'Schedule [Carbon emissions reduction targets] contains amendments to the provisions of the Gas Act 1986 (c. 44), the Electricity Act 1989 (c. 29) and the Utilities Act 2000 (c. 27) relating to carbon emissions reduction targets.'.— [Joan Ruddock.]
Brought up, and read the First time.
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With this it will be convenient to discuss the following:
New clause 10— Sectoral targets
"2A Sectoral Targets
(1) For the purpose of assisting with the achievement of the target specified in section 1, or any amendment thereto made pursuant to section 2, the Secretary of State must take all reasonable steps to ensure that the government sectoral targets for the time being specified in subsection (2) are achieved.
(2) The sectoral targets referred to in subsection (1) are—
(a) by 2020 the general level of energy efficiency of residential accommodation has increased by at least 20 per cent. compared with the general level of such energy efficiency in 2010;
(b) by the end of 2010 the general level of energy usage in the commercial and public services sector has reduced by at least 10 per cent. compared with the general level of such energy usage in 2005 and by the end of 2020 by at least 10 per cent. compared with the general level of such energy usage in 2010;
(c) as soon as is practicable the number of dwellings with one or more microgeneration installations shall be eight times the number of dwellings with one or more microgeneration installations in 2007.
(3) In this section—
"the commercial and public services sector" means—
(a) commercial and business premises, excluding industry;(b) retail premises, including warehousing;(c) hotels and restaurants;(d) premises used for the provision of any service or function by or on behalf of a public body.
"microgeneration" has the same meaning as in the Energy Act 2004.'.
New clause 11— Greenhouse gas emissions performance standard (electricity generating stations)
'(1) The Secretary of State may make provision by regulations for a greenhouse gas emissions performance standard to set the maximum level of carbon dioxide that may be emitted per unit of output by any generating station requiring consent for construction or extension under section 36 of the Electricity Act 1989 (c.29).
(2) Regulations made under subsection (1) may include provision—
(a) specifying how proposed generation stations are able to comply with any greenhouse gas emissions performance standard, and to demonstrate compliance with any regulations made under this section, including by the capture of carbon dioxide at the generating station and its transport to and injection into geological storage provided that such activities are licensed in accordance with applicable laws and regulations;
(b) specifying the basis on which emissions of greenhouse gases from combined heat and power generating stations shall be calculated such that the unit of output includes useful heat produced in addition to electricity generated by any such generating station;
(c) specifying any sources of electricity generation, including electricity generated from renewable sources, that are deemed to be compliant with any greenhouse gas emissions performance standard.
(3) No consent shall be granted under section 36 of the Electricity Act 1989 for any generating station that does not comply with regulations made under subsection (1).
(4) Before making regulations under subsection (1) (including setting the level of the greenhouse gas emissions performance standard), the Secretary of State must consult such persons as are likely to be affected by or have an interest in the regulations.
(5) Regulations made under subsection (1) shall be made by statutory instrument, which may not be made unless a draft of the instrument has been laid before, and approved by resolution of, each House of Parliament.
(6) In this section—
"greenhouse gas emissions performance standard" means a standard prescribed by regulations setting the maximum level of carbon dioxide that may be emitted per unit of output from an individual generating station.'.
Government amendment No. 45
Government new schedule 1— Carbon emissions reduction targets.
Government amendment No. 51.
The new clauses and amendments contain various proposals to tackle emissions from particular sectors of the economy. The Bill's overarching objective is to ensure that each budget is met, along with the 2050 target. In environmental terms, it does not matter where in the economy the emissions reductions come from, and we consider it important to retain the flexibility to act wherever it is most cost-effective to do so.
The Government new clauses and schedule give effect to our commitment to creating a new community energy savings programme, as announced by the Prime Minister on
As I think all Members will acknowledge, energy efficiency is never more important than at a time when rising energy prices have made it so difficult for large numbers of people to afford to heat their homes adequately. We need to ensure that vulnerable households obtain all the help that they can. It was with that in mind that the Prime Minister launched the home energy savings programme, a suite of measures designed to help households to save both money and energy.
The package included two significant changes to CERT arrangements. First, the Prime Minister proposed a 20 per cent. increase in the existing CERT target, and additional amendments to strengthen the CERT scheme. Both can be achieved without changes in primary legislation. Secondly, he announced proposals for a new community energy savings programme. The new clauses and amendments make the necessary changes to enable the Secretary of State to introduce secondary legislation creating the new scheme, which will be based on the CERT model but will have a number of novel features.
The precise arrangements will be subject to consultation, and we do not yet have fixed ideas, but one of the key features is that the scheme will be community-focused. It will be designed as far as possible to bring together the activity of the energy companies with that of local authorities and other key organisations in a particular area. We want action to be joined-up and comprehensive, and we want to see real community delivery on a house-by-house, street-by-street level. I know that a number of my hon. Friends, and indeed other hon. Members, have called for such an approach.
I welcome the proposals that my hon. Friend is describing. Can she assure me that she will take account of areas such as Stoke-on-Trent, where we already have a warm zone scheme, so that we can ensure that all the partners dealing with energy efficiency work side by side, not just on fuel poverty but on energy efficiency?
I can certainly give my hon. Friend that assurance. I pay tribute to her for the work that she has done, and for the way in which she continually brings to Ministers the views of her constituents on how well the programmes have worked on the ground.
As the Minister will know, people who are not on the gas main find it extremely difficult to heat their homes, especially as they have to rely on oil and other fuels. Will the new scheme allow CERT to be redirected, to recognise the benefits of heat pumps both in providing a cheaper means of heating the home and in reducing carbon emissions?
I am a bit of an enthusiast for heat pumps, and I am very much alive to the issue that the hon. Gentleman raises. I want us to be able to look at these schemes to see whether more assistance can be provided to people who are off the gas main—but, as I have said, we have not yet worked out the details. However, there will be consultation and we will, of course, be pleased to hear from the hon. Gentleman.
The new scheme will be funded and delivered by the energy suppliers and, for the first time, by the energy generators too. The generators are not at present covered by CERT, but we believe that all companies in the energy market now have a responsibility to help those in need of support. I am grateful for the constructive spirit in which the generators are already approaching the new proposals.
We expect to set the carbon savings target for the community energy savings programme at 12.5 per cent. of the current overall CERT target, equating to collective expenditure by the energy companies estimated at about £350 million over three years. I look forward to receiving input from a large number of parties as we refine the proposals, but for the moment we need to establish the powers that will allow us to flesh out the details of the scheme more fully in a statutory instrument, and that is what our Government amendments achieve.
New clause 10 would add to the Bill specific energy efficiency, energy usage and microgeneration targets. We recognise that we will need to deliver in each of those areas in order to meet the targets and budgets that the Committee on Climate Change will undoubtedly advise us of, but new clause 10 would remove the flexibility that we consider essential to the overall framework that maximises cost-effectiveness. We recognise the importance of providing increased certainty regarding which sectors of the economy will be required to act to ensure that we meet the targets and budgets, and that is why we amended the Bill on Report in the other place to provide greater sector-specific transparency.
The Bill contains a number of provisions to ensure that sector-specific issues are covered. Clause 33 requires that the Committee on Climate Change's advice on the level of carbon budgets must set out the sectors of the economy in which there are particular opportunities for contributions to be made to meeting that budget. That is supplemented by the requirement in clause 13 for the Government's report on proposals and policies for meeting carbon budgets to explain how the proposals and policies affect different sectors of the economy. Together, those requirements will ensure that a forward-looking process is in place for both the Committee on Climate Change when it provides its advice, and the Government in setting out how the proposals and policies for meeting a budget may affect different sectors.
Will the Minister explain why she has not taken this moment to ensure that the arrangements, particularly for the electricity and gas industries, include the introduction of smart metering, so that every one of us can play a part in making these decisions?
I understand that we all have our enthusiasms and that the right hon. Gentleman has an enthusiasm for smart meters. We are very alive to this issue as well, and we will continue to be so—and I understand that it has been a subject of debate in the other place's discussions of the Energy Bill today.
Let me briefly turn to microgeneration, which is one of the areas new clause 10 covers. As hon. Members will be aware, in considering the Energy Bill on Report in the other place on
This very belated conversion to feed-in tariffs—which the Conservatives have been campaigning on for two years now—is very welcome, but we have yet to see the detail, and as the detail will be of critical importance, can the Minister now tell us who will pay for the feed-in tariff? [Interruption.]
As my right hon. Friend the Secretary of State has just pointed out from a sedentary position, our Department has been in existence for only three weeks, so we think we are acting rather swiftly. I have already said that details are not yet available, so I am not in a position to give the hon. Gentleman any more information.
My hon. Friend says that the new Department is acting swiftly, but I have just heard her say that the consultation will not take place until next summer. I take on board the point that the proposals need to be drawn together, but since there are established mechanisms in neighbouring EU countries, I should not have thought that it would take until next summer just to start the consultation.
I hear what my hon. Friend says. I was advised on this, and there are procedures, but I am more than willing to look into the matter she raises, because I share her interest in making things happen faster.
In summary, new clause 10 may restrict the Government's ability to introduce policies to ensure the requirements of the Bill are met cost-effectively. For that reason and the others I have mentioned, I cannot agree to the amendment.
