Renewable Energy (S&T Report)

– in the House of Lords at 3:25 pm on 23rd June 2005.

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Photo of Lord Oxburgh Lord Oxburgh Crossbench 3:25 pm, 23rd June 2005

rose to move, That this House takes note of the report of the Science and Technology Committee on Renewable Energy: Practicalities (4th Report, Session 2003–04, HL Paper 126).

Photo of Lord Oxburgh Lord Oxburgh Crossbench

My Lords, I begin by thanking the right reverend Prelate the Bishop of Liverpool. He was successful in the ballot for a debate but, as it turned out, our debate on a related topic had been arranged for the same afternoon. He kindly agreed that the two Motions should be debated together.

We have waited a long time for this debate and we have the unusual but, in this case, welcome innovation of two government replies to our report: one after six months, which was, in the committee's eyes, seriously incomplete, and a more considered reply six months later. We are grateful for that, but I saw it for the first time only on Monday and the committee has not yet considered it.

Today's debate will be broad, not only because of the parallel Motions, but also because so much has happened in the past 12 months. There is now wide acceptance of the reality of anthropogenic climate change and the need to take action urgently. We have had a period of sustained high oil and gas prices which, short of a major world recession, seem unlikely to fall a long way any time soon, substantially improving the economics of renewable energy. We have seen the introduction of the European Emissions Trading Scheme and we have a new Government. We are delighted that the need for a Minister who can devote his whole attention to energy is accepted.

This is not a debate on climate change. However, some noble Lords may feel that the unwillingness of the Government of the United States to accept the judgment of its own prestigious National Academy of Sciences—not to mention those of every other national scientific academy in the world, including our own Royal Society—means that this is not an urgent matter. I shall, therefore, comment very briefly.

I am not a climate scientist but I have worked for many years in closely related areas. I can say only that the prediction of the Nobel Prize-winning chemist Arrhenius in 1903, that the burning of fossil fuels would increase the carbon dioxide content of the atmosphere and cause the Earth to warm, looks incontestable. There is uncertainty about how fast the temperature will rise and about details of climate change, but the overwhelming probability is that the Earth will become a less hospitable place for its current inhabitants. It is the speed of the change that will make it hard for us and many other species to adapt.

Among human populations, those living in the poorest countries will be at the greatest risk. In that way, the Government's agenda for Africa and for climate change are closely linked. I am happy to congratulate the Government on the firm stance they have taken on climate change and the priority they have accorded it for their presidency of the G8 and the European Union.

Our report addressed one element of the Government's energy policy as outlined in the 2003 White Paper; namely, the intention that by 2010, 10 per cent and by 2020, 20 per cent of our electricity should be generated from renewable sources—that is from wind, waves, sun and the other intrinsic Earth processes, or from plant life or organic wastes. I wish to record my thanks to our committee who devoted so much time to this inquiry.

That said, we remain puzzled by the introduction to the White Paper in which the Government list their desiderata: security of energy supply, reduced greenhouse emissions, competitive energy markets and elimination of fuel poverty. But they are unwilling to prioritise them. They include the important social objective of reducing fuel poverty. Surely this can be met more readily in other and, dare I say, more rational ways. The White Paper also involves a curiously eclectic application of market forces.

The Government have initiated a review of the Climate Change Programme and of the renewables obligation certificate, the so-called "ROCs scheme". In our report, we were critical of that scheme, but let me say that, whatever its deficiencies, it is much better than nothing. It has achieved results.

We were concerned about it for two main reasons: first, it was intrinsically incapable of achieving more than 60 to 70 per cent of the Government's target. Secondly, although nominally technology-blind, it could be attractive only to those deploying the imported technology of wind turbines because our indigenous research base in other relevant technologies was at such a low level. That remained true even after the ROCs scheme was extended to 2015. But, although the scheme is less than perfect, investor confidence must be maintained by not changing conditions that affect those who have already invested.

Another problem is that soon the commercially attractive renewable energy schemes will have been completed. On the other hand, as time goes on, the returns of the ROCs scheme will decline and the incentives for the new, more costly schemes will progressively diminish. Offshore wind installations cost about twice as much as those onshore, which is rather more than originally thought. At this point, I have to declare an interest as chairman of the Shell Transport and Trading Company; the Shell Group is involved in many wind projects.

At this point, it is possible to offer a suggestion. It originates neither from Shell nor the committee. Rather than extend the ROCs scheme as it exists today until 2020, as has been suggested, it could be slightly modified for future investors while keeping conditions unchanged for existing ones. The current renewables obligations that have been placed upon suppliers of electricity for 2010 and 2015 would remain unchanged and an additional obligation for 2020 would be added. However, only renewable energy produced from generation plant commissioned after, say, 2008—to give 12 years of renewables obligations—would be eligible for future buy-out fund payments. Renewable obligations certificates would carry a date stamp that would qualify them to receive payments from the respective buy-out funds for the applicable period. Suppliers of electricity to consumers would still have their targets to meet until 2020, and would have to buy-out their obligations if they did not, but after 2015, they would receive buy-out fund payments only for newer projects that have generated ROCs eligible for that period.

This would limit the cost of electricity, direct future payments to where they would do most good, not affect the conditions under which existing investors invested, and so on. It would also allow the Government to continue to extend the renewables target to deal with the longer-term carbon reduction plans without disrupting investor confidence by changing the system.

A different difficulty arises from the structure of the electricity industry. Annual payments from the ROCs buy-out fund go to electricity distribution companies that buy electricity from generating companies at fixed prices under long-term power purchase agreements. Therefore the high incentives provided by the ROCs scheme when the Government's targets are not reached, do not readily feed through to those who can build new plant—at any rate not readily, transparently or sufficiently promptly to affect their market behaviour. This problem too would be slightly mitigated by the proposal I made earlier.

Pressure of other commitments has prevented me examining in detail the Government's more considered reply. I am glad to see that in a number of cases the Government accept our recommendations. On the matter of whether the renewables target for 2010 will be met, frankly, it is now neither here nor there. The die is cast and, in any case, I believe that there is now a widely held view that national energy policy has to be revisited.

I looked at the later paragraphs in the reply concerning security of supply, and I am frankly dismayed by the blind faith in markets. It could be described in chemical terms as a failure to distinguish between thermodynamics and kinetics; that is, between what should happen and what will happen. It is probably true that markets will ultimately correct any imbalance between supply and demand. But the reply fails to recognise that there invariably is a time delay. If the market is for baked beans, that may not matter too much, but for an essential infrastructural service, it does matter; the lights must not go out. I expect that the committee will wish to pursue this matter further.

I now turn to the use of biomass as a renewable resource, partly because in this area we found multiple regulatory bodies whose terms of reference and priorities were imperfectly aligned. Furthermore, they were not aligned to support broader government energy policy. This led to operational nightmares for the firms concerned. We look forward to the report of Sir Ben Gill's working party, which has been set up to look into these problems.

Biomass—plant matter—may either be directly burned in power stations or be used to make liquid fuels. Because plants extract carbon from the air, when they are burned it is returned to the air and the energy derived from them should be carbon neutral. However, care is needed because energy is required to cultivate, fertilise and transport biomass, and one can end up using almost as much energy to produce the fuel as one gets out of it.

