I beg to move, That the Bill be now read a Second time.
Today is an appropriate day to discuss the Energy Bill-at the opening of the Copenhagen conference and before the ministerial meetings that will take place in its second week. Those talks are an essential part of the context of the Bill that we are debating, and in the past two weeks we have seen signs of progress from China, India and the United States. They have all put targets on the table, and we are determined to use our influence to get the best agreement that we can, consistent with the science. We are determined also to show the maximum ambition in our own plans, and that explains the Bill that we have brought before the House.
Given recent events, I should also like to say that we are here to debate a Bill that is driven in large part by the science of climate change. It is important to take this opportunity to restate briefly the case on the science, because it underlies today's debate. The science is not from politicians, but from scientists: the Intergovernmental Panel on Climate Change, whose work is based on 4,000 experts; the national academies of science of the G8 developed countries and the five leading developing countries; and, here at home, the Met Office, the Natural Environment Research Council and the Royal Society. All those organisations are clear that the science is unambiguous-that climate change is real and man-made.
Of course the science is not static, but we must not somehow suggest that robust and near universally accepted science is merely of equal validity to the views of a very small minority of people, many of whom are not scientists. Importantly, one chain of e-mails does not undo decades of climate science, and particular responsibility lies with Members of this House and, indeed, of the other place not to seek to sow doubt or to replace the view of the science with their prejudices.
I actually think that, by and large, members of the press, including the tabloid press, have during this year embraced the idea of climate change and the need to tackle it. However, the hon. Gentleman makes an important point: in this process, we rely partly on the press to make clear the burden of evidence and views and where they lie, and, indeed, the balance of views and where they lie. Anything that the press can do to help us to make that case is very important, because we are debating difficult decisions-and nobody should be under any illusion that they are not difficult. If people come away with the impression that the science is somehow not settled, or that there is an easy way out, we will face difficulties.
Does my right hon. Friend accept that the validity of the arguments and the scientific case for the existence of climate change is completely undermined by people such as Lord Lawson and the Conservative MEP Richard Helmer; and, that the Conservatives must do more to ensure that they align themselves with our policies and the policies that the British public want?
The truth is that we need as much of a consensus as we can get on these issues-from all parts of the House. That is very important, and that is why I emphasise the importance of us all showing responsibility, rather than setting ourselves up as scientists and somehow substituting for the views of the science. It is important that politicians act on the basis of the science, and that is what we seek to do.
The right hon. Gentleman talks about acting on the evidence of the science, but he knows that in the case of Heathrow airport, involving an important decision that will affect the environment, the only costed emissions were those of outgoing flights, not of incoming ones. How can he be serious about taking good decisions if his own Department does not get its maths right?
The hon. Lady has a long history of campaigning on this issue. I agree with her about the need to make decisions such as that on the third runway at Heathrow in the proper context. That is why we are the first Government in the world to say that we will stabilise aviation emissions at 2050 levels. Indeed, there will soon be a report from the independent Committee on Climate Change on that precise point.
The Select Committee on Science and Technology was in absolutely no doubt about the validity and strength of the case that climate change is happening and that it is the result of man's activity since the industrial revolution. Even if some of the science can be questioned, the consequences for the planet and mankind are so dire that the precautionary principle should be observed, and I congratulate the Government on taking that line.
The hon. Gentleman is completely right. The precautionary principle was emphasised by Gregory Barker in a debate that we had a few weeks ago. It is right that we should follow the precautionary principle in this process; in a way, that is an important part of the argument. However, in emphasising the precautionary principle we must not give a sense-I know that Bob Spink is not doing this-that the science is not settled and that we would be better off being cautious. The science is clear and overwhelming, and the precautionary principle adds extra weight to that.
Whether one believes that emissions of carbon dioxide into the atmosphere produce climate change is a big argument, but does my right hon. Friend agree that there are two other important reasons why we should not be burning fossil fuels? First, we are acidifying the sea almost beyond the point of no return. Secondly-I speak passionately as a chemist-producing energy from carbon fuels is a very inefficient process, and we need those carbon fuels as larders of chemicals for the generations of the future, so it is a sin to burn them.
My hon. Friend speaks with great knowledge; indeed, much greater than mine. My chemistry is probably as bad as my brother's physics in terms of his performance at school. My hon. Friend is completely right about that point and about ocean acidification, which is a serious issue that lots of oceanographers and others are very concerned about.
The Energy Secretary is clear that he is persuaded by the science and that the scientific evidence is overwhelming, which is the view of those on the Liberal Democrat Benches and on the Conservative Front Bench. Can he confirm that the logic of that is that the UK Government, this week and next, on their own and with the European Union, will go for the toughest, strongest, clearest binding agreement so that we can not only follow the precautionary principle but remember that we are going in to bat for a world where countries such as Bangladesh and the Maldives have the chance of a future, not just countries such as ours which caused the bulk of the problem in the first place?
I think I can say yes to that intervention. I agree with the hon. Gentleman that we need the toughest and most ambitious agreement possible and the shortest track to a legally binding treaty.
The right hon. Gentleman gave his maiden speech just after I gave mine; I congratulate him on his epic rise to fame on the Front Benches.
Taking up the issue of fossil fuels, we now know that nuclear capacity is running out and that we are running out of oil and gas. What have this Government done for the past 10 years? It is as though the Secretary of State is the boy scout who has turned up late for camp and finally realised that he was responsible for lighting the fire, so everybody will get very cold and angry. Have we not just had a wasted decade?
If we are talking about responsibility, I have to say that the alarmism that Opposition Front Benchers have engaged in on these issues is of no help at all. The answer to the hon. Gentleman is that we have very clear plans, as I will explain, on renewables, where we are now the leader in offshore wind, on nuclear power-opposed tooth and nail by the Opposition, whose leader said that it was a last resort-and on clean coal.
I very much agree with what the Secretary of State has said, but even if we get an agreement at Copenhagen, there is still the problem of having to explain to people what the figures actually mean. If we are talking about 80 per cent. reductions, that will mean massive changes in our economy. I am not convinced that the people of this country really understand what it means as yet.
I agree with the hon. Gentleman that, as I said at the weekend, there is a mountain to climb and a huge amount to do to explain to people the scale of the changes that we are making, such as 10,000 wind turbines between now and 2020, more nuclear power stations and the clean coal technology that I have talked about-and that is just in the energy sector. Those are big changes, and I will not pretend that they are not.
The central response to the challenge of the science must be for the Government to understand their role in making the low-carbon transition happen. The truth underlying the Bill is that markets left to their own devices do not put a price on carbon emissions and will not bring forward the investment and industrial policy that we need, nor will they provide the right energy mix for the future. Our low-carbon transition plan, which was published in the summer and widely welcomed, sets out sector by sector what needs to change to meet our commitment to a 34 per cent. reduction by 2020. I believe that we are the first country in the world to do that. It builds on the fact, which Opposition Members often forget, that we are one of the few countries to have met and exceeded our Kyoto targets, with greenhouse gas emissions 21 per cent. below 1990 levels.
Previous legislation, including the Climate Change Act 2008, provides us with many of the powers that we need. In the Bill, which is relatively short because of the length of the Session, we provide for legislation on three particular matters that are central to the task that we face. First, to clean up our energy supplies, it legislates for a levy to provide unprecedented investment in clean coal. Secondly, to improve the deal for consumers, it strengthens the power of the regulator and ensures that it must be proactive for the consumer. Thirdly, to deliver fairness, we are introducing compulsory cut-price energy for the most vulnerable customers.
Does my right hon. Friend agree that carbon capture and storage is important for the UK, because it will give flexibility to the energy mix, but even more important for the world? Exporting post-combustion technology will allow the bolt-on application that will help to reduce carbon dioxide throughout the world and help us to reach the 2050 targets?
My hon. Friend is absolutely right. We have said that there will be up to four carbon capture and storage projects, up to two of which will be post-combustion and up to two pre-combustion. That is not just for domestic reasons but for the international reasons that he mentions.
My hon. Friend's comments take me to one of the central purposes of the Bill, which is to provide for a levy for clean coal technology. In total, the new levy will provide up to £9.5 billion over the coming two decades. It is fair to say that in a world of tight resources, it must be right to provide a dedicated stream of funding for clean coal and CCS. It is the largest single investment in CCS by any country in the world, including the United States. Let me be clear about the timetable, which has been raised with us: if the measure is passed, the new levy will come into force in 2011. Next year, before its introduction, we will launch a competition for the up to three additional projects that will benefit from it, alongside the current competition. We need to move quickly on CCS, that is what we will do, in support of our central aim to demonstrate CCS and make it ready for widespread deployment by 2020.
The importance of that is that it is right not just for our environment but for our economy. As many hon. Members know, the CCS industry could provide Britain with up to 60,000 jobs by 2030. Furthermore, CCS can be good for our long-term energy security, as my hon. Friend has pointed out on a number of occasions, because it will give us greater diversity in our energy sources. As we develop it and make it viable, there will be future steps to ensure that it can be applied to gas-fired power stations as well.
The Secretary of State mentions consumers, so is there not now a compelling case for him to use his powers to refer the big six energy companies and the relationship between consumers and wholesale prices to the Competition Commission-that is supported by Consumer Focus, the statutory consumer body-given that the commission alone has the powers to break down barriers to entry to the market and that the enhanced powers for Ofgem in the Bill will not come fully into effect until 2011?
My hon. Friend has thought deeply about this issue and we have discussed it. The Competition Commission remains a potential last resort, which I still consider it to be. Let me explain why. For a Competition Commission inquiry, we are looking at one to two years, and further remedies will take longer. The commission looked into the liquefied petroleum gas market, but it was five years between the initial investigation and the final remedies being introduced-not that I hold the commission responsible for that.
However, the intent behind my hon. Friend's question is right in the sense that we have cause for concern, including about what Ofgem has shown today, but the Government need to think about a policy response, and we have work going on around the road map for low carbon that will be published in the spring. It is better to look at policy options-Ofgem will indeed have a report out early in the new year-rather than at a lengthy Competition Commission investigation.
I think the urgency is to make coal carbon capture work-CCS for gas is farther down the road. We know that coal-fired power stations have approximately double the emissions of gas-fired power stations. The North sea industry, for which the hon. Gentleman campaigns vigorously, can play a crucial role in that area of CCS-indeed, I enjoyed a recent visit to Aberdeen.
That takes me to the second part of my remarks, which is about the consumer. I welcome the fact that in the past year, we have seen an improvement in certain areas; for example, for prepayment retail customers, which has long been campaigned for by hon. Members. A year ago, people on prepayment meters paid £41 more for their energy than standard credit customers; today, that differential has been effectively eliminated.
However, there is a lot further to go, as I said in reply to my hon. Friend Mr. Grogan, and the Bill provides for three important changes in regulation. Central to the Bill is reforming the duties of Ofgem. It is wrong to think that competition alone can protect the consumer, so the Bill makes it clear that Ofgem must use all the measures at its disposal, not just competition. It is wrong that generating companies can unfairly exploit market power to overcharge consumers, so we are responding to a request-such a request was turned down some years ago by the Competition Commission-to provide Ofgem with new sanctions against market power exploitation in the generation market. It is also wrong that companies can escape penalty if abuse is not discovered for more than a year. To ensure that the enforcement regime provides an effective deterrent, the Bill extends the time limit within which Ofgem can impose penalties for licence breaches from 12 months to five years. That suite of new powers significantly strengthens the powers of the regulator to ensure that the costs of energy are fairer.
As the Secretary of State is going to change Ofgem's powers and duties, has he considered doing so in relation to new grid transmission lines? He will be aware of a new proposal by National Grid for a high-voltage line across the Somerset levels. Only two options have been proposed, but a sub-marine option up the Bristol channel was excluded even before consultation began. If he is considering making changes, will he put additional obligations on National Grid to consider other options for that type of environmental project?
The right hon. Gentleman raises a local issue that is of some importance, but I confess that I do not know the details. On the question of grid access, which is a significant and wider problem, he will perhaps be aware that I exercise powers-under the last Energy Bill we had, in the summer-to set the terms of grid access, which has been a perennial problem in relation to renewables. We pledge that that process will be completed by the summer of 2010, and we are on track to do that. On the local issue, he may wish to write to me or one of my colleagues and we will look into it.
The Secretary of State is right to say that there are some important issues connected with being fair to consumers given some of the monopolistic powers of the energy generators. Why has he rejected the suggestion of a legal requirement for gas storage, as is the case in other European countries? Some people believe that that allows those countries' markets to behave in a fairer way towards consumers, whereas our market, which has such a limited supply of gas storage, has enabled some of the suppliers to behave poorly.
We do need more gas storage, and the hon. Lady, as a member of the Select Committee, has expertise in these matters. The reason we are worried about the proposal that she recommends-we will shortly respond to the recommendations of the Wicks review, which looked at some of these issues-is the danger that it could take the pressure off the companies in terms of what they need to do to build more gas storage. If we substitute our judgment in these matters for their judgment about what is necessary, the danger is that we increase costs to consumers and inhibit future plans for gas storage.
The third issue is the question of vulnerable consumers, which is very important to hon. Members. As well as strengthening general powers of regulation, the Energy Bill will do more for vulnerable consumers. We need to help those most in need through higher incomes, energy efficiency and prices. That is why we have introduced and increased the winter fuel payment and brought in higher cold weather payments. Since 2002, 6 million homes have received loft or cavity wall insulation, and we are on the way to loft and cavity wall insulation for all houses where it can work by 2015. But we need to go further. Today we are announcing pay-as-you-save pilots in five parts of the country to test out a comprehensive, whole-house approach to energy efficiency, supported by finance, as is necessary to make it happen. This is on the way to whole-house refurbishment, beyond loft and cavity wall improvements, for 7 million homes by 2020 and for all by 2030. This will help save money for consumers.
But we also need action on tariffs. The current voluntary agreement on social assistance with energy companies has already helped more than 1 million customer accounts. However, the powers in the Bill will mean that rather than a voluntary agreement, there is a compulsory money-off energy deal for vulnerable customers. We will increase the total amount of help, up from the level of £150 million in the final year of the current voluntary agreement. We want the new system to ensure that older, poorer pensioners in particular receive assistance with their energy bills and we will set out more detailed plans in the coming weeks.
As for many of these levies, the cost will be spread across other bill payers. Alongside that, we need the tough regulation that I am talking about, which bears down on prices as much as possible. It is right that we take action to help the most vulnerable consumers in our society, and a voluntary agreement is inadequate in the current circumstances. We will have more to say about that in the coming weeks.
I welcome the announcement about mandatory social tariffs. The Secretary of State said that the poorest pensioners will benefit, but will he look at the case of people with long-term chronic illnesses and, in particular, the campaign run by Macmillan for people with cancer?
My hon. Friend asks about the debate that my hon. Friend the Minister of State is looking forward to in Committee about the groups that should be helped by the social tariffs. There are lots of strong cases to be made, but the point is that there is a balance to be struck. Because the costs are spread across all consumers, as I said in response to an earlier intervention, we need to strike the right balance between the groups that are helped and how targeted the measures are.
My hon. Friend Paddy Tipping referred to the sectors that are not covered by the social tariff. My right hon. Friend said that the issue would be debated in Committee, but would he like to comment now on the fact that although approximately 4 million-plus consumers are not on the gas network, but are instead dependent on liquefied petroleum gas and heating oil, they do not qualify for any social tariff? That is a genuine issue.
That is something that many hon. Members have campaigned on. I refer to my earlier answer. There was a Competition Commission inquiry into that issue which lasted five years and was designed to bring some relief. That is a warning to us all as we advocate a Competition Commission response to other energy issues. We are looking at measures to help those groups of consumers through Warm Front and other schemes, although I recognise the case that my hon. Friend makes.
As I approach the end of my speech, let me say, as I always say on these occasions, that we want as much of an all-party consensus as possible. Unfortunately, we have no clarity about where those on the Conservative Opposition Front Bench stand on the measures. When we debated the Gracious Speech, I posed five questions to Greg Clark, including about the Bill, but I am afraid that he gave satisfactory answers to none of them. However, I am a fair-minded person and I believe in second chances, even for members of the Conservative party-indeed, he was not always a member of the Conservative party, so perhaps he deserves a special offer.
Today the hon. Gentleman gets the chance of a resit on the questions that I asked him previously. I shall narrow those questions down, but if he is to show that the Conservative party offers more than greenwash on such matters, he must show that he can answer some basic questions. First, does he support the CCS levy that we have put forward? We say that it will provide unprecedented investment in clean coal. He says that he will use money that is already accounted for in the Government's tax and spending plans. He says that revenues from the EU emissions trading scheme can get him 5 GW of new coal, but, as we might expect, that is a policy about image and not substance, and it would damage our ability to tackle climate change.
Secondly, the hon. Gentleman needs to answer the question that was posed brilliantly by my hon. Friend Emily Thornberry last time about his £150 billion scheme for energy efficiency. He says that it will cost no public money, whereas his hon. Friend, Charles Hendry has said- [ Interruption. ] I know that the Opposition do not like to hear about their own policies, but they should be able to answer some basic questions. The hon. Gentleman said:
"The policy should be carried out and supported by loan guarantees from the Government, to ensure that the energy companies can do it. That is how the task is done elsewhere."-[ Official Report, Third Delegated Legislation Committee,
It would be good to hear today how those loan guarantees will be paid for, because the hon. Gentleman's colleague has said that loan guarantees are required.
Thirdly, there is the wider question of Europe, which I also posed last time. Frankly, again we see the Opposition hanging round with the wrong crowd in Europe.
I can read out the list if the hon. Gentleman- [ Interruption. ] He says that he is getting bored with it, but it is very relevant because action in Europe is essential to the Bill and to tackling climate change, yet the majority of the Conservative party's European partners voted against the motion that was put forward in last week's Copenhagen debate.
We do support the European super- grid, which we think is an important idea.
We deserve answers from the Opposition today, not just the usual hot air. They need to come forward with some genuine policies rather than just image. Tackling climate change, protecting our energy security and protecting consumers all require significant change. The Energy Bill is key to making those changes and it deserves the support of all Members. I commend it to the House.
I have respect for the Secretary of State but I have to say that, with every speech that he makes, he sounds more like a member of the Opposition than a Secretary of State. He seems to be practising. The decisions on climate change and energy policy are so far reaching that the rest of the country looks to us to establish some common ground and speed things up, rather than make petty points. I will answer all the questions that he asked-I have no problem with that-but anyone looking at the Bill cannot help but be disappointed at this missed opportunity.
This is an anaemic Bill that lacks energy, even though it calls itself an Energy Bill. The Secretary of State has had a year in post in which to think about the issues and to reflect on and bring forward legislation. Who knows what will happen after the election? He might still be in post, he might be in a different post, or he might be in opposition. This was therefore perhaps his one and only opportunity to put on the statute book a Bill that could have lived up to the ideals that he no doubt shares, and that could have made a difference and provided a legacy of which he could be proud. The problems that we face are mountainous, and we deserve boldness in response.
I do not want to cast blame at this stage; there will be other occasions on which we can do that. The Secretary of State and I came into the House at the same time and, whatever his contribution might have been to our national economic success when he was chairman of the Council of Economic Advisers, he was not in charge of energy policy at the time, so we cannot hold him personally responsible for that.
We can, however, agree on what the problems are. There are five in particular. We are facing power cuts and an energy crunch by 2017- [ Interruption. ] The Secretary of State says that that is rubbish, but he wrote an article entitled "We must work together to keep the lights on". Why would he write such a thing if he did not think that there was a risk of that happening?
My hon. Friend is correct. In that article, the Secretary of State said that we needed to work together to keep the lights on. Great! I agree, but where are the measures to do that in the Bill? There is not one single such measure.
As part of the evidence that my hon. Friend is putting forward to the Secretary of State, he might refer to that given to the Select Committee last week by Alistair Buchanan, the chief executive of Ofgem, who clearly described the worrying scenario of the lights going off in the middle of the next decade. He is the man in charge of this policy.
My hon. Friend is quite right. I am surprised that the Secretary of State has not taken that evidence into account. In fact, Mr. Buchanan went on to say:
"The headline fact is that Britain is the single most exposed country among the big players in Europe".
That is what the Secretary of State's regulator says. I thought that this problem was something on which we could agree, and that the Bill might contain measures to solve it, yet it contains none.
The second threat was mentioned earlier. The fact is that during the years ahead we will rely more and more on imported gas. For understandable reasons, North sea oil and gas supplies have peaked and are in decline. Other countries facing this situation have adequate storage capacity. The French have 120 days' supply and the Germans have 99 days, yet we have only 15 days. Where is the proposal in the Bill to increase our level of gas storage?
My hon. Friend Miss Kirkbride asked the Secretary of State a question on storage, and he gave a completely incoherent answer. He said that to advance the proposition that we should have the kind of storage on which other countries insist would somehow put off companies from investing. I do not understand what he meant by that. Perhaps the Minister of State will make a better job of explaining it when she winds up the debate.
Another problem is our pitiful progress on renewables. I know that the Secretary of State believes in renewables, as do I, and we want to accelerate progress. We agree that wind farms and other renewables projects tend to get bogged down in acrimonious planning disputes. He thinks that we should have more renewables projects, and so do I, but his approach is to go round the country shouting at people for opposing wind farms, like Lady Catherine de Bourgh visiting a disobedient relative to tick them off. But where is the policy in the Bill to provide incentives for local communities to take on such projects?
We share a view about the need to speed up the planning process, and we think that the powers of the Infrastructure Planning Commission are absolutely right. It is also right that what are essentially national matters are decided nationally through planning statements. We have two points of difference, and we would amend the proposals on the IPC. First, we think such decisions should be accountable; the final decision should be taken by a Secretary of State who is accountable to this House rather than by some unelected official. We think it is right that people should be able to hold someone to account, but under our proposals there would be the same time limits and the same secretariat to advise, and the same process would apply, so it would be at least as quick, if not quicker, than under the Government's proposal.
Secondly, we think that the planning statements that are read out to the House-starting with the nuclear one, in which I know Mr. Reed is as keenly interested as I am-are so important that they should be proofed against the inevitable legal challenges through judicial review that will be made against them. By subjecting them to a positive vote, the will of this House that the statements represent public policy will be expressed. If these statements are merely the utterances of a set of officials whose democratic legitimacy has not been established, that might be a problem that causes further delays. Therefore, we are at one with the hon. Gentleman in wanting these planning obstacles to be removed, and our amendments to the Government's proposals will speed that up.
Once again, I had hoped that we would seek to achieve unity on these issues. [Interruption.] When my right hon. and learned Friend Mr. Clarke made that comment, he said that he was speaking in a personal capacity and fully respected the Front-Bench viewpoint. The party in government goes around the country telling people that they are immoral to raise even a qualm about a wind farm in their area, but it has no policy response to it. If the Secretary of State has any policy suggestions, why do they not appear in this Energy Bill? The Bill is designed to solve a problem that Nigel Griffiths seems to think exists-but the Secretary of State has no solution. [Interruption.]
My hon. Friend certainly does not need helping out; I think that the Minister does. The Bill is very much a missed opportunity for planning. There is to be no obligation placed on large pieces of infrastructure-in my constituency, for example, 3.5 million square feet of roof space is not being used in any way, shape or form-to incorporate green initiatives, green energy or any form of biodiversity to help support it.
My hon. Friend is absolutely right. That is the point that I am making: this Bill is a colossal missed opportunity. If the Government think that there is a problem-we agree that there is-why do they not bring forward solutions? We have said that we need to cut people in to the benefits of renewable technologies, but nothing in the Bill addresses that.
I am astonished by the hon. Gentleman's response to my hon. Friend Nigel Griffiths. Since the hon. Gentleman aspires to be in government, how does he think a potential Government might function when the shadow Business Secretary, who is supposed to be an ally when it comes to wind farms, says:
"My view is that those few wild and open... spaces that we have left in Britain should not be used for wind turbines"?
