesterday. I also told them that the Government expect rapid action or explanation to remedy any abuses, and I will meet them again in a month to hear what they have done. We, and Ofgem, are determined to see those issues addressed. Ofgem is consulting on its findings until
For us, markets can provide enormous benefits in dynamism and efficiency, but they will only work properly if they are regulated effectively in the public interest, including with a strong independent regulator. There is more to be done to help consumers, and we will not hesitate to act. We need an end to unfair pricing, feed-in tariffs for electricity generation, and an 80 per cent. cut in emissions.
Our aim is a climate change and energy policy which is fair and sustainable, and which meets our obligation to today's and future generations. That is the work that we are beginning in my new Department, and I commend my statement to the House.
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I warmly welcome the right hon. Gentleman's statement, and welcome him personally—along with his ministerial colleagues—to the Front Bench. I also welcome him to the Dispatch Box, where he appears for the first time in his new post.
The Secretary of State is widely regarded as one of the most personable, thoughtful and respected members of the Government. Our debates have always been civilised and productive, and it is certainly my intention that our exchanges on this most important issue for our country's future should remain so. I thank him for allowing early sight of his statement—although not quite as early as that secured by The Guardian and the Politics Home website, which published most of the statement this morning. I remind him that the true home of politics in this country is Parliament, and that it should have been through Parliament that the statement was first released. But, for all that, we welcome it.
Conservative Members agree that the choice between ambitious and progressive action on carbon reduction and a successful, powerful economy is, in fact, not a choice at all—they are one and the same. Without decisive action, there is a risk that climate change will leach away huge resources from this country and every other nation on earth. The economic events of recent days have proved that catastrophic risk must be acted on rather than wished away. Does the Secretary of State acknowledge, however, that we start from a position of disadvantage? There has been a decade-long void in the Government's policy on energy, in which successive Ministers have looked the other way rather than addressing the issue of our future energy needs. Does the Secretary of State accept that to the intrinsic difficulties of making choices on energy have been added the consequences of a decade of indecision?
It was Conservative Members who first called on the Government to publish the Climate Change Bill, which we have sought to strengthen through scrutiny in this and another place. We have been called here today for the Secretary of State to announce a new target, but does he share his predecessor's view that the Government are unlikely to meet their 2010 target of a 20 per cent. cut in emissions, despite three successive manifesto pledges? We support his acceptance of the Committee on Climate Change's target of 80 per cent.—we have always said that we should be guided by the science on that—but, as he knows, eight years ago 60 per cent. was considered to be the right target. Does he agree that the committee should keep the target under constant review, and that if the advice changes, so must the target?
Does the Secretary of State share our view that the move to decarbonise our economy should involve leading the way in new technology and practices at home, rather than simply buying in permits from other countries? If he agrees with that, does he also agree that the Committee on Climate Change should advise on the right balance between domestic and traded reductions? Does he accept that his predecessors have been paying lip service to carbon capture and storage without decisive action? Will he commit himself to our policy of funding at least three CCS demonstration projects, so that Britain can lead the world in this vital technology?
If the Secretary of State is serious about decarbonising our economy, will he give us a guarantee by adopting our emissions performance standard, whereby no plant will be licensed if its emissions are worse than those of a modern gas-powered station? Will he acknowledge that decentralised generation offers a vital way for our citizens to cut their fuel bills and emissions, and inject greater resilience into our energy supply? I welcome his belated acceptance of our case for feed-in tariffs for micro and small-scale generation; however, it is regrettable that his statement appeared to contain nothing about tariffs for renewable heat and gas. Will he also now recognise the case for smart metering, which will enable customers to profit from microgeneration? Finally, will he tell us how many vulnerable people he now expects to be in fuel poverty by 2010, the date by which the Government have committed themselves to eradicating it?
Gas customers without pre-payment meters pay up to 40 per cent. more than those using online direct debits and, according to Ofgem, the cheapest online offers may be below cost—in other words, the poorest are subsidising the well-off. We look to the Secretary of State to act through his conversations with Ofgem and the companies, so that the poorest get the most help, not the least.
We welcome the measures that the Secretary of State has proposed today but, as with our public finances and our financial system, on energy and climate change, we are hobbled by—how would his friend the Prime Minister put it?—a decade of irresponsibility. Britain cannot afford the years ahead to be wasted like the years that have passed.
In the past few weeks, we have grown accustomed to the bipartisan consensus lasting all of 30 seconds before the Opposition retreat to their normal practice. I welcome the hon. Gentleman to his new role. I had the pleasure of having him shadow me at the Cabinet Office, where he distinguished himself with his talent—and sometimes with his constructive suggestions. He made his name in the Conservative party through his admiration for Polly Toynbee, which I share. He went slightly further than me, however, because he was in the same party as her at one stage—the Social Democratic party. However, I welcome him to his new position and I am sure that he will fulfil the role with distinction.