For some time, biodiesel has been made from vegetable oils—linseed, rape and so on—while the petrol substitute, ethanol, can be produced by the fermentation of plant sugars from sugar cane, sugar beet or corn heads. In the past, these products have been more expensive than their fossil fuel equivalents, but recent rises in oil prices have reduced the difference and I believe that last month corn ethanol in the US was briefly cheaper than gasoline.

The cost of these fuels is high not only because of the labour and energy needed to produce them, but also because only a small fraction of the plant is used for fuel and the rest is wasted. However, a small Canadian enzyme company, Iogen, has shown that this does not have to be so. It has developed an enzyme that will break down straw into its constituent sugars and it is now, in collaboration with Shell, making an ethanol fuel from what was previously a waste product. Industrially this process has much more in common with whisky making than oil refining: it is fermentation followed by distillation. In full production, it will be significantly cheaper than today's oil. Producing liquid fuel from waste is a great step forward. The processing itself has low additional energy requirements and waste straw is already collected and moved. That means that the fuel is effectively emissions-neutral. It is known as Ecoethanol to distinguish it from corn ethanol that carries around 75 per cent of the emissions from the gasoline that it can be used to replace.

The message again is clear: we must look carefully at the emissions capability associated with any particular renewable source. But this technology opens the door to the production of fuel from plant-derived wastes and from the organic elements of urban waste of all kinds. But perhaps more importantly, it opens the door to the co-production of food and fuel, avoiding very uncomfortable competition between the two. Ultimately, this approach may offer the possibility of sustainable transport.

If human life is to continue on this planet, we have to find renewable, secure and sustainable energy sources. Stocks of fossil fuel are, by their nature, finite, although we have no alternative to continuing to use them for some time. But we must recognise that this is a stopgap measure. There are promising advances, but the contribution from many renewables is limited simply because our technology is at the present time too primitive to exploit them fully. I beg to move.

Moved, That this House takes note of the report of the Science and Technology Committee on Renewable Energy: Practicalities (4th Report, Session 2003–04, HL Paper 126).—(Lord Oxburgh.)

Photo of The Bishop of Liverpool The Bishop of Liverpool Bishop 3:40 pm, 23rd June 2005

My Lords, to find that my Motion was drawn in the ballot for the same day as the report of the noble Lord, Lord Oxburgh, on renewable energy was due to be debated, seemed to me to be a happy accident, even providential; to discover that the movers of the Motions should be both Lords of Liverpool, the one temporal and the other spiritual, feels almost like an act of God.

The matters before us are very serious. I begin with a stark warning from the Intergovernmental Panel on Climate Change that the poorest countries in the world will be the first and most to suffer. Africa, Asia and Latin America are all at risk from sea-level rise and flooding. Already environmental refugees are numbered in their millions. The International Federation of Red Cross and Red Crescent societies has evidence that 13 times more people die per environmental disaster in low human development countries than in countries of high human development. On visits with the relief agency Tear Fund to India, Africa and central America I have seen first hand the devastating consequences of environmental disasters—irregular seasons leading to total crop failure, poverty and malnutrition; hurricanes that have devastated villages; and flooding that has swept children away to drown.

To quote an Indian commentator:

"In the recent past human actions were trivial when set against the dominant processes of nature".

That is no longer so. The human species now influences the fundamental processes of this planet. Ozone depletion, world-wide pollution and climate change are testimonies to our power. That view is reinforced by the academies of science of the G8 countries, who call on the leaders of the forthcoming summit to acknowledge that the threat of climate change is clear and increasing, and to identify action that can be taken now to reduce greenhouse gas emissions.

In a poem by Gerald Manly Hopkins called "God's Grandeur", there is the optimistic line:

"And for all this, nature is never spent".

I wonder whether he would have written so hopefully of today's world where our Prime Minister has gone on record saying that unchecked climate change could have the potential to be catastrophic in both human and economic terms.

I labour the point deliberately in case anyone should think that the Motions before us are just the hobbyhorses of eco-enthusiasts. The planet is facing a crisis of global proportions. Unfortunately, the people with the power to act are the most protected from feeling its impact; and those who do feel the devastating winds of climate change are the poor and are powerless to do anything about it.

In a recent lecture to the RSA, Sir John Houghton made the plea that:

"Global pollution requires a global solution".

That is why the forthcoming G8 Summit is so vital to the future of the earth. If the leaders are anxious to go down in history as those who made a difference to the future well-being of the planet, it needs to be said that unless they take action on climate change there may well not be a future history in which to record their meeting.

The Prime Minister rightly wants to place at the top of the G8 agenda both Africa and climate change. Dealing with poverty in Africa calls for debt cancellation, good governance and fair trade—but it also calls for action on climate change, which will increase Africa's poverty through droughts and floods. That is already happening. What is the point at Gleneagles of taking steps to reduce poverty with one hand but, by refusing action on climate change, to increase poverty with the other hand? Both problems need to be tackled. The Prime Minister's dual emphasis on Africa and climate change is to be warmly welcomed.

On a recent visit to America, which concluded with me leading a seminar at the World Bank on faith and sustainable development, I learned how much Americans value the leadership of the Prime Minister. I heard it said at a senior level in Washington that the President was not unsympathetic to the call to act on climate change, but that it was the Senate which needed to be persuaded.

It is therefore a relief to note that this week the Senate has begun at last to consider a programme to regulate and control CO2 emissions. Let us hope that this shift in the Senate translates into a more robust statement in the communiqué from the G8 summit.

As the report of the noble Lord, Lord Oxburgh, shows, investment in research and development of renewables in America in 2004–05 was $250 million, which actually compares favourably with the UK Government's investment of only £12.2 million in 2002–03. The Science and Technology Committee derided that sum as deplorable.

Many of us who welcome and support the Prime Minister's leadership in placing climate change at the top of the G8 agenda want him to strengthen his own position, which we feel is undermined by the Government's own record. The Prime Minister rightly says that time is running out. Leadership is exercised by both rhetoric and example. The former without the latter robs you of authority.

The government of China, whose economy is expanding at a remarkable rate, is allegedly embarking on a programme of building 600 coal-fired power stations. The imagination goes into meltdown at the effect that that will have on the climate and the environment. But any pleas from the G8 leaders that they, the Chinese, should invest in alternative sources of energy or develop and apply clean-coal technology, or that they should reduce energy consumption, would have the Chinese scrutinising our recent history and our current strategy and timetable for the same things. To adapt a famous saying, we should be careful about removing the dust from our neighbour's eyes when having a lump of coal in our own.

It is the considered view of many who are extremely sympathetic to the Government's aims that, when it comes to energy efficiency, reduction and conservation and to the implementation of a programme of renewable sources of energy, the Government's policy at home is ad hoc and lacks the investment, the strategy and the timetable necessary given the urgency of the situation—a matter to which the noble Lord, Lord Oxburgh, referred.

Our energy consumption falls into three categories—buildings, transport and industry. According to Sir John Houghton,

"large savings can be made in all three sectors, many with significant savings in cost".