Will that strengthen or weaken a potential Government when it comes to delivering on the renewables agenda?
The right hon. Gentleman is speaking from his experience of the type of mind control that goes on in the Labour Government. We Conservatives are perfectly relaxed to have discussions about these things, knowing that we have strong policies that will make a difference. It is one reason why the country is getting a bit fed up with the government by pager that we get from Labour.
I am now thoroughly confused about the Conservative Front-Bench position on wind farms. Would the hon. Gentleman have supported the private Member's Bill recently promoted by his hon. Friend Peter Luff, which sought to drive a coach and horses through wind power in this country? What is the Conservative position on such initiatives?
As the hon. Gentleman well knows, private Members' Bills are not taken up by those on the Front Bench, but my hon. Friend Peter Luff made an interesting point, and if it is relevant, I am sure that it can be taken up in the discussions on renewable energy that the Minister will be promoting.
The Bill contains no strategy to deal with fuel poverty, one of the most pressing issues facing the country. Yes, it gives Ministers reserve powers to intervene, but where is the commitment to the only sustainable way in which to reduce fuel poverty-improved home energy efficiency? That is completely absent from the Bill, although it is surely beyond politics and is something that we should get on with. When people's fuel bills are £1,200 a year and more, and they can save money and carbon dioxide and create jobs by improving insulation, how can a serious Energy Bill possibly be completely silent on the issue? It beggars belief.
At a time when we need £200 billion of investment in new generating capacity, we know that that investment is not being made. That is partly because people are so uncertain about the policy environment, including the price of carbon, which has been low and very volatile. Where are the measures in the Bill providing for a more stable carbon pricing regime?
There is a better way. This was the moment at which the whole House could have united-as we did when we discussed the Climate Change Bill-in devising an ambitious, progressive solution to a crisis that commands all our attention. The Bill, however, contains nothing to close the energy gap, nothing to secure our gas supplies, nothing to accelerate renewables, nothing to improve energy efficiency at home, and nothing to address the price of carbon. What a disappointment it is. I am sorry if the Secretary of State has been distracted, whether by writing the manifesto or by the silly dividing-line nonsense that he tried earlier, when he should have been applying himself to turning his policy thoughts into proposals in the Bill.
Let me now deal with the Bill's contents, slight though they are. Given the scale of the challenges, it is a pitiful Bill, and not even a Bill that produces any action today. In the case of each of its three components-carbon capture and storage, Ofgem, and social tariffs-it merely enables Ministers to take powers that they cannot begin to implement without new statutory instruments in a new Parliament, probably following further consultations. Where is the ambition and the urgency that we require from the Secretary of State? Of the 37 clauses in the Bill, 34 are enabling, consequential or technical; only three make actual changes to the way in which things work at present.
Let me give my response to the three measures that the Bill does contain. It seems that we do agree on the importance of carbon capture and storage, but not on its urgency. Britain is ideally placed to be in the vanguard of the deployment of carbon capture and storage. We have depleted gas wells and saline aquifers in the North sea. We have along our coastline some of the industries that can lead the world in this regard: processing industries and marine engineering businesses. We have some of the best research establishments in the world, and we should be leading the world. It is important that we do, because carbon capture and storage corresponds to the experience curve: the sooner we get on with it, the more we can establish a lead. There is no great scientific breakthrough for which people are waiting.
Given that the present Prime Minister announced plans to support carbon capture and storage in his 2006 Budget, why did the Government wait a further 18 months before launching a competition to deliver a single carbon capture and storage plan? It took until November 2007 for them to do that. More than two years have passed, and we still do not have a winner. Meanwhile, the chance for Britain to lead the world is slipping away. China, Australia, Canada, Germany, Norway and Belgium have all used that delay to overtake Britain.
The Bill proposes a new levy on electricity to pay for carbon capture and storage. The first question to be asked is why we have had to wait for a Bill that cannot possibly receive Royal Assent until 2010 to pay for a scheme that was first mooted in 2006. If it needs this levy, why was it not in the 2006, the 2007 or the 2008 Queen's Speech? We believe that, when it came to payment, the first choice should have been the revenues from the European Union emissions trading scheme. The Secretary of State tells me that they have been spent, although they do not begin to accrue in this phase until 2012. If they have indeed been spent, there must be an assumption of the amount that they were going to raise. Let me ask the Secretary of State now what that estimate is, and where it appears in the Red Book. I am happy to give way to him. [Hon. Members: "No answer."] This is typical Labour party economics: the money has been spent on something that is completely invisible and the Secretary of State cannot even find it in the Red Book. No wonder we are in the mess we are in.
In time. Can the hon. Gentleman confirm whether a future Conservative Government would support a Government subsidy for CCS, and if so, up to what level-and would he also make the same benefits available to the nuclear industry? The answer to that question will be listened to very keenly by international and domestic investors in this country.
Of course we would support a subsidy for CCS; that is what we have been urging on the Government. The Secretary of State says he has spent the money, although he is unable to say how much he has spent or what it has been spent on. On nuclear, we have said that it is a mature technology, and should not be given a specific subsidy. I do not think there is any difference between us on that.
If the Secretary of State can convince us that the money has, indeed, been spent, it may be the case that the levy is what we will have to fall back on. I still do not think, however, that he can get away with saying that this money has been spent on something the Government cannot account for. [Interruption.] So far, it is impossible to tell what the impact of the levy will be, because, as the Secretary of State has just said from a sedentary position, he is merely proposing powers to charge a levy in the future.
If there were to be a levy, however, would that not offer the Secretary of State an opportunity to provide a clearer price for carbon, which is much needed? Why should suppliers of electricity from renewables, for example, have to pay a levy to support the capture of carbon when they do not generate any carbon dioxide in their production of electricity? Should not the "polluter pays" principle be followed, so that the levy is incurred in proportion to the CO2 emissions generated by each supplier? The Secretary of State might like to consider that, since he has clearly not designed his levy properly yet.
Why are the Government restricting themselves to the same approach that they took in respect of the climate change levy: a stealth tax, which did not do what was described on the tin, as it were, because it had nothing at all to do with climate change? If the Government are serious about forbidding CO2 emissions from new coal power stations, why do they not specify-as we have said we would-an emissions performance standard so that no coal-generating plant can be more polluting than the most efficient combined cycle gas turbine station? That must be a totem of their seriousness in this matter.
If we are to have investment in CCS, in the hope that it will work and be demonstrated successfully, why will the Government not ensure that the pipelines for the demonstration plants are built oversize so that they can be made use of by future CCS plants, rather than be fully exhausted from day one?
They should be adequate for the potential in their area. The Secretary of State has talked about having clusters for CCS. It is possible to make an assessment of how many such future plants might be able to make use of the pipelines. It is wrong to spend public money on building pipelines that will be adequate only for the demonstration plant and then to have to repeat installation if the process is successful. That is a bonkers approach; it is a waste of public money.
I am delighted that the hon. Gentleman is asking me questions that presuppose that I will be in office. I am saying, assuming that this project works and looking to the future, that it will be rather ridiculous if the Public Accounts Committee holds an inquiry in several years and asks why on earth the Secretary of State consented to spending public money on building a pipeline network that was not adequate for the coal plants that he hoped would be able to access it in future. That is a waste. Will the Secretary of State make clear the criteria for the clusters of CCS that have been promised-but which are mysteriously absent from the Bill? Many parts of the country are keenly awaiting the answer to that.
In particular, with the devastating closure- [ Interruption. ] The Secretary of State should listen to this, because thousands of jobs are affected on Teesside. The people on Teesside, who have lost 1,700 jobs in the last week with the closure of the Corus plant, could benefit if Teesside became a CCS cluster. Can he or the Minister, in the winding-up speech, say anything about whether Teesside can count on being a contender for the cluster and when he will make the decision? I am disappointed that he does not find the situation on Teesside sufficiently meritorious for him even to listen to it. In the interests of giving the Bill and the levy mechanism proper scrutiny, will the Secretary of State commit to publishing in draft form the regulations that he proposes to make before the Bill goes into Committee?
The second part of the Bill creates a framework for obliging energy suppliers to provide social pricing for vulnerable customers.
I have listened very carefully to what the hon. Gentleman has said about the critical issue of CCS, and he has talked about urgency. What would a future Government do that is not being proposed by the Secretary of State? I am not clear about that and I am not clear at all whether or not he supports the levy.
Of course we will support the levy, if it indeed turns out that the funds from the emissions trading scheme have been exhausted. The detail of the levy requires scrutiny, which is why I have asked the Secretary of State to publish the regulations before the Bill goes into Committee so that we can ensure that there are no perverse consequences.
Has my hon. Friend noticed that the Bill is so slim and small that we have now lost interest in it almost in its entirety and have moved over to discussing Tory policy? That is all very well, but it is a waste of the time in which we are supposed to be focusing on the Bill. Does he agree that one thing that could have been included in the Bill, considering the threat that is now imposed on us, is what would happen if the lights went out? Should we not be considering an emergency plan in case we do not have power for Britain in the future?
My hon. Friend is quite right. This should have been a Bill that enjoyed cross-party support for keeping the lights on. The Secretary of State said that we need to work together to keep the lights on, but he seems to have shrunk from an important opportunity to do that.
When average bills for domestic fuel are £1,200, high energy prices are a desperate problem for many families struggling with the consequences of the recession-especially now. There is an unsatisfactory delay in the publication of the fuel poverty statistics. As the Secretary of State knows, the last available figures, which were published in October, are for 2007 and show that 4 million households spent more than 10 per cent. of their income on energy bills. Since then energy prices have risen still further-domestic gas prices have doubled since 2004-and unemployment has risen. To use the Government's projections, it is thought that 6 million households-one family in every four-are in fuel poverty.
We desperately need a strategy to address fuel poverty, but the Bill does not provide one. Again, it does not even set out the Government's plans; it merely hands over another batch of regulation-making powers to the Secretary of State to be used in the future. So, if the Bill is passed into law, only then will the Government come up with detailed proposals. No doubt Ministers will want to consult on them, too, before laying a draft order before Parliament. Not only is that the very opposite of the urgency that is so badly needed, but, in all likelihood, vulnerable households will be lucky if they see a benefit by next winter, let alone this winter.
A serious fuel poverty strategy, as everyone in the House knows, must be based on tackling the cause, not just the symptoms. Our housing stock is appallingly inefficient and yet the Government's approach to energy efficiency, which saves everyone money, is to ration it. The Government's approach is that we should ration energy efficiency improvements. The funding that is available through Warm Front, for example, is, as we discovered from the Under-Secretary, being cut by £15 million from the next financial year.
Earlier, the Secretary of State briefly skated over his pay-as-you-save scheme. That is not surprising, because it amounts to an exercise in piloting an approach in 500 homes-only 500 homes, when we have a problem on such a scale. This must be the biggest and most gaping hole in the strategy.
As I understand it, the hon. Gentleman would make available a loan of £6,500 for every house to be insulated. That is a big programme with a big cost. What will the cost be, at a time when his colleagues are talking about reducing spending significantly, moving from a big-state approach-and this is it-to a small-state approach?
I am delighted that the hon. Gentleman has asked me that question, because it allows me to explain once more that not all investment is public investment. It is possible, especially when there are savings to be made, for people to bring about those savings and, given that the savings will exceed the costs, to pay for the scheme through those means. We will allow every household in the country up to £6,500 in approved energy efficiency insulations, and the system will be conditional on money being saved on their bills during the payback time. That is a win-win situation.
Let me refer the Secretary of State to his own words about his pay-as-you-save schemes. He is having pilots for 500 homes, but I do not know why if he does not think that they will work. He has said that the pilots
"will give households the opportunity to invest in energy efficiency...in their homes with no upfront cost. Householders will make repayments spread over a long enough period so that repayments are lower than their predicted energy bill savings, meaning financial and carbon savings are made from day one."
That is his press release from today. I do not know whether he has read his own press release, but it mentions that the limit of his ambition is 500 homes.
The difference between me and the hon. Gentleman is that I recognise that this proposal will have a cost: we are providing £4 million to make those pilots possible. This comes back to image versus substance. He wants to claim that he can give £6,500 to every household in the country, costing up to £180 billion, and that it will cost no public money. That is clearly a con.
I regret allowing the right hon. Gentleman to deliver such a poor response. The difference between us is a lack of ambition. Every household in the country could benefit from energy efficiency improvements, but the limit of his ambition is to treat 500 homes. How can he introduce a Bill with such poor potential for success?
Let me address the third aspect of the Bill-the changes that it makes to the regulation of gas and electricity markets. We support in principle the clarification of Ofgem's objective and the clear role that is being given to enhancing energy security and pursuing our low-carbon obligations. We also support the extension of the time limit in which Ofgem can impose penalties for breaches of licence conditions. However, we need to be clear about the respective roles of the Government and the regulator. Ministers should make policy decisions and the regulator should execute them. The changes are necessary in so far as they allow Ofgem to implement decisions that are made or promoted by Ministers on grounds such as energy security. However, in the past 12 years-and for the past 15 Energy Ministers-there has been a policy vacuum, the solution to which should not be to look to unelected bodies to proliferate policy. Instead, they should implement policy that has been determined by Ministers. I hope that that is what the Secretary of State has in mind with these changes.
Once again, the other two elements in this part of the Bill are simply enabling clauses, and they fail to grasp the urgency of the situation. A year ago, I told the Secretary of State that he should ask for an immediate Competition Commission investigation into the relationship between wholesale and retail energy prices. Initially, his response-I think it was last November, but he will correct me if I am wrong-was to summon the energy companies in to growl at them in some fierce way, but he has proved to be a paper tiger, because nothing has happened and he has done absolutely nothing to protect consumers' interests. Ofgem has today published a report that says that
"customer bill increases have consistently outweighed cost increases"- this is in relation to the wholesale price cost of gas- since July 2008".
So, since July 2008, customer bill increases have consistently outweighed cost increases. On present trends, Ofgem expects customers to be losing £17 a month by September 2010, which will make a lot of difference to people's household bills. That should not come as a surprise to the Secretary of State because his own quango, Consumer Focus, told him last June that every household was then paying £74 a year too much. A swift, forensic investigation is needed to settle the matter once and for all. It is in no one's interests-neither those of the energy companies nor those of consumers-to have such a point of contention.
The Secretary of State's response to an intervention from Mr. Grogan on the matter was to say that he would examine the policy options in the spring. Meanwhile, we are approaching a winter in which, if we consider the figures from last winter, people will die because they feel unable to afford to keep the heating on to get them through. The matter has an urgency that I commend to the Secretary of State. I hope that he will think again rather than raising his eyes about a problem that is very real to our constituents.
Although we are, of course, content for the Bill to go into Committee, where we will try to strengthen it and remedy its deficiencies, it is a wasted opportunity. It could have taken urgent steps to keep the lights on, cut CO2 emissions and create jobs. It would then have had broad-based support.
First, the Bill should include a green deal to give all households the energy efficiency improvements they need. Secondly, it should have an emissions performance standard to require all newly built electricity generation to cut emissions. Thirdly, it should include a requirement for gas storage to get us through the winter. Fourthly, it should provide for reform of the climate change levy to make it distinguish between high and low-carbon sources of energy. Fifthly, it should contain measures to require energy companies to say exactly what would have been saved on a cheaper tariff had a customer had access to it, and how to switch to that tariff.
Sixthly, the Bill should have real incentives to allow communities that host wind farms to reap some of the rewards. Seventhly, it should provide for action to ensure that smart meters are fitted in every home, not by 2021-the Government's plan-but by 2017 at the latest. Eighthly, it should require immediate deployment of carbon capture and storage, with a network of pipes big enough for future use, not just for the proposed demonstrations. Ninthly, it should require the national grid to extend its network out to sea to harness the offshore wind, wave and marine energy that is available there. Tenthly, it should include the opportunity for Parliament to vote on the planning statements to ensure that there can be no further hold-ups in our nuclear programme.
The Secretary of State and the House could have been proud of such a measure-a Bill to keep the lights on, cut CO2 and boost the economy. Had the Secretary of State possessed such boldness and ambition, he would attract the admiration of the House and the country. Instead, it will fall to a Conservative Government to take the decisive action that Britain needs.
It is perhaps a coincidence that Second Reading takes place on the opening day of the climate change conference in Copenhagen, which Lord Stern described as perhaps the most significant international conference since the end of the second world war. Britain will show leadership at the conference. There may well be difficulties, but I hope that, at the end, we will get some sort of political agreement that can be translated into action.
It is important to recognise that the Bill's provisions link with the Copenhagen discussions. As has been said, the measure is modest, with 37 clauses and three subject areas. However, we all need to recognise the enormous challenge before us, and the big challenge of Copenhagen is to ensure that we move to having a robust and stable carbon price in future. Ofgem described the new investment required in the generating industry as being between £95 billion and £200 billion by 2020. It is interesting that Opposition Members have said nothing about nuclear power today. Is it still an option of last resort? Do they accept Zac Goldsmith's comment that the Tory policy is "No to nuclear power"? Where do they stand on nuclear power in their priorities for the future?
I am delighted to have the opportunity to correct the hon. Gentleman. He will discover when he reads Hansard that I made it clear several times that we want to accelerate the deployment of nuclear power.
What is the position then? Is nuclear power still a sort of last resort, ranking behind renewables? What does the hon. Gentleman say to his errant colleague Mr. Goldsmith, who says that his position-and he has been an adviser to the Tory party-is a no to nuclear power.
The hon. Gentleman is using tactics typical of those on his Front Bench. Instead of discussing the issues of the day and taking responsibility, he has shifted the argument to the Opposition. His party has been in power for 10 years, during which our nuclear power capability has shrunk. It took 22 years to get a spark out of Dungeness, but we have reached the point where nuclear power facilities are closing faster than we can replace them. That took place on the hon. Gentleman's watch; it was nothing to do with Tory policy.
We need new investment in generation capacity of £95 billion to £200 billion. Companies such as EDF want to know whether the policy framework will be secure into the future, because in a difficult capital market it is hard to see where those sums will come from. We must remember that of the big six players in the UK, four are truly international companies. It is far from clear that money will be invested in this country, so we must ensure that we have a set of policies that can encourage investment into the future. At the cornerstone of those policies is a robust and high carbon price.
May I tell my hon. Friend not to take any history lessons from the Opposition, because the reinvention of history that we are hearing today bears no resemblance to what has happened in the past 25 years, particularly in the nuclear industry? Does he agree that the Government's policy of proceeding with the Planning Act 2008, the Climate Change Act 2008 and the Energy Bill is the right way forward, and that we should all get back to talking about what is important, which is the needs of the people of this country?
And the need of the people of this country is to keep the lights on. There is a potential energy difficulty in 2015-17, and it is clear to me that we must encourage investment to ensure that we can keep the lights on. One way to do that, which my hon. Friend has always championed, is to bring on new nuclear generation. The Opposition may not like it, but they are Johnny-come-latelys to nuclear. There are differences between those on their Front-Bench team about nuclear power. If we are to ensure that the first new nuclear plant is open by 2017, we must ensure that companies such as EDF are confident that their investment will last into the future.
My hon. Friend will know, because he is a keen student of such issues, that every major nuclear decision in this country has been made by a Labour Government-from Calder Hall onwards. He mentioned the Copenhagen conference, but does he, like the rest of the policy-making world, believe that it is much harder for the Secretary of State to strike a deal with Environment Secretaries from other countries, because when they look at Britain's putative alternative Government they see that they increasingly consist of climate change deniers?
My hon. Friend makes the point. It is clear from the discussion in the Chamber, and from the policies announced by Mr. Clarke and by David Davis, who used to be the shadow Home Secretary, that there are real difficulties about investment in the future. To put it simply, they just do not know what they are doing. As they say in my part of the country, they don't know their arse from their elbow.
Order. I shall not ask the hon. Gentleman to withdraw those remarks, but perhaps he should choose his words a little more carefully.
I take your reproach, Mr. Deputy Speaker. Those words will be read down the coal pit in Welbeck in Edwinstowe, and the miners there will know what I am talking about, even if it offends some of the people in this Chamber.
My right hon. Friend the Secretary of State has been a champion in the process of preparing for Copenhagen, but I am not confident that the discussions will produce that high and stable carbon price for the future. He describes getting an agreement there as plan A. We need to consider plan B. There is an argument that if we want investment on such a scale, we need to ensure that we in the UK can underwrite the price of carbon-that there can be a ceiling on that price, to drive the investment forward. It is not a decision that we need to take this year, pre-Copenhagen or straight afterwards, but ultimately a decision will have to be made about how we can promote new investment. The obvious way is to maintain a robust carbon price into the future.
One way of bringing on new fossil fuel plant-new clean coal plant-is through a carbon capture and storage levy. That is in the Bill, and I welcome it, even though it is a little late. The rules of the competition seem to have changed over time, and the end date, even today, is not entirely clear, but four new projects here in the UK will be a tremendous development. I want my right hon. Friend to initiate that quickly. I want him to listen to the miners in Nottinghamshire, who know that although Harworth colliery is mothballed, it could be reopened and new reserves could be accessed. That is what UK Coal, the owners, would want to do, if £200 million were available.
That sort of money is pretty tough to raise on the capital markets just now. In recognition of that, there have been discussions with the European Investment Bank about a loan. The discussions have gone well. The sticking point appears to be that the EIB says that any coal that comes from Harworth should be burned cleanly. At present there is no power station in the UK that can provide that. I want to stick up for and protect mineworkers in Nottinghamshire and steelworkers in Middlesbrough and Redcar, because we owe it to them. They have given their lives and their health to keep us warm, so anything that my right hon. Friend can do with the EIB would be extremely helpful.
My right hon. Friend ought to pick up on two other points about carbon capture and storage. The first is that it is important not to let the market operate, but to take a strategic approach. E.ON's development at Kingsnorth is long delayed, but were it to win the competition, there would be sense in talking to E.ON and the rival company, RWE, which has a power station just over the river at the Isle of Grain, to ensure that any demonstration plant at Kingsnorth was significant, with sufficient capacity to act as a cluster. We do not want stranded assets.
We should look at the work that Yorkshire Forward has been doing in the Yorkshire coalfield down the Humber valley and take a strategic approach to carbon capture and storage. In Committee we need to debate that and think it through extremely carefully.
We should be clear that the cost of the levy will fall on customers' bills. One of the Government's aims, in addition to security of supply and a reduction in carbon emissions, is affordable heat. As politicians we must recognise that there is increasing consumer resistance to rises in bills. The £2 billion cost of the levy will be passed on to customers. They are beginning to say, "But we're paying the social tariffs." About 1 per cent. of their bill is for social tariffs, and 9 per cent. is for environmental purposes, to deliver the ROC obligation. In future that could rise to 20 per cent. There will come a point when customers say, "Enough is enough," and in the immediate short term we need to ensure that bills are detailed enough for customers to understand what they are paying for. Given the rising bills-Greg Clark quoted the figures-it is important that we look at social tariffs. Some companies, such as Centrica, have an excellent reputation and record, but we need to go further, which is why I support mandatory social tariffs.
I look forward to discussing in Committee who might benefit from such tariffs, because they should apply not only to elderly people, but to people who are in fuel poverty generally. Last winter, 5 million people experienced fuel poverty, including a group below pensionable age with long-term illnesses. We need to look carefully for ways in which we can help them, and we need to discuss mandatory social tariffs in a wider context.
The hon. Gentleman, in his intervention on the Secretary of State, specifically mentioned Macmillan, which has taken this issue forward. It provides a helpline to support people with cancer, and one of the commonest questions asked is, "How do we cope with our energy bills?" That is because when someone is being treated for cancer, not only do they often become more sensitive to a shortage of heat, but their income falls at the same time, because their employment is disrupted.