New clause 11 would introduce a specific cap for emissions per unit of output from the power sector. We have three main difficulties with this amendment, which, as I understand it, is designed to prevent the construction of new coal-fired power stations without carbon capture technology. First, there is no guarantee that it would reduce UK emissions, and certainly not within the EU. Secondly, it may have the effect of slowing down or halting the development of carbon capture and storage technology, which would make it harder to reduce our carbon dioxide emissions in the long term. Thirdly, it would risk jeopardising the security of the UK's energy supply.
I am sure that I am required to give a little more detail, so I shall oblige. The EU emissions trading scheme caps emissions from all UK power stations over a 20 MW threshold, and is key to achieving emissions reductions while maintaining a secure and diverse supply of energy. Under EU proposals currently being discussed, the EU ETS cap is expected to continue to decrease up to 2020 on a scale calibrated to enable the EU to meet its 2020 climate and energy targets. As the cap tightens, power station operators will need either to reduce their own emissions or to buy carbon allowances, thus financing emission reductions elsewhere in the EU economy. That trading mechanism ensures that abatement occurs at the least-cost location, which is one of the scheme's key principles. In this context, the proposed amendment might affect where the EU's emissions come from, but not the overall level, which is determined by the level of the cap. That is an important point. The cap ensures that there can be no more emissions, even if new capacity is produced.
By putting a price on carbon, the EU ETS encourages investment in new, more efficient power stations and technologies with lower emissions. The proposal may, on the other hand, have the perverse incentive of encouraging older, less efficient fossil fuel power stations to keep operating by cutting off the option of building new, more efficient fossil fuel power stations in the UK.
Is the Minister therefore saying that this Government would condone and want to see the building of new coal-fired power stations without carbon capture and storage?
Clearly, we are not prejudging the issue, but I must make the following point to the hon. Gentleman. If, for example, a new coal-fired power station replaces an ageing coal-fired power station and the new station has a 20 per cent. increased efficiency over the old, even without carbon capture and storage there might still be a benefit.
Surely when the energy sector is the one sector through which, using today's technology, we can deliver a roadway to zero emissions, to replace current capacity with a system that has only a 20 per cent. reduction in energy use and that will be in place for decades to come is to put up the white flag of surrender.
May I help the Minister not to prejudge it by saying that if we build a new power station that is 20 per cent. more efficient, it will also have a much longer time in operation? If we are talking about 2050, what we do about carbon capture and storage really is an issue to consider. Conservative Members would like at least the provision for a real step forward to be put in place before we endanger the long-term arrangements.
I share the right hon. Gentleman's aspirations. We are one of the few countries in the world that will allow for a demonstration of carbon capture and storage, and the Government have been very active in pressing on that issue. Of course, there is always the possibility that we can get the technology working and make use of it in future.
Will my hon. Friend remind me of the Government's policy on carbon capture and storage? Are we not one of the few countries in the world that are supporting it? Are we not one of the few countries that are in discussions with the EU about it, talking about some of the 12 demonstration plants that are coming to Great Britain? On a more critical point, I know that my hon. Friend will not want to comment on Kingsnorth power station, but it would make sense to make early decisions and announcements, whatever they are.
I am always keen to go further and faster, so I understand my hon. Friend's point, but I am not going to speak about that particular installation and its application tonight. I do wish to say, however, how grateful I am to him for reminding the House of the Government's enthusiasm for carbon capture and storage. Not only do we wish to seek a project in this country, but we have been very active in the EU and supported its programme for a number of plants. In addition, critically, we are working with China, which will continue to have coal-fired power stations for decades and decades. If carbon capture and storage matters here, it matters much more in China.
If the Minister is right that the Government are leading the world in carbon capture and storage, will she tell the House what resources they are putting behind a CCS programme? Is it just the miserable tens of millions of pounds over a period of years to which a ministerial colleague of hers has referred? With how much is she prepared to back her words?
I might invite the hon. Gentleman to consider how much he wants to back— [Interruption.] Oh, he says that he is committed and signed up.
Given the Minister's claim that we are in some kind of leadership position on carbon capture and storage, will she congratulate China on having a working demonstration project well ahead of us? Does she therefore regret her predecessor Department's decision to have a carbon capture competition so narrowly drawn and poorly funded that it led to the cancellation of carbon capture projects in this country?
I would take issue with the hon. Gentleman's last remark. I do not think that it has ever been claimed that the decision not to go ahead at Peterhead, to which he refers, was the result of Government action. It was a private decision by a private company. I reiterate that we are enthusiastic about carbon capture and storage. Believe me, we raise it in every international forum, we are doing the work on the ground and we will have a project. I congratulate China on that and on many other aspects of its move to low-carbon technologies.
I am sorry that my hon. Friend has posed that question, because I am not in a position to give him an answer. The process is being gone through, and I cannot give him that information today. I am sorry.
I have supported new clause 11. Given the reservations of my hon. Friend Rob Marris about the feasibility of achieving the 80 per cent. target by 2050, including in aviation, I am horrified that we should be supporting new power stations that are only 20 per cent. more efficient in carbon dioxide emissions. Surely if the new clause were accepted, it would be an incentive to people wanting to build new power stations to have to invest in carbon capture and storage technology. How can we contemplate giving permission for a coal-fired power station without carbon capture and storage?
Perhaps my hon. Friend will listen to the rest of my remarks and then make up her mind about what she has just said and how she wants to react. Because I have taken interventions, I have not been able to get to some of the remarks that I want to make, which I think will cover some of her points.
Ruling out new, more efficient coal stations now would be likely to hamper the development of carbon capture technology, as I have indicated. The efficiency penalty associated with the capture of carbon dioxide makes retrofitting the technology to older, less efficient power stations a much less attractive option than installing new build. Mr. Gummer said that such stations would be in use for a much longer time, but it remains the case that it would be more attractive to link carbon capture and storage to a new station than to retrofit an old one.
This point is hugely important. As far as Peterhead is concerned, that was gas, and sadly we can now leave that matter parked. The fact is that we need both systems so that we can retrofit and build power stations with new CCS. That is the problem. There is real concern that we need to be putting in a lot more resources.
I thank my right hon. Friend for his contribution. I am trying to say to the House that it will be easier to build a new power station, and the incentive will be there. New clause 11 would rule out a new power station. I am not speaking generally, I am speaking to the new clause and the fact that it would rule that out. As I understand it, the new clause specifies that no new coal station should be built unless it had carbon capture fitted, but at the moment it is not possible to fit that technology because it is not available on a commercial scale.
The hon. Lady is absolutely right. Let me be absolutely clear: the Conservatives are saying that no new generation of dirty coal will be built under a Conservative Administration.
As I have already said, that prejudges the issue. As I wish to come on to say, there are other issues involved, not least security of supply. My right hon. Friend Dr. Strang said that we need to have both, and we not only want to have retrofitting if it is possible, but we certainly want linkage to new facilities. The technology applies to gas as well as coal, of course. CCS is not simply a coal technology.
The hon. Lady is speaking good sense. Unfortunately, she is not articulating Government policy, which is to have just one form of technology. She should therefore support the Conservatives' much more ambitious CCS proposal, which is for post-combustion, pre-combustion and oxycombustion capture. If she would like to join us in our costed, ambitious programme, that would be great. Unfortunately, all that she has to defend is a rather piddling, unambitious, sometime never CCS programme.
Will my hon. Friend be kind enough to confirm that if we were to accept new clause 11, as proposed by the Opposition, it could leave the country vulnerable? Old power stations would come to an end, so if CCS was not commercially viable, there would be no replacement facilities and, therefore, new clause 11 could put us in a position where the lights went out.
I never want to anticipate the lights going out, but I can confirm that everything else my hon. Friend said is correct.
I am puzzled, because the Minister has said on a large number of occasions that she does not want to prejudge these matters, yet is not the entire Bill based on prejudging the issues and on the fact that we do not want highly polluting technologies that will prevent us from reaching our climate change targets?
I wish to make some progress now, not least because I want us to get to the other groups of amendments.
We need new, efficient coal power stations if we are to encourage and support the crucial development of CCS technology. New clause 11 would adversely affect our energy security objectives. We are facing particular energy security challenges at the moment. Coal and oil-fired power stations producing 12 GW—equivalent to 20 per cent. of peak demand—are due to close by 2015, and that is in addition to the closure by the end of 2023 of nuclear power stations that produce about 5 GW. That will make us increasingly reliant on imports of gas, with all that that means.
I am trying to follow the hon. Lady's argument about how brand new coal-fired power stations, which pump pollution into the atmosphere, will be easier to retrofit with yet-to-be-developed technology than old ones. Is it not possible that we will discover that brand new supercritical power stations turn out to be harder to retrofit when we eventually obtain the relevant technology? Does she have any evidence to back up her claim that new power stations will be easier to retrofit than old ones?
What I know is that new clause 11 says that we should not have any new coal-fired power stations unless a particular technology—CCS—is available, but the fact is that it is not available at the moment. An issue is being prejudged, and I am making a case against new clause 11.
Although we hope for a major expansion of renewables and nuclear power, those technologies alone will not meet all our electricity needs, especially given that we will need flexible power stations that are able to provide back-up support because of the intermittency of renewable generation. Without coal, the only option is gas, and that has all the implications for energy security that I have mentioned.
We take seriously the need to reduce emissions from fossil fuel power stations. Significant improvements in design specifications already mean that new coal-fired plants would, as I have said, emit approximately 20 per cent. less carbon dioxide than older coal-fired power stations. Moreover, CCS offers the possibility of still further reductions; there is potential for a reduction of up to 90 per cent. in carbon dioxide emissions from fossil fuel-burning power generation.