But it is simply not happening on the scale needed. Over the next 20 years, for example, 4 million homes will be built. But where is the policy to ensure zero energy development? And what is the co-ordinated strategy to reduce the amount of energy consumed through transportation? One of the conclusions of the report of the noble Lord, Lord Oxburgh, is:

"The Government are not taking these problems sufficiently seriously".

I know only too well that it is very easy for people like me to stand up and make demands on the Government. I would like to reassure the noble Lord the Minister that I sometimes put myself, believe it or not, in their shoes and imagine how the executive must cope with all the competing demands. I know that the Government cannot do everything. I know that they have to establish priorities. But this is precisely the point. Both the Chancellor and the Prime Minister have already established climate change as their priority. Having established climate change and, therefore, by implication, energy reduction and renewables, it is right for us to ask whether or not they have in place a strategy and a timetable to deliver on their acknowledged priority.

In another place on 14 June the Minister for Energy announced the figure for investing in carbon abatement technologies. He acknowledged the major expansion of coal-fired power generation expected in China and India, saying that he wanted,

"to put the UK at the forefront of what could be valuable export opportunities".—[Hansard, Commons, 14/06/05; col. WS55.]

The figure announced was £25 million—approximately the cost of one city academy. I do not mock; I happen to chair the governing body of an academy that will open this September. But does that sum of money really reflect the Government's priority on climate change?

On 13 June, the Minister announced that the Government are spending more than £500 million between 2002 and 2008 on emerging renewable and low-carbon technologies. That figure over six years is about £80 million a year. But given all that the Prime Minister and the Chancellor have said about the urgency of climate change, does £80 million a year seem adequate to the threat; does it seem commensurate with the millions of environmental refugees; does it seem a proper expression of the word "priority"?

In a comprehensive and visionary speech last year on climate change, the Prime Minister set out what needs to be done nationally and internationally. Referring to the target of 60 per cent reduction of CO2 emissions by 2050, he said:

"This implies a massive change in the way this country produces and uses energy. We are committed to this change".

He added:

"We need . . . to invest on a large scale".

The question is: do the Government's policy and sums of £80 million a year for six years express this "massive change" and investment on a "large scale"?

I know from other statements that the Government hope for and fully expect investment from the commercial sector—rightly so—but the market has a poor record in anticipating trends in the long term. It responds overwhelmingly to price and to the short term. Although the market has been effective in bringing reduced energy prices during the past two decades, in its raw form it takes no account of environmental or other external factors. That is why leadership and intervention are required from the Government to stimulate and regulate the market for the sake of our futures and the common good.

Environmental factors must be integrated into the Government's energy and economic policies. The point was powerfully made by the Chancellor of the Exchequer in an address to the Energy and Environment Ministerial Roundtable three months ago. He said:

"Environmental issues—including climate change—have traditionally been placed in a category separate from the economy and from economic policy. But this is no longer tenable. Across a range of environmental issues—from soil erosion to the depletion of marine stocks, from water scarcity to air pollution—it is clear now not just that economic activity is their cause, but that these problems in themselves threaten future economic activity and growth".

That is the clearest statement from the Government that we cannot expect the market to be the protector of our environment. Environmental factors must be integrated into the Government's economic policy. The wellbeing of the planet and the needs of the poor require all the G8 countries, who produce 50 per cent of the world's CO2 emissions, and our Government in particular, to have a strategy and timetable for energy reduction and renewable resources on the scale that is so evidently and urgently necessary.

There is an African proverb which eloquently and succinctly points up our responsibility to future generations:

"We have borrowed the present from our children".

I support the Motion.

Photo of Lord Whitty Lord Whitty Labour 3:54 pm, 23rd June 2005

My Lords, first, I thank the noble Lord, Lord Oxburgh, and his committee for such an expert and detailed report, which he outlined today. That is very helpful. My thanks go, too, to the right reverend Prelate, who has not only anticipated my lines on the importance of climate change but done so far more eloquently than I could have. That is the backdrop against which we are discussing the issue of renewable energy and energy efficiency. Although the noble Lord, Lord Oxburgh, is right to say that this is not primarily a debate about climate change, climate change is what drives much of our consideration today.

Much technical expertise was represented on the noble Lord's committee, many members of which are speaking today, along with many others with detailed knowledge of this area. My only claim to fame is that for the past three years part of my title in Defra was Minister for sustainable energy. Broadly, that meant that I looked after the environmental and social dimensions of energy policy. I must say, it was one of the more frustrating aspects of my job. Given that I was also Minister for agriculture, in proportionate terms, that is saying quite something. I therefore thought that I would take the opportunity of this debate at least to share some of my frustration.

The key to that frustration is that this is such an important issue. There are not only the catastrophic consequences of failing to tackle it, which the right reverend Prelate has already pointed out, but the difficulty of doing so, because we are engaged in a process of changing the behaviour of millions of individuals, of hundreds of thousands of institutions and companies and, indeed, of government departments. So I shall talk about a few of the specific aspects of renewables and mainly about energy efficiency, but also about the machinery of government.

My frustration is not because I disagree with the broad thrust of government policy. I strongly support it—indeed I was party to it. My frustration—this was reflected by the right reverend Prelate—is at the lack of urgency, priority, resourcing, redirection of other governmental bodies in terms of regulation and of co-ordination of government in this field.

There are some serious issues here that the Government will have to grasp if they are to live up to the objectives set out by the Prime Minister in the speeches already referred to. We ought to be absolutely clear that the prime objective of energy policy must now be a reduction in the carbon content of our energy sourcing and use. There are of course other objectives of energy policy, which are set out in the White Paper on energy, but the prime objective of energy policy over the past 20 years of minimum price achieved through maximum competition is no longer valid. That was the policy objective for several decades, and as a society we have benefited from it in many ways, but there is now a more important objective: the environmental climate change objective.

Although there are always trade-offs, that priority must be reflected over other objectives. These include consumer preference in relation to planning considerations; waste management, whether in relation to biomass or nuclear power; and—even I, who was its champion, am prepared to admit—the fuel poverty programme, despite the consequences of higher energy prices to drive the achievements in energy efficiency that are now needed. We will need other measures to offset some of those effects in the social and environmental field, but we ought to be clear, as the right reverend Prelate has just been, that the overriding objective of energy policy, in sourcing and use, must be to minimise the carbon content thereof and that of other greenhouse gases.

Some serious ideological problems are involved here. Reference has been made to the American position. The Americans also have heavy investment in the technology that is required. The world will need that American investment and commitment to technology, but we cannot afford the American ideology that says that technology will provide the solution—that we do not need other market interventions, either nationally or internationally because, ultimately, technology will provide. Technology is a vital part of the solution, but it emerges only in a framework set by governments nationally and internationally and by society as a whole.

We recognise that. Although there has been liberalisation and privatisation of the industry, we have already recognised that this is not a normal market. We have had heavy regulation. The whole paraphernalia of ROCs, tax interventions, the energy efficiency commitment and the role of Ofgem indicates that it is not a normal market. It is one in which government must intervene, and we cannot afford the ideology that says that the market will, in the end, provide without very heavy intervention by government regulators and others.