The hon. Gentleman has a long track record of following the subject of fuel poverty, and he is exactly right. I look forward to a more detailed discussion about how to tackle that problem.
As I have said, we need to set social tariffs in a wider context. The Warm Front budget is clearly under real pressure, and there needs to be a discussion about its future. The Minister of State, Department of Energy and Climate Change, my hon. Friend Joan Ruddock, who will wind up the debate, has made some very welcome changes to Warm Front, but I want us not only to roll out smart meters but to give people real practical assistance with energy issues such as efficiency and insulation. I want us to roll out smart meters at the same time as we give advice.
Members in all parts of the House agree that smart meters are important, but, from what I have seen of them on television over the past week or so, I think that they will be quite technically challenging for some members of our communities, particularly the elderly, the frail, people with sight problems and so on. We really have to provide education as well as the meter.
I am sure that that is right. Smart meters with a visual display will clearly be interesting for some people but a turn-off for others. Nevertheless, now that we have the technology to look at a minute-by-minute, second-by-second account of our energy use, it is clearly right that we structure the market to ensure that elderly people and those with visual handicaps know that they are getting the best deal.
I talked about a wider discussion, and I am keen to discuss the winter fuel allowance. Last year it cost £2.7 billion, and I am not entirely confident that we get the best out of it. Of those who received the allowance, it is estimated that only 12 per cent. were in fuel poverty. We need to make some tough choices about how best to use our resources, and as part of a debate about mandatory social tariffs, Warm Front and Eaga we need to discuss whether the winter fuel allowance is the best way forward.
The final part of the Bill deals with, and extends, the role of Ofgem. My respect for Ofgem has grown over the past 12 months, when, under pressure from Government, it has become much more proactive. I welcome its quarterly reports, in which it is interesting to follow the tracks and see the gross margins that have been made by all the energy companies. We must extend Ofgem's role by giving it more investigatory powers and greater responsibilities, to ensure that customers benefit as soon as possible from those powers.
The case for going to the Competition Commission has been argued on both sides of the House today. However, let us be clear about this: it would probably take two years for that inquiry to come round, and during that period the big energy companies would not be investing. It is as simple as that. If people want £95 billion or £200 billion of investment, a Competition Commission inquiry would be completely the wrong way to go about getting it. It would stop that investment in its tracks, because companies such as E.ON and RWE would make decisions to invest elsewhere in the world, and we need that finance here.
The big issue for us at the moment is the renewal of our generating capacity by 2020. The Bill goes a small way towards achieving that, and I support it, although I am not entirely confident that it is supported throughout the House. I look forward to the debate in Committee, because it is a valuable, if modest, Bill, which could still be improved.
I am happy to follow Paddy Tipping, the acting Chairman of the Select Committee on Energy and Climate Change, who speaks with a long-held interest in energy issues.
The hon. Gentleman ended where I begin: by contrasting the Bill before us with the great task that begins today across the North sea in Copenhagen. Earlier, I put it to the Secretary of State-he responded positively-that Copenhagen requires the United Kingdom and the European Union to be ambitious, bold and brave in reaching for the best possible permanent deal. That is obvious. We could also have had an ambitious energy Bill being debated in this country at the same time but, to repeat the word used by the hon. Member for Sherwood, this is a very modest Bill indeed.
Having been in the House throughout the period, my analysis is that, after nearly 13 years in government, Labour's energy policy is perceived by many of my constituents and those of many colleagues as having left millions of the British public out in the cold. They feel worse off, not better off, as a result of the energy policies of the past 12 and a half years-and they are worse off. Energy is costing them more and the future is less certain. The number of people who spend more than 10p in the pound on their fuel bills has gone up, not down, and that situation is likely to get worse, not better, given the price increases in oil and gas that they know they are to expect. If the Government had been really bold and determined, they could have said, "This is the opportunity to try to put high fuel bills that people cannot afford behind us once and for all."-in other words, to do the sort of social justice legislating that I thought Labour came to power to deliver. It is therefore sad that, on the first day of the Copenhagen conference, when people are calling for radical action abroad, we are not seeing extensive and radical proposals at home.
Over the past 12 and a half years, the response to variations in fuel costs has been a system that, although welcome when delivered, is very much one in which Labour makes people dependent on themselves. The winter fuel payment, which is a better system than the benefits system if people do not claim the benefits, has been given irregularly, spasmodically and unpredictably. There has not been a built-in subsidy for poor people, or a guaranteed, legislated-for provision so that people know they will be able to afford their bills. That is in the Bill-we are now seeing it for the first time ever-but it has taken 12 and a half years for a Labour Government to realise that without guarantees in law, people often end up paying much too high a price.
As we have heard, there are three issues before us. Many of us wish that there were many more and that this was legislation in which the Government nailed their colours to the mast of continuing to support and to develop support for the renewables sector, which is growing, but from a terribly lame and slow start. Of course, in some respects there is a difference between my colleagues and I and both the Government and the Conservatives. We do not think that the future lies in nuclear power, which is always expensive, always delivered late and always risky because of the fuel that we import and the failure to find ways to store, let alone to dispose of properly, the waste that is created. Nothing that has recently come to light suggests that nuclear power will become any more safe or secure in future, as the climate change crisis affects Britain and we get more floods, more storms and more risk of disruption, with the same things happening around the world. For this country, which is so well placed with our wind, wave and tidal power, renewables are a far safer and saner route forward, and that is the way we should go.
As I do with much Lib Dem policy, I am having a few problems understanding this. If the hon. Gentleman is against nuclear policy per se, why does he support the nuclear deterrent? From a safety perspective, he seems to have one rule for our service personnel working on nuclear submarines and another for the civilian population.
Those are entirely different arguments, as the hon. Gentleman well knows, having also been involved in this debate for a long time. I will not be distracted into a debate on defence, although I am happy to have it another time. The position we have always taken is that we have inherited a nuclear deterrent that, in the multilateral negotiations that are coming up next year, we should use to lever down the number of nuclear weapons in the world, with a world policy and a national policy of reducing dependence on things nuclear.
We believe that, having gone down the nuclear road in this country and seen that it is unsatisfactory-it was not at all successfully developed under past Tory Governments-it is completely the wrong road to go down under any prospective Government, whether Labour or Conservative, or with somebody else in the lead.
Some of the sources of supply that we need for nuclear are not in those countries but elsewhere, and there are predictions that they may run out in the foreseeable future and that prices may become significantly higher. If the hon. Gentleman thinks that, in a world of uncertainty, transporting around the world things that are needed to create nuclear power is a safe and sensible thing to do, he can make that argument, but it is not finding much credence with the public, who, on all the opinion poll evidence, find the idea of renewables a much more satisfactory way forward than nuclear power.
Let me make a bit more progress. I do not want to get bogged down in nuclear, which is not in the Bill, nor should it be. We are not in favour of it, and we hope that in the end the Government realise that they should not support it either.
The first item in the Bill is carbon capture and storage. Ministers know that we support CCS technology, which is vital if we are to make coal our servant in the years to come and ensure that it does not produce the same problems for our planet in the future that it has in the past. It needs to be seen to be commercially viable, and one difficulty has been that we have been really slow off the mark. That is not the fault of the Secretary of State or the Minister of State, Joan Ruddock, but it was in 2006 that the Select Committee on Science and Technology said of carbon capture and storage:
"Multiple full scale demonstration projects using different types of capture technology and storage conditions are urgently needed."
The first demonstration project was in 1996 in Norway. Why have we been waiting? What has caused the delay? Why, for 12 and a half years, when the technology has been developed elsewhere in the world, have we not sought to advance the CCS that we have always known we would need? We are now going to have to try to catch up, but with other countries much further ahead, it might be as easy for us to take the technology from them as to develop our own.
I would be interested to hear from the Secretary of State why the Government have not yet come clean on their response to the results of their consultation, which ended in September, on having a framework of emissions performance standards for the whole coal industry. He did not allude to that in his opening speech, so I hope that the Minister of State will do so in her response. In the debate in the summer on a Bill introduced by my right hon. Friend Mr. Kennedy, the Under-Secretary of State for Energy and Climate Change said that he supported the general direction of it, but it was a sort of St. Augustine's reply-"But not yet." He said:
"The Government's position is that in our general policy direction, we are where every Member who has spoken has urged us to be. We have already commenced a consultation on the best way to get a detailed policy so that we can travel forward... I believe that consultation is a very good thing and an important component of getting policy right."-[ Hansard, 3 July 2009; Vol. 495, c. 636.]
The consultation has ended, and we are clear that there ought to be- [Interruption.] I know that the Government have responded, but we need to know what they will do now. It is generally accepted that the current carbon price is not the stable one that this country and the world need, and that it needs to stabilise at something much more like €50 or €60 a tonne than the present €14 a tonne.
Given the European Union directive on clean coal, which will come into force at the end of the next decade, we need a clear position on the future of coal in this country. There has to be a clear statement that there will be no new coal-fired power stations without carbon capture and storage working right from the beginning, not retrofitted later. Without that absolute parameter, the industry will not know where it stands, and Ministers know that we are likely to have new coal-fired, dirty coal power stations that will contribute to worsening the climate crisis rather than help to solve it.
Another question about the CCS levy has been asked a couple of times already. I assume that the Secretary of State-again, he was silent on the matter-does not expect the parts of the energy industry that do not release carbon into the atmosphere to contribute to the levy to fund CCS demonstration projects. I assume that under the regulations that he anticipates-like Greg Clark, I believe that it would be helpful to see them in draft-the renewables sector will not have to contribute. It would be nonsense if the sector that does not contribute to the climate crisis and the emissions problem had to pay to develop the technology for making dirty coal clean.
One other point on the technology of carbon capture and storage has not so far been alluded to, and I would be grateful if the Minister of State mentioned it in her response. She has said before how important it is that we share the technology that we develop in this country with developing countries in other parts of the world. It is not just we in the rich west who will need CCS; it is eastern European countries such as Poland, as well as countries such as China. What will happen to the intellectual property of the technology that the prototype plants will produce? I hope that it will be shared and that we do not just develop it to be nationalistic. I understand that all the CCS interests are to be consortiums of companies, some British but mostly international, in locations up and down the east coast, so I hope it is clear that we will share the technology and intellectual property and ensure that we have the power to help the developing world and not just ourselves.
The second section of the Bill is probably the most immediately important to our constituents, because it is about how we deal with rising and, for many people, unaffordable fuel bills. The Government know how embarrassing their record on that is. Again, that is not because of this Secretary of State, but his Government should be embarrassed about the cost of fuel to the poor over the past 12 and a half years. They set a statutory target, which still exists in law, to eliminate fuel poverty in vulnerable households by 2010 and all households by 2016. I understand that 4.5 million or more households now spend more than 10p in the pound on their fuel bills, compared with 2 million or thereabouts only four years ago. We know that there are explanations for part of that and that there has been a massive failure to take up benefits and tax credits that could help to pay the bills. However, it is not just pensioners who are affected but single-parent families and those with long-term illness, who do not benefit from the winter fuel payment. The hon. Member for Sherwood alluded to that. The whole system has failed to ensure that the poor and the vulnerable are protected.
Another group affected, which is often spoken for by Liberal Democrat Members such as my hon. Friend Sir Robert Smith, is the large number of people who live off the gas grid. They may live near it, but they have not been protected at all by the system. They have had to buy their liquified petroleum gas or oil fuel and get it into the tank at the bottom of the garden, and nothing has protected them. There have been 12 and a half years in which some of the rural poor have not been assisted at all, along with many of the urban and suburban poor.
Ministers know that the Liberal Democrats are again going to criticise the fact that all the schemes for warm homes have been piecemeal, limited and inadequate responses. They have told us this year that only one in 80 homes in Britain is a warm home, so we need a scheme that encompasses everybody. The carbon emissions reduction target and Warm Front are inadequate. Age Concern tells me that it receives 5,000 complaints about Warm Front every year, and CERT does not have reducing fuel poverty as a key objective. I understand that Warm Front funding will be cut by half next year, from £350 million to about £176 million, because some of the money was brought forward. The size of the grant has been kept the same, but fewer and fewer people are benefitting. We have heard the example of the latest pilot scheme, which is for but a handful of people.
If Ministers had said that they wanted a scheme rolled out across Britain, led by Government and using local councils, to make every home a warm home within 10 years, as we have argued for, they would have had our support. [Interruption.] Of course it costs money, but there are ways of doing it and I have explained them in the House. The Government could underwrite a loan that was paid back over a maximum of 10 years. Of course there would have to be investment for that underwriting, but it would be worth it. It would save on CO2 emissions, produce warm homes, reduce winter deaths and insulate housing.
I would have liked the Government to display that sort of ambition, and I would have liked them to tackle the problem of those who pay far more than average for their fuel bills because they are not connected to the gas grid. The figures that I currently have are that the average bill of someone on mains gas is £568 a year, that of someone on domestic fuel oil more than £1,000 a year and that of someone on LPG more than £1,300 a year. There is no justification for that inequity in this country today.
There is plenty of evidence and Select Committees have put the argument for change on an all-party basis, but the problem is getting worse. We know that last year, gas bills year went up by 58 per cent. and that this year, when gas prices came down, bills decreased by only 6 per cent. Last year, electricity bills went up by 28 per cent., but when prices came down this year, they decreased by only 8 per cent. The reality is that the system has not properly regulated bills according to the wholesale prices paid by the utility companies that supply the product.
There have been opportunities in this place to legislate along these lines. My hon. Friend Mr. Heath introduced a Bill to deal with high fuel bills earlier this year, but the Minister resisted and talked it out, and did not let it proceed. The reality is that it is bit late now, in the last months of a Labour Government, to get a Bill through to paper over the cracks and to try to cover the embarrassment that they know they feel, in however limited a way. They have not delivered to their constituents, but far worse, they have not delivered to the public as a whole.
There is one very odd bit of the Bill that I hope the Minister can explain. Clause 14, "Schemes for reducing fuel poverty", states:
"For the purposes of this Part, fuel poverty is reduced if... (a) the number of people living in fuel poverty is reduced, or...(b) the extent to which any person is living in fuel poverty is reduced" and clause 14(4) appears to give the Secretary of State by regulation the opportunity to redefine fuel poverty. I should like clarification of that, because we have seen plenty of figures massaged over the years. I know the Government are embarrassed, and they know they are embarrassed, but we need to be clear. If the general understanding is that when we talk about fuel poverty, we are talking about people who pay more than 10 per cent. of their income for fuel, that should remain as the definition. Ministers, whether of this Government or the next, should not have a chance to change it and to pretend that the problem is less than it is.
On the regulation of the energy market, if this was a Bill to really get to grips with Ofgem and produce a regulator that regulated in the consumer interest, people would say, "Amen." However, I sense the Bill will be not nearly as tough as that. The Secretary of State has spoken to Ofgem and told it that if it does not behave, there will be more draconian powers, but the Bill introduces only a modest change to its regulatory authority.
Of course, there is some good stuff. The provision to ensure that energy transmission costs, which could result in higher bills if companies argued that they had low capacity in the grid, cannot be a method of exploiting the consumer is a good thing, and we welcome it. It is also good that the time period for investigations will be extended. There have been lots of abuses. I have seen cases in the paper and I have spoken to people who have had repayments of more than £1,000 from npower, because there has been a fiddling of the tariff and a misrepresentation of the cost. Those cases were taken up and awards were made in favour of those people. What will happen to cases that are currently timed out, but in which there has been a clear breach? I am not asking for retrospective legislation, but what remedy is there for people who have a clear, justifiable complaint against utility companies that has not been met?
I am concerned that nothing in the Bill will make Ofgem more open to the consumer, accountable and transparent. Ministers know what Consumer Focus, Which? and others are asking for -that Ofgem meet in public and that it include representatives of the public. The regulatory body needs to be much more accountable if it is to have the confidence of the public.
There is now going to be, for the first time, an ability to change the rules on the method of payment and the Government will have the power to control such things. The current voluntary system to which, as I understand it, the energy companies have subscribed, means they do not currently charge more, for example, for prepayment meters. However, I am concerned that some of the companies have indicated, even this winter, that they may be willing to go back on the system and charge more. Scottish and Southern Energy, for example, has said that it intends to withdraw its offer of equalisation at the end of this winter.
The hon. Member for Sherwood led into my speech by saying that this is a modest Bill, which sadly it is. In Committee, we will seek to make it tougher. We will seek to make Ofgem's powers tougher and the rights of the consumer greater and to ensure that the schemes for making our homes in Britain warmer and better insulated are much more extensive. We will also seek to ensure that the CCS proposals do not penalise the renewables sector, which has just been re-incentivised by increased support. We need that support to go on growing, and we must not be seen as punishing or hindering such development.
We hope that we will make the Bill stronger and tougher. The Secretary of State has promised to be bold when he goes to Copenhagen in the next couple of days. I hope he will be, but I also hope that he will leave a message for his ministerial colleagues who will be in Committee that if the last of the Labour Government's Energy Bills is to be worth having, it needs to be much tougher, bolder and socially just.
Hon. Members have this afternoon said that the Bill is a modest one. It is indeed modest if one goes by the number of clauses or what it provides by way of new legislation in the light of what we know are the challenges ahead. However, when considering Bills, it is important to understand clearly what we need to legislate on at particular times. It is important to ask what has already happened legislatively and what is still required. It is also important to ask what the role of regulation is and what are the roles of future initiatives, which stem from powers given by the Bill and other legislation, in meeting the energy challenge ahead of us.
The reality is that the Bill builds on the Energy Act 2008 and a number of other items of legislation to make some progress on issues relating to the energy challenge. In any event, regulatory powers are already available and financial investments can and are being made. There is a strategy for ensuring that a new low-carbon energy economy properly protects those in fuel poverty, and for ensuring that the future base load of our energy supply, which will inevitably concern coal and gas in future, is properly developed as far as the low-carbon form of energy supply and CCS are concerned. The regulator has the base powers to regulate the energy market as it becomes much more sustainable. They may appear to be modest legislative achievements, but they underpin a much greater step forward.
What we have heard this afternoon concerns me. The Opposition claim that they will allow the Bill a Second Reading and make changes in Committee, but they would, were they to have their way, have a huge legislative programme. They make declaratory statements on everything under the sun as far as energy policy is concerned, including on a great deal of legislation that, unless they have been completely oblivious of what has been happening in the House, they would notice has already actually been passed.
For example, we know that as a result of the 2008 Act, a feed-in tariff for smaller-scale electricity generation will be introduced soon. We know that the year after that a renewable heat incentive will come in. Incidentally, that will be the first introduced by any Government anywhere in the world to ensure that renewable heat is part of a programme of moving towards low-carbon domestic and commercial energy for providing heat.
Having that legislation in place will help when it comes to the next stage in energy efficiency for households and domestic properties, because that will require not just passive insulation and energy efficiency measures but active measures such as the installation of small-scale or district generation in domestic properties. That can reduce the carbon footprint of a house radically over time. Therefore the future relates to regulation following from legislation that has already been passed, and the will to ensure that that happens actively in the future. The claim that an opportunity to pass legislation has been missed in those areas is to misunderstand how one makes progress with a renewable and sustainable energy policy. I do not claim that that is a deliberate misunderstanding, but a misunderstanding it is, nevertheless.
It concerns me when that misunderstanding is compounded by simplistic claims about how progress can be made on these issues. We have heard the suggestion -it was repeated this afternoon-that every household should be given £6,500, and that that will sort out the whole question of insulation and active energy generation concerns. As a result, it is suggested, we will have fully insulated and approaching zero-carbon households, but it is akin to the other short-lived policy we heard about a while ago, whereby everybody was to put £8,000 into the pot and they would then have their health and social care needs taken care of for the rest of their lives. That policy ran into similar mathematical difficulties.
The mathematics of the £6,500 policy-over and above requiring loan guarantees of some £160 billion to £170 billion to be injected into the economy if the guarantee is from the public purse-would require savings of £360 a year, if the loan is to be serviced and assuming that it would not be just given out to householders.
The hon. Gentleman is making one or two errors in interpreting our policy. The amount would be up to £6,500, because not every home would require the same level of cost-effective investment. Any private company that can save money on its electric bills by investment is doing so: the problem with individuals is that they cannot borrow the money in the same way as businesses. This scheme would enable them to draw down their future energy savings to invest in the energy efficiency of their homes. It seems a bit of a no-brainer to me.
I am delighted that the hon. Gentleman intervened at the moment that he did and in the way that he did because he has completely anticipated my next point. Despite the fact that the leader of his party insisted that every family in the country could spend £6,500 on their household energy efficiency-and the shadow Secretary of State for Energy and Climate Change emphasised that point in the House recently-the truth of the matter is that in practice it would be nothing like that sum. And if it were £6,500, it would be unsustainable to support, in terms of the investment required to underpin it. It is only because the sum would be nothing like £6,500-it would be more like £1,500 on average under the Conservatives' blue-green energy proposals-that funding the policy even starts to become conceivable for most households. Indeed, the savings suggested for an expenditure of £1,500 are the full £360 that would be needed to underpin the £6,500 in terms of the interest that would be lost through granting that sum. It is claimed that those savings would result from measures such as the installation of low-energy light bulbs, cavity wall insulation and roof insulation, all of which have already been legislated for to a considerable extent, or are under way. By 2011, for example, low-energy light bulbs will be in place across the whole of the UK. The Conservative's policy does not take seriously the real job that needs to be done, especially on fuel poverty, or the investment in efficient homes that it will be necessary to undertake.
The recent White Paper, which does take the issue seriously, proposed that all homes should have a whole-house package-to be achieved not by legislative means but through other measures-to include cost-effective energy saving measures plus renewable heat and electricity measures as appropriate by 2030, and all lofts and cavity walls to be insulated, where practicable, by 2015. It also included the development of new ways to provide financial support so that people could make more substantial energy saving and renewable energy improvements. Does it not appear sensible to work out how that can be done properly in order to pursue the policy, instead of magicking a sum of money out of thin air, which would be completely insupportable in the real world? Would it not make more sense to examine placing a charge on the district network operator for the supply to the household? Would it not make sense to consider how loans could come into the equation to overcome the capital costs of such energy-saving devices? Would it not make sense to consider the option of leasing, or to pilot some of these schemes so that what we say and what we can do are the same thing? In a future low-carbon energy economy, the savings will need to match up to the investment so that the householder will be in a win-win situation in terms of their energy bills as well as the security of a well-insulated, low-carbon house.
We need to be clear that whatever the oscillation in energy prices in the future, they will be high and will get higher. There is therefore a particular onus on us to bring forward serious and well-thought-out programmes to ensure that those people who are not able to afford their energy bills now-let alone future higher energy bills -are proofed against those bills for a long time to come.
We need to be looking at a quantum shift in our understanding of what an energy bill should consist of and what those in fuel poverty face in paying their fuel bills. For the future, I envisage that happening in much the same way that council tax is paid-everybody pays it, but there is a rebate for those in less fortunate financial circumstances-so that a number of people are thereby effectively excluded or only partially included in the process of paying energy bills. Having a requirement in the Bill that social tariffs be introduced by legislation in future, rather than by voluntary agreement, seems to be a move towards that idea. We are all in this together, in ensuring that we have a low-carbon energy economy, alongside what we know will be high prices for energy supplies, but at the same time ensuring that the effects of that high-cost energy economy are not brought to bear in a most cruel way on those who can least afford to finance such an energy economy.