I hope that the combination of these arguments—the duplication of the effect of the EU ETS cap; the possible undesired impact on the development of CCS, and the energy security concerns it raises; and the actions we are taking to promote CCS technology—are sufficient to persuade Gregory Barker not to press new clause 11 to a Division.
Anyone who has heard me speak about climate change will know that my party has long recognised that the benefits of moving to a more efficient, low-carbon economy extend far beyond just stabilising our global climate. Shifting to a low-carbon economy will also mean saving ordinary people money by making their homes, and even their businesses, more energy-efficient.
That is why I wish to speak in support of the Government's amendments to the Electricity Act 1989 in order to enhance the role of the carbon emissions reduction target. New schedule 1, new clause 16 and amendments Nos. 45 and 51 will all receive the support of Conservative Members because we consider them the right thing to do. We wonder why these actions are so long overdue, but we welcome them nevertheless. As we debate this issue in late October, one wonders why serious action to stave off fuel poverty this winter was not taken earlier by this Government.
I am also highly sympathetic to new clause 10, which was tabled by Colin Challen, who is one of the House's experts in this area. His proposal to improve energy efficiency in the residential sector and in the commercial and public sectors touches on a vital issue.
Would it not be easier to do all this if home owners could see, at a glance, how much money they were spending on the energy that they were using? Why are we still waiting for smart metering to be rolled out, given that the relevant legislation is in place—if only the Government would activate it?
Sadly, I cannot give my right hon. Friend a good answer to that. Conservative Members have been champions of proper, real, intelligent smart meters, and of an ambitious programme to roll out that modern technology. I do not know why the Government have dragged their feet and will not heed the opinion not only of Conservative Members, but of Members from across the House that there should be a far more ambitious roll-out of real smart meters. It is regrettable that the Government have not taken advantage of the Energy Bill to introduce a more ambitious programme.
I support the hon. Gentleman on the introduction of smart metering. He will know that discussions are taking place on that subject in the other place today. He talked about an ambitious roll-out, so will he tell us how he proposes it should be done? What will the cost be? What will the cost to the consumer be? If he has answers to all those questions, the House would be keen to hear from him.
I am not going to be drawn any further, because I am mindful of the time. If the hon. Gentleman would like to listen to the energy debate in the other place or read the Hansard account of it, he will discover an extensive extrapolation of our policy, in which all his questions will be answered.
New clause 11 is the provision on which I most wish to focus. It proposes the introduction of an emissions performance standard, which I consider vital if we are to meet the ambitious targets inherent in the Bill. Those ambitions are shared across the House, and support for new clause 11 extends well beyond the Conservative Benches. The Conservative policy enshrined in new clause 11 is modelled on the Californian example, which was introduced in January 2007. It requires all new base load generation serving the Californian market to have emissions no greater than those of a modern gas power plant: 500 kg of CO2 per megawatt-hour. By contrast, even advanced technologies, to which the Minister alluded, such as the new supercritical units proposed for use at Kingsnorth in Kent, will, in the absence of CCS technology, operate at the much higher level of approximately 700 kg of CO2 per megawatt-hour. Governor Schwarzenegger described the emissions performance standard as being similar to the standards set for appliances such as fridges,
"where there are minimum performance standards and beyond that it is up to the market to compete, as long as they meet or exceed the minimum standard".
On new clause 11, what level of kilograms of CO2 per megawatt-hour does the hon. Gentleman have in mind? If I recall, Lord Turner said last week that the UK's current performance level is about 450 kg of CO2 per megawatt-hour and by 2030 that should have reduced to 50 kg of CO2 per megawatt-hour.
Clearly, we would look to push that down in the future, with the advent of technology. However, until we have the CCS technology on-stream, we would not wish to push it lower. That figure is a sensible middle course between the most ambitious target and the Government's target, which is—unfortunately—the least ambitious.
Our EPS policy is clearly defined, transparent, non-discriminatory and verifiable. It would guarantee equality of access for EU electricity companies to national consumers. In his 2006 review, Lord Stern said:
"Carbon pricing alone will not be sufficient to reduce emissions on the scale and pace needed...Effective action on the scale required to tackle climate change requires a widespread shift to new or improved technology in key sectors such as power generation, transport and energy use".
It is the opinion of pro bono legal advocate Client Earth, in its submission to the Department for Business, Enterprise and Regulatory Reform carbon capture and storage consultation in 2008 that the Government's description of CCS readiness is a
"a vague and meaningless definition that does not create effective incentives or requirements for private sector energy companies to make the necessary investments that are required".
Could not a deal be done between the Opposition and the Government on this issue? Could we agree if the Government gave real sense to what they mean by "readiness for carbon capture" so that it was clear that any new power station would have that technology when it became available and the money was in place? The fundamental problem is that the vagueness of the Government's position means that we have to stick to the argument that there should be no new generation without CCS. Can we press the Government to be more precise?
Regardless of what the Government say, the great benefit of our position is that it is clear: there will be no new generation of dirty coal without carbon capture and storage. The clarity of that position sends a clear signal to the market so that it can plan for investment. It is unfortunate that the Government competition has such a long timeline, is so vague and has no clear funding commitments. We are told that the funds available might be tens of millions of pounds, which is even less than would have been needed to ensure that the Peterhead CCS project stayed in the UK, instead of going to Abu Dhabi.
The hon. Gentleman has been clear, and it is right that we have clarity on this issue. Will he be equally clear about the consequences of adopting such a position? If new generation capacity without CCS were ruled out, it is possible that, as old stations ceased generating, we would not have enough supply to meet domestic and industrial need. Does he accept that that is a clear possible consequence of his amendments?
No, I do not, and certainly that would not happen under a Conservative Government. The Government may have a one golf club policy on the energy economy, but we would look at a range of instruments to ensure a balanced and secure energy economy. We see CCS not as a way of ruling out coal in the future, but as driving forward an agenda that will ensure that we can use the UK's coal reserves and reach our 2020 CO2 emission targets. We are more ambitious and more clear-sighted than the Government, and if we ruled out a new generation of dirty coal, we would have to have a range of policies across the energy economy. If the hon. Gentleman waits until the new year, we will unveil our climate change strategy papers and he will see the stark contrast between the Government's one-club golfing and doom and gloom-mongering, and our wide-ranging energy horizon.
Does my hon. Friend intend to accompany his proposals with a cost-benefit analysis to ensure that these mandated low-emission power stations are the best way of achieving a lower carbon emitting economy? Otherwise, we could be loading more expensive plant and higher electricity prices on British industry during a very deep recession. How confident is he that his proposals, which could be written into statute, would be the best way to achieve a lower emission economy?
I have to be frank with my right hon. Friend—without carbon capture and storage, we will not meet our targets. If we cannot decarbonise the electricity sector in the UK and elsewhere in the world, the chances of being able to meet our CO2 targets in the next couple of decades are very slim. It is by no means the only policy tool at our disposal, but it is one that we cannot afford to throw away. He is right to say that the costs will be considerable—hundreds of millions of pounds, and perhaps even billions of pounds—but this policy would be a good use of the auctioned ETS credits that will accrue in 2012, recycling them back into the energy sector to fund research and development and innovation for UK plc. Unfortunately, the Government are sitting on their hands and have no credible policy not only on implementing CCS, but for funding or developing it.
I contrast the vagueness of the Government's unambitious policy—we can hope that that might change with the new Department and there will be an announcement in due course—with the clear policies articulated in June by the Leader of the Opposition, when he announced that the Conservative party in government would introduce an EPS standard for all electricity generated in the UK.
We support the hon. Gentleman's proposal, but the Minister's response was that if emissions are capped within a cap and trade scheme, the only effect would be to produce slack somewhere else. My answer is that we should also lower the cap at the same time: is that the hon. Gentleman's position?
I cannot give the hon. Gentleman a definitive answer on what the cap should be in 2012, but his general point is correct. We see CCS not as an alternative to the ETS, but as a complementary policy. The whole point of an emissions trading scheme is that it drives technological change. I am sorry that Ministers do not accept the verdict of Lord Stern—in a report commissioned by the Government—that
"Carbon pricing alone will not be sufficient to reduce emissions on the scale and pace needed".
Perhaps the Minister can say now whether she refutes those words. If not, I hope that she will join us in supporting an emissions performance standard that is the most market friendly approach to driving CCS.
Regardless of the hon. Gentleman's comments about having no new coal-fired power stations without CCS, will he accept that new clause 11 would not, in itself, bring that about? It would set emission standards, but it would not say what those standards would be.
The hon. Gentleman is right. We have tried not to be overwhelmingly prescriptive, which is consistent with our approach to the Bill. We do not want to put specific figures into the Bill if possible, because technology moves on.
Not at all. I have told the hon. Gentleman what a Conservative Government would do. We would follow the Californian model. When he sees the climate change strategy that the Opposition will publish in the early new year, he will get a full flavour of the range of policy tools that we will be deploying.
Will my hon. Friend come back to the point about carbon capture? Would it not be helpful if we could say to the Government that there ought to be a mechanism whereby, if they could be stronger in explaining how they were going to extend carbon capture and storage, it would be possible to have a phased introduction rather than this sharp distinction between the two sides? It seems to me that if the Government were prepared to be tougher about what such a measure would mean, the Opposition could, perhaps, come closer to the Government on the issue.