There is also a bit of an ideological problem, particularly in this House, about the role of nuclear energy. I do not believe that we should have the argument in terms of "nuclear energy versus renewables". It is a question of nuclear energy and renewables replacing carbon-based fuels. With nuclear power, the timescale, the cost, the management of by-products and public acceptability must be addressed. It ought not to be seen as a question of wind power against nuclear power. That is a false dichotomy.

Among the areas in which I found some frustration in developing renewables was the biomass area. Reference has already been made to the committee that I helped set up under Ben Gill—I hope that it will report later this year—to consider how we might overcome some of the regulatory and financial difficulties in getting the biomass market off the ground.

With regard to liquid biomass and biofuels, we already have a solution. We provided it in this House through amendments to the Energy Bill. I do not understand why the Government have not adopted the renewable fuels obligation with regard to transport. After all, transport is our most rapidly growing source of carbon-based emissions, and that issue must be tackled directly. We have already put the ability to do so on the statute book.

There are other frustrations. One is the change in behaviour that we need and the timidity with which government, industry and those who advise them accept interventions to try to change behaviour. Behaviour will not change of itself; we all know that. We know that, despite the increasing price of energy, energy is a pretty low priority for almost every company—big or small—in the land. We also know that we leave the television and the computer on stand-by. Unless there are interventions to ensure that we change our behaviour—they can come only from the state—we will not achieve change. We need fiscal intervention, regulatory intervention, standard setting and some restructuring of the taxation of consumer products.

My experience in government suggests that Her Majesty's Treasury and the regulatory authorities, particularly Ofgem, find it difficult to intervene in a way that is designed to change behaviour. If we do not change behaviour, all the interventions in the world and all the debates, declarations and exhortations from the Prime Minister downwards will not achieve the kind of improvement in energy efficiency that we need.

My final point is that I believe that we have not yet got complete cohesion in government on the matter. I welcome the appointment of Malcolm Wicks. He may be in the wrong department, but we shall settle for that at the moment. I do not normally argue for changes in government structure to achieve a change in government policy, but, in this context, I think that, despite the relatively good co-operation involving Ministers in the energy field, we need a more focused structure, to take in not only the environmental dimension of energy policy but a broader role for Ofgem and new responsibilities for buildings, which produce 50 per cent of our carbon, and for transport. We need a more focused structure for dealing with energy, which is probably the most important aspect of our attempts to tackle climate change.

Photo of The Earl of Selborne The Earl of Selborne Conservative 4:03 pm, 23rd June 2005

My Lords, it is a great privilege to follow the noble Lord, Lord Whitty. I derived some comfort from hearing about his frustrations at the centre of government in dealing with renewable energy policy because I wanted to refer to more or less the same issue, albeit from the grass roots—perhaps I should say, "the wood chip"—and talk about how, at a farm level, one tries to implement a renewable energy policy, when one sometimes faces conflicting pressures, some—not all—of which come from government.

First, I pay tribute to the noble Lord, Lord Oxburgh, and to the right reverend Prelate for giving us the opportunity to speak in this debate. I pay particular tribute to the Select Committee for a report that I read with particular pleasure. It brought together for the first time—in my mind, anyway—some of the practicalities relating to renewable energy and the reasons why we appear to be drifting towards targets that we will not achieve.

The trouble with renewable energy is that it is diffuse. It comes from different directions and does not fit in to the large generation schemes that we are used to. For those who are centrally planning, it must be a nightmare; they cannot predict when it will appear, and they cannot price it sensibly. There is a failure to reconcile the renewable energy sector with the existing infrastructure. If you are going to set targets for renewable energy, you have to look first at the requirements of the renewable energy sector and try to fit in appropriate arrangements. I do not think that anyone has seriously done that.

As the committee points out in the report, the pricing arrangements under the new electricity trading arrangements are simply inappropriate. The balancing charges penalise the small generators, and much—not all—of the renewable generation of electricity will be small.

There are, however, any number of participants in government and in trusts who will encourage feasibility studies, particularly for biomass. You would have thought that, with all that goodwill washing around, it would be fairly easy to set up some sort of commercial operation. However, as the report shows at, I think, box 10—I was privileged to be allowed to give evidence to the committee—I pointed out some of the difficulties that I had had trying to implement a small biomass scheme at farm level.

Reading the report, I was particularly pleased that the Select Committee had visited Woking Borough Council. It was clear to me that, if we are drifting and losing the plot at the national level, that borough—at local level—has followed through on consistent, coherent policies, whatever administration may be in power, taking the low fruit first and moving on to more ambitious schemes and meeting some impressive targets. We are told in Appendix 7—pages 103 and 104—that the CO2 emissions of Woking Borough Council have been reduced by 15 per cent since 1990; that 84 per cent of electrical and thermal energy supplied to council properties is generated from sustainable sources; and that 3.9 per cent of the electrical energy generated is from renewable sources.

That policy started with energy saving and using the money saved to fund further investment in different renewable projects, including combined heat and power plants right in the middle of Woking. Some of your Lordships may have seen them. Many people think that they are nothing less than incinerators and that they should be treated with great caution. They do not realise that they have just parked their car next to one and that there are no noxious toxins coming out of the top. People learn that those are something that they can buy into and they are proud to be part of a successful borough council. They also attract inward investment, an associated matter.

In order to get around the iniquitous new electricity tariff arrangements, Woking Borough Council has gone to considerable cost—again with funds generated from its own projects over the years—to put in a private wire network. It is now selling electricity to houses and properties at something less than the full retail price, as opposed to the wholesale price, which is very different.

I should have liked to start by declaring an interest and saying that, in my modest way, I was doing a small Woking Borough Council exercise on my farm. I have a large packhouse with 2,000 tonnes of refrigerated storage of fruit, with greater capacity, which is a large user of electricity. We have 300 or 400 acres of weald and woodland which used to be coppiced for charcoal and for the coppice products that are now no longer commercially in demand. Nevertheless, wildlife requires or would appreciate the coppicing being restored. Again, there are a number of relatively modest schemes that Defra and the Forestry Authority have promoted to try to encourage people to coppice.

If you are lucky enough to have a contract with a renewable energy supplier, Defra will give you money to plant acres and acres of willow or miscanthus, but that is not at all what wildlife interests would wish—that is monoculture. Miscanthus has no value at all that I can think of. But if you were to restore some of the traditional woodlands—incidentally, south-east England is the most wooded region of England—you would have had a double whammy and succeeded on two fronts. It seems logical that we should have policies that combine nature conservation as well as renewable energy programmes. As I say, however, that proved very difficult and we were prevented by the punitive pricing for those who have to sell at the prices required under the NETA.

However, there is no need for new research—the technology exists. Wood-chip operations exist at the farm scale in Denmark and Holland where you can buy a plant and install it. You can make wood chips from any number of products. We need—I hope that Mr Ben Gill's report addresses it—a much more friendly regulatory approach. We also need an approach where we think small. It is very sensible to think small in renewable energy. It could even be the householder with his own wood-burning plant or solar panel with appropriate metering. They should be allowed to net off the cost of supplying the grid with electricity. The report refers to that. We may not be there yet, but it is something to aim for.