Therefore, a fuel poverty strategy should combine several different factors, not all of which will exactly correlate with each other. It is not the case, for instance, that everybody who is in fuel poverty lives in a badly insulated house, although a good proportion do so. Therefore, a strategy that moves rapidly towards ensuring that the standard assessment procedure ratings-the SAP ratings-of houses across the country are raised substantially, in order to fuel-poverty proof those houses as far as possible, seems absolutely essential. However, it is also not the case that simply doing that will cause everybody who is now in fuel poverty not to be in fuel poverty. It is also not the case that everyone who is in fuel poverty stays in the same house. Therefore, a programme to ensure social tariffs, tariff reductions and affordable tariffs for those in fuel poverty-these might be related as, in effect, a gateway benefit, in respect of other indicators of the fact that a person in fuel poverty lives in a house that is not well insulated-would seem to be a way forward in ensuring, as far as possible, that fuel poverty becomes a thing of the past in our future energy economy.
We have to be honest and reflect on the indicators of fuel poverty. Although it is widely accepted that those who spend more than 10 per cent.-10p in a pound-on their energy bills are in fuel poverty, that definition rises or falls precisely with energy prices. Some 40,000 people will be in fuel poverty if fuel prices rise by 1 per cent., yet they will apparently come out of fuel poverty if fuel prices fall by 1 per cent., regardless of their objective circumstances before or after that price rise or fall. Therefore, attempting to secure a combination of factors in fighting fuel poverty, so that people are fuel-poverty proofed as far as possible, seems to be the right way forward. That will require a combination of legislation and regulation on a series of important fronts. It is therefore interesting to note that the code for sustainable buildings, which will ensure by 2016 that the building of new houses is carbon-neutral as far as possible, which will, among other things, help to increase the SAP rating of UK housing stock, is not based on legislation.
Does the hon. Gentleman agree with us that it is important to have consistent measures of fuel poverty, so that Governments of any colour cannot wriggle out of their responsibilities, and that therefore clause 14, to which my hon. Friend Simon Hughes drew our attention earlier and which appears to give the Secretary of State the power to change and flex the definition, is rather dangerous and ought to be removed?
There is a distinction between ensuring that the definition of fuel poverty works in the way that I have described and a clause in a Bill that enables a Government simply to declare that fuel poverty does not exist. As the hon. Gentleman says, it would be a bad outcome if a Government were able, by a legislative ruse, to declare that fuel poverty did not exist. However, as we all know that it does exist and as we have a definition in the Bill that is not to be removed, the question is how we ensure, through a combination of fuel-poverty proofing, social tariffs and reduced tariffs, and through how they cross over for people living in particular houses, that fuel poverty is combated rather more effectively than previously.
I want to say a few words about the future of our energy supply. As my hon. Friend Paddy Tipping mentioned, the test of the success or otherwise of our whole strategy of moving towards a low-carbon fuel economy will be the extent to which we effectively replace the 40 or so per cent. of our existing electricity supply with a low-carbon electricity supply. Over the next 10 to 15 years, all but one of our nuclear power stations will go out of commission, as will all our coal-fired power stations, a number of gas-fired power stations and, as things stand, all our oil-fired power stations, through a combination of age, end of life, the European large combustion plant directive and associated activities. It is imperative that that process should take clear note of the need to ensure, first, that we have a base load capacity in our fuel economy and, secondly, that we do not require investors in new plant-let us be clear: by and large, the investors in any new plant will be the energy companies that currently supply our energy investment in the UK-to invest in plant that will become redundant or a stranded asset as soon as it is installed.
That will require two things to happen. First, we need to ensure that the capacity exists to invest in both coal and gas, while at the same time squaring the circle of that investment for a future low-carbon economy. Secondly, it is absolutely right that we should send out strong signals about carbon capture and storage for those new investments. It is also absolutely right, therefore, that we should put in place a legislative framework through this Bill to move ahead with carbon capture and storage, both pre-combustion and post-combustion, coupled with a serious tranche of new powers for the regulator to ensure that the energy market works in a more carefully regulated way.
One thing to emerge as a result of those changes is that in future we will live in a far more regulated energy economy. Indeed, it is right that we should do so, because we have serious targets to reach, a short time in which to reach them and a series of replacements that we need to make in our generating capacity to enable us to reach them, rather than standing against them. Therefore, a combination of this legislation and Ofgem being able to recast the market arrangements for the generation of electricity, so that it underpins new investment in a positive way, will be a good achievement of the Bill should it become law.
If we are to regulate positively to achieve our aims, it is important that we all face in the same direction, and that we do not place on the statute book legislation that resiles from those aims. I was therefore concerned to hear proposals from Conservative Members for legislation to prevent onshore wind energy from being put in place anywhere in the country if it is less than a specified distance from a house or dwelling. The aim of that proposal is not, as has been suggested by Opposition Front Benchers, to involve communities more in onshore wind development. It is simply to stop onshore wind farms being put in place.
Giving that kind of signal through legislation would prevent the investment in our energy supply that we need to replace our ageing equipment, and create uncertainty in the market. Our claim to be able to move forward on to a low-carbon economy would effectively be rugby tackled by legislation that would make that impossible to achieve. I am sorry that, when those on the Opposition Front Bench were given the opportunity to repudiate that approach today, they simply ducked the question and said that it was nothing to do with them. It is something to do with them.
We should place on record that we will put on the statute book legislation and regulations that will move us solidly in the direction of a low-carbon economy, to ensure that the people who are going to be paying their bills in such an economy are not so disadvantaged by what that economy is going to produce that they cannot take part in it. We should all face in the same direction on this, and we must make it clear that we do not support anything that goes against that. I hope that when the Opposition Front-Bench spokesman sums up their case on this Second Reading debate he will take the opportunity to repudiate that it is any part of their policy to stop the development of onshore wind farms by placing distance barriers in the way of such developments, thereby preventing them from going ahead.
It is a pleasure to follow Dr. Whitehead, but I must begin by correcting him. He has spent the past 10 minutes talking about Tory policy, and I hope that that theme will not continue through the debate. I want to clarify the fact that my hon. Friend Greg Clark put clearly into context the remarks about wind farms made by my right hon. and learned Friend Mr. Clarke.
It was, however, the comments made by Paddy Tipping- [ Interruption. ] I have inadvertently promoted him. The hon. Member for Sherwood made a thoughtful speech, and he made two points that I hope those on both Front Benches will listen to. First, he talked about the rising cost of winter fuel allowances, which needs to be addressed. Is it right that we should pour so much money into heating houses, rather than making them capable of requiring less heat by insulating them? He also raised the possibility of power cuts in 2017-I see him nodding- which is a prospect that the Secretary of State refused to acknowledge even though he wrote about it not long ago.
We have gathered here today to debate the Second Reading of this Bill, but there is another gathering taking place in Copenhagen. That involves a significant grouping of international leaders who are hoping to move the debate on the 1997 Kyoto protocol forward. We must all wish that conference well, but also bear in mind that it took more than eight years for much of that protocol to become law. Our hopes are high that we shall see agreement on the targets for greenhouse gas emissions, on financial support for adaptation to climate change in developing countries and on the carbon trading scheme. I shall not hold my breath while waiting to see any of that put on the statute book, however, because of the slowness of planning and the delays involved in Government agreements. All that goes against the grain of what we have heard on both sides of the House about the urgency of dealing with climate change and the demise of this country's natural resources.
I visited Cumbria last week. We do not know whether the flooding there was caused by climate change, but many of the images that we saw on television are still vivid in our minds. I want to place on record the fact that Cumbria is very much open for business. Yes, there have been problems in Cockermouth, but Lake Windermere is back to its normal levels, and the people there are calling for tourists to visit the area. When we debate climate change, we need to be careful not to label or identify places that have been affected and simply leave it at that. We can incur damage if we do not subsequently confirm that repairs have been made. The fighting spirit of the people in Cumbria has got it back to business as normal, and we owe them a debt of gratitude. We can show that gratitude by sending out the message that the Lake district is very much open for business.
I am delighted to be participating in this Second Reading debate, not only to underline my own views on climate change but to comment on the demise of our own natural resources. As I said in my interventions on the Secretary of State, I am very concerned about what has happened to those resources over the past decade. History will look back on that decade with concern that we did not do enough in time to make people aware that our resources were being so greatly reduced.
The risk of blackouts in the future is now a reality, yet we hear denials of that from those on the Government Front Bench. Instead, we get lists of initiatives. Some of them are very good: we have just heard about the longer-lasting light bulbs initiative, and that is fantastic. Unfortunately, however, it does not address the question of what we should do when the oil and gas run out. That is exactly what is happening. In addition, our nuclear power capability used to contribute 30 per cent. of the UK's energy needs; the figure is now down to 12.5 per cent. and falling. We have had many discussions on the further use of coal, but it is now seen as too dirty to use on its own. Extra investment is required, as is further research, because the scale on which we could use carbon capture and storage has yet to be confirmed.
We have also had big debates about renewables. The subject was just raised by the hon. Member for Southampton, Test. I do not doubt that there have been problems over planning in Conservative councils and in others across the country. It is worth putting on record the fact that there are more Conservative councils than there are Labour and Liberal Democrat councils put together, so of course there will be more issues and question marks in relation to those matters. I would like to see more incentives provided by the Government so that councils, regardless of their colour, would be encouraged to look at renewables as opposed to other energy sources.
I do not think that that point has substantial weight. The same sort of attitudes were present before the major wave of new Conservative councils was elected two years or so ago. Often, in the more balanced councils-in terms of political control-it was the Conservative councils that led the opposition to energy initiatives of this kind, so I am not sure that the hon. Gentleman's point is all that significant.
I did not quite understand that intervention.
The point is that today, we are where we are. If councils are not embracing the opportunity for renewables, we need to look at ways of incentivising them to do so. What is wrong is that despite 10 years of commitment by this Government, the contribution to Britain's energy requirement made by renewables has gone from 1 per cent. to 1.3 per cent. That is not good enough, considering the pressure that we are under to find other ways of providing our energy. It is almost as if a pilot were to take off without knowing how much fuel was in the tanks and then started searching around for somewhere to land to refuel. That is not sensible planning for the future. That is my basic argument. What has happened in the last 10 years, as the oil and gas have been running out? The initiatives that we need to prepare ourselves for the future when the lights may be threatened, or indeed turned out, have not been forthcoming.
In Germany it is against the law to run out of fuel while driving a car on the motorway: one has to plan ahead. I wonder what the fine would be for a Government who were running towards empty, or if their tank ran out completely. It would probably be more than this Government could afford.
It is helpful to remind ourselves of our energy needs. It is fair to say that for many years we have been blessed with energy efficiency in this country, as we have had an ample supply. Our requirement is roughly around 60 GW, although it is likely to decline this year, simply because of the recession and the consequent reduction in requirements. Current capacity is 76 GW, so one might ask what all the fuss is about. According to the Government's own statistics, our energy requirements are likely to increase by around 40 per cent. over the next 20 years.
Let us look at our resources more closely. We have known for years that North sea oil is on the decline. Surely the recent oil price spike at $147 a barrel would have set the alarm bells ringing to say that what we are doing is not sustainable. We clearly cannot carry on this way-and not only on account of the cost of the fuel, because it is simply running out. Labour has watched, like a rabbit caught in the headlights, as the North sea oil dials swing round towards empty.
The story with gas is not much different; about a third of our requirements are now imported. UK storage capacity has also changed little. That was pointed out a number of times to the Secretary of State, who gave the most waffly reply I have heard in this Chamber about the reasons why we cannot have a legal requirement, as France and Germany do, to keep a certain number of days' supply of gas in storage in the UK. In France it is 125 days; in Germany it is 95 days; in the UK we average around 15, but last winter we went down to just four days' capacity, coming very close indeed to running on empty.
The question has been raised-the hon. Member who raised it is no longer in his place-about an issue that the Front-Bench teams need to answer: rough storage, and who owns the gas itself. Germany owns a number of the companies that operate in the UK, but is it right that when they are running low on gas, they can remove gas from rough storage here in the UK and take it back to Germany to look after their own residents? The Government should provide an answer to that question.
The nuclear story provides another tale of woe. Again, 30 per cent. of energy needs were once being met, but we are now down to 12.5 per cent. The Magnox fleet is going to disappear almost completely over the next few years, as are pressurised water reactors. These cannot be replaced overnight. The Government are at last waking up, but they will turn around and say, "What are the Conservatives going to do?" That is not a powerful argument, when it is under their watch that the nuclear power capability has been reduced to the point at which we cannot replace those power stations, like for like, in time to meet the same energy requirements as before.
As I said in an earlier intervention, it took 22 years to get planning permission to build the Dungeness nuclear power plant. The processes have been speeded up, but the technology is no longer here in the UK. Virtually every nuclear power station is different-unique-as we have built one, learned from it and then moved on to build another one. That is not a good story. Much of the technology and the people have moved elsewhere, to places such as South Africa, Canada, the United States and France. We should be looking to international organisations to come over here to teach and train us so that we have the right nuclear capability to meet our needs in the future.
I thank the hon. Gentleman for his comments about Cumbria, but on the subject of the nuclear industry, I urge him please not to talk down the capability of the UK industry. Many of the points that he has made are not true. I know he is supportive, which I welcome, but let us stick to the facts.
I am sticking to the facts. I am on the all-party nuclear energy group, and we have made a number of visits across the globe. We meet British people-now slightly aged, I have to say-who worked in the British nuclear industry and have now moved away from it. I could mention the CANDU systems in Canada, the pebble-bed systems in South Africa, and other systems developed in France and Sweden, all of which benefited from British interest and British know-how, as they started off here in the UK.
The second absence from the Bill is any mention of nuclear fusion, and I suspect that not many Members are aware of what is going on in that connection. The Minister of State shakes her head, and if she were to intervene now, she would no doubt say, "Oh, that's 20 years away." Well, it will continue to be 20 years away, so long as we continue to fail to invest in it. Given that that is effectively nuclear power utopia, I cannot understand why we are not doing more to find something that would allow us to build only one more set of nuclear fission reactors before moving over to nuclear fusion. Nuclear fusion combines hydrogen, turning it into helium, creating water, so it is very safe: there is no radioactive material and there are no CO2 emissions, making it extremely clean. Yet we are doing nothing-no research, no discussion in the UK of how to move that debate forward. Scientists know that that power can be harnessed, but because it a long time in the future, the attitude is that it will not happen on our watch; I am afraid that that is not the right attitude.
As for coal, we have a supply, but as we have known for a long time, it is a big polluter. If we have known that for a long time, why are we only now coming to terms with the challenges, issues and benefits of carbon capture and storage? Again, it is all too late in the day.
I repeat that that took place before I had the opportunity even to comment on it; I was still at school studying chemistry. The hon. Gentleman has been in the House for 10 years now, and this Government have been responsible for 10 years, so at what point do the Government finally stop using, "Oh, it was the last Government's fault," as an excuse to cover what they are not doing now. That debate is getting very old indeed.
I put it to the Minister that the levy that the Bill introduces will penalise the entire industry, including those who do not produce any CO2 emissions. Would it not be an incentive for the producers of electricity and energy-and, indeed, the consumers-to move over to greener forms if they knew that they would not then have to pay the levy? I am ready to give way to the Minister to explain, but it does not look as if she is going to intervene. We will wait for her summing up.
Finally, on renewables, the point has been made that we have managed to increase our capability in the UK by only 0.3 per cent. There are more imaginative ways of using renewables. The point has been made that there are so many buildings-council-owned buildings and other public buildings-that would readily provide a place for wind turbines of varying sizes, in order to increase our contribution. Those are not all Tory council town halls either, as there are myriad places where we could do that. That is the approach that we need.
To have 10,000 wind turbines by 2020 is a fantastic target, but this Government did not manage to save a major wind turbine company close to my constituency, in the Isle of Wight. What a shame that it has now gone out of business. I am afraid that this provides another example of people upping sticks and moving out of this country: their experience, technology and resources have now left these shores.
I share the hon. Gentleman's regret about the fact that the Danish company Vesta is ending its activities on the Isle of Wight, but I hope that he will be open enough to accept that one of the causes of its frustration was the consistent opposition to those activities by the Tory-run council there, and by his Tory colleague Mr. Turner. When those at Vesta's headquarters asked what support it was receiving locally, it had to answer, "Very little, if any."
The hon. Gentleman has made a fair point. As I think I said at the beginning of my speech, we need to find ways of incentivising all councils, whatever their colour or persuasion. If it is true that councils are turning their backs, we must think about how the situation can be reversed. However, I see nothing in the Bill that would take us down that route. I see nothing in it that would persuade councils on the Isle of Wight, in Felixstowe or anywhere else to invest more in technology of this kind.
The position in Europe is just as bleak as it is here in the United Kingdom. Europe is already largely dependent on imports-90 per cent. of oil, 80 per cent. of gas and 50 per cent. of coal come from outside Europe-but we cannot lean on our neighbours and depend on them to provide long-term support for our energy needs. That raises the question of security of supply-another issue that is absent from the Bill. I had an opportunity to visit Georgia and observe the development of pipelines there. A political game was being played, involving the geography of the placing of pipelines in Europe. What is worrying is that Russia is now in a strong position to turn the taps on and off, and we may see prices fluctuate across Europe. We must not find ourselves in that position again, particularly as we approach another tough winter.
We are seeing an abdication of responsibility by the Government. I do not understand the reason for the delay in the introduction of smart meters, and of charging points for electric cars-those were mentioned by my hon. Friend the Member for Tunbridge Wells, and the nation is calling out for them-and the upgrade of the 50-year-old grid. Moreover, surely an energy Bill should focus on reducing heat requirements, given that they constitute 42 per cent. of our energy requirements. It should also focus on greener transport systems. The introduction of TGV-style trains would reduce the need for aeroplanes, and an increase in the number of light railways might encourage people to use their cars less. A particular interest of mine is the introduction of grants or other incentives for councils to provide safer bike lanes, to reduce the need for cars for the school run-a major contributor to road pollution.
There is little in the Bill with which we can disagree-but then there is little in the Bill anyway. As the Copenhagen summit gets under way, I hope that none of the delegates are turning their eyes in the direction of this Chamber to see whether they can learn anything from what is being said here. I fear that they would be sadly disappointed.
From an energy perspective, Labour's period in office will be seen as a wasted decade, and the Bill represents a wasted opportunity. The nation can rightly ask why we have not planned for the future. Our oil and gas are running out, our nuclear power stations are grinding to a halt, and our coal is becoming too expensive and dirty to use. Why has more not been done not only to ensure that we can generate the power that we need, but to ensure that our homes are more energy-efficient? More fundamentally, what has been done to keep the lights on in the future? I believe that we have just 15 days of supply-although that may have been reduced to four days. The test will be the coming winter. I shall be interested to hear about the Minister's plans for the winter, and the emergency procedures that may be required should it be as harsh as winters have been in the past. We are gambling with people's lives, as was proved by the increase in death tolls during last year's harsh winter.
Earlier generations created the problem of greenhouse gases through ignorance. The Government are compounding that problem with arrogance, by doing so little. We have had 15 Energy Ministers in 10 years. That is recycling at its worst. It seems that we must wait for a Conservative Minister to take the neglect of our energy requirements seriously.
I shall not be as churlish as Opposition Members about the Bill. It is indeed a modest Bill, but I think it unreasonable to expect a compendium Bill dealing with every outstanding energy issue to go through Parliament in the limited time that we have before the general election. For obvious reasons, this Bill focuses on what is needed immediately.
I welcome the Bill, and I gather that, in a way, the Opposition do as well, so I assume that they will not vote against it. [Interruption.]
My apologies, Madam Deputy Speaker.
As I was saying, this is a modest Bill. Only three issues, in my view, have not been addressed at all, or have not been addressed as much as they might have been. The reason why we need the Bill is clear, however. We have a liberalised electricity market, for which we must thank the Opposition in their former role as the Government. I sometimes think that our problems with energy policy would be much easier to deal with if we still had the late, lamented dear old Central Electricity Generating Board. If that were the case, we could simply say, "We are going to do this," rather than having to act through a purely commercial market. All change is not progress, and the liberalised electricity markets have created more problems than solutions.
Low-carbon or zero-carbon technologies cost more than fossil-fuel technologies. It is as simple as that. Deploying those technologies requires market support mechanisms, or, to put it more crudely, subsidies. There is no way of getting around that in the present circumstances, and it is the reason for part 1 of the Bill. No one will invest in the building of plants with carbon capture and storage without a subsidy to cover the extra cost. That basic fact applies to renewable energy and, indeed, to the nuclear industry. If the nuclear industry had to compete with gas or coal-fired power generation on costs, it would not have a chance. It has made that clear through a number of darkly muttered remarks, for example, about the need for a sufficiently high carbon price to underpin its investment. The industry would also like long-term supply contracts, thank you very much, to guarantee it flat-out running of its reactors and make it as economic as possible.
The playing field would, of course, be more level if the fossil-fuel generators had to take care of their own waste. At present, they simply expel it into the atmosphere for us or future generations to deal with. At least the nuclear industry contains and processes its own waste. Surely that is the point of what we are discussing today.
I think that one of the best ways to level the playing field is to have a realistic carbon price. We currently have a ludicrous price in the EU emissions trading scheme. I know that one of the things that my right hon. Friend the Secretary of State hopes will emerge from Copenhagen is an internationally agreed means of increasing the carbon price.
I was somewhat astonished by what Mr. Goodwill said about cost. Would the hon. Gentleman care to remind us of the current cost of the Nuclear Decommissioning Authority to deal with historical nuclear waste, never mind new nuclear waste?
It is about £70 billion, but I have slightly lost track; there is, however, a mounting pile of both waste and cost. I should add that the nuclear industry does not want to know about making a level playing field.
Returning to my theme, the whole process would be made a great deal easier if we had a sensible carbon price. If we had such a carbon price, we would not need to exact as much money through a levy from electricity consumers. It is the electricity consumers who will have to pick up the tab for the levy, and £9.5 billion is quite a lot of money. It could be raised through a carbon tax-that was a Freudian slip. I have long advocated our having a carbon tax, but I should have referred to it being raised through a carbon price-although that does not really matter because a sensible carbon price would, in effect, be a carbon tax, so that is just semantics.
It has now become really quite respectable to suggest that we should have a mechanism for underpinning the price of carbon. That has now been suggested by Lord Turner, chair of the Committee on Climate Change, and by many others. If we had a realistic carbon price, that would help to level the playing field for competition in generation. We need to do that, because it is unrealistic to think we can continue to subsidise everything, as we have to do now to get decarbonised electricity supply.
We cannot do that through regulation because of the liberalised market. We could regulate, however, to say not only that no coal-fired power station will be built without CCS in place, but that there will be no coal-fired generation at all. Under that restriction, only zero or low-carbon generation technologies would be licensed, but we would not get those power stations built, because the capital markets are in such a bad state that no one would invest in them. We are therefore, in effect, having to cough up subsidies to satisfy bankers. It all comes back to bankers-I am sorry to have to say that, but it is true. They want to see returns on their investments, and the only way they can get them is through subsidies: in this case, it would be the CCS levy, and in the case of wind and other renewables, it would be renewables obligation certificates. Either way, there has to be the subsidy.
That brings me on to the first matter that I would have liked the Bill to address. As has been mentioned, we have some of the best raw energy-producing resources of any country in the world in terms of wind, wave and tidal stream, but although some of our wave power and tidal stream technologies are at the point of being ready for commercial exploitation and deployment, that will not happen under our current market support regimes. Even if the double-ROCs for offshore wind could be accessed, it would not be enough because such new technologies have higher capital costs, which can only come down with increased scale, the development of supply chains and so forth.
Other countries, notably Germany and Denmark, have deployed market support systems that will develop technologies so they reach the point of cost reduction. In the process, although such countries may have to invest a bit, they will gain enormously in terms of the green industries they develop. We could have had the wind industry in Britain if we had done that. Like Germany, we might now have had 250,000 extra jobs and several billions of pounds-worth of turnover from the manufacture of wind turbines. We have an opportunity with wave and tidal stream technology, but it will not happen unless we put in place a market support mechanism-to be brutally honest, a subsidy-that will bring that through.