Let me deal with some of the specific questions that the hon. Gentleman raised. On the question of inaction and targets, let me say clearly that currently, on the latest figures, our greenhouse gas emissions are 16 per cent. below our 1990 levels. We have made progress. Indeed I think that we are one of the few countries to be going beyond our Kyoto targets. Therefore, far from a decade of inaction, we have been making progress.
On the question of buying in permits, the Climate Change Committee will indeed advise us on that issue. I urge him, as someone who is new to these questions, to take care on that issue. It is right that we set stretching and demanding targets for our country, but it is also right that we find ways, because we are in this together, to encourage other countries to move to a low-carbon economy.
Exactly. One of the ways of doing that is through carbon trading and buying in permits. He says that it should not be one or the other. That is the position that I am explaining.
On the question of carbon capture and storage, the hon. Gentleman does what the Conservative party has started to do quite a lot, which is to say, "Why don't you just fund more of this?" Of course we want to do more in respect of carbon capture and storage. However, he may not have noticed that times are tight in terms of public expenditure. We are funding a carbon capture and storage demonstration competition. What is more—this is an important point and Conservative Members do not want to hear it, because it is about Europe and they do not like to hear about that—we are arguing within the European Union for a dozen carbon capture and storage projects, which the European Parliament has agreed. In my early experience of this job, it has been quite good to go to European meetings and not to be seen as someone on the sidelines who is talking about withdrawing from the groupings that we are in or about renegotiating existing treaties. Being part of the European Union is about being a proper member of it.
The hon. Gentleman asked a number of other questions. We agree that smart metering has an important role to play. We also agree on the issue of prices. I made it clear in my statement that we expect Ofgem to act as an independent regulator should, and put pressure on the situation in terms of prices across a range of areas, including on the issue of pre-payment meters—he rightly pointed out that that is an issue.
I look forward to my debates with the hon. Gentleman in the coming months, but on the issues of energy and climate change the Conservative party is completely confused. Nuclear power used to be a last resort. Now Conservative Members are not quite sure what their policy is. They say that they are in favour of renewable energy, but all around the country they oppose wind turbines, and they oppose tooth and nail the Planning Bill, which will make it possible for us to make a difference in relation to renewable energy. Therefore, I encourage him in his first few weeks in the job to sort out Conservative party policy on those issues.
It is customary to start questions from the Labour Benches by congratulating the Minister on his statement. I do not know how it is possible to add to that, but I unbelievably warmly congratulate the Secretary of State on the statement—the Gordian knot on climate change and energy supply has been untied.
On the proposals for a feed-in tariff for small-scale generators, is it the intention, either directly as a result of the feed-in tariff mechanism, or indirectly through an incentive mechanism, to ensure that heat is part of the process of small-scale generation tariffs as well as electricity?
I pay tribute to the work that my hon. Friend has done on these issues, particularly feed-in tariffs. He is one of the people who has led the work on those issues. I have looked at and listened to what he has been saying on those questions. I agree that heat can also play a role. We need to find ways of doing that. I look forward to talking to him about those issues. Again, we will want to make announcements very soon on that issue.
I also warmly welcome and congratulate the right hon. Gentleman on this critical role within government. I also congratulate the Government on following the Lib Dem lead from nine months ago and putting energy and climate change into a single brief. However, I want the right hon. Gentleman to be even more powerful than he is because we will tackle climate change effectively only if he also has control over pretty much the rest of the Government as well. Is it not the case that, in the week that he was appointed, one of his ministerial colleagues said, "We will expand Stansted airport"? What is the point of having a climate change Minister who has no clout with the rest of the Cabinet? I urge the Secretary of State to wield a big stick around the rest of the Cabinet and ensure that not just energy and climate change decisions, but all other Government decisions are taken through a green lens.
I welcome the move to the 80 per cent. target. Can I save the Secretary of State some trouble? He does not need to table a fresh amendment. He can simply accept mine: amendment No. 1 to the Climate Change Bill, which deletes "60" and inserts "80". It is on the Order Paper, and I will be honoured to have his name added to it.
On a serious point, can the Secretary of State clarify the coverage of the 80 per cent. target? He used some vague words in his statement about aviation and shipping playing their part, but he did not say that they were included in the 80 per cent. target. Is not excluding aviation and shipping from the 80 per cent. target like being on a calorie-controlled diet but not counting the cream cakes that one plans to eat? Surely, we have to count the big polluters and the rapidly growing polluters in the target.
On the issue of domestic effort, we fully appreciate the importance of saving emissions at home and abroad, but is it not the case that the Climate Change Bill would allow every single saving to be brought in? We do not have to save any domestic emissions at all under the Bill. Surely the Secretary of State, when he goes to international forums, wants to set the lead? Is there not some floor that he is willing to set that insists that the British domestic effort is substantial?