The advantage is not so much in the amount of electricity that will be provided as—as the noble Lord, Lord Whitty, said at the conclusion of his remarks—in the fact that we need to bring people into a commitment. If people think that their own lifestyle can contribute directly to producing renewable energy—and by installing solar panels they can make a modest contribution, inconvenient though it will be to the large electricity generators—it will help to win their hearts and minds, as the right reverend Prelate urges us to do.

Photo of Baroness Sharp of Guildford Baroness Sharp of Guildford Spokesperson in the Lords, Education & Skills 4:11 pm, 23rd June 2005

My Lords, I think that I am the first member of the committee other than the noble Lord, Lord Oxburgh, to speak in this debate. I would like to thank him for his chairmanship of the committee, which was admirable, and I thank the right reverend Prelate the Bishop of Liverpool for coming together with the noble Lord, Lord Oxburgh, to initiate this debate. I would also like to thank the clerk to the committee, Chris Johnson, and our two specialist advisers—Professors Anderson and Elliott. Together, we put together a very powerful report, which has already had quite a considerable influence on government policy.

As all noble Lords who have spoken have made clear, the focus of this report on renewable energy emerged from the White Paper and from the urgency of the agenda for climate change. As the noble Lord, Lord Oxburgh, indicated, if this planet is to survive we cannot go on as we are. We have to cut back on carbon emissions and greenhouse gas emissions.

It is very depressing that at present, if we look at the figures for carbon emissions, this country has been increasing them, rather than decreasing them, over the past few years. Yes, we have met our Kyoto targets, but we met those in the 1990s with the shift from coal to gas. Now, partly because of the very fast rise in transport emissions, total carbon emissions in this country are increasing.

That increase reinforces our call in the report for the development of carbon-free technologies such as wind, tidal and solar power—which admittedly when one counts in the initial capital investment are not totally carbon free, but are so when working—and the carbon-neutral technologies of biomass energy. In the growing of biomass crops, the carbon being emitted is consumed.

While the target priority must lie with cutting carbon emissions, other greenhouse gases are also important. I refer to coal mine methane emissions, which I believe the noble Baroness, Lady Platt, will talk about at greater length. Methane is 64 times more powerful in its emissions than carbon. That indicates why energy efficiency is so important. As the noble Lord, Lord Whitty, pointed out, the more we can cut back on our use of energy, the better. Many savings can be made through greater efficiency. It is the subject of the report the Committee is currently working on and which will be published before the House goes into Recess in July. It develops and carries forward themes in the current report.

An issue that concerned us is the diversity of energy supply. The shift to gas means that we shall be very dependent on imported supplies from distant countries with unstable regimes. So the push towards renewables is urgent and in that regard it is clear that the committee has been critical of the Government not only for not placing enough priority on the push to renewables, but also for putting all their eggs into one basket, that of wind power. We have heard already the speech of the noble Earl, Lord Selborne, about biomass energy, and other noble Lords will talk about tidal and wave power. I also want to pick up on the noble Earl's remarks about microgeneration. It is an important means by which we can move quickly to make carbon emissions savings.

I was pleased to note that the right reverend Prelate picked up on the issue of R&D spend. Yes, to their credit the Government have increased the annual spend on R&D from £40 million to £70 million, but if this issue is of the highest priority, is that really enough? I shall be interested to hear what the Minister has to say.

The title of the report concerns the practicalities of renewable energy. By how much are the Government's targets practical? They are a 2010 target of a 10 per cent renewables contribution to electricity generation and the "aspirational" target of 20 per cent by 2020. We cast particular doubt on the 2010 target. The figures we had at the time showed clearly that in 2003, something like 3 per cent of our electricity was being generated from renewable sources, but half of that percentage came from hydro power and landfill which, under the renewables obligation, are not directly accountable. Only 1.5 per cent came from acknowledged renewables obligation sources.

The figure given by the DTI for 2004–05 is 2.8 per cent. We must give credit for the gains made over the past couple of years and accept that the percentage is 2.8 per cent this year. But only 25 per cent of it comes from wind power. In their response, the Government placed a lot of emphasis on the 50 megawatts of new wind power that they expect to see installed during this year. So if 25 per cent of the percentage comes from wind power, it means that currently wind power makes a contribution of 0.7 per cent. Doubling that by the end of 2005 or the beginning of 2006 would take it to 1.4 per cent. Planning consents already in hand look like more or less doubling the percentage again. Over another two years, by 2008 we will have reached 2.8 per cent. But even if we add in the extra margin from other renewable sources, that is still a very long way off the target. We will have only two years in which somehow to make the leap from a renewables supply of somewhere in the region of 4 to 5 per cent up to that 10 per cent target. In spite of the Government's faith that they will meet the target, there are real doubts about it.

I am glad that the noble Earl, Lord Selborne, mentioned Woking. What is being done there with CHP—a scheme based not on incineration but on gas—with the by-product being electricity—is good work. The electricity is sold to low-income people in the area and is run on a private network. That private network was a limitation. One of the barriers was that there could be only 3,500 subscribers to your private network. When we said that that was silly, and that the scheme should be expanded, the Government stated:

"If the Committee's recommendation were implemented, there would potentially be tens of thousands of domestic consumers on unlicensed distribution networks without regulatory protection and without access to the competitive market".

That is tantamount to saying that private consumers who pay 9.5p per kilowatt hour for their electricity would be pleased to know that they were benefiting from competition and not locked into a single supplier who was charging them 7p per kilowatt hour—which is what Woking is charging its users. Is that promoting competition?

The other limitation is the question of tariffs—that when you generate your own electricity and put it into the grid, you receive the wholesale price of about 2p per kilowatt hour, compared with 9.5p. In Germany, it is the other way round. For every kilowatt that you put into the system, you are paid roughly four times the consumer price. Some of you who have travelled in Germany may have noticed that little windmills are sprouting up on many chimneys for precisely that reason. Some German commentators to whom we spoke felt that some uneconomic investment was taking place.

Nevertheless, there are many technologies which we, as consumers, could invest in now. For example, a mini windmill can generate enough electricity to cope with standby power requirements, such as those of a refrigerator. Similarly, passive solar energy to heat water and solar panels on the top of office buildings to supply air conditioning are used in Woking. All of that represents unexploited potential. It is an area that we should examine in more detail and develop. I should be interested to hear what the Minister has to say about today's announcement that the Government are pushing forward on that front and precisely what they are planning to do.

Photo of Lord Haworth Lord Haworth Labour 4:22 pm, 23rd June 2005

My Lords, in my maiden speech to your Lordships' House in February in the debate on climate change, I expressed the hope that the Government would soon address themselves to restarting the nuclear programme. Some noble Lords found that a bit controversial for a maiden speech, but I had wanted to place that call in the wider context of dealing with the most serious issue facing the planet—namely, global warming. I also said that I would have liked an opportunity to say something about wind power in that context, but the shortage of time meant that I would have to leave it until another occasion. I think that this is that occasion.