I would have liked to have seen a provision in the Bill to extend the levy principle to support and foster new technologies, because none of the current market support systems are doing the job. We could have a magnificent tidal stream industry in this country, as exemplified by the first commercial machine, SeaGen, in Strangford lough. There is a danger, however, that those involved in the industry will be forced to go to other countries, where there is a market support mechanism.
My hon. Friend is making a very good argument. On market mechanisms, does he not agree that we might look back at a previous Bill on feed-in tariffs? I know it depends on the scale of generation, but there is a possibility of helping emerging technologies through the feed-in tariff applied. Although the Department of Energy and Climate Change has put in place a very good tariff structure, is there not an argument for having a higher rate-perhaps only temporarily, for a few years-to encourage those new technologies?
I absolutely agree, and I thank my right hon. Friend for that intervention. I do not mind whether the measure in question is called a feed-in tariff, a multiple ROC or a special levy, as long as it does the job. Obviously, it would be temporary and tied to the state of development of a given technology. If we do not do that, however, we run the risk of losing an industry that this country could have-it is on the point of development-and that could produce gigawatts of power that could, in turn, produce great industrial benefit. If that does not happen, we will still want to deploy tidal stream power in this country, because we have so much of it, but instead of being the manufacturer and getting 100 per cent. of the added value of deploying the technology, we would get very little-perhaps about 10 per cent. We would be a client. We would be importing machines made abroad that could have been made in Britain, and we would lose a potentially huge export industry as well.
I therefore make the following serious plea: we should examine the possibility of incorporating in the Bill a new support mechanism for emerging technologies, so that we no longer have to try desperately to get the Treasury to agree to tweaking the existing mechanisms. That just is not happening, and that is extremely frustrating for those in the industry, those who want to see it develop, and all of us who want this country to have the low-carbon electricity it can produce for us and the contribution it can make towards our climate change efforts. I think we have now had enough of that whinge, although it is intended to be a very constructive whinge.
It is inevitable that energy prices will increase. I cannot think of a single factor that would bring them down. Oil and gas prices are going up and the recession will not counter that. The general trend is inexorably upwards, just as the general trend in climate change is of global warming and temperatures moving inexorably upwards. It is vital that the increased burden of decarbonising energy is shared reasonably and that it does not fall on the poorest sections of the community, so I very much welcome the social tariff provisions of the Bill. I think that they are long overdue. We need to ensure that they bite the energy companies. It means that the rest of us have to pay, but I have no objection to that. Some of us accept that principle with taxation, although I cannot say that everybody does.
That is vital, but the tariff is not the only thing. Quite a lot has been said already about energy efficiency, and a social tariff regime needs to go hand in hand with increased energy efficiency. Whatever financial difficulties there are, we need to explore alternative mechanisms of ensuring that those people at the lower end of the income spectrum who will benefit from the social tariffs can also benefit from support for increasing the energy efficiency of their homes. That is the other gap in the Bill as I see it. Such an approach will not necessarily involve great expenditure on the part of the Treasury and it can be done by manipulation of the market. I would like to see that explored.
Finally, we come to my concerns about Ofgem. Those who are easily bored might remember that I have been having a pop at Ofgem for many years now, trying to get some responsibility for sustainability into its mandate. Ofgem has resisted that quite strongly. However, my efforts achieved something in 2004, when sustainability was added to the secondary responsibilities of Ofgem-I cannot remember the list of them now, but it was quite long. There it stayed, but it made very little difference to Ofgem's behaviour in practice because Ofgem has focused almost entirely on competition and security of supply up until now. I am very pleased that the Bill puts sustainability and climate change at the top of Ofgem's primary responsibilities.
It will be extremely interesting to watch the behaviour of Ofgem when it has to consider such matters as its primary remit, with everything else following them. That should produce a culture change that is long overdue. Ofgem's role is central to all energy policy, so if it is singing from the climate change hymn sheet, we might see some real progress towards large-scale deployment of renewable energy.
I am broadly in sympathy with the hon. Gentleman's argument. It is long overdue that sustainability should take a major place in Ofgem's remit. Is he satisfied with the rather circuitous and convoluted way in which the Bill attempts to do that, by redefining sustainability as one of the consumer benefits?
That is an interesting question, but I do not think it matters. The provision states quite clearly that sustainability is a primary part of Ofgem's responsibility and, of course, it is a consumer benefit. Fighting climate change is as much a consumer benefit as anything else. In fact, I think that it is probably one of the greatest benefits that we can give to successive generations of consumers. I do not have a problem with that. As long as Ofgem finally starts to go green, I shall be quite happy.
The other thing that worries me about Ofgem is that, although for years it has been rather tentative in its regulation and how it has tackled abuses of the energy market by energy companies, it needs more powers. Even if it has the will to go in a particular direction of enforcement, it definitely needs more powers. The Bill contains some. Although I have not worked through the issue enough to define the extra powers that I think Ofgem might need, this is one part of the Bill that will need very careful scrutiny in Committee. It could well be expedient to increase further Ofgem's powers beyond those that are already in the Bill.
I endorse the Bill, although I think it can be improved. I realise why it is a modest Bill. It fits within a time setting. It is what it is and can only be what it is. However, even within the limited time that we have left of this Parliament, I think that it can be usefully improved. I sincerely hope that the whole House will at least give it a Second Reading.
It is a pleasure to follow Dr. Turner.
We have become accustomed to relying on an uninterrupted supply of electricity in this country although, as Paddy Tipping mentioned and as I also read in a report from the Environmental Audit Committee-in fact, only the Minister has not recognised it-we are heading for a situation in which the lights could well go out in 2017.
Every aspect of our modern life is plugged into the grid. There are usually no back-up arrangements, except perhaps for hospitals or dairy farmers who need to keep their milking machines going. For many vulnerable people and families, the prospect of losing power supplies is a real concern. Even our gas central heating systems and cookers rely on electricity to function, so there will be no Christmas dinner without electricity. In fact, a couple of years ago in my part of north Yorkshire there were power cuts on Christmas day, which created particular problems.
We have identified two serious challenges. The first, as I have mentioned, is security of supply of electricity and gas. The experience in Ukraine a couple of years ago, when Gazprom decided to turn off the supplies, showed that this is all too great a threat for many parts of the world. Of course, the United Kingdom is at the end of the pipeline, and we have heard it asked whether Germany could pull back supplies that are already in the UK should there be a strategic problem.
The second challenge-and this is the really big one-is CO2. When the North sea oil and gas run out, our major indigenous supply of energy will be the coal that stretches from under the south Yorkshire area to under my constituency in north Yorkshire to where the Barnsley seam extends.
One decision that the Government have made, which I think was right, is to embark on a new generation of nuclear power stations in this country. I am disappointed that the Liberal Democrats have still got a head-in-the-sand attitude, whether it is out of political opportunism or whether they just sing too much to the tune played by Greenpeace and Friends of the Earth. They need to wake up and realise that the nuclear industry has a vital part to play in delivering our CO2 targets.
I am grateful for the hon. Gentleman's contribution to the Liberal Democrat policy debate, but is he aware that no nuclear power station has ever been built on time and to budget and that we are still paying between £1 billion and £2 billion to clean up the last generation of nuclear waste? We have still not found anywhere or anyhow to dispose of the waste from the last 40 years of nuclear waste generation; why on earth would we want to go down that route again?
If the hon. Gentleman spoke to the Canadians, he would find that they are delivering nuclear power stations to places such as China and Korea to budget and on time. As for legacy waste, much of it has come from our military nuclear developments. The incremental amount of waste that will be produced by the new generation means that that is not an insurmountable problem. I visited a nuclear power station in Canada with some people who had never been in a nuclear power station before and who had no experience of nuclear. When we saw some waste in a tank, they were asked how much they thought there was-a week or a year's supply-but the tank contained the past 15 years-worth of waste. The nuclear industry's waste is manageable.
The hon. Gentleman should speak to the Canadians about how they address their waste problem. They picked the Canadian equivalent of Jonathan Porritt, a lady called Elizabeth Dowdeswell, to set up a commission, and it became apparent that the problem of nuclear waste management and disposal is not a technical or scientific issue but a purely political one, and that courageous decisions have to be taken to enable waste to be managed and for closure on that issue.
I have to accept that even a Liberal Democrat Government would have to find some way of managing that waste-that is inevitable, as it is already in existence-but will the hon. Gentleman tell us when, how or where the last generation of nuclear waste will be disposed of? An answer to one of those three questions would do.
The current generation of power stations has a credible plan to store waste in tanks until it cools down. It could then be transferred to air-cooled silos for 40 or 50 years. In the long term, the answer would be long-term geological storage-not disposal, but storage-because future generations might need to access that nuclear fuel again to use in a new generation of power stations, perhaps in 100 years' time. I believe that the Government have made the right decision in embarking on a new generation of nuclear power stations, although it is true that the nuclear industry in the UK has had a somewhat unfortunate history.
My hon. Friend Mr. Ellwood talked about bumping into nuclear engineers from the UK in different parts of the world. When I was in Canada, I was told that the premier league engineers had been in Britain building our gas-cooled reactor fleet. The theoretical design behind those reactors made them the safest in the world, but the problem lay with the practicalities of building the power stations, particularly as no stations were built to exactly the same design. I think that there was a similar strategy behind the building of Concorde: we thought that we were the best engineers in the world and that we could engineer our way through anything. Perhaps, as lessons were learned, we should have gone down the route of the Americans and French with the pressurised water reactor, which was originally designed to be put into a nuclear submarine or aircraft carrier, as that has turned out to be the most dependable and reliable reactor.
Nuclear has a bright future. The only problem is that the decision to build has been left 10 years too late, and so we might have a problem keeping the lights on in the meantime. Certainly, there is plenty of fuel for the nuclear industry. When I was in Canada, I spoke to representatives of the nuclear uranium mining industry who told me that there was enough fuel for at least 40 years. The problem is that there is no incentive for anyone to prospect for more fuel in places such as Canada and Australia, given that the likely return will be more than 40 years away. Some of the scare stories that have been put about by the Liberal Democrats have more to do with political opportunism than with the best interests of the UK economy and the world climate. It is all very well their saying that renewables are the answer-and they are, absolutely, part of the answer-but so is nuclear. I am pleased that we will have a new generation of nuclear power stations, and I hope that they will be a start. I hope that, in years to come, when we look at future generations, we consider having still more nuclear.
If we get to the point at which nuclear supplies more than just the base load supply, we should look at how the surplus generation can be used. Our coal and gas stations can be turned on and off; at half time in the World cup final, in which I sincerely hope England will be playing, when everyone goes to put the kettle on, those gas and coal stations can be cranked up. The nature of nuclear generation means that those stations have to be on permanently so, looking a little further ahead than the Bill envisages, we should consider ways we can use our successes.
I am extremely grateful to the hon. Gentleman for giving way again. He is being very generous, given that I am criticising his points, but I cannot let him get away with the idea that nuclear power has ever been on constantly in this country. Can he name any period in which all our nuclear power reactors have been working at once?
I recall having just mentioned the technical problems that we have had with advanced gas-cooled reactors and that that is why we changed to the technology that the French and Germans developed-the Sizewell technology-which has been proved to be more dependable.
As I was saying, if we have that base load supply at night when people are not boiling kettles, we will have to think about how to deal with that. I read an interesting paper about developing a hydrogen economy. We already have motor cars that will run on hydrogen-BMW and other manufacturers have taken the lead on that. It would certainly be practical to use hydrogen that is generated by electrolysis at night, or by a process that the Americans are looking into of producing hydrogen directly in a reactor core-I get notes from Mr. Reed, who knows more about the nuclear industry than I do. It would be practical to pump hydrogen around the existing gas network-hydrogen is a little more porous than the current natural gas that we put in there-and have a hydrogen economy based on our existing gas network. That idea looks a little further ahead than even the Bill envisages, but we do not want to close the door to such ideas.
I welcome the news from the Government about electric cars, and I am sure that even if there were a change of Government, that approach would not change. However, I think that some people are making claims that cannot be substantiated by research or data about how green electric cars are at the moment. I am not sure how green an electric car can be if it is being charged up using coal power, but it is important to allow the industry to develop electric cars because we will in due course have green electricity that they can use. Another issue to consider is smart metering and how car batteries can be used as a resource when they are on charge. We might be able to smooth out some of the peaks in supply and demand by using the resource of all those car batteries, when they are plugged into their chargers, to augment the grid at certain times.
Recently, at Imperial college, London, I looked at some very interesting developments involving fuel cells for domestic use. There was a boiler that looked every bit like the kind of normal combi boiler that we would have in our flats and homes, but it was producing electricity using a fuel cell that used natural gas, and the waste heat that was being produced was not being wasted as it is in big power stations in south Yorkshire, where it goes up as waste heat through cooling towers, but was being used to heat domestic water for the house. I hope that we will see that interesting technology go forward.
The Minister nods. It would be one way of having micro-generation in every home in the country and utilising that waste heat.
It was not clear to me, from the Secretary of State's introductory remarks, whether the research and development that we are embarking on will be kept as a UK possession, or whether we will share around the world the benefits of any new knowledge on carbon capture and storage. I suppose there is a difficult line to tread between allowing the UK to capitalise on and profit from the investment that we will put into that research and allowing the rest of the world, including developing countries, to benefit. Perhaps when she sums up the Minister will give us some idea of how the ownership of that technology, which will be funded partly by the Government but largely by electricity consumers, will benefit the UK. Will she tell us what degree of co-ordination there has been between the major economies, which are all looking into this type of technology, to make sure that we are not duplicating work that is being done elsewhere? Certainly, sequestration and carbon capture and storage are part of the solution. The most wonderful part of that would be an ability to burn biofuels in our power stations, capture the carbon and pump it down into the ground. That would be genuine sequestration: taking CO2 out of the atmosphere from the biofuels and getting rid of it in a hole in the ground.
I think that there has been an element not of complacency but perhaps of thinking, "Well it's just going to happen. If we throw enough money at this research, it will definitely happen. Whatever research we put in, we'll come up with a solution." Although we could technically come up with a post-combustion or pre-combustion system and make it work, the problem is the cost and the energy loss. The Intergovernmental Panel on Climate Change report suggested that there would be a 25 to 40 per cent. energy loss from carrying out such processing of gases. I recall the regulation that we passed more than a decade ago on fuel quality for diesel and petrol vehicles, whereby we took the sulphur out of the diesel and petrol. There was a 10 or 15 per cent. energy loss at the refinery from that. For every environmental step forward, we sometimes have to take a short step back. Of course, a 40 per cent. energy cost in that sort of process will have a severe impact on people's energy bills.
We need to ensure that we are not missing the point on other sorts of technology that we should identify. We have been criticised for missing some of the low-hanging fruit. The proposals of my hon. Friend Greg Clark to allow people effectively to borrow against the savings on their bills so that their homes become more fuel efficient seem a sensible way forward. Most businesses are doing that already. If they go to their bank manager with a proposal for investing £100,000 to save £25,000 a year, the bank would go with that. We want that sort of scheme to be extended to ordinary domestic consumers.
We also have a long way to go in heating our homes. We fitted a new central heating system in my home recently and put thermostatic valves on the radiators. However, the bedroom heating does not need to go on till perhaps 9 o'clock at night; the living room heating does not need to go on till 5 o'clock. In many homes, when the heating is on, it is simply on, and people do not go around the house adjusting their thermostatic valves. I hope that we will examine ways in which heating systems in houses can become more intelligent to allow people to make savings.
When I was in Canada, those generating electricity there told me that their peak load is not in winter, but in summer because of air conditioning. I hope that we will examine more carefully ways of using natural ventilation. In Parliament, if one has an office in Portcullis House, it is impossible to open the window. However, I am pleased that the temperature in the Chamber today indicates that we are leading by example in keeping the dial turned down.
My big disappointment with the Bill is that it does not refer to energy from waste through incineration and anaerobic digestion. There was a scheme in my constituency-everybody calls it the Seamer Carr tip; I think the council has a better name-which foundered because of the technology not working. It was a pyrolysis scheme, whereby waste was heated to produce gas, which was burned in an engine. The Department for Environment, Food and Rural Affairs put a lot of money into that scheme, which unfortunately did not come to fruition. That is an example of how we cannot always assume that technology will work.
It is interesting to consider other European Union countries, which comply with the landfill directive and incinerate their waste and capture the energy from it rather than continuing to throw it into holes in the ground. I suspect that it will not be long before the European Commission has something to say about that.
Is it not also important to try to gain the public's confidence about incineration? In south-west London, there is a great deal of controversy about the prospect of the polluting effects of an incinerator. Perhaps more work needs to be done on technology so that people can feel reassured that their environment will not be compromised by such incinerators in urban areas.
My hon. Friend is right. In Vienna, there is an aesthetically as well as environmentally nice incinerator in the middle of town. People in Austria understand that the standards that the large combustion plants directive imposes on new incinerators mean that they are in more danger from airborne pollution from a neighbour who has a garden fire and throws some plastic or other waste on to it than from a properly run incinerator-not a toxic waste incinerator, but a normal domestic waste incinerator. We face quite a challenge in persuading people that such incinerators are not a threat to their health or their children's health. Indeed, it is a sensible method of harnessing the energy in waste in a way that will save not only the planet but their bills.
Some local authorities-certainly in the borough of Scarborough in my constituency-go for recycling targets by, for example, targeting green waste, which many people previously simply composted in their gardens. That has increased the mass of waste that has been collected. The local authority also collects a lot of unseparated waste-thereby creating costs-which people would previously have perhaps taken to a collection area, where they could separate it themselves. The value of waste has been somewhat compromised by the wish to increase weight rather than value. We need to consider the incineration of waste and take the people with us to persuade them that it is a good thing for their community and the environment. The other way we can get energy from waste is through anaerobic digestion.
Although I welcome the Bill, it is the sort of step in the right direction that a person takes when their shoe laces are tied together. I hope that we will have the opportunity in Committee to improve the measure and make it more fit for purpose.
Order. Before I call the next speaker, I reassure hon. Members that the temperature in the Chamber is not cool because the authorities and I are not trying to improve it. We have closed windows and are doing our best to increase the temperature so that it is a little more comfortable.
It is a pleasure to follow the thoughtful and informed contribution of Mr. Goodwill, who made some relevant points.
Like the Bill, I will be mercifully brief. I declare an interest at the outset, as I will mention nuclear power and the nuclear industry throughout my contribution. You would be surprised if I did not, Madam Deputy Speaker. Sellafield is in my constituency and I therefore declare rather more than my interest: I declare around 17,000 interests-the number of jobs that it provides in my constituency and in west Cumbria, including for many of my family and friends. I am a former employee of the site-a third-generation nuclear worker
The Bill does not specifically affect nuclear generation. Many hon. Members have pointed out that previous Bills have attended to that. However, the measure raises issues, particularly on public subsidy, which are germane to future electricity generation from nuclear and other sources.
Before I continue, I thank Mr. Ellwood for saying that Cumbria is open for business. We were badly affected by the floods. Our economy relies very much on tourism, and the roads, hotels, hostels and guesthouses are open. Please come and spend money there this Christmas.
There is a limit to how far we can play the blame game. There has been some of that in the Chamber this evening about specific elements of policy, in particular how we have arrived at the current nuclear policy. Having said that, the genesis of the malaise in the nuclear industry, which we have begun to remedy, is in the previous Government's failure to address the long-term waste disposal issues. I think that we have resolved that with the laudable and overdue creation of the Nuclear Decommissioning Authority and the effective prosecution of a properly informed, thoughtful, well-understood long-term radioactive waste management policy for this country. That commands support from hon. Members of all parties.
Simon Hughes raised the issue of nuclear fuel, and the environmental consequences and security of supply issues affecting the new generation of nuclear reactors in this country. The answer is very simple: we already reprocess our spent fuel and, moreover, we continue to manufacture fuel in my constituency at Sellafield and at the Westinghouse facility at Springfields.
I shall make a brief pitch for something for which I have been pushing for four and a half years. There are 40,000 tonnes of uranium oxide-that is a commodity, not waste-and 100,000 tonnes of plutonium oxide, which is also a commodity and not waste. If we turn those materials into fuel, not only do we obviate the need to dispose of them, saving £3 billion to £4 billion, but we could run three new nuclear reactors at Sellafield over a 60-year period, eliminating the need to emit more than 0.5 million tonnes of CO2 in the same period while providing 6 per cent. of the UK's electricity-based generation. That is a prize worth pursuing. In addition, we could provide perhaps the most comprehensive and effective way for the nation to meet its non-proliferation targets. That policy should be championed by any Government of any colour in future.
With that in mind, I welcome the Bill's main objectives. The establishment of carbon capture and storage technology-and consequently ours, and the world's, ability to reduce emissions of CO2-the protection of millions of customers from energy price exploitation, and much-needed steps to end fuel poverty are at the heart of the Bill. It is a scandal in the world's fourth largest economy, at the beginning of the 21st century, that anyone in the UK should be affected by, or live in, fuel poverty. It is even more distressing to note that, inevitably, it is the least well-off, including thousands of elderly people, who find themselves in fuel poverty for lack of what is a basic essential need. As my hon. Friend Dr. Whitehead pointed out, the days of cheap energy are well and truly over, so it is right for the Government to mandate energy companies to discount bills for some people on the lowest incomes.
I pay tribute to the Secretary of State for taking up cudgels against electricity providers. That has been mentioned fleetingly, but I believe that he was right to intervene. His intervention was significant, and will be welcomed by people living in fuel poverty. As has been said, about 1 million households receive discounts and other help with their energy bills. However, that voluntary arrangement will end in March 2011. The Bill will ensure that when it does so, discounts for the most vulnerable will continue in law through compulsory social programmes, which should be welcomed by Members on both sides on the House.
It is right that we should spend more to take people out of fuel poverty, and I welcome the fact that new resources will be targeted at the most vulnerable consumers. I have mentioned the elderly, and I pay tribute to Age Concern for its interest in this issue over many years and its advocacy on behalf of elderly people in fuel poverty. Not only is it morally and socially right that we attend to the most vulnerable people in fuel poverty-as I have said, very often they are elderly people-but I am sure that there is a body of work about to be done somewhere demonstrating the value to the nation in policy areas such as the NHS of taking elderly people out of fuel poverty. It must be significant, and somewhere there must be a figure that we can put on that.
It must also be said that the fight against fuel poverty is a real test of the deregulated market. Historically, consumers have benefited financially from increased competition driving down the unit price of electricity. I do not think that anyone would doubt that, but in recent years the deregulated market has not so much driven down prices as resembled a multinational cartel. I am not suggesting for a second that the creation of fuel poverty was ever an aim of the market or of its constituent parts, but it is a consequence of the way in which it has conducted itself in recent years.
There are two alternatives to that model: first, the complete re-regulation of the energy markets, which may well be the inevitable consequence of continued failure; and secondly, the creation of a stronger regulator, with more socially responsible practices deployed by the energy utility companies, and a stronger framework established by Government designed to protect the most vulnerable consumers-not quite a public-private partnership, but not far from one. That is what the Bill strives to achieve, and I support it.
The House should make no mistake: the strength of feeling about fuel poverty is such that unless that second alternative works, re-regulation will become a necessity. This is the last chance for the energy utilities to prove that the current model of regulation can be effective and even beneficial, so I urge them to make it work. They must not follow the route of the banks. If the market cannot deliver for the people of this country, we will have no choice but to intervene.