The Secretary of State had a meeting with the energy companies yesterday, the latest in a very long line of cosy chats with them that have delivered precisely nothing. Is it not time, not for more cosy chats, but for action? His statement says that, if the energy companies do not play ball, he will threaten them with consultation on legislation. Have not hard-pressed customers had to wait long enough?
Today, I have published figures that show that the poorest four fifths of single pensioners will on average be in fuel poverty this winter; the figures were produced by the House of Commons Library based on Office for National Statistics projections. That is totally unacceptable. Waiting another month and then consulting is too late for pensioners this winter. Will the Secretary of State act far more urgently than that?
I thank the hon. Gentleman for his kind words about my statement. It is probably a good sign that everyone is trying to claim credit for that on the Opposition Benches—perhaps that is better than the alternative.
Let me deal with the specific questions that the hon. Gentleman has raised. The first was about Stansted airport and the announcement by my right hon. Friend the Secretary of State for Transport. One needs to be honest about the trade-offs and difficulties. If we carry on flying in the way that we are and expanding airports, we need to do less of other things. We are absolutely determined—this is why I said that—to meet our overall targets.
The hon. Gentleman raised the issue of the 80 per cent. target and whether it includes aviation and shipping. Lord Turner's advice is that they should be taken into account and be considered as part of the overall target. There are concerns, however, about including aviation and shipping in the Bill which relate to the measurement and calculation of international aviation, and the hon. Gentleman knows that there are ongoing discussions about how to calculate international aviation—domestic aviation is easier to deal with. However, it is, of course, the case that aviation and shipping need to be part of our overall approach to cutting carbon emissions. That is why, for example, we have argued that aviation should be part of the EU emissions trading scheme, which will be the case from 2013. The hon. Gentleman invited me to sign his amendment. I shall have a look at that and get back to him. However, I suggest that he does not call me; I will call him.
On the important issue of energy prices and pensioners, I agree with the spirit of the hon. Gentleman's remarks about the urgency of getting on with things. I have been in this job for less than two weeks, and I am absolutely committed to moving as quickly as is legally possible on all these issues, as I have been making clear to officials in my Department—and as I made clear yesterday to the big six energy companies, and as I have made clear in my two meetings so far with Ofgem, the independent regulator. We have a regulatory system in this country that we must observe, but I am absolutely determined that we will deal as speedily as possible with some of the issues the hon. Gentleman has raised.
I thank my right hon. Friend for making a clear, serious and radical statement, which encourages many of us, and I congratulate him and his formidable ministerial team as they take up their new responsibilities. They take them up at a time when the geopolitics of energy insecurity impinge not only on Europe's and Britain's supply, but on Britain's national security.
May I ask two questions? Many of us believe that climate change is truly the big challenge facing our planet this century. Will my right hon. Friend confront the siren voices that we are now hearing in many parts of the world, including Europe and Britain, that say that, given the economic and financial difficulties, we cannot afford to save the planet? My right hon. Friend has stressed the economics of tackling this problem, and I wish him all strength in that campaign.
My second question is on affordability. Despite the Government's many achievements in many Departments in safeguarding the interests of the most vulnerable, we know that many vulnerable people, and not just the elderly, are frightened about the prospects this coming winter. Will my right hon. Friend consider going further than the energy efficiency package that has been announced, and develop a kind of national plan—to use an old-fashioned term—so that we can start to retrofit Britain's housing stock to help tackle the problem of carbon emissions while making sure that we understand our duty to protect our most vulnerable from the perils of the cold?
Let me start by paying tribute to my hon. Friend for the great work he has done on this issue. He started much of what was in my statement on the energy side. I know that people across the House and across the energy industry have the highest regard for the work he has done on these matters, and I look forward to carrying on working with him in his new role around global energy markets.
On my hon. Friend's climate change question, I completely agree that we must confront the siren voices who say we should retreat and row back from these commitments, partly because we know that the longer we wait the worse the problem will get, and partly because, as I said in my statement, we know there are ways in which we can address both the economic issues we currently face and the long-term climate change questions.
I also have a lot of sympathy with what my hon. Friend has said on the issues of fuel poverty and affordability, and I am urgently looking into that by asking what more can be done, as soon as possible, to help such vulnerable people. Let me make just one other point, however, which refers back to my statement. We have a market system that was designed 20 years ago in completely different times, and some of the issues that we are now facing are symptomatic of having a differently designed system created some time ago. Therefore, there is a whole set of questions that we need to consider to do with how we can fundamentally tackle the issues my hon. Friend raised in his second question.