Since February, I have been coming up the learning curve. Then, I had been under the misapprehension that the development of renewables would mean their substitution for fossil fuels and other sources of greenhouse gases and that renewables would play a significant role in helping the UK to meet its international obligations under the Kyoto protocols and help us to lead others by example. I believe that most people think something broadly similar. I have to admit that it has only slowly dawned on me—chiefly in preparing for this debate—that that is not quite so.

From a careful look at what is happening, it emerges that any increase in the percentage of electricity generated by renewables will largely be used to replace nuclear power. It will make no difference at all to the sources of climate change, unless one is content to say that it would be even worse if we did not promote those developments. But the situation should be getting better, not simply failing to get worse.

The Science and Technology Committee's report notes that the mix of energy sources for electricity will have changed dramatically by 2020 and provides a description of where present policies will lead us. It would appear from paragraph 9.6 of the report that in 2020 we will have a mix of roughly 60 per cent gas, 15 per cent renewables, 15 per cent coal, with the remainder made up of small contributions from nuclear, oil, pumped hydro and electricity imports. The report points out in the very next paragraph, with massive understatement:

"Meeting the Government's environmental objectives will be made much harder by the retirement over the next two decades of around 20 per cent of our present generating capacity that is carbon free—namely nuclear".

Currently more than 20 per cent of our electricity is generated by nuclear power and considerably less than 5 per cent from renewables, with a growing emphasis on wind, and with the scope for growth in the immediate future almost entirely dependent on wind. The rest of our electricity production—from gas, coal and oil—is contributing big time to global warming. If we wind up, after an ambitious programme of developing renewables over the next 15 years, with more of our electricity generation contributing to global warming, not less, that will be quite perverse. I also think that the public, who are being sold renewables on the basis that they are green, may consider themselves to have been led up the garden path.

I remain in favour of renewables in principle. Who could not be? Their development is to be supported because they are sustainable and conserve rather than deplete the Earth's resources. But I am not in favour of the role in terms of energy mix which they presently seem designed to play. I entirely agree with my noble friend Lord Whitty that renewables and nuclear together should replace the burning of fossil fuels.

In Scotland, there are visible signs of growing opposition to upgrades of the national transmission system, besides the A9 at Drumochter Pass, for example, and further north still at the Dirrie More, the mountain pass taken by the road to Ullapool. "Highlands before Pylons" is the catchy name for the latter protest movement, and this is perhaps a good example on which to focus.

If a massive wind farm is built on the Western Isles, the undersea cable must come ashore somewhere. This is perhaps the weak link in the plan. Huge pylons will be needed to carry the wires to the nearest point of connection with the National Grid.

This electricity generation can bring great benefits to the Western Isles through a community fund which can be used to regenerate and diversify the local economy and have all manner of benefits. But to get the power to where it is needed could—will, on present plans—defile an area of outstanding beauty.

When I retired last year as Secretary of the Parliamentary Labour Party, the MPs had a whip round and collected a substantial sum of money. They bought me a wonderful leaving present, now one of my treasured possessions. It is a big oil painting by one of Scotland's finest artists, James Hawkins, who has his studio at Rhue, just beyond Ullapool. He paints magnificent sceneries. Perhaps his best-known work is the very fine piece depicting the Great Glen; it hangs in Inverness Airport, welcoming visitors to the highlands. My painting is of Sgurr Mor Fannaich from Leckmelm. Leckmelm, on Loch Broom, is well known for its mature woodland garden and is a tourist attraction in its own right.

When I look at my painting, every evening when I am in London, I ask myself if that lovely scene would be enhanced by a series of 50 metre high pylons and their wires marching across the landscape—bringing us renewable electricity, yes, but at a terrible price.

Those who know the highlands will know that one of the most famous viewpoints in Scotland, where every tourist bus that ever visits Wester Ross makes an almost inevitable stop, is just up the glen. It is a superb view—straight down Loch Broom, from just above the also much visited Corrieshalloch Gorge. And this is the way the pylons are coming, to ruin the view.

The report addresses this issue in Chapter 8, using a different example, namely the price to be put upon the loss of landscapes from transmission lines through the Vale of York. Referring to the questions involved, it says:

"Given that the most widely used argument in favour of renewable energy is environmental, they will have to be answered at national level if public concerns are to be addressed".

The next paragraph, paragraph 8.17, is printed in bold. I shall quote it in full:

"'Planning' should not be seen as an obstacle. Planning and co-ordination at every level are in fact the preconditions for the effective development of renewable energy. Planning of this sort means a 'whole systems analysis'. The unresolved tensions within the Government's policies on renewable energy fall far short of this ideal".

In the Government's response, we learn that the DTI has created a dedicated 2010 target team, which,

"has responsibility for delivering the 2010 target and overcoming the major barriers to reaching the target".

These barriers are listed as,

"grid; planning issues; communications; finance and investment as well as looking after business development activities. Each barrier has a project team leader and project plan which details the barriers, and their sub-sets, and activity underway to remove the barriers".

This is certainly a very focused approach. I am in favour of the Government having a policy, and having mechanisms to drive it, but the above approach sounds ominously like a stance which is intended to overcome any opposition, however legitimate.

I would welcome an assurance from the Minister that officials will be encouraged to find ways of having a meaningful dialogue in their quest to overcome obstacles. There might be room for compromise or for alternatives to be considered when it comes to issues such as the routing of transmission lines through sensitive areas.

For the Government's policy on renewables in general and on wind in particular to succeed, they will need public support for both the ends and the means.

Photo of Lord Jenkin of Roding Lord Jenkin of Roding Conservative 4:31 pm, 23rd June 2005

My Lords, I welcome with others the fact that this debate is taking place. It will of its nature be a fairly diverse debate because so many different issues are raised.

I hope that the right reverend Prelate will forgive me that I do not follow his very eloquent speech as he outlined the pressing need to address climate change, but rather concentrate on one or two of the other detailed matters to which the Select Committee drew our attention. I make no excuse for that because, as with so much else—this has emerged from the speeches that we have heard—the devil is often in the detail. Although I may not follow exactly what the noble Lord, Lord Haworth, has said, he has put his finger on one of the details: the problem of the transmission of electric power from renewable generators to customers through the grid.

The noble Lord spoke about the environmental aspect—I had not previously heard "Highlands before Pylons", but I shall treasure it—but I shall look at the other aspect which flows from the nature of wind power; namely, that it is intermittent and will have a progressively more serious impact on the operation of the grid. I shall turn latterly to a second question on that, but I shall come to it in a moment.

The Select Committee dealt very fully with the problem of the intermittent nature of wind power, in chapters 6 and 7 of the report. In paragraph 6.16, it highlighted it as,

"an issue of major importance", and gave proper attention to it.

The problem arises because intermittency inevitably gives rise to uncertainty of supplies. That adds to grid costs because of the need for back-up. In a very trenchant paragraph, in box 13, the committee referred to,

"a law of diminishing returns: the amount of conventional generating capacity that can be displaced by intermittent generating capacity falls proportionately as the absolute amount displaced increases".

There is a generally accepted view that up to 10 per cent of wind penetration can be managed fairly simply without undue difficulty to the operation of the grid. But as the figure goes beyond 10 per cent, the strains on the system become increasingly serious.