This is a very rare parliamentary occasion when I find myself in the slightest disagreement with my right hon. Friend. The beauty of our policy is that it is absolutely crystal clear. It sends certainty to the market and allows investors and the energy sector to understand that we will not countenance a new generation of dirty CO2-polluting coal-fired power stations. We want to engage constructively with the energy sector, which is up for this if long-term leadership is provided. Earlier in the year, in that leaked exchange of letters between DBERR and the energy companies, we saw just how the whip hand is with the energy companies. The absolute failure of Ministers and senior civil servants to provide any leadership means that we have to take back the initiative and show vision and leadership. That is what the EPS standard will do. A clear statement of our intent in this policy is vital in providing market certainty.
Does my hon. Friend agree that under this Labour Government we have had posturing on climate change while there has been an absolute and consistent failure to deliver the targets that have been set? To pick up on the comments made by Barry Gardiner, who has just left his seat, there might already be a shortfall in generating capacity in about 2017. We have potential shortfalls in energy generation and a failure to commit to cleaning up new coal when it comes on stream.
My hon. Friend is spot on.
Let me conclude on this element of the group of amendments. The ETS is a vital part of the drive to a low-carbon economy. However, unlike the Government, we do not believe that the ETS on its own will deliver enough. That is why we are on the same side as Lord Stern. As my hon. Friend Mr. Hurd said so clearly earlier, the signals being sent to the market from the ETS alone are too vague, too fickle and too weak just to rely on emissions trading. That is why we need to introduce an emissions performance standard to give real teeth to the Bill.
I am grateful for the support that the EPS has had from those on other Benches. We must give the long-term clarity that the market needs to invest appropriately in order to deliver a decarbonised electricity supply to this country within the next 30 years, through which many of the policies for meeting our 80 per cent. reduction target by 2050 can be achieved. Although we cannot vote on new clause 11 now, we will wish to put it to a vote later on.
We are broadly in favour of the measure to expand the carbon emissions reduction target, but are concerned that the Government have made fuel poverty a problem for the industry to solve rather than taking initiatives to tackle it effectively themselves. If they had done something about fuel poverty when there was still plenty of time ahead of this winter, such as when we were pointing to the sharp rise in forward gas prices earlier in the spring, they would not be expanding CERT out of necessity at a time when it is unlikely to help anybody this winter. A fairly small amount of money per household is likely to be passed on to the bill payer anyway. Do the Government now see CERT principally as a fuel poverty mechanism or as a carbon reduction mechanism?
When the Government first introduced the CERT order in January, we were critical of it on several counts. The order failed to explore how, in targeting vulnerable customers, the energy distributors might readily identify that group without contravening the Data Protection Act 1998. It was an unambitious response to the scale of the climate challenges that we face and, in trying to drive microgeneration, tackle fuel poverty and lower carbon emissions, it might easily have been driven at cross-purposes. However, we supported the measure then and we will support it now, as it takes much-needed action to help the fuel poor, a group that has suffered particular hardship under the Government.
According to National Energy Action, the Government slashed the budget of the Warm Front scheme this year by more than 25 per cent. for the next three years, leading to 50,000 fewer vulnerable households receiving assistance next year. The value of cold weather payments, which were introduced by a Conservative Government, declined in real terms over the last four years, failing to keep pace even with the rate of inflation, let alone with soaring fuel costs. [Hon. Members: "We've just increased them."] But over four years, they have failed to keep pace.
Simple energy efficiency measures, such as cavity wall insulation and lagging boilers, will make the difference between life and death this coming winter. It is a sad testament to the Government's record on fuel poverty that today's measures, coming as they do at the end of October, will do little to tip the balance this winter.
Will the hon. Gentleman at least acknowledge that the Government have significantly increased winter fuel payments, as has just been announced? More particularly, he recognised that the CERT scheme was paid for in the main by energy companies, and seemed to imply that that was not enough. What is his commitment? What is he saying? What money would he make available, were he in government, to retrofit existing households? How many millions of pounds is he prepared to commit now?
I shall come on to that question in just a moment, because I want to keep some structure. The hon. Gentleman is right that we welcome the expansion and improvement of the CERT scheme. We are pleased that the Government have chosen to take on board our concerns over the targeting of vulnerable customers and have provided for that support to be targeted at areas and groups as well as individuals. All fuel poverty charities tell of the difficulties in finding the fuel-poor and the further struggle in getting them to accept help. Street-by-street, postcode-by-postcode improvements mean that the most vulnerable will be lifted by the tide of change and lasting improvements to our housing stock that can be strategically mapped out to encompass those most in need.
The new schedule includes the energy generators as well as the distributors in the scheme. That will significantly broaden the base from which the improvements can come and more fairly spread the burden of cost to the emitters of the carbon. By allowing the expansion of the scheme, presumably to facilitate the Prime Minister's September announcement, the change will empower the Secretary of State to use the CERT approach in a broader, but also more targeted, way. If that is done wisely—I hope that it can be—that can only be a good thing.
Considering that the new schedule has been brought forward as a result of action on fuel poverty, I have some concerns about its place in a Bill whose priority is greenhouse gas emission reductions. I do not for a minute discount the fact that we need to act on fuel poverty, but we also need to be clear about the principal purpose of the Climate Change Bill. However, as the problem is urgent and in almost every case the ends are congruent, I see no reason not to support the change here and now on those grounds. To clarify, will the Minister confirm whether the Government regard CERT as a fuel poverty measure or a carbon abatement measure?
Some serious concerns have been raised that the costs of CERT will be passed straight on to the consumer, not least by the Association of Electricity Producers. That problem would be exacerbated by its expansion through the amendment, and it would be a cruel irony if this well-meaning step to tackle fuel poverty actually increased domestic fuel bills in the long term. Therefore, I hope that the Minister will reassure the House that the price increases will not be passed on to consumers and that, over the lifetime of the measures, she or her successors will continue, through the regulator, to be mindful of that danger.
Finally, the Opposition are very sympathetic to new clause 10. Although the Government have done many good things during the Bill's passage through the House, we greatly regret that they have not engaged more positively on this vital issue. We hope that they will take on board the ambitions of this new clause, and the serious concerns that exist in all parts of the House about the need for a serious delivery strategy for energy efficiency. The matter is so vital that we need such a strategy now. We simply we cannot wait any longer.
We believe that energy efficiency is about more than reducing CO2 emissions. In the modern, 21st-century economy, it will be as important to UK plc as labour efficiency was in the 20th century. Energy efficiency will be a hallmark of a successful, internationally competitive economy going forward. That is why the Germans are placing much more emphasis on energy efficiency and have a much more ambitious 10-year target than we do. More to the point, they have a far more ambitious and thought through delivery programme to make sure that energy efficiency becomes a reality.
If the Government cannot support new clause 10 this evening, I assure the House that the Conservative party will bring forward ambitious policies to that end in the spring.
I, too, welcome this Bill. It is a major step forward, and certainly a world first, so it is a great privilege to take part in this debate this evening. I rise to speak in support of new clause 10, and I also want to say a few words about new clause 11.
New clause 10 deals with what lies at the heart of a great part of our carbon emissions, 40 per cent. of which come from the building stock in this country. It provides an answer to those sceptics who talk about cost only as a burden and not as an opportunity or an investment. We have heard some of that talk this afternoon but, if we invest in homes to make them more energy efficient, people will save money and we will not have to subsidise them so much in future through the various schemes that exist. That would be an immediate gain for people today, and not just for future generations.
New clause 10 addresses three targets, and I think that I can claim correctly that all of them are existing Government policy, except that they have never been set in statute. The first target is that the general level of energy efficiency in residential accommodation should be increased by at least 20 per cent. by 2020, compared with the general level of such energy efficiency in 2010.
The 2003 energy White Paper identified that a carbon saving of 6 million tonnes from residential energy efficiency is achievable between 2010 and 2020. An answer to a parliamentary question appeared in Hansard on
The second target is that the general level of energy usage in the commercial and public services sector should be reduced by at least 10 per cent. by the end of 2010 compared with the general level of usage in 2005, and reduced again by at least 10 per cent. at the end of 2020 compared with the general level in 2010. Again, a parliamentary answer appeared in Hansard on
The final target in new clause 10 is to ensure, as soon as is practically possible, that
"the number of dwellings with one or more microgeneration installations shall be eight times the number of dwellings with one or more microgeneration installations in 2007."
"we will provide new incentives with the aim of raising eightfold the number of households which are producers as well as consumers of energy."
It is therefore clear that all the proposals in new clause 10 are existing Government policy. The Government have assessed the situation and said that all the targets are achievable.
The hon. Gentleman is making a very powerful case, and showing that all the elements in new clause 10 are Government policy. How then does he explain the hypocrisy of those on the Government Front Bench, who refuse to adopt it?
Order. That is not a word that we tend to use in the House. Perhaps the hon. Gentleman would like gently to withdraw it.
Why is it important to set these achievable targets, and to put them into statutory form? We need to inform ourselves about what is happening today. The investment being made in insulation and other aspects of energy efficiency is struggling to cope with our stated objectives, and many manufacturers and suppliers of equipment and insulation materials are having problems. For example, Knauf Insulation makes plasterboard and insulation materials. It does not produce a poor product—the firm is actually at the cutting edge of the industry—but it is closing its factory in St. Helens because sales are not sufficient to keep the business going.