As Chairman of the Business, Enterprise and Regulatory Reform Committee, which has had responsibility for scrutinising energy policy, I must welcome the higher priority that is being given to energy and climate change matters, even as I regret what I imagine will be the loss of my Committee's responsibilities in this area, and also the loss of an excellent Minister of State, Malcolm Wicks, who will be greatly missed. I also worry that the new Department might have an inappropriate tension between energy and climate change, because there is a tension between those two matters; securing supply is also very important for keeping the lights on, and I did not hear quite enough on that in the Secretary of State's statement, although I am sure we will hear more about it later.
Let me ask a question specifically on fuel poverty. The Secretary of State referred to pre-payment meters, but may I gently remind him that they are not the real issue? The real issue is standard credit terms. Most fuel poverty is concentrated among pensioners and others who are on standard credit terms, and that, for me, is the real political priority if we are to keep people warm this winter.
I thank the hon. Gentleman for his question, and I pay tribute to his Committee for its July report on these issues. I recommend it to Members as a good read—although perhaps not a bedtime read—as it addresses in great depth the issues surrounding the energy market and energy prices. It is an impressive piece of work, and I have found it extremely useful.
I agree with the points the hon. Gentleman makes on security of supply being a very important issue. Of course, there are always dilemmas and tensions in Government, such as between energy and climate change, and we need to find ways of resolving them. The new Department can, however, also now take advantage of the synergies between those two issues.
The hon. Gentleman asked about people on standard credit, and I agree that that is an issue. On pre-payment meters, however, let me just say to him that there is a conventional wisdom, which I do not say he shares, that many of the people on pre-payment meters are not disadvantaged people. The fact is that 53 per cent. of people on pre-payment meters are in the D and E socio-economic categories. Disproportionately, it is the poorest who are on such meters. Not everyone on a pre-payment meter is poor, but many of the poorest in our society are on one. That is, therefore, an urgent issue, and so, too, are the other matters that the hon. Gentleman has raised.
I, too, welcome my right hon. Friend's bold statement. The 80 per cent. target will be widely welcomed not only in Britain, but throughout the world. In response to my hon. Friend Malcolm Wicks, my right hon. Friend made the important remark that we need to look again at the whole structure of the energy markets. Will he give the guarantee, which I think is consistent with what he has said, that we will never allow price to be used as an instrument to ration energy supply to the poorest people in our country, because this issue is not only about security of supply, but it is also about adequacy of supply for people who need heat and light?
My hon. Friend is absolutely right, but we need to address the issues in a cautious manner because, as Peter Luff has said, investment and security are also important matters, and we need to ensure that companies keep investing. In this area, there is a whole range of problematic issues across the board, which, again, the Select Committee addressed very well. As I pointed out to the energy companies, only 60 per cent. of the people who switch supplier do better from having done so, which means that 40 per cent. are either no better off or worse off from having switched. I made the point to the energy companies yesterday that that does not suggest to me that the market is working as well as it should in relation to the information people are receiving and what is happening with prices. Somebody said to me yesterday that a week after having switched suppliers the prices changed and they were worse off from having switched. Therefore, a whole range of issues need to be looked at; I thought it was better to look at them in detail with proper care and attention than to make statements about them in my first two weeks in the job, but they are important issues that need to be addressed.
Is the Secretary of State aware that earlier this week the Department for Transport brought forward new environmental regulations for the automotive industry where the Government's own impact assessment showed that the costs are likely to exceed the benefits, possibly by as much as £11 billion? Does that not show that there are better ways of reducing our carbon emissions, such as by the Government's new-found and recent conversion to nuclear power, and that it would be a sad and damaging outcome to his statement if we were to meet our UK emissions simply by driving businesses and jobs, and emissions, overseas without any benefit to the global environment, but at further great damage to British manufacturing industry, which is already in recession?
Two issues are raised by the right hon. Gentleman's question. The first is the efficiency with which we meet our targets and about which he makes an important point. Our overall target for climate change emissions and the EU emissions trading scheme play an important role, but the more extra targets we have below that, the more danger there is that we will meet those targets less efficiently. I did not refer to that when the Opposition Front-Bench spokesman asked me about the matter, but that would be my response to additional targets and limits in relation to specific power stations. The right hon. Gentleman raises an important point on that.
The point on which I disagree with the right hon. Gentleman is that I think the European Union must play an important role. A lot of cross-border issues are involved, such as the EU emissions trading scheme, and they need to be dealt with in a cross-border fashion. We need a European dimension, partly for reasons of competitiveness. We also need to take care, when setting new targets, that we do not damage our competitiveness unnecessarily.
I welcome my right hon. Friend and his team to the new Department, which is an excellent step forward. It could not have had a better start than this statement, which addressed not only targets but issues such as the consumer impact. I welcome his comment that markets have changed in the past 20 years, and I wonder whether that logically means that the regulator's role should be reviewed to address those changes.