Carbon capture and storage is a phenomenally important issue, and a great deal has been said about it today. If that technology can be proven to work, it may well rank in importance alongside the invention of the internal combustion engine, the advent of powered flight and the splitting of the atom. Given the nature of the challenges posed to human life by climate change, it may in time prove to be even more important than any of those landmark achievements. Again, it is right for Government to facilitate CCS. The Bill will introduce a financial support mechanism for up to four commercial-scale demonstration projects for CCS, and it will also permit the retrofit of additional CCS capacity for those projects, should it be required in future.
The benefits of CCS, as we have heard, are enormous. It will create truly green jobs. In the UK, 30,000 to 60,000 jobs in engineering, manufacturing and procurement will be created by 2030. It will leverage investment for the UK, and could create £2 billion to £4 billion a year for the economy, or a total of £20 billion to £40 billion between 2010 and 2030. It will develop a genuinely new industry for Britain, thus providing a massive regional opportunity for Tyneside, Teesside, the Thames Gateway, the firth of Forth, the Humber, Merseyside and other locations with industry sources that are CO2-intensive, and offer a great opportunity for the establishment of British CCS business centres. In my view, those are jobs in the right areas.
CCS will also bring an end to unabated coal. The conditions that the Government propose are the most environmentally ambitious of any country in the world, and it is right that at the advent of the Copenhagen conference we should lead. Our plans will make the UK a world leader in technology that will help us to avoid the most severe effects of climate change. Something that has not been mentioned is the fact that CCS technology could be of real benefit in helping to facilitate or smooth the transition to a post-oil economy. When, inevitably, we begin to exploit tar and oil shale reserves and so on, CCS technology will be vital in enabling us to use them.
I fear, however, that the public at large do not yet know enough about CCS. I am concerned that there is a belief that CCS is a panacea or a silver bullet for the climate change challenge facing us all, but it is not like that. The Government are right to support and subsidise CCS, as it is a strategic and environmental necessity for the nation. Again, I draw a comparison with the nuclear industry.
CCS must command well-understood public support, so there is a job of work to be done. In many ways, as the hon. Member for Scarborough and Whitby suggested, the challenges of CCS make the challenges of radioactive waste disposal look like a walk in the park. We know a great deal about radioactive wastes-their properties, their effects, their half-lives, how to contain them, for how long, and the costs and engineering challenges associated with containment. As much as I support CCS, can we really say the same of it right now? How and where will carbon be stored? What are the public liability implications? How will it affect the unit price of electricity? What are the effects of storage on the environment? What would happen in the event of a leak or catastrophic failure? We must address all those questions, because CCS is too important to fail. However, it does not follow that it will succeed just because we want it to. Nevertheless, the signs are encouraging.
I support the necessary subsidy of CCS, and I place on record that I support subsidy in principle for any technology that will help us to ensure the security of our energy supplies and help us to combat climate change. Let me be explicit. If it is necessary, I would agree with state support for the nuclear industry and all aspects of it-although I do not believe it is necessary. I refer to power generation, fuel reprocessing, fuel manufacture, waste disposal and decommissioning. Will such an approach work? Ask the French.
The Secretary of State heads for Copenhagen well armed, able to demonstrate leadership and able to make British industry central to whatever policy initiatives and agreements emerge. We should all support him in doing so. These issues require cross-party political consensus, so it is a matter of regret that so many front-line Conservative figures are leading what can only be called a counter-revolution in the scientific and political consensus regarding climate change. It beggars belief that the Leader of the Opposition will not publicly denounce these senior figures in his party and his hand-picked non-dom environmental policy advisers, who have holed his attempted rebrand below the waterline-the rising waterline.
Instead of supporting the Government in an effective and non-partisan fashion for the benefit of the planet and entirely within the national interest, the Leader of the Opposition is presiding over a party that increasingly believes that the established science which attributes climate change to manmade activities is a sham. It is worse than neo-conservative flat earth science. So obsessed are they, many of them, with the size of government that they do not believe that the Government can achieve any good, even when the future of the planet depends upon it. That is not a philosophy. It is an illness. The right hand does not seem to know what the extreme right hand is doing.
The Leader of the Opposition currently resembles the Quisling of the climate change deniers, so if he seriously wants to bridge the chasm between his rhetoric and the reality of so many in his party, he should have the basic decency and courage to do that publicly. We need a consensus or else we invite failure. If we fail-
Order. I am not very happy about the word that the hon. Gentleman has just used. Perhaps he would like to withdraw it.
Before those somewhat churlish closing remarks, I was going to say what a great pleasure it was to follow Mr. Reed, who speaks with great knowledge of the nuclear industry.
As many other Members have pointed out, it is not wholly coincidental that we are debating the Second Reading of the Bill on the first day of the Copenhagen summit on climate change, which has been described by some as the most important conference in human history. Although there may be some hyperbole in that description-I seem to recall that Yalta was quite important-the question of climate change is certainly the dominant one for our generation. Notwithstanding the local difficulties at the university of East Anglia's climatic research unit, it is clear to most sensible commentators that the world's climate is indeed changing. Whether climate change is caused by human activity is still a matter for debate.
A few years ago I was fortunate enough to pay a visit to the Argonne national laboratory in Chicago. My visit and the presentation that I received there left me in no doubt whatever that since mass industrialisation, the world's climate has warmed and is continuing to warm significantly. I, for one, am entirely satisfied that human activity is contributing significantly to global warming, and it is clear that for the sake of future generations, we must take what action we can to attempt to slow that process and to adapt to it.
As other hon. Members have pointed out, however, the Government have been somewhat slow to respond to this phenomenon. Given that some 47 per cent. of carbon emissions are produced in energy generation, the Government's energy policy was for many years timid, with a refusal, for example, to accept and recognise the urgent need to replace our ageing fleet of nuclear power stations. Very late in the day they have recognised that nuclear generation should be an important part of the energy mix of this country, and that it will be necessary to build new nuclear reactors.
The Government's slowness in recognising that fact means that there will be a hiatus of many years between the closure of our last remaining nuclear stations and the commissioning of the new ones. During that time the country will be prone to serious power cuts, and when the lights go off, the British people will remember who is responsible for that.
Nevertheless, there are signs in the Bill that the Government have belatedly recognised that security of supply should be central to our energy policy. To that extent, I welcome the amendments in clauses 16 and 17, which provide that the principal objective of both the Secretary of State and Ofgem is to protect the interests of consumers in relation to gas and electricity-interests which include the reduction of emissions of greenhouse gases, and security of supply. Indeed, security of supply must be a prime objective.
With the depletion of North sea oil and gas and the decline in our nuclear generating capability, it is all the more important to ensure that our supply of gas and electricity is as secure as it may be. This will undoubtedly mean employing various fuels for the generation of electricity, including nuclear, gas, conventional fossil fuels and renewables.
We in Wales have a significant interest in all matters relating to energy, which is perhaps unsurprising, given that we are sitting on large coal reserves, are in a particularly windy part of the country, and have coastlines that lend themselves to the production of tidal power, to say nothing of the fact that we are on the coast of the Severn estuary. We also have one of the last remaining operational nuclear power stations, at Wylfa, and I was pleased to see that only last month the Secretary of State indicated that Wylfa was a preferred location for one of the new fleet of nuclear power stations.
We also have Trawsfyndd, which is in the process of decommissioning, and which I have visited. It provides an example of an impressive exercise in the handling of a retired nuclear power station. I was told by the work force there that one of the things they would like most of all in that area is another nuclear power station, because nuclear power stations provide high-value jobs in areas where frequently there is no other work at all.
We also have the Dinorwig and Ffestiniog pump storage schemes. I am sure many hon. Members have visited those schemes. They are remarkable feats of engineering, able to fire up from complete shutdown in 12 seconds, giving an enormous and reliable boost to the energy supply in the grid.
Some three years ago, the Welsh Affairs Committee conducted an important inquiry into energy in Wales, and produced a follow-up report a couple of years later. Those reports were important contributions to the debate on energy production in this country, and I commend both of them to hon. Members. Some of the themes touched on by the Committee in its inquiry have to some extent been addressed by the Government and feature in the Bill. In particular, I welcome the proposals to take forward the development of carbon capture and storage technology, as set out in part 1.
Coal is an important resource for future generation in the UK. However, it is clear that if we accept, as I believe we must, that emissions from conventional power stations are contributing significantly to global warming, the problem of those emissions must be addressed.
The Select Committee on Science and Technology has indicated that in the long term, some 85 per cent. of carbon dioxide emissions could be stored safely through the development of carbon capture and storage technology, so it is highly desirable to do as much as we can to develop that. We are fortunate in this country in that we already have significant expertise in exploiting the North sea's resources, which themselves could be turned to the development of CCS technology. Exhausted wells in the North sea could also prove to be ideal locations for the storage of captured carbon. The Government therefore need to press on with the development of CCS technology, and I welcome the Bill to the extent that, in its own faltering way, it provides the launch pad for that development.
However, I have concerns about how CCS will be funded. My constituency-indeed, much of Wales-is largely rural, and I know from conversations with constituents that fuel poverty is a significant concern. Indeed, it has been estimated that more than 740,000 rural households in the UK live in fuel poverty, and that amounts to about 8 per cent. of rural households. Further, some 42 per cent. of rural households are not connected to the gas mains, as compared with only 8 per cent. of households in urban areas. As a consequence, many rural households rely upon liquified petroleum gas or fuel oil to heat their homes, and the Commission for Rural Communities has estimated that heating a three-bedroom house in the countryside costs some £1,300 per annum using LPG and £1,044 using domestic fuel oil, as against only £568 using mains gas.
Clause 4 provides that CCS demonstration projects will be funded by a levy on electricity suppliers. As other hon. Members have said, that levy will undoubtedly be passed on to consumers in the form of higher electricity prices, and although the levy will affect all consumers, it will have a disproportionate affect on rural households, which already pay considerably more than urban households to heat their homes. Clause 4(4) provides that the Secretary of State may make regulations exempting certain types of electricity suppliers from the levy, so I ask the Secretary of State to consider the disproportionate impact that electricity price increases will have on rural consumers, particularly because they will not benefit from the schemes in part 2 for reducing fuel poverty, because those do not apply to either LPG or fuel oil.
Returning to clause 17, I should say that the new statutory focus on greenhouse gas emissions will, or should, clearly lead to the development of new sources of renewable energy. At the moment, the principal form of renewable energy in Wales, as indeed in most of the rest of the country, is wind power. There is no doubt that wind should form part of an energy mix, but it is illusory to suggest that it can ever constitute a reliable form of base load generation. Its efficiency-at some 27 per cent. as opposed to nuclear power's 95 per cent.-is worryingly low, and the reasons why are obvious: wind by its nature is intermittent, and when the wind does not blow the turbines do not turn.
Wind can at best, therefore, constitute only an ancillary source of generation. However, in Wales and many other parts of the country, wind appears to be the only form of renewable generation that is being pursued, and the inherent hazardousness of that is self-evident. During the five coldest days last winter, very few turbines turned, and those days were just the period when we needed as much electricity as possible. The reason why they did not turn is quite simple: a large anticyclone was sitting over the British Isles, and as every schoolboy knows, anticyclones in winter tend to produce cold conditions without wind.
Nevertheless, wind farms continue to be built, and that is a significant phenomenon in Wales, where the Welsh Assembly Government's infamous technical advice note 8 provides a planning presumption in favour of wind farm development in the so-called strategic search areas, which tend to be located, interestingly enough, on Forestry Commission land, the rental income of which passes to the Welsh Assembly Government. Consequently, large areas of Welsh upland are being progressively colonised by wind turbines.
Indeed, the Hiraethog area of my constituency contains numerous small wind farms that have been consented to under town and country planning legislation. RWE npower renewables, however, now has plans to build in the Clocaenog forest a wind farm with an output of more than 50 MW, for which an application will soon be made to the Department of Energy and Climate Change under the provisions of the Electricity Act 1989. If that is consented to, the cumulative impact of development on the Hiraethog area will be to turn a beautiful rural landscape into an industrialised one-for a source of generation that is only 27 per cent. efficient.
Part of the problem is the way in which renewables obligation certificates are structured, a point that Dr. Turner touched on briefly. ROCs are a very blunt instrument that reward the developers of wind farms at precisely the same rate as the developers of other renewable technologies-with one certificate per megawatt-hour. The Department has proposals for banding ROCs to encourage the development of other forms of renewable technology. However, wind farms would still have the benefit of one ROC per megawatt-hour under the Government's new proposals. That is particularly worrying, because other forms of renewable technology, if exploited, could prove significantly more efficient than wind.
In that respect, I agree entirely with the hon. Gentleman. He mentioned tidal power, which offers the most obvious advantages. The tide, after all, ebbs and flows with absolute predictability twice a day, every day, and Wales has many locations where tidal stream technology and tidal lagoon technology could be developed commercially. Swansea bay and Kinmel bay, which is off the coast of my constituency, offer particularly exciting potential for the development of tidal lagoons.
Indeed, evidence taken by the Select Committee on Welsh Affairs indicated that the Kinmel bay site had a potential generating capacity of 432 MW, which is by any standards a significant power station. However, ROCs have hitherto not differentiated between the various forms of renewable technology, so developers have tended to opt for the low-hanging fruit of wind turbines, with all their inherent unreliability, as opposed to tide. The Department's proposed re-banding will not settle that.
Wind turbines are relatively cheap and easy to construct, so developers will continue to opt for them, but the Government should reconsider their proposal for the banding of renewables obligation certificates as a matter of some urgency, so as positively to encourage the development of new technologies.
As other Members have said, this Bill is a step in the right direction, but it is a somewhat timid and faltering one. The Government need to be bolder and to act more quickly and decisively. Twelve years have elapsed, and only now are we really getting to grips with a problem that will affect our children very significantly indeed. We need to develop the nuclear power stations and to facilitate development of the reliable renewable technologies that the country needs. I believe that this will be done, but that the Government who achieve it will be a Conservative one.
I was interested to hear what Mr. Jones said about wind energy, in particular. As one who also represents a rural constituency, I understand the concerns that many residents have about the impact of wind turbines on the landscape. However, we have to accept that this is a proven technology and that many other countries have developed their wind industries in areas that are important to their citizens in terms of landscape value. Perhaps the way forward is a policy that states that the wind industry should not develop in national parks and areas of outstanding beauty, but that elsewhere we must accept compromises because ultimately they give us the prize of low-carbon, low-emission generation. I accept what the hon. Gentleman says about its efficiency compared with base-load generation, whether in nuclear, gas or coal, but we must accept that it was never intended as a base-load form of generation.
I was somewhat concerned by the references to security of supply made by Conservative Front Benchers and several Conservative Back Benchers. What is missing from their equation is what is already happening in relation to the building of new generation facilities. In my constituency, the construction of a 2,000 MW gas-fired power station is under way. There is Staythorpe, a large gas-fired power station in Nottingham, and another such facility in Plymouth. Some Conservative Members gave the impression that the Government have done nothing, not recognising that the large combustion plant directive means that several coal-fired power stations will have to close because they have reached their decommissioning date, and several nuclear power stations will be phased out as well. Several projects are already in the pipeline and under construction. There is also a substantial expansion in wind generation, particularly offshore, which the Government were right to encourage. The offshore wind industry will start to deal with the problem of renewables development, which we must accept has been too slow in this country. It also presents many opportunities, not only for CO2 reductions in our own economy, but through the expertise that Britain has developed, particularly in our offshore oil industry. There are real opportunities for British companies to develop offshore wind farms around the world.
Another aspect of security of supply, which was not mentioned by Conservative Front Benchers or anyone else, is what has happened in the new market that has developed for liquefied natural gas. At Milford Haven, there are now two large LNG terminals which together can supply 30 per cent. of the UK market for gas-just from one part of Wales. The development of a new LNG terminal at the Isle of Grain provides further opportunities for substantial imports from-in terms of the middle east-relatively stable regions. We also import gas in LNG form from the Caribbean. There are already several developments taking place that will provide us with security of supply in the gas industry. Unlike continental Europe, which has very little indigenous gas supply, we have had North sea gas. Basically, the industry grew on the back of that and used those gas fields as a storage facility. We are now moving on: supply from the North sea is declining and we must depend on imports. I emphasise that we import our LNG from stable areas, unlike continental Europe, which has depended on a Russian gas supply that, sadly, has been unpredictable, let us say, in recent times. That is why continental Europe has such substantial storage capacity-it is aware of that instability in its source of supply.
I welcome the Bill. The fact that we are now legislating for essential new technology indicates that the market has not worked. The science and technology behind carbon capture and storage is not new, but ways of converting it to a practical form, so that it can work in large coal or even gas-fired power stations, have yet to be developed and proved. It is clear that the market was not prepared to take the risk of such a development on its own, and given those circumstances it is right that the Government have said that this is an absolutely essential technological development, and we have to support it.
A number of Members asked whether it was fair to expect those who are on a green electricity tariff to make a contribution in their bills to the development of CCS. As the hon. Member for Clwyd, West said, the green tariff source of energy is not available to some people. Whether electricity is from a coal, nuclear or gas-fired station or a wind turbine, it all comes down the same cable at the end, so the idea that the contribution should be across the board is a relatively fair and reasonable compromise.
We should be saying to the industry now that we are going to set carbon emission targets for future new generation. As I am sure many Members did, I received a briefing from a number of organisations, including the Royal Society for the Protection of Birds, arguing that the Bill should include a mandatory emissions performance standard for any new applications for fossil fuel power stations. That is a reasonable concept, because at the moment the large combustion plant directive means that generators know that they have to meet certain standards on emissions of sulphur dioxide, nitrous oxide and so on to prevent acid rain and other pollution. We should say to them now, "If you build any fossil fuel power station, we will set a mandatory emissions standard that you will have to meet." We should give them notice of that.
In my constituency, RWE npower has started building a large, 2,000 MW power station. During the planning process, the Countryside Council for Wales expressed concern that the waste cooling water that would be taken from Milford Haven, then returned there having gone through the plant, could cause environmental problems. The solution that it suggested would have required the construction of cooling towers. Although they would have been electric-powered, rather than the traditional very large ones that give off a plume of steam, the power station would have been significantly less efficient and its CO2 emissions would actually have increased. In trying to address one environmental problem, we create another.
If, right from the word go, an emission performance standard had been set for the amount of CO2 per kilowatt-hour generated, perhaps the company could have come up with an alternative use for the excess heat from the waste water. To be fair to the company, it is now trying to deal with the problem. It is considering developing, with another partner, large glasshouses for the production of fruit and vegetables or flowers. That interesting suggestion could perhaps be explored in Committee.
I intervened on my right hon. Friend the Secretary of State to ask about social tariffs. I welcome the fact that we are now moving to mandatory schemes. The arrangements that have been made with some companies are welcome, but the identification of those who should, in my view, be eligible for social tariffs, is a major problem. Many such people are on benefits, and when it comes to identifying them, there are data protection issues. The fact that there will now be a mandatory scheme will hopefully encourage the Department for Work and Pensions to become involved in the decisions about who qualifies.
There are two issues related to social tariffs. First companies currently give social tariffs almost exclusively to pensioners, but Citizens Advice has informed us that not many pensioners remain in fuel poverty because of the effect of the winter fuel allowance. However, significant numbers of younger people, certainly below pensioner age and some who have children, go to citizens advice bureaux with major problems with fuel debt. It is fair to assume that if people have problems with fuel debt, they have problems with fuel poverty. It would therefore appear that a significant number of people who would benefit from a social tariff-perhaps a significant majority-cannot currently access one.
I hope that any mandatory scheme will definitely include those younger people. For example, a single pensioner on pension credit receives £130 and under-80s also qualify for the £250 winter fuel allowance, but a single person aged 50 on long-term incapacity benefit would have a total weekly income of £91.80, no winter fuel allowance and the same sorts of needs. There is also a very strong argument behind the Macmillan campaign for assisting those with cancer, to which hon. Members have referred.
The second issue, which has also been referred to by hon. Members, is that 4,300,000 households are not connected to the mains gas system and depend on heating oil or LPG for their central heating and hot water. A number of figures have been bandied about, but Citizens Advice estimates that someone who is not connected to the mains gas system has an average fuel bill of £1,700, whereas those who are connected to the mains gas system have bills of just under £1,200-approximately £500 difference, or £10 a week, purely because people have no connection to the mains system.
The sale and distribution of LPG and heating oil are not regulated, but they should be. We are talking about a significant number of people-4,300,000 households, almost exclusively in rural areas. It is the oil companies that are supplying the distributors of LPG and heating oil, so I do not see why they cannot be regulated for that part of their business by Ofgem. The mandatory social tariff should also be available to those people who are dependent on LPG and heating oil. I hope that in Committee we can make that happen. It is essential, as a matter of fairness, that we do so, given that the average consumer in a rural area has to pay at least £10 a week more than the average urban consumer. That is wrong, and we need to address the issue, especially for those families and individuals on low incomes.
I am glad that clauses 16, 17 and 18 will change the responsibilities and duties of Ofgem, and I hope that part of its responsibility will stretch to transmission capacity. Areas such as Wales have a strong electricity distribution system in the north and in the south, but very little in the middle, and wind farm developers are having a real problem-not in finding the funding to invest in building the turbines, but in obtaining a connection to the national grid. The hopes of achieving a significant offshore wind industry, especially down the west coast of both Wales and England-and Scotland, although I do not wish to speak for Scotland-depend on a submarine cable network. I hope that the Bill will provide sufficient powers to ensure that such development takes place as quickly as possible, so that we can take advantage of the major opportunities that it will bring. The regular wind provided by nature down our west coast should be exploited, and the main stumbling block appears to be the connection with the national grid.
I welcome the Bill, and I hope that it can be improved along the lines that I and other hon. Members have suggested. I hope that the Minister of State, who will take the Bill through Committee, will be able to accommodate some of the sensible suggestions that have been made in the debate so far.
In this debate, we have had a canter around various parts of energy policy and climate change. It has been said that this is a modest Bill, but it is an important one that covers three distinct areas that impact on us all. Indeed, the Bill impacts on some issues that I have spent many happy hours debating in the Chamber over the years.
Part 1 deals with the framework for establishing carbon capture and storage, which follows the Budget announcement in April of
"a new funding mechanism to support up to four carbon capture and storage demonstration projects, and £90 million to fund detailed preparatory studies."
The original carbon capture and storage project, or contest, seems to have been grinding on for some considerable time. Paddy Tipping was on the mark when he said that the rules seemed to keep changing. A shiver ran up my spine when the Secretary of State mentioned a contest for the remaining three projects. I hope that they will be an awful lot quicker than the contest we are going through, although better late than never.
Ministers are keen on telling us about our world leadership in carbon capture and storage technology, although sadly I doubt whether that is entirely correct now. We had an excellent opportunity to be in the lead with the proposed development of the gas station in Peterhead, but unfortunately that was lost, owing to endless dithering by the Government, and the project is now proceeding in Abu Dhabi. It appears that the reason the Government did not want to proceed with that project was that they wished instead to concentrate on pre-combustion processes, which they hoped would lead to an export industry, particularly to developing nations such as China. Unfortunately, that dithering led to China developing its own industry. Indeed, one of the few commercial projects that is up and running is the one in Beijing. We could end up importing such technology instead of being in the lead, and if we had developed it in the first place, we could well be in the lead.
Peterhead could also have helped to develop a method that would have been of particular benefit to the UK, as it would have allowed gas stations to de-carbonise and the carbon to be stored in the North sea's depleted oil and gas reserves. Sadly, it appears that the prejudice against gas continues, as I note that clause 6 defines a CCS demonstration project as
"a project to demonstrate and assess carbon capture and storage technology through its use in commercial coal-fired electricity generation".
Gas seems to be specifically excluded by that definition. I wonder whether the Minister could explain in summing up why gas is excluded and why only coal is to be helped by the scheme. That point was also raised with the Secretary of State, who said that gas could come in further downstream, but we already have a lot of gas-fired stations and we still have a lot of gas in the UK continental shelf, although obviously it is diminishing. It therefore seems crazy not at least to look at the prospects of carbon capture and storage for gas, and instead of putting all our eggs in the basket of coal, important though that is.