I have also spoken to people in the microgeneration industry. They have complained about the to-ing and fro-ing—a sort of game of ping pong—that has occurred in the low-carbon buildings programme with the result that, from one month to the next, they cannot tell how much work they are going to get. When the terms of the programme were changed to reduce support for microgeneration projects, many people decided that the payback period was stretching out so far that they no longer had any interest in pursuing that course. It is therefore clear that we need to set statutory targets, and not just say that they are aims or objectives that have no force.
In conclusion on new clause 10, I should tell the House that the Department for Business, Enterprise and Regulatory Reform commissioned independent research on microgeneration that was carried out by a company called Element Energy. The research found that
"the underlying certainty and impact provided by a combination of legally binding targets and policies will drive the decisions by suppliers and their investors", and that
"there appears to be a sensible logic for establishing a microgeneration target in the UK".
That also extends to the other proposals that I have mentioned, and these are matters that the Government have to take on board. They may not do so in this Bill, but I think that we will have to return to the issue and strengthen our objectives with statutory backing.
I want to comment briefly on new clause 11. The Opposition Front-Bench spokesman, Gregory Barker, weakened his case tactically by allying it so much to the fantasyland of a future Conservative Government's targets. The new clause already has cross-party support, but it would have got even more support if the hon. Gentleman had just presented it on its merits.
It is perfectly sensible to set a CO2 emissions target for new power stations. I cannot see what the objection is to that. The opposite, of course, would be to permit anything. There are different ways in which such a target could be set. The Government could say, "We'll have a target whereby new coal power stations must have such an efficient combined heat and power plant attached that even without carbon capture and storage, it would be possible for us to approve them." It would all depend on the level set. I was speaking from memory when I intervened on the hon. Member for Bexhill and Battle, but I listened to Lord Turner last week.
Does my hon. Friend agree that new clause 11 would not prevent, say, the building of the Kingsnorth power station, as the provision is dependent on the level set? The level set could very easily be one that a modern, clean combustion plant could meet without CCS. The new clause is actually a gesture without great meaning.
Yes, that is true to a great extent, except that new clause 11 provides a power for the Secretary of State to set what might be described as a kind of licensing condition. That is a suitable power for a Secretary of State to have. Of course, a future Secretary of State in a different Government could say, "We'll help Poland out by buying some of their old coal-powered power stations and setting the limit so high that we can set them up here." In that sense, my hon. Friend's point is correct, but no sensible Secretary of State would do a thing like that. The provision is about reducing the emissions from generation. Lord Turner said that by 2030, we should be aiming for emissions of 50 kg per megawatt-hour, which seems an extremely ambitious programme. If that kind of aim appears in the Committee on Climate Change's thinking when it sets its budgets, this Government—or any Government—will have a real problem on their hands. A power such as that in the new clause would help them to deal with that.
Jim Hansen at the NASA Goddard Space Flight Centre, perhaps one of the world's leading climate change scientists, has said that a complete ban on new coal-powered power stations that do not have CCS must be implemented immediately if we are to achieve our targets. Al Gore, who I think still advises the Prime Minister on climate change, is on record as encouraging young people to place themselves in front of bulldozers that are preparing to build new coal-powered plants. Of course, many such plants without CCS are to be built in the United States, unless new President Obama deals with the situation.
We should think again on the subject, and not have a "We'll do better than you" kind of debate. A lot of people outside the House are expecting clear guidance on CCS. Of course, we will have to use it to deal with the Polish and German problems in the EU; there is a great dependency on coal in Germany. I hope that the Front Benchers will reconsider their total opposition to such a proposal.
I join others in congratulating the Government on getting the Bill this far, even though it has been a rather slow and painful process at times. I should also like to congratulate Friends of the Earth and its campaign for the Big Ask, and various rebellious Members on both sides of the House. If it were not for their rebellious instincts, I do not think that we would be debating this Bill at all tonight.
In her opening remarks, the Minister highlighted the links between economic growth and carbon emissions. That might be thought a slightly unfortunate and perhaps tactless thing to highlight when we are going into recession, but it is quite an important point to make. In fact, Sir Nicholas Stern—now Lord Stern, but Sir Nicholas when he wrote his report—pointed out that the biggest carbon emissions reduction achieved by any economy over a sustained period was that of Russia in the 1990s, and it achieved that, broadly, by collapsing its economy.
It is particularly important, as we enter a recession, that we keep all the signals, indicators and policy frameworks to decarbonise our economy in place, so that UK plc is best placed to take advantage when the upturn comes, and can have an economy that will take advantage of a new era in global economics and business. That is particularly important, and it underlines many of the amendments in the group that we are discussing, all of which we Liberal Democrats will support.
Government new clause 16 and the consequent new schedule and other amendments are welcome. The Secretary of State for Energy and Climate Change said earlier, from a sedentary position, that there was no choice to be made between tackling fuel poverty and tackling carbon emissions. If we can find policy mechanisms that do both at once, we certainly should take advantage of them. I have to say that the proposals have faint echoes of the green mortgages that the Liberal Democrats advocated years ago; those mortgages sought to do exactly the same. They linked carbon reductions to tackling fuel poverty and very high fuel bills. Unfortunately, fuel bills have got even higher in the meantime, and it has taken an economic crisis to stir the Government into real action on that front. Nevertheless, the new clause is welcome, as is the Government's acceptance that targets for 80 per cent. reductions in carbon emissions by 2050 should be in the Bill; again, the Liberal Democrats have called for that for years. It is important to recognise the progress that the Government are making, and to support it. I hesitate to say, "We told you so," too many times—but we did, and we have been doing it for years.
New clause 10 is also an important improvement to the Bill. As others pointed out, Sir Nicholas Stern said that the emissions trading scheme and carbon trading were necessary steps towards producing a decarbonised economy, but were probably not sufficient. It is important to grasp that point. The Minister talked about clause 33 in relation to sectoral opportunities, and clause 13 in relation to how policies affected various sectors, but the wordings are slightly wet. This is an area in which toughness and urgency are required, and new clause would 10 begin to deliver that.
We need a host of additional incentives and policy measures, not least to give the clearest possible signals to the private sector. I have great faith in the private sector's ability to respond to policy frameworks. In my experience, given everything that I am learning about the renewable energy sector, low-carbon transport technologies and other environmental measures, when the private sector is given sufficiently clear signals, it responds brilliantly. A good example is the car industry's response to developing EU restrictions on carbon emissions, which are being flagged up decades in advance. I have to say that we Liberal Democrats would go much further, and would argue for zero-carbon new cars by 2050, but the emerging policy at European level is clearly sending the car industry strongly in the direction of lower-carbon technological innovation. My personal favourite is the Tesla Roadster, which is now on the road. It is rather expensive, but the emissions are only 25 g per kilometre. It looks quite like a Ferrari, and I would happily test-drive it, if anyone listening to the debate wants to offer me that opportunity.
The white goods industry is another example of a sector that was given clear signals, not as part of some broad overarching general scheme, but on a specific basis, and in that case, too, the private sector responded well. Sectoral targets of the kind proposed in new clause 10 could play an important part in energising particular sectors. Colin Challen is right to want to give force of statute to targets that, as he said, were already Government policy in many respects. If we do not do that, there is of course a risk that they might go the way of other Government targets, such as the 2010 targets for CO2 emission reductions or the 2010 target for renewable energy; the Government have drifted away from those targets. We need the kind of pressure that is in the new clause to give a clear direction on issues such as microgeneration and the residential and commercial sectors. We need it to give businesses and industrial sectors the commercial drivers that will release investment, when those sectors can get it, and direct them clearly towards a lower-carbon future.
There is an example in my constituency of which I am very proud. A very good but perfectly ordinary office supplies company called the Commercial Group has set itself the ambitious target of reducing its carbon footprint by 75 per cent. in just three years, and it is well on track to achieving that. That makes all the politicians' targets look, frankly, rather sick. That example demonstrates how well the commercial sector responds when it gets the bit between its teeth. I am happy to support new clause 10.
One sector that might have been excused for thinking that it was a special case consists of the advocates of unabated coal-fired power stations. To say that the Government are giving mixed signals on that front is putting it mildly, and to call Britain a world leader in carbon capture and storage is like calling a penguin a polar bear. Since the Government proudly announced that they were a world leader in the field during the passage of the Energy Bill in the summer, two other countries, Germany and China, have produced working demonstration projects. As the Government were hoping to sell their more relaxed and gradual demonstration technology to China, that rather pulls the rug from under their feet.
Is not the situation even worse than that? There was a project at Peterhead that would have put the UK and Scotland at the forefront of carbon capture. The Government withdrew their support, and the project is now going ahead in Abu Dhabi.
The hon. Gentleman is exactly right. The Peterhead project was a classic example of the Government sending precisely the wrong signals. Although the Minister seemed to disagree with this earlier, it is clear from talking to BP that the Peterhead project was stopped as a direct result of the announcements relating to the Government's own competition. That meant that the opportunity to use some of those gasfields for carbon storage is lost for ever, because once capped, the gasfields are almost impossible to exploit. It was a terrible decision, and it meant that projects such as the one at Peterhead, which would probably have been on line and functioning by about 2011, were stopped and replaced by a competition that was unlikely to produce anything before 2014 at the earliest. The Government have produced a carbon capture strategy that is too narrowly focused on post-combustion technology, too miserly and too unambitious in its scale. That is a great shame.