As chairman of the all-party Globe UK group, I have written formally to my right hon. Friend, not only to welcome him to his new post but to offer our support as we move towards the crucial 2009 COP 15, and to express the importance of a post-Kyoto framework coming out of that conference. In that respect, does he share my concern that there are signs that some European member states are going backwards on mid-term targets because of the situation that we face? Does he agree that the European Union needs to set a clear example and send a signal if we are to get an agreement at COP 15?
Again, I pay tribute to my right hon. Friend's work, both in Government and as president of Globe, which is an important organisation that works with legislators across the world on climate change issues. His work will be an important part of our securing a deal in Copenhagen at the end of next year.
On the wider questions of regulation that he raises, I shall proceed cautiously. It is important that we continue to get the investment that we need in the energy market, but I have come to no conclusions on the matter yet. The context has changed and, in the coming months, I shall examine the implications of that on policy.
May I make a plea for people in rural areas who have no option of gas and depend heavily on heating oil? According to the Library note, heating oil is 86 per cent. above its July 2008 price and 227 per cent. above the late 1998 and early 1999 low. Those people are really hurting, and they are not benefiting from falling prices as others are. What can the Secretary of State's Department do to ensure that they do?
Secondly, the Secretary of State has not mentioned the security of our own oil and gas production, which will still be needed despite the climate change commitments. Can he reassure us that the Government have a commitment to maximising production from our own resources for our own security?
On the second point, absolutely. That is very important. I put it to the right hon. Gentleman that we are a transition economy, but it will be a long transition and the role of oil and gas will be central for many years to come. I absolutely agree with him about that.
On rural areas, I shall examine the right hon. Gentleman's point about heating oil. He raises an important issue, because I believe that the 4 million electricity-only customers identified in the Ofgem report are mainly in rural areas. Part of the discrimination that Ofgem has found is against people in rural areas, who are paying more than they should be. I hope that the companies take action on that quickly to help ease some of the problems to which he refers.
I too welcome my right hon. Friend to his important new role in this very important new Department. I congratulate him also on the quality of his statement and particularly the decisions that it contained, such as the change of heart on the feed-in tariff, which I very much welcome.
My right hon. Friend mentioned Stern. May I ask him to consider how we are progressing towards achieving Stern's recommendation that we should be spending 1 per cent. of gross domestic product on reducing and mitigating climate change? Of course, the feed-in tariff is an example of the Government using their powers to encourage private investment, and nobody is suggesting that all the money needs to come from Government sources. However, the information from the Library suggests that Government spending is only a fraction of what it needs to be if we are to meet the Stern recommendations. May I ask him to examine that? After all, having strong targets is no good if we do not have the means of achieving them.
My hon. Friend makes an important point. I think that the 1 to 2 per cent. recommended by Stern was for 2050, so we have some time to get there. I shall take that as a homework point to go away and examine. Working out the direction of travel for public spending and what will be required is an important part of the attempt to tackle climate change.
Order. I think that the time has come for a plea for brevity. I have to protect the important debates to follow, so I am aiming to move on to them by roughly 1.25 pm. I hope that I do not hear the word "secondly" again, and I am afraid that those who arrived late for the statement may be casualties.
Will the Secretary of State find time to come up to Norfolk and join me on a flight over the Wash, where he will see a large number of offshore turbines? We will eventually have 500 or so. They are very popular, in stark contrast to onshore turbines, which generate very little electricity, are extremely unpopular and do great damage to the environment. In a case such as Norfolk and Suffolk, does he agree that turbines should be concentrated offshore?
I will be cautious about accepting the hon. Gentleman's invitation, not least because of the carbon emissions that would flow from flying over the wind farms. However, I agree that offshore wind plays an important role. Believe it or not, we are about to overtake Denmark in the amount of offshore wind power that we have, which is a good sign that we are moving in the right direction.
My right hon. Friend's statement was dynamic and decisive, and it has given his Department the best possible start. In setting the 80 per cent. target, he has recognised that long-term certainty is vital for investment in energy. Will he consider ensuring that investment can be made in renewables, particularly wave technology and other marine technologies, and that incentives are aligned with the need for the technology?
Again, I pay tribute to my hon. Friend for his work on forestry and a range of other matters. I shall definitely consider wave technology, which has already been raised with me, and I am happy to have a meeting with him about it.
In answer to my right hon. Friend Malcolm Bruce, the Secretary of State mentioned the study of electricity prices. It is important that our constituents get a fair deal on electricity in rural areas, where there is no access to the gas main. He did not tackle the fundamental point that even a slightly cheaper electricity bill will not pay the oil bill. The cost of heating homes that do not have access to the gas main is disproportionate. If the Government seriously want to tackle poverty in rural areas, they will have to come up with a much more robust strategy for those who do not have access to the gas main.
The hon. Gentleman will forgive me; I do not have an immediate answer to that question. I shall endeavour to look into it now that it has been raised by both him and Malcolm Bruce.