That said, CCS provides an important opportunity. I strongly support the claim of the Longannet project, which is being developed in Fife, as a strong candidate for help from the scheme, especially given its proximity to the North sea and the ability, therefore, to enable the current infrastructure of the North sea oil and gas industry to be utilised in the development of CCS. Nick Ainger made the good point that the oil and gas industry could develop to include aspects of CCS. There is a huge opportunity to ensure the transfer of those skills to new industries after the run-down of oil and gas, as many of them will be useful in CCS, particularly if it is developed by storing the carbon under the North sea.
The Scottish CO2 study has concluded that there is a possibility that the North sea could store up to 200 years of CO2 emissions, bringing in a huge amount of work and billions of pounds to the economy over a long time. Indeed, the EU is interested in a North sea grid to help to develop CCS and seize the potential for development in the old oil and gas fields and the saline aquifers. However, that brings up another issue that is not covered in the Bill and that the Government will need to address: how do we ensure that the North sea infrastructure is in place to enable that development to happen?
Much of the existing infrastructure of the oil and gas industry is now becoming fairly elderly. As the main fields in the North sea begin to wind down, there is a danger of losing that essential infrastructure unless action is taken to ensure that it is retained. Many of the new discoveries in the North sea are of much smaller fields, where the oil and gas industry perhaps needs a different set of infrastructure, but what is now in place for the depleted fields could be important for CCS. Given that we are probably still a decade away from the technology becoming commercially viable, will the Minister tell us whether either the Department of Energy and Climate Change or the Treasury have been in discussions with the oil and gas industries to try to agree on a regime that would ensure that that infrastructure is maintained and available for CCS?
Part 2 deals with fuel poverty, an issue in which I have taken a great interest over the years. I hope that many of these measures will be entirely non-controversial. I warmly welcome the efforts to replace the existing voluntary schemes operated by the energy companies with a mandatory scheme. That is welcome and long overdue. One of the great problems with the existing system has been the bewildering variety of schemes that have been marketed by the energy companies. It is sometimes difficult for people to find out what the best social scheme for them might be. The new system should be much simpler for consumers, and will be a huge improvement.
Like many other Members, however, I regret that a vital element among the fuel poor has once again been omitted from the statutory regime-namely, those who rely on liquefied petroleum gas or home fuel oil to heat their homes. The Bill specifically defines the suppliers as electricity and mains gas suppliers. I appreciate that there are difficulties with the LPG and home oil market. There has been a Competition Commission inquiry into this matter, which ran for years and came to no real conclusions. The market is much more complex than that for electricity and gas supplies, which contains only a limited number of large companies, but this is none the less a serious issue for its customers. Many of them live in rural areas, where the gas mains will never reach, and their choices are very limited indeed.
The hon. Member for Carmarthen, West and South Pembrokeshire mentioned the difference in cost between the average mains gas bill and the average home fuel or LPG bill, but another factor that works against consumers in this market is that the problem is exacerbated by the fact that many face minimum delivery amounts. This means that they sometimes have to pay substantial sums up front in order to get a delivery of fuel. Those on low incomes-many of whom live in rural areas, and suffer disguised rural poverty-suffer particularly badly because of this. They simply do not have the funds to pay up front for large amounts of fuel oil. This can lead to their being unable to get the fuel, and unable to heat their homes. That is unacceptable in this day and age.
I appreciate that efforts are being made to get alternatives such as small-scale renewables to those consumers, but again there is a problem of cost. Many small-scale renewables, such as heat pumps, are very expensive and therefore outwith the reach of many people, even with the grants that are available. I agree with the hon. Member for Carmarthen, West and South Pembrokeshire that it is simply wrong that that group of people do not have the same access to social tariffs as those on mains supplies. Ministers must look again at this issue, which has plagued the whole fuel poverty debate for a considerable time. This is discrimination, pure and simple, against those people who are fuel-poor in rural areas. We must do something about this, and ensure that they get the same benefit as those who live in towns and can access mains gas. I also echo what has been said by others about those with long-term medical conditions who need more heat.
One of the impacts of ensuring that we meet our carbon targets and improve our infrastructure is that increasing amounts of subsidy are being paid by consumers through their energy bills. Centrica is the first to put a percentage on that, but I am sure that the other companies will do so. The CCS levy will inevitably be another part of that, as will all the other subsidies that are coming through.
People who do not benefit from the various tariffs or the winter fuel subsidy are going to find it increasingly difficult. It is simply unfair that those who require more heat because of long-term medical conditions do not get the help available to pensioners. Again, that must be looked at-as was said earlier, energy bills are not going to go down in the near future. Indeed, when Ofgem was before the Select Committee last week, I believe it said that up to 20 per cent. of the bill could come from various subsidies within a few years. That is a worrying statistic for those who have to pay the full amount of their electricity bills.
Part 3 deals with the change to the regulation of gas and electricity markets and the role of Ofgem. In my time in the House, I have had many spirited discussions with Ofgem about its actions, particularly regarding the hoary old issue of transmission charges. It has always seemed to me that Ofgem had a totally blinkered attitude defined by its ideological interpretation of its principal duty to look at the interests of consumers. That seemed to give it the idea that all generation should be based near the main centres of population, which meant that many renewable energy developments in the more remote areas of Scotland-having listened to the hon. Member for Carmarthen, West and South Pembrokeshire, I appreciate that this may also be a problem in Wales-where much of the wind and many of the waves actually are, faced very discriminatory transmission and access charges over the years to be able to get into the grid and transport the energy to market.
I appreciate that the Secretary of State is taking powers, which deals to some extent with the access charge problem, but there is still a transmission charge problem, although it has been slowly improving. I very much hope that the changes brought about by clause 17, which ensures that climate change and security of supply will become much more important for Ofgem to consider in coming to its decisions, will mean that much of the ideological baggage of the past will have to be jettisoned. I would caution, however, that before this can be done, there will have to be a major cultural change at Ofgem. It is one thing to put these clauses in the Bill, but strong action is needed to ensure that they are given the required weight in Ofgem's decisions. The recent report that Ofgem was seeking to undermine the introduction of feed-in tariffs is a matter of huge concern and shows that it is one thing for a Government to declare a policy and for Parliament to pass a Bill, and quite another to ensure that it is energetically followed through.
I am not sure that clauses 18 to 25 are so welcome, as they might have a negative impact on investment in energy generation in Scotland. These provisions relate to various constraints within the energy distribution system, and it has been a particular problem at the Cheviot gap between Scotland and England, which has rumbled on for quite some time.
At the moment, there are constraints on transmission under the British electricity trading and transmission arrangements. Generators in Scotland pay to be connected to, and to use, the Great Britain transmission system. Annually, such payments amount to 40 per cent. of the total transmission charges, which, allowing for the fact that Scottish generation represents only 12 per cent. of total generation, means that Scottish generators contribute approximately £100 million a year more than what would be a fair share. In return for the payments, generators are entitled to access and to use the transmission system to move their generated electricity to market. Consequently, when they cannot have full access to the system because of inadequate grid capacity, they should be entitled to compensation for the resulting loss-and these are referred to as constraint payments.
Electricity generation in Scotland already exceeds the capacity of the network, and additional renewable generation in Scotland will exacerbate the situation. Neither National Grid nor Ofgem has previously taken sufficient steps to address the capacity shortfall, even though the problem has been known about since well before 2005. There is an ongoing programme of infrastructure reinforcement works to increase capacity, but it will be several years before the interconnector capacity between Scotland and England is sufficient to eliminate constraints.
National Grid and Ofgem previously put forward a proposal that appeared to target Scottish generators. They wanted to change the system of balancing costs so that constraint payments would effectively be charged back to the same generators, which is to say that generators would pay constraint charges for not being able to access the system, which seemed bizarre in the extreme. Thankfully that proposal was junked. However, the Bill seems to be trying to achieve much the same, although I can see that its proposals are slightly better than the original one. They are limited to the balancing market, there are good appeal mechanisms, and there is a sunset clause that will remove the provisions when the much- delayed upgrades have been introduced.
Placing artificial limits on the level of compensation that Scottish generators would receive-irrespective of the value that they provide for National Grid or the losses incurred by generators-seems daft, but the proposal also seriously undermines the confidence of those who might otherwise invest in Scotland's thermal and renewable energy sectors, including carbon capture and storage. We are placing a great deal of faith in the future of CCS to meet our emission targets, and we need to do everything possible to ensure that that happens. We cannot discriminate against existing and future Scottish generators, because that would call into question the validity of the British electricity trading and transmission arrangements.
I ask Ministers to consider the matter again, and to ensure that they do not introduce a measure that will work against future generation. We need investment in new generation, regardless of whether it involves renewables or not, but such investment will not come about if constraints of this kind are imposed.
Another part of the Bill intrigues me. I may be completely-as we say in Angus-up the wrang dreel, but I should be obliged if the Minister would clarify the meaning of clauses 27 to 31. Clause 27, entitled "Adjustment of charges to help disadvantaged groups of customers", empowers the Secretary of State to adjust charges if he thinks that some consumers are paying unfair charges. So far, so good; none of us, I hope, would disagree with that. I fully appreciate that the clause constitutes, in effect, more or less a restatement of powers that exist in the Utilities Act 2000. It seems to me, however, that the definition of the categories of customers covers all the customers of the energy companies as set out in subsection (5). That is important because of subsection (3), which states that disadvantaged customers can constitute all the members of the group specified in subsection (5).
In theory, the upshot of that is that the Secretary of State would have the power to decide that all the customers of one energy company, or indeed all of them, were paying too much for their energy, and could decide that everyone's bills should be reduced. That might be welcome, but I think we need to know exactly what the clause means. One interpretation is that it would give the Secretary of State power to decide the level of charges that energy companies could impose.
Despite the reservations that I have expressed in regard to certain clauses, I support what the Government are trying to do. If I am fortunate enough to be selected as a member of the Committee, I shall look forward to many happy hours debating the issues. This may be a small Bill, but it contains a great deal that is very important to the future of energy generation in this country.
One of the delightful aspects of speaking late in a debate is that one has heard so many wonderful speeches. However, the theme that has typified the speeches today is that the Bill is lacking in many respects-that it is a light Bill. A Labour Member, who is not present now, described his own comments as a constructive whinge. I had thought that it was up to the Opposition to produce constructive whinges, so it was good to hear so many of them, and to hear a long list of things that should have been in the Bill but-as has been freely admitted-have not been included because time constraints made it impossible to include anything of note.
I can think of a few measures that could easily have been included, as they touch on the theme of the Bill, but sadly they are not there. One involves the production of biodiesel from used cooking oil. I drew this to the attention of the Under-Secretary of State for Energy and Climate Change in a Westminster Hall debate in October. It was a very lively and well-attended debate, and he said he would reflect on the point. I therefore hoped he might have inserted some constructive measures into the Bill, but I am sorry to say that thereare none.
That debate was about the production of biodiesel by recycling used cooking oil of UK origin. That is a highly sustainable way to produce energy. We have hundreds of restaurants, fast-food premises and commercial food producers, all of which use large quantities of cooking oils. When used, they become a waste product, and they can be both costly to deal with and difficult to dispose of. Within manufacturing industries, huge quantities of fats and oils are used, with significant quantities of waste food oils resulting from processing methods. When recycled properly, it can be a truly sustainable fuel, and we all want to increase our use of such fuels as much as possible. The Bill should have gone a little further in this regard, because it is ridiculous to dispose of such waste oils when they are ultimately a valuable recyclable resource. If we are worrying about the lights going out and shortages of fuel, it is also ridiculous that, despite the fact that the huge amount of waste from used cooking oils could be used highly efficiently as a truly recycled product, people are paying to get rid of it.
Earlier this year, I discussed this matter with Richard O'Keefe, director of Green2Go. He was the inspiration behind the debate in October. His company was established in 2007 with the express intention of providing renewable and sustainable heat and power solutions. We are hearing a lot about dirty solutions, such as coal, having to be made greener, but this is a green solution.
Green2Go is a relatively small company, but it is a key proponent of this effort. It estimates that there are currently 250 million litres of the waste product of used cooking oil available from commercial sources and significant further amounts from domestic sources. In areas that pride themselves on trying to increase recycling, such as St. Albans, we are also getting rid of this product at the domestic level.
Biodiesel, which can be manufactured from used cooking oil, is a particularly sustainable renewable fuel, whose use can reduce lifecycle carbon emissions by up to 90 per cent. If we were to use that fuel, it would help us deliver on our challenging energy targets. Used cooking oil does not cause additional deforestation, as it is a waste product that would otherwise have to be disposed of by professional collectors at significant cost-in the debates on this, it has been mentioned that sometimes it is not disposed of properly and it goes down into rivers and drainage and there is then the high cost of cleaning that up as well. Certain green pressure groups have great worries about whether the steps we are taking to try to ensure that the lights do not go out are green, but this is certainly green. It does not cause any land-use change, and the fuel is consequently one of the lowest-carbon forms of biodiesel. Converting to biodiese used cooking oil that might otherwise have gone to landfill is an excellent example of a sustainable biofuel.
The Under-Secretary of State agreed with all this in our earlier debate. As he said it was a valuable debate, I am hoping I shall hear some more from him about the issue today. This type of biofuel contributes to reducing carbon emissions and waste minimisation. As it uses a waste product, there is no resultant pressure on land use and no impact on food prices. There is a big concern about third-world countries that should be growing crops to eat but that are instead exporting crops for making biofuels. This does not contribute to that concern. Vital resources are not diverted from a valuable existing land use.
Methanol is commonly used in the process of producing biodiesel from used cooking oil. However, in March 2009-not very long ago-Ofgem reversed an earlier position and ruled that the use of methanol made from natural gas in biodiesel production discounts the fuel from being included in the renewables obligation scheme. That cannot be right. Many right hon. and hon. Members who are present have served on the Select Committee, and I see its acting Chairman, who will remember when the Committee was discussing this part of our energy remit. I raised the discounting with a witness who was giving evidence to the Committee, and he described it as a "bonkers anomaly".
A bonkers anomaly was introduced under this Government's watch in March 2009. As the Government are aware of this bonkers anomaly, I would have thought that they would have taken the opportunity in the short time left to them to address it. The ruling was made following consultation and discussion with the Department of Energy and Climate Change. As a result of the presence of that very small portion of fossil fuel derived from methanol in some biodiesels, we have this bonkers anomaly. The ruling is based on a very literal interpretation of the law, which classes the entirety of the biodiesel produced in such a way as a fossil fuel under article 9 of the renewables obligation, despite the fact that the fossil fuel element of the fuel, made from used cooking oil, is relatively small-about 11 per cent. by mass.
Members of the UK biofuels industry believe that the Ofgem ruling on biodiesel is likely to have a significant effect on the UK's industry and would have ramifications for our future domestic supply of renewable energy. That is what the Bill should be considering-to ensure that we have domestic supplies of renewable energy so that the lights do not go out. That is why there is a real missed opportunity in the Bill. I hope that we will have a chance to raise that issue in Committee.
Energy production in the UK has been set extremely ambitious long-term targets for renewable sources, yet many feel that the 2009 legislation-or at least Ofgem's interpretation of it, and I note that Ofgem is mentioned regularly in the Bill and it should have its attention drawn back to the anomaly-does not offer any incentive to use such a form of renewable fuel in the generation of electricity and heat. When I mentioned that to the Under-Secretary, I was encouraged. He agreed to meet representatives of the industry who had raised the anomaly with me to discuss it in more depth. I had heard that they were having trouble getting hold of him and I hope that he will tell me tonight that they have met. I would love to hear any update about any meeting that he has had with them. If he has not met them, I press him to renew tonight that commitment to meeting them.
The renewables obligation came into effect in 2002 to support renewable electricity projects in the UK. Under the obligation, suppliers are required to meet their obligations by presenting sufficient renewables obligation certificates-it is a mouthful, so I shall call them ROCs-which are green certificates issued to an accredited generator for eligible renewable electricity generated. The 2008 consultation by Ofgem, which led to this decision, focused on the detail that the methanol used in the process was normally derived from natural gas, itself a fossil fuel. Ofgem therefore set out that it was difficult to view biodiesel made in that way as a renewable fuel as set out in the Electricity Act 1989 and in specific parts of the Renewables Obligation Order 2006 (Amendment) Order 2007. Instead, Ofgem argued that biodiesel produced from the reagent will in turn fall within the term "fossil fuel"-that is, the whole of the biodiesel-under article 9 of the renewables obligation and concluded that biodiesel produced in such a way should be classed as fossil fuel generation under articles 9 and 18.
I believe that the Government do not want this anomaly and that, in October, the Minister saw that the argument in favour of it was nonsense. Given that the ruling stated that where fossil fuel-derived alcohols are used no ROC will be issued, even for the biomass-derived portion of the biodiesel involved, will he-or whoever speaks on behalf of the Government-take up the suggestion that we made in October to have 0.9 of a ROC to recognise such a truly renewable biofuel and the greenness of the energy provided by it? Electricity generators cannot receive the renewable obligation on electricity that is produced from that fuel. That is despite the fact that the fuel element is so comparatively small and despite the fact that the majority of the fuel is truly recycled from the waste stream and would have no other purpose.
There was widespread industry reaction to the Ofgem ruling on the basis that exclusion from the scheme would not encourage the generation of renewable energy-something that we have talked about at length tonight. Ofgem itself has concluded that its ruling ran counter to the desires of the majority of respondents to the 2008 consultation. Ofgem has further admitted that the issues that many such respondents raised are policy decisions that are the responsibility of the Department of Energy and Climate Change and are outside the remit of Ofgem's role as the scheme's administrator.
I have raised this issue in a sitting of the Energy and Climate Change Committee, in which we discussed low-carbon technologies in a green economy-I note that our acting Chairman, Paddy Tipping, is nodding. When I raised it with Greg Archer of the Low Carbon Vehicle Partnership, he did not hold back; as I have said, he described the situation as a "bonkers anomaly". He is not the only expert who has misgivings about the situation. I hope that the Minister will update me regarding the possibility of introducing a 0.9 ROC. He has agreed to investigate that idea, and I am sure that he will have made some progress in that regard. Used cooking oil can produce significant carbon savings and is an excellent way of using a waste product to create energy, but it currently seems to be uneconomic for many producers to do that. Will the Minister re-examine the legislation covering the treatment of biodiesel that is produced from used cooking oil to see whether anything can be done to iron out the anomaly? I would also welcome a statement on the implementation of the renewable energy directive.
Before my hon. Friend leaves that point, will she enlighten the House as to what form of fossil fuel is comprised in that 0.1 of a ROC or that 10 per cent., of cooking oil? I should not have thought that cooking oil could possibly comprise any fossil fuel.
I probably have not explained that point well enough. Some 89 per cent. of the fuel will be from used cooking oil and 11 per cent. will be from the methanol that is used, which is derived from gas. That is the fossil fuel element that has unfortunately given rise to the bonkers anomaly.
I believe that every encouragement should be given to green initiatives and technologies, and that green technologies should be used on all new, large-scale development projects. If they cannot be used, there should be a good reason why not. Some used cooking oil is converted and used-I know that Martin Horwood, who also spoke in my previous debate on this issue, has a used cooking oil company in his constituency. Such investment by companies is welcome, as is the fact that used cooking oil is being used in that way.
It has been in the news today-I do not know whether anyone has been reading the papers-that the famous supermarket chain, Tesco, has opened its first zero-carbon store in Ramsey, Cambridgeshire. I understand that Tesco is combining a host of energy-saving features in the store, which is part of its plan to make the company a zero-carbon business by 2050. The store is powered by an on-site generator that runs on renewable sources such as vegetable oil. The store's heating is provided by the generator, and there are a host of other green features. All that must be welcomed. It demonstrates what is possible, as well as the company's commitment to being zero-carbon.
Much is being done to reduce the impact of domestic properties, particularly in the new-build sector, but large industrial and commercial buildings often have very little provision for saving energy. I have to ask why such measures were not included in the Bill. Other hon. Members have raised this issue, and my hon. Friend Mr. Ellwood has said that there should be more joined-up thinking in that regard, particularly in relation to planning. That is the way forward. There is nothing in the Bill that will commit large projects to having to explore at least some form of green energy and microgeneration on their sites. That is a totally missed opportunity.
I will give an example of a missed opportunity. I do not want such a development in my constituency, but the totally non-green plans are there for everyone to see for a massive strategic rail freight interchange at the former Radlett aerodrome site. They include huge warehousing, covering more than 3.5 million square feet. The hangars are colossal-hon. Members can imagine the amount of roof space. The development will concrete over acres of green-belt land. It is claimed that a rail freight development is a green initiative. However, although the plans provide for aesthetic improvements to the surrounding area, there is little foresight about energy use and environmental impact.
My hon. Friend is making an important point about the use of extra space. It is a tragedy that Germany, France, Japan, Spain, Norway, America and Korea all outperform the UK on solar photovoltaic installation. Does she agree that that would be an excellent use of the roof space that she just described?
My hon. Friend has knocked the nail on the head. I have heard much in the debate about wind farms and how people are resistant or otherwise to them. Yet so little attention is paid to the vast amounts of space, particularly industrial space, that could be used efficiently. I believe that people who intend to develop large projects that communities are supposed to accept should be compelled to consider that. It would make them greener and improve their carbon footprint and could overcome some of the resistance in communities to built development.
There are no plans for the solar energy generation that my hon. Friend just mentioned. There are no plans for water recycling and no microgeneration provisions for the site. It is a scandal and a huge wasted opportunity. As I said, wind farms have been much criticised today. Why are we talking about building wind farms, nuclear power stations, and so on on the green belt, when we are not saying that buildings that are already being constructed should be made as energy efficient as possible and hopefully generate energy that would go into the grid?
Surely more should be done to encourage applicants to build and invest in environmentally sustainable structures. That would lower their carbon footprint. Such disregard for green technology should mean a rejection. We should not allow plans to go ahead if they have not made even a nod to green technologies. How on earth are we supposed to meet our stringent targets when developers can simply build what they like without having to do that? That is important.
The hon. Lady referred to wind turbines. I believe that her party, were it elected, is likely to introduce a policy whereby wind turbines would not be allowed within a minimum distance of any houses. What sort of distance does she consider appropriate for such an embargo?
I am afraid that I am not good on planning distances, but I am good on the planning distance for the rail freight terminal, which will come within 100 yards of some houses. If the Government allow that, I shall look to the hon. Gentleman to ensure that he gets his yardage right, too. The development is totally wrong.
No, I have only a few minutes left. It has been a long debate and the Labour Benches were empty for a while, so I hope that the hon. Gentleman will forgive my not giving way, given that I have sat through the graveyard shift, as it is sometimes called.
Part 2 deals with fuel poverty. The Bill includes various schemes to reduce fuel poverty, and that must be welcomed. The most recently available sub-regional split of fuel poverty figures, which relate to 2003, showed that there are approximately 1,900 fuel-poor households in St. Albans-which is considered to be an affluent constituency-and around 22,200 fuel-poor households in Hertfordshire. Since then, the number of fuel-poor homes nationally has risen sharply from 1.2 million in 2004 to 3.5 million. I can extrapolate rises of a similar magnitude in my constituency. This year, the Government announced that 4.6 million households in England could be fuel poor, despite a pledge to end fuel poverty by 2016. Does the Minister agree that an undelivered pledge is a worthless pledge?
I agree with the Macmillan campaign, of which I am a patron, that many groups must bear the cost of having to heat their homes. The ill, particularly people who have terminal cancer, are an important group. If we cannot get fuel poverty measures right for the Government's designated groups, I hold out little hope that we can get them right for people with long-term illnesses, such as those who are supported by the Macmillan campaign.