If the decisions relating to Kingsnorth are anything to go by, it is clear that the current framework of the emissions trading scheme is, almost by definition, insufficient to drive us towards a low carbon economy. The fact that Kingsnorth is to go ahead when its carbon emissions will be 70 per cent. higher than the nearest commercial equivalent is almost proof of the inadequacy of the ETS. The Minister seemed to suggest that we should not talk about technologies that had to be retro-fitted more expensively to old power stations, while ignoring the fact that if Kingsnorth is allowed to go ahead without locking in carbon capture and storage in some form, even if it is only in financial form rather than in technical form to start with, carbon capture and storage will have to be retro-fitted to an old coal-fired power station. That is what Kingsnorth will be—a dinosaur from a bygone age—by the time carbon capture and storage is ready.
Perhaps all this is a legacy of the Secretary of State's predecessor in the Department for Business, Enterprise and Regulatory Reform in its previous incarnation. Malcolm Wicks, as the Energy Minister was an amiable Minister to have on board in these debates, but he did not give much away and DBERR was clearly pointing in the wrong direction on such issues. Now that the new Secretary of State has responsibility for energy policy as well, I would urge him to add carbon capture and storage to the long list of welcome modifications—we would not dare to call them U-turns—that he is adding to Government policy.
To say that the Conservative party had a slightly mixed record on some of these issues might be a little churlish in the circumstances, although I would point out to Gregory Barker the failure of his colleagues consistently to support the Californian model that was put forward in an amendment tabled by the Liberal Democrats to the Energy Bill in the summer. He probably ought to look carefully at the voting record of the Conservative group on Kent county council on the subject of Kingsnorth, as well.
However, the hon. Gentleman made clear his position today, and we welcome him on the increasingly crowded road to Damascus. He said that the Conservatives would put the greenhouse gas limit at Kingsnorth at 500 g per kilowatt-hour. If that is the case, he was wise not to specify the exact limit in the new clause. We would have had some difficulty supporting it at such a high level. Our preference is for a lower limit—to judge from the nods from some on the Government Benches, I suspect that others might agree with me—of about 350 g per kilowatt-hour, which would direct investors towards alternative gas-fired power stations if no unabated coal-fired power stations were viable.
I appreciate what the hon. Gentleman is saying, but we hope that the Bill will stand the test of time and that any figure, be it 500 or 350, with the push that it puts behind the technology, will be amended sooner rather than later. It therefore makes sense to give the discretion to the Secretary of State. We hope that there will be an ambitious and progressive Secretary of State, rather than the present hopeless and unambitious lot.
I welcome the hon. Gentleman's comments in that respect. As he said, the new clause gives the Secretary of State the power to define the limits— [Interruption.] The Secretary of State says from a sedentary position that he has that power anyway. In that case, he should support the new clause and welcome it into the Bill. There should be no dispute across the Chamber. We should make sure that we are giving the clearest possible signals to the industry and to private investors that this is the direction of travel, and that if anyone wants to invest in a coal-fired power station, they should factor in the cost of carbon capture and carbon storage into the future, or they would be misreading the investment opportunity.
I am afraid that that is not the signal being given to the energy industry. The signal that the Government are giving at present is that the industry can get away with it, and that, as the Minister described, by going ahead with very high emissions in some sectors and allowing ourselves headroom within the European emissions trading scheme, we will effectively buy our way out of a high-carbon economy.
The hon. Gentleman spoke about the direction of travel. What is the direction of travel of his own energy policy? He and many of his colleagues in local government are against wind power, nuclear power and new, cleaner coal plant. Does he want us to be so heavily dependent on gas that our source of power and our security of supply are at risk?
The hon. Gentleman has introduced an unfortunately partisan tone into the debate. However, I am happy to answer him. It is wrong to say that Liberal Democrat councils are against wind power. I have plenty of examples from Orkney and Shetland downwards where Liberal Democrats at local level have supported wind power in their localities, but I would never say that every application for a wind farm is always right. We have been committed to a democratic planning system, which always gives local people the right to refuse a wind farm.
The direction of travel is more in the direction that Denmark has followed for a long time, putting great emphasis on community buy-in to wind projects and there has therefore been a very low level of opposition to wind farms in that country. That is a model that our energy companies might follow. The hon. Gentleman is right that we are against nuclear power, which we believe would leave a toxic legacy to future generations that runs the risk of leaving us with the kind of bill—the Secretary of State is smiling. I do not know whether he has done the sums, and I am not sure whether he has inherited the budget from DBERR for nuclear clean-up, which runs to some £1.4 billion a year. Fifty-six years after the first nuclear power started producing radioactive waste, we still have not found anywhere to put it. If Paddy Tipping is advocating that we make those same mistakes again, I would certainly reject the policy.
We need transitional technologies to see us through any possible energy gap while we wait for renewables to come on stream on a scale sufficient to fill the needs of the whole UK economy. We should do that partly by investing in new renewables. The Carbon Trust recently produced some encouraging figures about how offshore wind is coming on stream faster and is likely to attract more investment than was previously envisaged. Another part of the answer is, of course, energy and demand reduction and energy efficiency, which must make a big contribution.
The other key transitional technology will probably be carbon capture and storage. We need to lock in that technology, which is why it is so important to support amendments such as new clause 11 and give the clearest signal that we will not tolerate unabated coal power into the future. That would give precisely the wrong signal to the private sector and discourage investment in carbon capture and storage. As has been pointed out, that would mean that the projects would go ahead—but in Dubai, China, America and Germany, not in this country. I am happy to support new clauses 10 and 11 and the Government new clauses and amendments.
New clause 10 is extremely important, and I endorse everything that my hon. Friend Colin Challen said about it. However, I want to add a dimension to this debate. Proposed new section 2A refers to the sectoral targets for 2020 in respect of residential accommodation and the commercial and public services sector. My argument is that those targets could be more ambitious. In the past 25 years, without much effort, we have been improving the general level of energy efficiency in the United Kingdom by about 1 per cent. a year. In one sense, to call for an improvement of only 2 per cent. a year is very modest.
The extra dimension of energy efficiency policy that we have to consider is the impact of the recent events on the financial markets and the global slowdown in the economy. The Chancellor and Prime Minister have recently been forthright in saying that they will invest to avert the worst effects of the slowdown in the United Kingdom, and they are considering bringing forward capital projects already in the Government's programme to alleviate the difficulties over the next year or so. However, ramping up the energy efficiency work that is already being done would not only be one of the cheapest and easiest ways of reducing our carbon emissions; it would also be powerful in countering the effects of rising unemployment resulting from the global slowdown.
I hope that the Secretary of State will speak to the Chancellor about that because the Government have an opportunity to take an important initiative that other western European Governments could follow, just as they followed the Prime Minister's initiative on taking ownership in the financial services sector. The United Kingdom has a unique opportunity to increase massively the energy efficiency of its residential and commercial accommodation and of its existing public sector institutions and to upgrade the skills of some fairly low-skilled people to create jobs when the trend in the market is for jobs to be shed. I am reluctant to use the words "green new deal", because they have been a little overdone recently, but they are the best simple way of describing the opportunities on offer. That is why new clause 10 is so important.
The hon. Gentleman is talking a great deal of sense and there is a lot of shared thought across the Chamber about the importance of investment in green technology and energy efficiency as a response to the current economic crisis as well as for the long-term good of the economy. Has he had a chance to consider what the Germans are doing? He said that the 2 per cent. target was unambitious, and I mentioned earlier that the Germans are looking at 3 per cent. a year for the next 10 years. Has the German plan influenced his thinking at all?
I am aware of what Germany, Denmark, Norway, Sweden and Finland have done, so I do not think that it is new or revolutionary. Nor is it idealistic; in the past 10 or 20 years, other countries have made far greater progress than we have. What is happening in Germany at the moment, however, is particularly interesting.
I have followed the hon. Gentleman's argument with interest. He has just said that in the past 10 years many other countries around us have made much greater progress in energy efficiency than we have. I wonder why that is.
What I have said is that a handful of northern European countries have made more progress than Britain in many recent years; this goes back 20, 30, 40 or 50 years. We have a lot to learn from what has happened in some other northern European countries, but our progress on energy efficiency in the past 10 years has been faster than in any other decade in our history.
I move on to new clause 11. I was interested that Gregory Barker admitted that his policy that there should be no new coal-fired stations without carbon capture was not dependent on new clause 11. That was an important admission; it is important that every Member understands what new clause 11 says. It says not that there will be no new coal-fired power stations without carbon capture, but simply that
"The Secretary of State may make...regulations...to set the maximum level of carbon dioxide that may be emitted per unit of output".
Such regulations would be sensible. I do not know whether it is necessary for the provision to be in the Bill, whether the Secretary of State could make the regulations anyway or whether the provision could be made through an amendment to the Electricity Act 1989, although I suspect that it is not necessary to include it in the Bill. The sentiment and statement of intent are admirable, but they are not absolutely related to the question of carbon capture and storage and new coal-fired power stations.
The hon. Member for Bexhill and Battle has worked tirelessly to give a green veneer to his party, and in some senses he has been successful. I have had many dealings with him in recent months in his new capacity as the shadow Minister, and he was formerly on the Environmental Audit Committee with me. I know that his heart is in the right place. The problem is that the mind of his party is in completely the wrong place. The hon. Gentleman talks about spreading around so much money on new CCS projects, but that is not credible given that his party leadership are still obsessed with sharing the proceeds of growth—when it returns—and giving half of it away in inheritance tax cuts for multi-millionaires or tax cuts on gas-guzzling vehicles. The policy is not credible.