I think that there is a difference—at least, I hope so.
I welcome my right hon. Friend's statement, but will he accept that there is bound to be anxiety up and down the country at the increase of some 35 to 40 per cent. that is being implemented in domestic prices? Would it not be useful if, when he met the energy companies, he would be a little tougher and make it clear to them that those increases should be cancelled? If not, why not a windfall tax?
My hon. Friend has a long-standing interest in these matters. As he knows, a windfall tax is really a matter for the Chancellor of the Exchequer, not for me, but I would say to my hon. Friend that we are very concerned about what is happening to prices. The wholesale gas price is now going down, and we will be looking to see how that is passed on to consumers. We absolutely want that to happen.
My constituents support renewable energy. We have a wind farm at Burton Wold with 10 turbines, soon to expand to 17 and possibly to 24 in future. It supplies between a quarter and a third of the houses in the borough of Kettering. What local residents do not want is loads more wind farms all over the countryside, but five planning applications are coming through. What mechanism exists for local authorities to support a wind farm in their locality without feeling pressurised into giving permission for all the applications that come along?
In the end, this is a matter for local decisions. We have taken action in the Planning Bill to speed things up, but this issue is not easy. I know, from the experience in my constituency, that people worry about the impact of wind farms on the value of their houses and so on. The problem is that, as always with these things, if we do not act on questions of renewable energy—Mr. Bellingham rightly made the point about offshore wind, but onshore wind must also play a part—we will not meet our renewable energy targets. There is no easy answer, but I think that feed-in tariffs and the possibility of community wind farms and smaller-scale projects have an opportunity to command more public consent than larger-scale projects sometimes do. That is another reason why I hope that the decision I have made about feed-in tariffs will help on some of these questions.
In order to reduce our emissions by 80 per cent., we clearly need increased investment in a wide range of renewables. Will the Secretary of State carefully consider what the cumulative effect would be on forest and land use around the world of locating enough biomass material to feed all the biomass power stations in the planning system? I fear that our system of renewables obligation certificates might end up rewarding electricity producers for importing biomass materials huge distances from unsustainable sources. That would be completely different from small-scale projects using locally sourced biomass.
The question was definitely worth waiting for, because this is an important issue. My hon. Friend may know that an independent report on forestry published earlier this week argued precisely for a sustainable approach to forests, which must include the approach we take on biomass. I hear her comments and will think further about them.
I welcome the statement, although I did not quite hear the detail about the insulation scheme that the Leader of the House advertised in advance. I am strongly in favour of that scheme, which is long overdue. The problem that I face is that many of my constituents are among the most vulnerable people, because of the reasons explained by my Liberal colleagues—they are dependent on oil fuel or high-tariff electricity; and they live in houses that are often cold, damp and old, so they cannot benefit from cavity wall insulation. May I suggest to the Secretary of State that we need the maximum flexibility in the scheme so that the most appropriate measures are taken to reduce energy need, whatever that might be in a particular area and for a particular type of house?
I agree with the hon. Gentleman that we need as much diversity as possible, particularly in relation to the CERT—carbon emissions reduction target—scheme. One thing that I discussed with the companies was the diverse range of ways in which they can help people with their heating bills. It is right that we make and encourage the investments involved in this scheme, because that is a sustainable way to reduce people's bills. I know that there are issues to address, particularly in respect of older houses and the kind of technologies that we need to develop. We need to speed up such development and continue to examine it.
I congratulate my right hon. Friend on his radical statement, which contains enough to give credence to everybody's point of view. I wish to make two points. First, security of energy is of the utmost importance, because, at the end of the day, we must deal with it. Secondly, clean coal technology must be part of that dimension. Some 85 per cent. of our reserves are still in this country, so it would be ludicrous if we did not deal with that. May I ask him to take one message back to the six companies? Can he tell him that if they do not change, Members on both sides of this House will change things for them?
I agree with my hon. Friend, because keeping the lights on is a central part of what we need to do and the security of supply is obviously central to that. He also makes a very important point about the future role that coal and carbon capture and storage can play. I concur with that, as a result of my local experiences.
My right hon. Friend rightly talked about the role of our European partners in creating an effective response to the environmental challenges that we face. Will he undertake to show the same effort with regard to the incoming United States Administration, to ensure that the international response is what it needs to be?
I thank my hon. Friend for that question. He raises a very important issue that will define whether we get an agreement at Copenhagen at the end of next year. I am very encouraged by what both candidates for the presidency have said about what they want to be doing on the environmental and climate change issues that we face, and the role that the US can play. Obviously, Britain, Europe and other countries have an important role to play after the US election in engaging in dialogue with our US partners about how they can be part of a successful process leading up to the Copenhagen meeting.