It is a pleasure to follow Anne Main. We do not always agree, but I warmed to her defence of the green belt and agreed with it. She is exactly right, too, about utilising used cooking oil for biodiesel. As she said, I have raised the issue, and I was pleased that the Under-Secretary of State for Energy and Climate Change agreed to meet my constituents and me. We all look forward to positive announcements, if not today, then perhaps in the pre-Budget report on Wednesday. We live in hope.
Liberal Democrats have given this limited Bill a broad welcome. The revisions to Ofgem's remit to take account of environmental considerations are long overdue, as is a more consistent framework for social tariffs. Millions endure fuel poverty, and social tariffs are patchily applied by private sector companies. Liberal Democrats have called for a more uniform framework ever since, in the case of my right hon. Friend Malcolm Bruce, the time of former Prime Minister Mrs. Thatcher, so measures to tackle the problem more consistently are long overdue.
The measures to promote carbon capture and storage are welcome, too. CCS is a critical technology if we are to achieve our aims in tackling climate change, and while we-I hope-make the transition to a more renewable energy economy in the long-term future, we need transition technologies. I certainly support CCS, rather than nuclear power, as a means of keeping the lights on. I was astonished by the speeches by Conservative Members, which featured consistent attacks on renewable energy, particularly wind energy, and consistent support for nuclear power.
Not only despicable but wrong, as modern wind turbines, especially the larger ones that avoid providing perches for birds, have turned out to be perfectly safe for most bird life. Such an ill-informed attack on wind power is exactly the kind of thing that we should reject.
The Conservatives' support for nuclear power worries me just as much. That technology costs us billions even today, and we do not how, when or where to dispose of nuclear waste, which will leave a toxic legacy for future generations for as long as 1,000 years. I was struck by the speech by Mr. Reed, which was well informed and technically accurate. He is a gentleman who knows the nuclear industry very well, so it is instructive that he made a plea to open the door to public subsidy for the nuclear industry. I hope that the Government will take the opportunity tonight very firmly to reject that out of hand.
We agree with some of the criticism of this limited Bill. The encouragement of social tariffs is welcome, but it is very little and, I would say, much too late. There are weaknesses in the Bill, and there is still not a clear ban on differentiated fuel tariffs according to the method of payment, which have been widely condemned. However, there is not an absolutely clear commitment in the Bill to remove that inconsistency. We have heard a great deal about the lack of attention to rural fuel poverty in particular.
The steps towards more carbon capture and storage are welcome, but there is a loophole in the Bill, which I have mentioned to the Secretary of State on several occasions. There is no guarantee that by the 2020s, coal-fired powers stations will not emit large amounts of carbon, with only a proportion of their output subject to CCS. Ministers are nodding their heads, but I cannot do better than quote the progress report to Parliament by the Committee on Climate Change, issued in October. It is concerned that we have not given a strong enough signal that
"for any plant not fitted with CCS there will be little or no role further into the 2020s".
The report goes on to say:
"The Government should make it absolutely clear now that whether or not CCS can be deemed economically viable any conventional coal plant still operating unabated beyond the early 2020s would only generate for a very limited number of hours."
We still have not heard that commitment from Government.
We have been debating the Bill in an enjoyably cool environment. When Madam Deputy Speaker was in the Chair earlier, she considered turning the heating up so that we were all warmed up during the debate. I know that the Minister was feeling particularly chilly, but it is entirely appropriate that on the first day of the Copenhagen summit we have resisted that temptation, and for once seem to have saved some energy in this place and reduced the amount of hot air in the Chamber-which many of our constituents might think could be done on many other occasions.
As it is the first day of the Copenhagen summit, it is right that I should take a moment to express our unity across the House. We are critical of Government policy from time to time. We are critical of many aspects of the Bill, but when the Secretary of State goes to Copenhagen, if he goes to press for a tough deal on climate change and for a clear timetable for binding commitments-early in 2010, I hope-he goes with our best wishes and our support. It is quite possible that the future of human civilisation as we know it may rest on decisions taken in Copenhagen over the next couple of weeks. That obliges us to put aside national and party political divisions for the common good. To that end, we wish him well.
We have had a thoughtful, constructive, well-informed debate which, on rare occasions, related to the content of the Bill. Most of the rest of it dealt with wider energy issues. The Secretary of State would probably say that the Bill is so good that we did not need to discuss it in the Chamber.
I listened in vain for the words that one usually hears-the senior Back Bencher who says, "This is a great Bill, which deals with the challenges that we face," or the energetic young Back Bencher who is keen to get promotion in the remaining few months, who says, "My constituents will be very grateful that the Government have had the vision to bring forward these vital measures," but they have not been here. The word that has run through the entire debate is "modest". After 12 years, 15 Ministers, countless reviews, consultations and White Papers-more consultation than one could imagine possible-the culmination is a modest Bill.
The issues that have come through are clear. The first theme that has run through the debate is the lack of detail in the Bill. We do not know at what level the levy for carbon capture and storage will be set. Simon Hughes asked who would be exempted from the levy. We need to understand that. We need to understand which technologies might be exempted. Will it be low-carbon technologies or zero-carbon technologies? Will micro-generation be exempted? We need a great deal more detail before we can give the Bill the approval that it needs.
On the fuel poverty issues, Paddy Tipping asked who would benefit from the fuel poverty measures. My hon. Friend Mr. Jones and Mr. Weir spoke about the need to protect people who live in rural areas and who are dependent on oil or LPG. We need to understand who the Government have it in mind to exempt.
My hon. Friend Mr. Goodwill asked who would own the intellectual property from the carbon capture projects. The hon. Member for Angus wanted to know whether the changes in the transmission arrangements would be damaging to investment in Scotland. If the Bill is to get the necessary agreement to proceed to Committee, we must have answers on those details. They cannot be left vague for the Secretary of State to decide in future. We need to know what is in the Government's mind, so that people can clearly understand what is being supported.
The second theme of the debate has been the lack of ambition. The hon. Member for Sherwood talked about carbon capture and storage as a competition without end; the hon. Member for North Southwark and Bermondsey talked about the slowness of the whole procedure, which has resulted in Britain moving from the top of the international league in CCS and slipping down the table; and the hon. Member for Angus talked about the need to understand the role of gas in the carbon capture model.
Dr. Whitehead talked a great deal about his concern that there was not more ambition on energy efficiency, but he also managed completely to reinvent Conservative party policy. He was wrong about what it includes, what it might cost and how it would be paid for-but apart from that, he was pretty close.
Dr. Turner talked about the need to be more ambitious in using the carbon price as a key driver of low-carbon technologies, and many hon. Members called for the need to be more supportive of emerging technologies. The hon. Gentleman talked about marine renewables and the absolute insistence that, with all our natural potential for such technology, we should not end up in 20 years' time looking back and saying, "How did we lose that advantage? Why did the Germans, the Danes and the others manage to master that technology? Why didn't we have the leadership that was necessary in those areas?"
My hon. Friend the Member for Scarborough and Whitby talked about the importance of developing energy from waste technologies, because we must change our whole way of thinking. We have to think of waste as a resource, not just as a cost. We have to do so much to reduce the amount of waste that goes to landfill or landrise, and we must ensure that we deal with it by addressing both the waste issue and the energy issue. My hon. Friend Anne Main, warming to the cooking oil theme that she has made her own, also made sure that we start to address those issues.
My hon. Friend the Member for Clwyd, West talked about pump storage and what we are going to do to realise the potential in that area. Mr. Reed mentioned nuclear power and gave a broadly thoughtful and sensible speech, until it was taken over by some raging creature, and he launched into a vicious attack on the Opposition parties while trying to say that he sought consensus. It was the sort of speech that, when he re-reads it in the morning, may make him wonder whether he got the balance quite right.
Running through the debate is the issue of missed opportunities and the recognition that the Bill does not rise to the challenges that we face on energy policy. We face a genuine crisis, but we do not see any measures to address it. Again, I return to the hon. Member for Sherwood, who is the acting Chairman of the Select Committee on Energy and Climate Change. I always thought that he would be a very good Energy Minister. Indeed, there is still time-we have a change every few months-and he could still have the chance to be the Energy Minister before the next election.
The hon. Gentleman's words made it sound as if he were being critical of the Conservative party, but, when one listened to what he was saying underneath, one found that he was actually putting the boot into his own Government. There he was, talking about the £200 billion of investment that is so essential, and which we must make. He said that the investment needed a secure framework-but we have been waiting for that for 12 years, and we are still waiting. He talked about the need to work harder to encourage international companies to invest in Britain and to understand the potential that is here, and he also talked about power cuts.
The Secretary of State says, "No, there's no risk of cuts," but he writes articles saying that there may be power cuts. Even the Government's own documentation mentions power cuts: there they are, on page 86 of the UK Low Carbon Transition Plan, although it does not say "power cuts", but "demand unserved", which is Government-speak for power cuts, and the equivalent of a city the size of Manchester being without electricity every night for three months. Nevertheless, the hon. Gentleman told us where we were failing to respond to the size of the challenge.
My hon. Friend Mr. Ellwood, in a very powerful critique, talked about the serious challenge that we face on gas storage. We have just 15 days' storage, and in January we exported through the interconnector 25 million cubic metres of gas a day-the equivalent of 250 Albert Halls of gas every single day being pumped out of this country. Just as we were approaching a dispute between Russia and Ukraine, during the coldest winter for 18 years, our gas storage was down to just four days. Nevertheless, here we have a Bill, and in it the Government do not have a single word to say about gas storage.
We have also missed, particularly on this day when the Copenhagen summit is starting, the challenge of discussing what more can be done urgently to tackle the problem of CO2 emissions. Nowhere in the Bill does one see a driving sense of urgency. There is a little movement and change, but no sense that this is a crisis that has to be addressed. Nick Ainger-I am delighted to see him coming in on cue-talked about a lack of the strategic thinking that is needed if we are to see the development of marine technologies such as offshore wind. The Government must take the lead and put in place down the coastline the high-voltage DC cables to connect up those facilities.
In terms of failing to recognise the challenges, most telling of all was the Secretary of State's indication that the Government would come forward with a strategy on fuel poverty in the spring. The numbers of people in fuel poverty have gone up, and they need help now, not proposals after the winter. We need a sense of urgency and a recognition that the Bill must do more than it currently sets out to do.
I turn to the key elements in the Bill. On the CCS levy, there has to be a funding mechanism to make carbon capture and storage happen-we completely support that. However, let me ask the Secretary of State again: where is the money from the third round of the EU emissions trading scheme that was promised? How much is in it, and what has it been allocated to? He says that it has all been spent, so what has been done with it? We recognise that if it is not available, the levy may be a way of trying to support that. However, if the Bill is to go into Committee, we need from Ministers a clear explanation of what has happened to the Government's expected revenue from the third round.
However, the levy is just part of this. We still do not have the leadership that we require if we are to lead the world in CCS. We were leading, but we have been overtaken by America, Canada, Germany, Abu Dhabi, Norway, Australia and China- critically, given that this whole project was designed to develop a technology that we could sell to the Chinese. We must have more strategic leadership. How will the whole process be handled? What aspect of Government will make CCS happen? Who will be responsible for scoping the potential sites? Will there be oversized pipelines to facilitate the development of clusters? Can we not do still more to speed up the pace of this competition, which has been absurdly slow? We need to move towards a conclusion, and to know who is going to be the winner on the pilot project.
The whole aspect of social tariffs and support for consumers brings home how far away we are from achieving the fuel poverty targets set out by the Government, with the legally binding commitments that by 2010 all vulnerable households would be taken out of fuel poverty and that by
As the hon. Member for Brighton, Kemptown said, prices will be rising, and everything that is necessary will be expensive. Of course we support social tariffs, but we want the Bill to go much further. We want much more information on bills so that people can see how much electricity they are using in comparison with their neighbours in similar houses. We want information on bills about CO2 emissions. We want people to be able to see how much less their bill would be if they were on the lowest tariff available from the company, and, perhaps, information on environmental charges. We want those things because they are the ways in which we can help to deal with fuel poverty. In addition, we need a great drive forward on energy efficiency. It is extraordinary that in a Bill that deals with fuel poverty, energy efficiency does not get a mention.
The Bill includes proposals on the remit of Ofgem, which has interpreted its new role well. Project Discovery shows that it has been giving good consideration to the issues that face us. However, we need to understand more clearly who is in charge. The Bill suggests that there are equal powers as between the Government and Ofgem, but it is clear to us that in policy terms Government should have primacy.
The Bill will do many worthy things, but it is simply not up to the scale of the challenge that we face. We need to attract £200 billion of investment in the next 15 years.
I will not, because I am keen to ensure that the Minister of State has plenty of time to respond.
We need to do more to secure that investment, and the Bill simply will not do it. Those who are looking to invest in nuclear power need much more certainty on the price of carbon, and the Bill fails to give them any reassurance. If we are to become more reliant on gas imports-many predictions suggest that 80 per cent. of our gas will be imported by 2020-we need much more action on gas storage, and the Bill has not a single word to say about that. If we are to drive forward investment in renewables, the Government have to accept that they have a strategic role in requiring high-voltage DC cables to be put in place, and providing much more support for embryonic marine renewables. They must ensure that we develop a real spirit of partnership, so that when applications for new renewable facilities come to our communities, they know that there is something significant in it for them if they decide to host those facilities.
The Bill is not so much a plan of action as a statement of intent that the Government will think about consulting and having a review of whether they should change their energy policies. We need firm government and decisive action: time is not on our side, and the Bill is not up to the challenge. The Secretary of State is a very ambitious man-so ambitious, we are told, that one day he would even like to be Leader of the Opposition. The Bill is not ambitious, and if it goes to Committee we hope to work with the Government to find consensus and address many of the issues that have been left out of it.
Combating climate change while maintaining secure and affordable energy supplies is one the greatest challenges that our Government face. This is a landmark year in the fight against climate change and today, as many contributors have said, is the start of the discussions at Copenhagen. The world has come together in an attempt to reach a new international agreement to tackle climate change. We are going into the negotiations with a clear plan of the ambitious, effective and fair deal that we believe all the world's nations must agree, and confident that the UK has a track record of taking real action at home to tackle our own emissions. The low carbon transition plan, which we launched in July, sets out a clear pathway that will lead us to a low-carbon world with secure energy supplies and protection for the most vulnerable. The Bill puts into place legislation that will implement that plan.
Let me comment on the speeches that have been made today. Greg Clark simply gave an alarmist account of what this country faces, without any positive reference to the measures in the Bill, some of which tackle the need for energy security in future. He constantly referred to matters that were not in the Bill, reciting a huge wish list of things that he believes could be legislated for. He failed to notice that most of the measures of which he spoke are already under way and do not require primary legislation. It was complete nonsense of a speech.
The hon. Gentleman said that there was a possibility of power cuts, which has been repeated by Opposition Members over and over again. [Interruption.] I shall come to what my hon. Friend Paddy Tipping said in due course, but at the moment I am dealing with the opening Front-Bench speeches. We challenged the hon. Gentleman on the need for assistance to households to make their homes more energy efficient. We still do not know how the Conservatives plan to fund the provision of £6,500 to households. He challenged us by saying that we have only 500 homes in our pilots, but why do we have pilots? To work out what is the best way of incentivising people and how the public are most likely to respond. That is why the pilots are critical. The hon. Gentleman is not able to tell me tonight how the up-front payments for those energy efficiency measures will be made, and he has never been able to say.
Is it not the case that the sum involved would be £6,500 times 20 million or so, so we are talking about £160 billion-a figure not unadjacent to 10 per cent. of gross domestic product? Surely the official Opposition must have thought in more detail about how they can fund that.
My hon. Friend is right. One would have thought they would have done so, but it appears they have not.
The hon. Member for Tunbridge Wells spoke about how vital an emissions performance standard is and again said that such a measure was not in the Bill. The fact is that it does not need to be in the Bill. We do not need primary legislation and can adopt an emissions performance standard without new legislation if we wish to do so- [ Interruption. ] I will come to that in due course.
The other point on the emissions performance standard is that we think it better to gain a proper understanding of the potential of CCS before considering how the regulatory and financial measures relating to emissions from power stations will be affected. We will continue to maintain a rolling review of progress, as we have clearly stated, with CCS technologies. By 2018, we will publish a report- [ Interruption. ] It is not far off. By 2018, we will publish a report that considers the case for new measures to drive a move to clean coal.
Order. I apologise for interrupting the hon. Lady, but there is a constant chorus of chuntering from those on the Opposition Front Bench. Mr. Barker, you need to sit quietly and listen to the Minister's speech. Stop chuntering-I do not want to hear it.
I am so grateful, Mr. Speaker.
The hon. Member for Tunbridge Wells spoke of the UK falling behind in the race to build CCS. That could not be further from the truth. A number of other hon. Members, including Mr. Weir, mentioned China, but no project in China is on the scale of any of our projects, and no construction is under way for capture, transportation and storage on the scale that our projects propose. It is therefore complete nonsense to suggest that other countries have overtaken us. We are still in the lead. We are co-operating with other countries, which is the most reasonable thing for us to do.
My hon. Friend the Member for Sherwood, the acting Chairman of the Energy and Climate Change Committee, made a very thoughtful speech and we are glad that he welcomed our CCS proposals. He spoke with passion about the mining communities and the future of coal mining in this country. Of course, it is CCS that can offer a guarantee of a future for those activities.
My hon. Friend spoke in more moderate and reasonable terms about a possible energy supply gap around 2016, but I must tell the House that the evidence does not support that view. It is true that 18 GW of electricity generation is due to close by 2018, but nearly 20 GW is under construction or has planning consent. Industry is responding to the signals of the need for new generation by getting on with the building. The latest analysis issued by the Government has shown that there is no gap. Ofgem's "Project Discovery" presents a wide range of scenarios and shows that electricity supplies would meet demand in almost all foreseeable situations.
Is my hon. Friend as surprised as I am that Conservative policy on the energy gap still seems to be to sit on the fence about nuclear and say, "If we need a nuclear power station, we'll just pop down to the supermarket and get one"? That is a crazy policy.
My hon. Friend is absolutely right, but perhaps the most remarkable thing the hon. Member for Tunbridge Wells said was that he was entirely relaxed about the shadow Business Secretary's comments about wind turbines. It is quite clear that the Conservatives do not want the new generation capacity that we believe is so vital.
My hon. Friend the Member for Sherwood asked about the consideration of clusters. We understand that co-location of CCS demonstration projects could reduce the overall costs of the demonstration programme, but the competition process could be weakened if that is a requirement. It is not a requirement, but clearly those who come forward in the competition might propose that making a cluster is an attractive feature of the offer.
May I correct the hon. Lady? I have a long history of leading a campaign against nuclear weapons.
Simon Hughes said that he wanted to see more ambition in the Bill, although he welcomed many aspects of it, and we are grateful for that. He challenged us to say whether there would be new coal that did not have some sort of constraint on emissions. We have made it clear that all new coal will have to have a degree of carbon capture, and that if the technology is proven, there will be retrofitting. As he knows, other old stations will go out of use, so it is clear-
I am not giving way on this point. It is clear that under our proposal, if the technology works, we will end up where we want to be. To suggest that it should be in place from the beginning would be to defeat the progress of the technology completely.
The hon. Member for North Southwark and Bermondsey also asked about CCS and intellectual property. We want to have the maximum sharing, and that is why we are working with China. We want to see the sharing and development of technology. It will be necessary, of course, to have some intellectual property rights, but we do not envisage those standing in the way of the kind of co-operation that we need.
The hon. Gentleman, and other hon. Members, asked about fuel poverty and argued that those off the gas grid are not protected. One way to deal with the situation would be to put the social price support on electricity bills. In that way, we could assist everyone who had an electricity supply, which is virtually everyone in the country. That would mean that we did not disadvantage those who are off the gas grid.
That is an interesting proposition. Does it mean that those who are off the gas grid would get a greater reduction in the electricity social tariff to make up for the fact that their heating comes from oil or LPG?
What will be done is a matter for extensive consultation, when the hon. Gentleman will have an opportunity to make those points. I offer that suggestion as a way out of the dilemma that hon. Members mentioned.
I was asked about clause 14 by the hon. Member for North Southwark and Bermondsey. The Secretary of State already has the power to amend the fuel poverty definition under the Warm Homes and Energy Conservation Act 2000. We are not, however, looking to change that definition. The hon. Gentleman also asked what we could do those customers already suffering harm, but whose cases had been timed out. The legislation will not apply retrospectively, as I think he understood, and that is why we are extending the provision to enable breaches of licence going back more than 12 months-indeed, up to five years-to be tackled.
My hon. Friend Dr. Whitehead said that the Bill might be modest, but it represents a real step forward. He is so right. He recognises that this limited Bill will do a lot that is complementary to the huge programme of change that is already under way. He demonstrated his deep understanding of the relationship between the three elements of fuel poverty-prices, energy efficiency and incomes-and I am grateful for his welcome of the investment and regulatory approach that we are taking in the Bill.
Mr. Ellwood, in an alarmist speech, spoke a great deal about gas storage. He accused us of coming late to new nuclear, but it was his party that said that it was a policy of last resort. We are getting on with the job while his party has been dithering. He spoke about Vestas, which is producing blades not for the UK market, but for the US market. He said that there is nothing in the Bill to incentivise wind turbines-that is incredible, because we have the renewables obligation certificates-and nothing for local communities, when of course there are jobs and investment.
I cannot; I do not have time.
The hon. Gentleman asked what we would do if this winter was as harsh as last winter. National Grid, which is most closely involved in protecting security of supply, tells us that although unforeseen events could occur, overall supply and demand in gas and electricity look relatively comfortable. We have the highest generation margin for many years and gas import infrastructure has increased by 500 per cent. over the past decade.
My hon. Friend Dr. Turner spoke about the carbon price and suggested that there should be a mechanism for underpinning it. That is not something that we are going to adopt, at least not at present, because we see significant risks in attempting to manage the carbon price. For example, introducing a price floor would set a precedent for intervening in the market and lead to increased calls for a price ceiling in times of higher economic growth. He also argued that market support is not sufficient for the development of marine technology. We always keep the way to incentivise such development under review. I also point out to him the investments that we are making in the south-west in marine renewables.
Mr. Goodwill made a strong and constructive speech in favour of nuclear and is obviously a keen advocate of new technology-he made a reference to my old college, Imperial. He can be assured that we will be co-ordinating with others in the various CCS projects, as I have indicated.
My hon. Friend Mr. Reed spoke on behalf of his constituents, as always, about their keen interest in all things nuclear. He welcomed the social price support, but asked us to do more. We are always looking to do more on fuel poverty and will consider everything he said. On CCS, he referred to the huge potential opportunities, including job opportunities, for areas with CO2-intensive industries. We agree with him and believe that CCS will be adaptable to many industries.
Mr. Jones asked whether the Secretary of State would exclude rural communities from the CCS levy. That is not one of our plans, but all such issues will be a matter for debate in Committee. He was also not keen on the proliferation of wind farms in Wales, but we are talking about a technology that can be used now and ought to be used now, and we should be getting on with that.
My hon. Friend Nick Ainger gave a helpful account of gas import and storage. He welcomed the Bill, and we appreciate his support. On fuel poverty, he argued that pensioners were not an absolute priority, but I have to tell him that, regrettably, the majority of people in fuel poverty are still pensioners.
Mr. Weir posed a lot of questions that I think I have dealt with already. [ Interruption. ] I am being urged to come to the end of my remarks by everyone around me.
This is an important Bill. It is important to implement the measures to decarbonise our electricity supplies, help more vulnerable customers with their energy bills and provide the clear market framework needed for a transition to a low-carbon economy.
Question put and agreed to.
Bill accordingly read a Second time.