The hon. Gentleman's Government have shot our fox on sharing the proceeds of growth; it is very unlikely that there will be any growth for the foreseeable future. In the light of that, we have had to amend our policy. However, if the hon. Gentleman had paid attention to what the Leader of the Opposition has said, he would know that my right hon. Friend has clearly spelt out that we anticipate significant funding for carbon capture and storage from the auctioning of emissions trading scheme credits in 2012 and that we have also spelt out where the savings would come for the funding of feed-in tariffs. The hon. Gentleman would also know of our clear commitment on the expansion of Heathrow. On all those issues, his party's Government are vague and our party is absolutely clear.
The hon. Gentleman has just argued that at a time of economic slowdown, spraying away tax cuts is not the best way to pursue our climate change policy. The point also applies to the Liberal Democrats; just a few moments ago, Martin Horwood said that the Government were too miserly and unambitious in the scale of their financial support for CCS. His party promises to cut £20 billion from public investment, so it is hardly credible for it to accuse my party's Government of being miserly and unambitious.
I just want to put the record straight: that £20 billion would come from savings, not cuts to public investment. A great deal of it would be redirected to what we believe are the important priorities for people in this country.
The hon. Gentleman means efficiency savings through sacking consultants—I understand that.
I turn back to the serious point. New clause 11 is an admirable statement of intent. Few could disagree that what it proposes would be a good thing for the Secretary of State to do. However, I doubt whether it needs to be an amendment to this Bill at this time, and that is why I urge hon. Members to vote against it.
It is a pleasure to speak in this debate. Following the debate on the previous group of amendments, we know that the Bill will go forward aiming for an 80 per cent. cut in emissions in this country by 2050. However, we should bear in mind that aviation and shipping are growing at an enormous rate while growth in the broader economy other than in those two sectors will doubtless, according to the chairman of the Committee on Climate Change, have to be even greater.
The Bill promises a lot, but it allows the Government to do what they have done so often. We have heard excellent speeches by genuinely environmentally committed Labour Members who feel frustrated by a Government who have so often failed to deliver on the ground the cuts in emissions and the change to a low-carbon economy that they have promised. The Bill is sending a false signal to the British people, because the Government are not capable of delivering on the targets within it. Colin Challen made an excellent speech in which he laid out with great care how all the components of new clause 10 are current Government policy. In fact, the Prime Minister himself has said that some aspects of it are Government policy. Yet when the hon. Gentleman puts it down in a new clause, we find that his Front Benchers refuse to accept it.
I was not aware before this evening, Madam Deputy Speaker, that a ruling had been made that accusing Government Front Benchers of rank hypocrisy was unparliamentary and should not be done, so I will not do it.
I stand corrected, Madam Deputy Speaker. I was searching for a form of words that my constituents down the Dog and Duck would think adequately expressed the Government's behaviour, but I suppose it would be best to say that they say one thing and do another.
I fear that this Bill is like a conjuring trick that people follow with their eyes. So many people, from Friends of the Earth to many others who genuinely care about this issue, have bought into the idea that the Government are going to take action on it and set down in law the 2050 target, but we need to look at what the Government have actually done. Mr. Chaytor referred to energy efficiency. That is an area where it is cost-beneficial to the economy to deliver energy efficiency because it serves the purpose of benefiting social justice, but where we have lagged—pardon the pun—behind our neighbours.
Earlier this year, the Sustainable Development Commission, which has the job of monitoring Government, reported to the Environmental Audit Committee that nearly two thirds of central Government Departments are still not on track to meet the target of reducing carbon emissions from their own centrally held offices by 12.5 per cent. by 2010. The Department for Environment, Food and Rural Affairs was more than halfway down the list. The central Government agency that previously led on climate change has failed to deliver these changes in its own offices in buildings that we can see from here. Yet we are supposed to believe that this Government, who have so signally failed to turn rhetoric into action, can be trusted to deliver on some long-term target about 2050. I am afraid that I have little confidence that they will do so. Policies are not co-ordinated between the different Departments. Instead of leading by example, they push for environmentally unfriendly policies such as new and unabated coal-powered plants or the expansion of Heathrow airport. As the Environmental Audit Committee has noted, the Government will miss their own target of cutting national carbon dioxide emissions by 20 per cent. by 2010.
That is the backdrop to the Bill. None the less, I welcome the Government's late conversion to feed-in tariffs, for which the Conservatives have been pushing for some time. That will be welcome, albeit belated, if it helps to lead to change on the front line and we can copy some of the success of our north European neighbours.
I support new clause 10, which was well argued for by the hon. Member for Morley and Rothwell, as it would give statutory backing to targets that are already supposed to be Government targets but which Front Benchers seem unprepared to accept despite the impassioned pleas of Members on the Benches behind them.
I also support new clause 11. That is accompanied by a statement of Conservative party policy by my hon. Friend Gregory Barker—the belief that we should not be allowing the creation and building of any more dirty coal power plants. Looking ahead, there is a real risk of an energy shortfall from 2017 onwards— [ Interruption . ] The Secretary of State is suggesting that that is not the case. If he looks on the national grid website, he will see that it itemises that potential shortfall. Moreover, there are imponderables such as how long existing power plants can be sustained for and what is their efficiency and effectiveness in producing energy. The Government's inaction has put us in a position whereby we have failed not only to deliver energy efficiency, which would reduce demand, but to put in place the production capacity to ensure that we can be well served by it.
The Conservatives, on the other hand, have said clearly that we would not allow any more dirty coal power plants to be built. When one looks at this country's historical skills and strengths—the presence of major oil companies, our history of offshore platforms and involvement in coal mining—in what better way could we give a genuine lead to world efforts to reduce emissions than by leading on carbon capture and storage? The Minister completely failed to convince anyone that new dirty coal power stations would be more likely to be retro-fitted with CCS than existing power stations. If the Government were serious about this, instead of saying one thing and doing another, they would back CCS and ensure that it was delivered.
It is not only north European countries that have done a better job than we have. The latest Chinese five-year plan for 2005-2010 looks for a 20 per cent. reduction in energy usage per unit of gross domestic product. In a developing country with hundreds of millions of people still living in poverty, the Chinese have a greater ambition than this Government, who claim to lead.
It took me quite a long time to decide to add my name to new clause 11. My reservations about it were exactly the opposite of those expressed by the Minister. I do not think for one moment that it would prevent the development of any sort of new power station working to any sort of standards. My reservations centre on the fact that the new clause is based around the word "may", not "shall". We can argue about what different parties may do if they are in government, but as there is no "shall" there is no obligation to act.
I looked at the Bill, and I found that a couple of voices were permanently ringing in my ears. One was the voice of my hon. Friend Rob Marris, who has legitimately challenged this House to say at what point the 80 per cent. target becomes reality politics as opposed to fantasy politics. It is not enough to set a 2050 target if we have no idea of how we are going to achieve it. The second voice that permanently nags me is that of Aneurin Bevan, who, a long time ago, said that there is no point in willing the ends if we are not prepared to will the means. In our context, the means have to be measurable intervention measures that set minimum performance standards, and perhaps minimum requirements, about carbon reductions.
I have awkward feelings about the introduction of thresholds in the Bill. If we want to amend the thresholds, we will need to come back with primary legislation. If there is a case for thresholds, they should be minimum thresholds that would allow us to set standards that have to be met, but perhaps exceeded. There is nothing in the new clause that does that, and there is not even a duty to require those regulations to be brought in. Those were my misgivings, but running through the Bill is a recognition that, as various hon. Members have said, we have to be willing to define the route map to take us from where we are to where we want to be in 2020 and 2050.
Having said that, there has been a degree of ungenerosity from the Opposition in their criticism of the Government's lack of imagination. I am pleased that we have this new Secretary of State, and I am really pleased that he was able to come to this House and announce that we were raising the 2050 target from 60 per cent. to 80 per cent. I was also pleased that he made a point about feed-in tariffs and the genuine scope for community-based energy generation. It is quite wrong to pretend that the sense of vision and leadership in his statements did not reflect a Secretary of State who could be quite transformational in delivering the 2020 and 2050 targets—I hope that does not damn him for all time.
The circumstances in which the Bill has to be taken forward provide the Secretary of State with ammunition, which, three to six months ago, we may not have anticipated needing. The collapse of global financial systems has prompted leaders in our country and internationally about the need for public investment to deliver economic stability. Where will we find that? The answer, as my hon. Friend Mr. Chaytor said, is probably to be found in a green new deal. That is the lesson to be learned from what has been done in Germany since 2001, and probably since 1990.
I have done quite a lot of work on the way in which Germany has introduced its feed-in tariffs and the transformational effect that that has had. The one benchmark comparison I offer is that the Government have set 2016 as the staging point at which we will insist that all new houses are to be zero carbon, and by which we will be building eco-towns. But by 2016, Germany will have converted between 40 and 60 of its existing cities into eco-cities because it has taken a visionary approach to the scope for feed-in tariff legislation. We can anticipate that the Secretary of State will take an equally visionary approach to the same provisions when they come back before the House in another Bill.