Plaid Cymru and the Scottish National party welcome the new target. It will be particularly welcome in Wales, where the "One Wales" coalition Government agreement already commits the Welsh Assembly Government to a 3 per cent. annual reduction in greenhouse gas emissions.
On unfair pricing, I wish that the Government would move towards legislation quickly, because the energy companies' record is not good. Can the Secretary of State give an early indication of the nature of such legislation? Would it be UK-wide or would it cover England and Wales? Alternatively, would he take the option of having enabling clauses to allow other Welsh Assembly Governments to build on an already good basis? That would be of interest to Welsh consumers.
We need to examine the matter in more detail, but if we took legislative action to end unfair pricing in these areas, we would want to ensure, by talking to the Welsh Assembly Government and our counterparts in Scotland, that it was UK-wide. The situation may differ in different parts of the country, so I cannot prejudge that issue. Clearly, this is something that we would want to have across the country.
I welcome my right hon. Friend's statement and, indeed, the new team. When he met the energy companies last week, did he discuss phase 2 of the EU emissions trading scheme? As he knows, the energy companies will pick up a large sum, estimated by Ofgem to be £9 billion. Did he talk about how that might be used to deal with some of the problems that we have just discussed? Were the energy companies responsive to any of his suggestions?
The meeting that I had with the energy companies yesterday is becoming increasingly public. There is an awareness of the long-standing issue of the EU ETS and how the decision was made on carbon allowances, and of the EU ruling on that question. The companies would say that they are using that money for investment. It is also important that they realise that at this time, when people are under terrible financial pressure, they have a set of responsibilities to our wider society and to the people who are their customers—I certainly made that point to them.
As someone who served on the Public Bill Committee on the Climate Change Bill, I very much welcome the Secretary of State's statement, although one thing puzzles me. If we are to meet the emission targets, surely power stations such as Kingsnorth will require effective carbon capture from day one, rather than at some unspecified date in the future.
I have not prejudged—it would be wrong for me to do so—a decision about Kingsnorth, which, as the hon. Gentleman knows, is part of a process. I agree that carbon capture and storage is essential as a clean fuel of the future. It is the thing that makes fuels such as coal very important and part of our energy future. CCS must be central to our plans.
I thank my right hon. Friend for listening to the arguments of the Labour Back Benchers on the Public Bill Committee who originally tabled the "remove 60 and replace with 80" amendment and making that replacement. Will he consider whether public sector buildings should be in the top quartile of energy efficiency so that we can achieve an 80 per cent. carbon emission cut by 2050?
I pay tribute to my hon. Friend's work and that of Labour Back Benchers on pushing this issue forward. She makes an important point about public sector buildings, because we need to do a lot more in that area. The Parliamentary Secretary, Cabinet Office, my hon. Friend Mr. Watson is working on these issues, and I intend to work with him to move forward what we are doing in this area, because the public sector must show a lead.
One of the first reports to land on the new Secretary of State's desk will be on the viability and potential of the Severn barrage. A number of organisations are lining up against the barrage, including Friends of the Earth and the Royal Society for the Protection of Birds. Will he undertake to bear in mind, when considering that report, that other technologies could be equally productive in terms of energy, but much more friendly in terms of nature conservation?
Again, I hope that the hon. Gentleman will forgive me for being coy on such questions. I want to examine issues such as the Severn barrage properly, and I will certainly take account of the points that he raises.
I very much welcome the commitment to the 80 per cent. target. It is an ambitious target, as my right hon. Friend will agree, that will require co-operation from all levels of government. Will he therefore have a word with the Secretary of State for Transport to try to persuade him to support an amendment that I have tabled to the Local Transport Bill that would require all local authorities to have regard to issues of climate change when formulating their transport policies?
I will definitely do that. My new Department has a wider role across government, working with the Departments for Transport and for Communities and Local Government and others, on such issues. We will not always succeed in our aims, but I accept that we have that responsibility. My hon. Friend also raises an important point about the role of local authorities and communities in being part of the battle to tackle climate change.
I welcome the dynamic statement that my right hon. Friend has made today. As he knows, the north-east of England is well placed to lead the way in offshore wind farms. What is his Department doing to prioritise offshore wind farms and what part will they play in reaching the 80 per cent. target?
Offshore wind does play an important part in our plans. In the Energy Bill, we are introducing a so-called banding system for the renewables obligation that will reward offshore wind, taking account of its higher costs with one and a half renewable obligation certificates rather than the standard one. That will incentivise people to build offshore wind capacity. We are apparently overtaking Denmark and I am told by my officials and the British Wind Energy Association that that is a big deal. However, I am sure that there is further to go on offshore wind.
I will try to avoid being bewitched. I will also try to take a balanced approach to these issues. We need a diverse energy supply that includes nuclear as well as renewable energy and microgeneration.