I was privileged a few days ago to be briefed by a couple of senior operational managers of the National Grid company. Their message was very clear: they entirely corroborated what the Select Committee had said about the matter—indeed, their evidence may have been the source of it. They pointed me in the direction of Germany, where wind penetration has now reached the figure of 16 per cent. They cited it as an eloquent example of the problems that it causes the operation of the grid. Wind power can sometimes fall by hundreds, or even thousands, of megawatts, in the course of just two or three hours, which requires the immediate mobilisation of fossil fuel generators to meet demand, with consequent major increases in emissions.

But there is the other side of the problem as well, as exemplified by Denmark, to which the managers at the National Grid also drew my attention. If there is a full supply of wind, and the wind is blowing neither too lightly nor too hard, at a time when electricity demand is low the resulting excess has either to be sold across borders or the turbines simply have to be switched off.

In Denmark they have the opportunity to sell it. But what happens? They produce their wind power very expensively—and the Danes have the highest electricity charges in Europe, both to industry and to householders—and when they cannot use it themselves they sell it at a loss across borders to their neighbours in Sweden, Norway and elsewhere. The Danes have naturally enough become pretty cross about that, because what they are effectively doing is not only subsidising their neighbours by selling them cheap electricity but allowing those countries to store up their hydro when they do not need to use it, so that when they have a high demand and no wind, they have hydroelectric power. So it is not surprising to learn that the Danes have stopped building wind farms.

I saw a report recently that was put to the Whinash public inquiry, which said that,

"the problems of imbalances . . . will almost certainly be repeated in the UK".

So what does the Government's response say about that? There are some advantages in having an original and a revised response. Paragraph 119 of the revised response says:

"The Government agrees with the Committee that there is a need to improve our understanding of the technical implications of high levels of wind generation connected to the electricity networks".

They go on to say that they have appointed the Joint Government/Industry Electricity System Issues Steering Group to oversee work by the NGC and others. They hope that that report will come,

"in the next few months".

But the corresponding paragraph in the original response, published in December last year, said that they were expecting that report early in the new year—that is, early in this year, six months ago. We are now told that the report will not come for a few months.

Here we have, as the Select Committee said, perhaps the major issue in the operation of the grid in relation to wind power, and the committee's report seems to have slipped by nearly a year. Why is that? Is it a manageable problem or one which will present us with considerable operational difficulties? I do not find the revised response in the least bit persuasive, and it gives the impression that Ministers do not really seem to have taken on board the seriousness of the issue. I hope that the Minister this evening will give us some more comfort on that matter.

The second point that I wish to raise very briefly is the question of transmission from remote renewable generators. The Minister will recognise that I asked him about that matter at Question Time earlier this month on 13 June. When discussing the Bill Parliament agreed to allow substantial additional subsidy for that transmission, I have to say against the advice of Ofgem. I asked when that would happen. The noble Lord, Lord Haworth, has given us one reason why that is not happening. The Minister gave the following reason on 13 June when he said that,

"one of the important issues with achieving our target for wind power and renewables is that we do not have problems with the upgrade of the transmission lines, particularly from Scotland. Those are now going ahead"— but here is the point—

"but there is obviously the question of where the costs fall".—[Hansard, 13/6/05; col. 1065.]

Here we are a year after the passage of the Act and a year after the new subsidy was agreed but, so far as I can see, none of these lines is being built because there is no agreement regarding where the costs fall. I hope that the Government will give us some comfort on that matter because offshore wind is one of the things that they are really hoping to press. However, if there is no transmission, there will be no offshore generators.

Photo of Lord Methuen Lord Methuen Liberal Democrat 4:41 pm, 23rd June 2005

My Lords, I, too, would like to thank the noble Lord, Lord Oxburgh, for his very capable chairmanship of our committee, and for introducing the debate on the report. I thank the right reverend Prelate for his Motion.

None of us is in any doubt about the reasons for cutting back on emissions due to energy use. I for one read the recent interview with the noble Lord, Lord Oxburgh, in the Guardian newspaper with great interest. It is depressing to note his conclusion that even if we achieve the Government's targets for the reduction of CO2 emissions by 2020, our good efforts are likely to be swamped by the emissions of energy hungry developing nations, particularly India and China, as other speakers have said.

We published our report this time last year. The initial government response was weak and the revised government response is welcome.

I had the privilege of being a member of EU Sub-Committee B when it reported on renewable energy in 1999. On both occasions that we visited Denmark it was interesting to note the change in the attitude of the Danish Government to wind energy. The previous Minister had been a very powerful character in its promulgation but that is not the case with the current government.

The remit of our committee was to look at the practicalities of the Government's programme for renewable energy. There was almost universal disbelief on the part of those we spoke to in our ability to achieve the ambitious targets that the Government had set. The only mature technology capable of meeting those targets is obviously wind power. However, the visit to Woking showed what could be achieved by large-scale use of photovoltaic and other means by a committed public body. It was also interesting to note that at one point there was a major power failure in Woking and Tesco had to shut down for a considerable period at very considerable cost. However, the Woking borough offices and its customers continued to operate quite happily.

As the right reverend Prelate pointed out, energy efficiency, its use and conservation must not be ignored. A recent Written Answer by the Minister to the noble Lord, Lord Dixon-Smith, emphasises the discrepancy between the thermal energy inputs and electrical energy outputs of our power stations. This indicates a thermal efficiency of about 38.7 per cent and a corresponding wastage in excess of 60 per cent.

CHP systems, where practical, can raise the thermal efficiency to more than 70 per cent. Our take-up of CHP in this country is pathetic compared with our European counterparts, and the Government should do much more to encourage CHP schemes in our major urban areas where they are practical.

Regarding our report and the revised government response, I am glad to see that they welcome many of our proposals, and that they have moved to tackle some of the obstacles to the achievement of their targets. The planning regime, the need to enthuse the local populace—perhaps by beneficial pricing due to the lack of transmission costs—and the need to satisfy MoD safety concerns, are critical. I am glad to note in the government response that the MoD has become less dogmatic in its opposition to wind farm schemes.

Large-scale offshore wind farms, such as the committee saw at Horns Rev in Denmark, are an obvious solution, and it is good to note that similar developments are now coming on-line in the UK. It is also welcome to note that the Swansea Bay tidal lagoon system is being more actively considered. R&D funding is vital for the less mature technologies, and I welcome the £500 million to be spent between 2002 and 2008, as the right reverend Prelate mentioned. Will the Minister elaborate on how, and on what technologies, that money might be spent?

I am particularly interested in marine systems for power generation, but as an engineer I am highly sceptical of the long-term viability of reciprocating wave generators in a harsh marine environment. However, I welcome the other initiatives in the marine sphere and the ongoing research into them. I still have concerns with system stability and the position of the distributed network operators with substantial distribution generation at the local level. There must be technical limits, at about 20 per cent penetration of wind power, due to the type of generators used. There is also the requirement to maintain security of supply on occasions in both winter and summer when there is no wind. That has been touched on by other noble Lords.