Would my hon. Friend accept that we have an opportunity to revisit the 2016 zero carbon target and bring it forward? That target was set when our ambition was to build 3 million homes by 2020—a quarter of a million homes, or more, a year—and given the state of the housing market and the housing industry, those homes will not be built in the next two, three or four years unless the Government intervene. Could the Government not intervene to boost the building of new homes, and bring forward the target date for new homes so that the energy efficiency is built in at an earlier stage?
I am sure that the Government could—and I hope that they will. For me, the most exciting point with which all the German political parties connect is that our future will probably be determined not by the building of the 100,000, 200,000 or 250,000 new houses a year that we may need, but by what we do with the 25 million houses that we have today. The scope for retrofitting holds the possibility of genuinely transformational energy and carbon saving economics. In Germany, that transformation currently delivers a domestic economic multiplier with a turnover of €30 billion a year and almost 300,000 new jobs a year. That is the sort of momentum for which I confidently expect the Secretary of State and the Prime Minister to provide in unveiling the new package of green economics that will drive our transformation in the UK.
However, we cannot achieve that transformation without setting targets and standards as the benchmark against which we measure it. I therefore make a plea to the House: new clause 10, which covers sectoral targets, sets out some impressive ideas about Government responsibility for the public estate and from where leadership for that should come, but they will not be realised if we do not push them to a vote or a point of acceptance, so that targets are written into our commitments. The ideas become fantasy economics only if we will not take the transformational steps that define the route map.
For all its weaknesses, I would rather the Secretary of State had a permissive power to introduce those regulations than no power. My preference was for a duty—for "shall" rather than "may". Whatever performance standards are set, I would prefer serious debate in the House between the different parties about what they should be to the current debate about whether we should have performance standards for new power stations.
If we are not prepared to say to ourselves that there must be performance standards, how can we say that to any other country on the planet that intends to build a power station with no standards? That is not so much hypocrisy as inconsistency, which is out of tune with the demands of not only the public but the planet and our time.
Does the hon. Gentleman realise that he has made an incredibly powerful case to many hon. Members, and especially people outside, who argue that we cannot afford to go green during a time of economic turbulence and downturn? He has put his finger on it—not only are such matters important for the climate, but, from the beginning of the industrial revolution, innovation and change have been the engine of new growth. The most exciting as well as the most necessary new growth in the 21st century is in energy technology. He is right to point out that it is the responsibility of any Government to put in place the standards that we need to drive that growth forward.
I believe that absolutely. I have made the case on many occasions that we have possibly a decade in which to transform ourselves into a post-fossil fuel economy. If we have the courage to do that, the great benefit of our time is that we have access to the technologies that allow for such transformation. The reality of the current crisis is not that we cannot afford to go green, but that we cannot afford not to go green. I genuinely believe that the new Secretary of State is one of the people who could drive that transformation.
I am pleased to follow Alan Simpson because, apart from the fact that I have no confidence in the Government, his speech contained little of substance with which I disagree.
The Government's attitude to new clauses 10 and 11 demonstrates their attitude to the Bill. They resolve to be good, but not yet. We must therefore consider the direction of travel on the consumption of fossil fuels, of which the three main ones are gas, coal and oil.
The Government clearly want more oil burned every year. The Prime Minister said that—at column 33 of last Monday's Hansard. Tonight, we had confirmation that the Government's objective is to build some nice new coal power stations. The second law of thermodynamics constrains the energy efficiency, but the Government are saying that the power stations will not be carbon capture systems and that we will simply emit carbon dioxide into the atmosphere. Those power stations may be more efficient because the engines are better designed, but the Government do not intend to try to reduce the amount of carbon dioxide emitted. That leaves gas. If we are going to burn more oil, more coal and, one therefore presumes, more gas, we are not going in the direction of reducing carbon emissions.
The reality is that we have to start somewhere. At some point, we have to say, "We're going to reduce carbon emissions, so we don't need more oil, more coal or more gas," and we should have a strategy for that. It may take time to change direction, but we cannot have constant increases in oil supplies, which is what the Prime Minister says we require.
All our constituents are crying out about the increasing costs of energy. I happen to take the view that the UK has gone far too far down the free market route and that the European model is far better, which is not necessarily something on which I am 100 per cent. aligned with my party. The green new deal is an option. We have managed to find £50 billion for the banks, but what about £50 billion to sort out the energy intensity of gross domestic product? That should not necessarily be the precise figure of course, but the principle that we should invest in energy efficiency to reduce the amount of energy used and, by reducing demand, thus reduce prices must be the way forward.
New clause 10 basically says, "Let's get on with it and do something," but the Government do not want to know, while new clause 11 would introduce a permissive power. I accept that "may" in new clause 11 should be "shall", but the Government do not even want that. They have therefore taken a very clear view: they are in favour of being good, but not yet.
Let me first try to tackle some of the issues raised by Gregory Barker from the Conservative Front Bench, whose position, it became apparent during the debate, was that we would have no new coal-fired power stations unless carbon capture and storage were available, which it currently is not. That is completely unrealistic. The Government are of course committed, as he says his party is, to long-term renewable energy policies, energy efficiency and CCS. However, we continue to need a diverse energy supply and we must take energy security very seriously indeed. Coal currently accounts for one third of the electricity supply. I therefore suggest that his suggestion of prejudging and totally banning any new coal-fired power station is completely unrealistic.
The Minister said in her opening remarks that she was not going to prejudge the issue, but it sounds as though the Government are now doing exactly that—prejudging it and saying that they will allow dirty, carbon-emitting coal.
Absolutely not. There is no prejudgment on our part, but the hon. Gentleman is indeed prejudging the issue, and obviously takes no account of issues of energy security.
The hon. Gentleman made a number of other points about CCS, as did other hon. Members, particularly in relation to the BP Peterborough project. [Hon. Members: "Peterhead."] I am so sorry—and I know Peterhead well enough. As I said, we are talking about a private company making its own decisions. Of course it would have liked to pocket Government money, but we need—and have agreed to have—an open competition, so that we can choose from among those companies that wish to put projects of that kind forward. Then we can choose what we regard as the most appropriate project to receive Government money. It is as simple as that. We did not force anyone to withdraw from what they were doing.
No, I will not give way, because I have too much to deal with.
The Conservative Front-Bench spokesman, along with another hon. Member—I am afraid that I do not have the relevant note—also mentioned Lord Stern's advice warning that the emissions trading scheme would not make a sufficient impact on the power generation sector soon enough to prevent us from becoming locked into high-carbon infrastructure. We have in no sense ignored what Lord Stern said. On the contrary, we recognise that, in addition to supporting the EU ETS, Government action is needed to stimulate the development of a broad profile of low-carbon technologies, such as our action to facilitate new nuclear build and support renewable deployment, and the CCS demonstration.
We also need to reduce costs, so that a range of commercially viable options can be made available to companies when they are looking at managing their emissions. We need to drive down emissions in sectors not covered by the EU ETS, which we are doing through our measures on home energy and transport, among other things. We also need to change behaviour. The Government are doing all those things, and it is completely wrong to suggest otherwise.
The proposals on carbon capture readiness are closely based on those in the International Energy Agency's technical study, which was released last year. In summary, it mentioned a need for: sufficient land on site that could accommodate a carbon capture and treatment plant; a study of the feasibility of retrofitting stations for carbon capture technology; and assessments of the availability of sites for storing carbon dioxide and of how carbon dioxide could be transported to those sites. We have consulted on carbon capture readiness over the summer, and we aim to publish the Government's response by the end of the year.
The hon. Member for Bexhill and Battle mentioned the fact that the Conservatives' proposals were based on measures that had already been adopted in California. I have to tell him, however, that there is no equivalent to the EU emissions trading scheme in California. That is why he is completely mistaken in thinking that there could be a read-across between what happens in California and what happens in this country, where the emissions of all our energy-intensive industries are covered by the EU ETS. That is why his scheme does not make sense.
The hon. Gentleman also asked whether the carbon emissions reduction target was a fuel poverty mechanism or a carbon reduction measure. The truth is that we do not have to choose. The great virtue of helping people to save energy and save costs is that we can assist with fuel poverty at the same time as we produce further reductions in carbon dioxide emissions. That makes a win-win case, and we will continue to pursue those policies in tandem.
No, I will not. I need to make some progress.
I want briefly to refer to the debates on new clauses 10 and 11, and to the speeches of my hon. Friends the Members for Morley and Rothwell (Colin Challen) and for Bury, North (Mr. Chaytor), both of whom have made excellent contributions to the debate. I acknowledge that the Government already have sectoral targets, and that they have programmes that are proceeding as we would expect them to do. We do not in any sense reject the concept of targeting or of having a means by which we can measure progress. However, we do not think it is appropriate for those measures to be placed in the Bill. It has been suggested that it is important for the Government to get on with what they have pledged to do, and I give all my hon. Friends the assurance that we are doing just that.
We want to look at the kind of sectoral targets we would need, and to determine whether we would need different targets for different types of business, for residential areas and for different kinds of microgeneration schemes, such as wind, photovoltaic and ground pumps. We have sympathy with everything that my hon. Friends have said, and for the concept of targets, provided that we can consult on the detail of how they would work alongside our feed-in tariffs. I am giving the House that reassurance. We have announced on feed-in tariffs, and this opens up a whole new dimension in the debate. If hon. Members reflect on that, they will see that this is a way forward for the Government that means that we do not need to add these particular measures to the Bill. I urge the House to support new clause 16.
Question put and agreed to.
Clause read a Second time, and added to the Bill.