My right hon. Friend has certainly hit the ground running in his new job, but he may not yet have realised that Bristol has ambitions to be the green capital of the UK. That is illustrated by the fact that nearly 1,000 people have written to me about the 80 per cent. target. To achieve that target, we need fundamental changes in our behaviour, as individuals, as companies and in the public sector. What is he doing to encourage people to adopt more sustainable lifestyles?
I thought that my hon. Friend was going to ask what I was doing to adopt a more sustainable lifestyle. I am certainly not putting myself forward as a paragon of virtue, because that would be very dangerous. The argument on the science of climate change has been won, but the argument about how people can make a difference has not yet been won, and we have a lot more to do. We have the Act on CO2 campaign which my hon. Friend the Under-Secretary led in her time at the Department for Environment, Food and Rural Affairs and will lead in the new Department. However, more can be done in local communities to show how they can lead the way in tackling climate change.
My constituents will greatly welcome the measures announced today, especially the 80 per cent. target, which I called for in February. However, many of my constituents live in houses in multiple occupation. What can be done to assist them not only with pre-payment meters, but to achieve the target and become more green, which is what they want?
My hon. Friend raises an important point, but it is one to which I do not have an immediate answer. How do we encourage landlords, especially private sector landlords, to play a role in relation to energy efficiency? More can be done on that and it is something that I am considering.
In relation to carbon capture and storage, will the Secretary of State consider preparing plans to reopen the mines, for the reasons given by Mr. Hamilton? We would have to run both policies in parallel, and the training that would need to go with them. Does he also recall the Radio 4 programme about three weeks ago in which Sir David King and Dieter Helm severely condemned the wind turbine policy, in line with the arguments that we are making in Norton-in-Hales and Maer in my constituency?
I shall endeavour to obtain a transcript of the programme, although I do not agree with those views on the evils of wind turbines. I do agree that coal can play an important role in our future. As I have said, carbon capture and storage and the new technologies are an important aspect of making clean coal part of the energy mix of the future.
May I reiterate the importance of improving the energy efficiency of the existing housing stock and remind my right hon. Friend that on top of the problems of older houses and private landlords there is also the issue of housing of non-traditional construction, much of which is in the control of local authorities, and almost all of which is lived in by people on very low incomes? Those houses cannot be easily made energy efficient, but they must not be left out.
My hon. Friend speaks with a deep knowledge of these issues and I look forward to hearing her suggestions on what we should do in that area. She clearly raises an important point.
May I respectfully suggest to the Secretary of State that he does not take too much advice from the Conservatives who, after all, destroyed the cleanest coal technology in the world and put in place the companies who are fleecing our constituents? In discussions about clean coal technology, everyone talks about carbon capture and storage, but we should also consider the underground gasification of coal. Will he meet me and people from Newcastle university who lead the world in that?
I would be happy for our team to do that. CCS and IGCC—as I think it is called, although I shall not try to remember what that stands for. It may be intergasification combined cycle, or integrated—no, I should not have tried. In any case, all those technologies have an important role to play in the future.
My constituents will welcome this statement and, in particular, the action that the Secretary of State is taking against energy companies. Has he considered similar action against the petrol companies? Petrol prices were $147 a barrel, and the price was rising almost every day, but it has now fallen. Apart from at Asda and Tesco, however, pump prices remain high, despite the fact that oil prices have almost halved.
The fundamental point that my hon. Friend makes is right. When prices go up and companies pass them on, the counterpart should be that when prices fall, the reduction needs to be passed on urgently and swiftly.
I will not comment on how I regard you, Mr. Deputy Speaker, other than to say that I have the greatest of respect for you.
My hon. Friend is right that nuclear power must be part of our energy mix. We were right to lift the moratorium on nuclear power, and I am sorry that the Opposition took a long time to come with us on that issue. I will certainly make that point to the Scottish Executive.
Like everyone else, I welcome the statement, and I am especially looking forward to the letters that I shall write to those many constituents who have asked about a cut of 60 per cent. and feed-in tariffs. In his increasingly public meeting with the energy companies yesterday, did my right hon. Friend get a commitment from them that the very poorest people, who are on enforced pre-payment meters, will pay the lowest tariff?
It is fair to say that there is further to go with the energy companies on these issues. There are two questions, and we must be clear about them. First, the energy companies claim—currently supported by Ofgem—that the cost to the companies for people with pre-payment meters are higher than for other people. I am urgently investigating that claim. The second issue—also raised by the Ofgem report—is that even taking account of those higher costs, people on prepayment meters are paying too much. On that point, I have demanded urgent action from the companies. On the first issue, I am investigating the truth of those claims and what can be done about the issue in general.
I thank hon. Members and the Secretary of State for making reasonable progress. I hope that I have not prejudiced the chances of hon. Members who wish to speak in the other debates.