That implies that for security of supply we must have other reliable base load generation currently filled by our existing coal, gas and oil-fired power stations and the 22 per cent input from the existing nuclear power stations. The progressive closure of all our coal-fired power stations and the closure of all nuclear generation by 2023, except for Sizewell B, will leave us almost totally dependent on oil and gas imports from Russia, the Ukraine, and other states that may not be as politically stable as we are. Not only that, but for Russian gas we shall be at the end of the pipeline, and anyone else on the other end can turn it off and we will get none. Furthermore, we shall be competing in an increasingly competitive marketplace for diminishing supplies at an increasing price, which must in turn substantially raise our generation costs.

For the UK to abandon nuclear electricity generation in that scenario is madness. Renewables can supply only a minor portion of our requirement, and nuclear is the obvious candidate for base load generation. New designs such as the BNFL Westinghouse AP1000 reactor are now ready for exploitation, but I understand that there is a serious risk of the intellectual property rights for that design being lost to the UK and sold to the US, thus losing the benefits of our accumulated design expertise. Will the Minister comment on that?

A balanced energy policy with a diversity of reliable energy sources is essential for the future of our country. Due attention must be paid to energy conservation and efficiency, not only in its domestic and industrial use but also in transport, an area in which we have done much too little.

Photo of Lord Cameron of Dillington Lord Cameron of Dillington Crossbench 4:48 pm, 23rd June 2005

My Lords, any energy debate is bound to cover a wide range of issues, both in saving power and producing it through environmentally beneficial means. I shall focus on one rather narrow, but possibly far-reaching, aspect. I want to draw your Lordships' attention to a form of renewable energy that could play as large a part as wind power, but in a non-intermittent form, while at the same time virtually removing the costly and harmful need for any landfill of waste in this country. That is killing two birds with one stone; or a double-whammy, as the noble Earl, Lord Selborne, would say. Noble Lords might think that is an ambitious proposition. A small company called Compact Power in Avonmouth, in my neck of the woods, is showing the way. For the avoidance of doubt, I do not have any shares or any other connection with the company.

Compact Power has developed and put into commercial operation a world-leading small-scale pyrolysis and gasification plant that is capable of extracting renewable energy from all non-inert wastes except nuclear wastes. The Renewables Obligation Statute allowed for,

"Newer, cleaner technologies such as pyrolysis and gasification to generate electricity that would qualify for ROCs to the proportion of the waste used that was non-fossil fuel derived".

For example, when processing municipal solid waste, about 68 per cent would be "non-fossil fuel derived". Thus 68 per cent of the electrical output would earn ROCs. As noble Lords will be aware, electricity generated by incineration, which has been favoured to reduce our current over-reliance on landfill, does not qualify for ROCs.

The UK produces about 80 million tonnes per annum of non-inert waste, of which about 87 per cent is currently landfilled. The existing commercial Compact Power plant at Avonmouth is a single-module cooker, as it were, that can process about 8,000 tonnes per annum. Compact Power is about to build a new four-module plant at Avonmouth, which will process 32,000 tonnes per annum. Possibly the optimum plant size is eight modules, although the great advantage of the modular format is that you can add or subtract modules to fit local circumstances. An eight-module plant can process 64,000 tonnes per annum and generate four megawatts per hour, of which 68 per cent on average would qualify for ROCs.

The process produces neither dioxins nor toxic fly ash. The waste is reduced to 15 per cent bottom ash, which is safe for use mixed with aggregates and for certain building materials. There would be near zero landfill, which would greatly reduce the amount of landfill-generated methane, which is deemed to be 21 times more harmful than CO2.

A plant of 64,000 tonnes per annum would be ideal for about 100,000 people—a typical district—after the extraction of the maximum amount of waste that could be recycled or composted. With a population of 60 million, the UK could build 600 district level pyrolysis and gasification plants that would generate 2.4 gigawatts per hour, which is about 6.7 per cent of the UK's average electricity demand. However, a recent report by the Institution of Civil Engineers and the Renewable Power Association shows that the potential electrical yield from those wastes, if processed at the highest yield rate, could account for as much as 17 per cent of total electricity consumption by 2020. They admit, however, that meeting those highest yield rates is an unlikely reality even by 2020. Nevertheless, 10 per cent of our electrical needs would be worth it, especially if we also meet our EU landfill diversion directive obligations and can thus trade our surplus allowances to other member states.

Furthermore, those community-level micro power plants would reduce dramatically the amount of electricity lost in transmission from remote sources of power. That has already been mentioned as a problem. The losses are currently estimated to be about 10 per cent per 100 miles. The plants would also reduce waste haulage; 10 per cent of all trucks on the roads in the EU currently haul waste. Therefore, congestion and vehicle emissions would be helped.

The district-level plants are considerably smaller than the mass-burn incinerators, which typically require an 80-metre stack and gravity feed. The district-level plants of the sort that I advocate would sit in a building no larger than a double indoor tennis court, with a small aluminium stack a little more than five metres above the roofline. Construction and commissioning time is 15 months. That compares to a three-year construction time for a large incinerator, which would also take longer in the planning process. The small size of the district-level plants will enable them to be collocated with other businesses in, say, a business park, where best use can also be made of the secondary heat from the processes. Unfortunately, there are still no renewable heat certificates available.

Meanwhile, the emissions are a mere 10 to 15 per cent of the new tougher EU waste incineration permissible levels, so the plants make good neighbours. Also, adopting a district-level integrated waste management strategy would achieve the Government's proximity principle better than a policy based on larger incinerators, with their bigger catchment areas.

There is a question about joined-up government here. It is a problem that the DTI handles energy but that Defra is responsible for waste. Even within Defra, there is confusion as the former MAFF part of Defra handles farm waste and has confused biomass for energy crops in the farm slurries, whereas biomass is the biodegradable portion of any type of waste. These compact power plants can take most forms of waste, including old tyres, sewage sludge and clinical and hazardous waste such as half-used pots of paint, used oil and so forth. In rural districts, they could be co-fired by energy crops grown by local farmers—again minimising travel distances. It is worth noting that the normally excessive costs of running power-producing plants purely for such farmers are offset or subsidised by the money charged for handling urban and industrial wastes. I might add that the processes involved avoid the technical problems encountered by the ARBRE plant at Eggborough.

I believe that renewable energy from waste could play as large a part as wind power in reducing the UK's dependence on fossil fuel, while having the advantage of being non-intermittent and virtually removing the need for costly and environmentally damaging landfill in the UK.

We undoubtedly need a mix of renewable energy, ideally with as much as possible that is not-intermittent. But as a proven technology, given the political will, the network of district level plants, which I have described, could be in place by 2010, while other renewable technologies, such as wave and tidal, are developed for the 2010 to 2020 period.

Photo of Baroness Platt of Writtle Baroness Platt of Writtle Conservative 4:56 pm, 23rd June 2005

My Lords, our committee was very disappointed with the Government's first response to our report. Since then, we have received a much better response from the new Minister for energy.

On a number of matters, we are in agreement in principle with the Government. The threat of climate change is a real one and we need to reduce our consumption of fossil fuels, which leads to greater production of carbon dioxide in the upper atmosphere and therefore the development of global warming.

The UK has a responsibility in this field, as does the EU, but we are aware that the rest of the world, especially India and China, must also reduce their production of CO2. In reducing our production, we must be careful of our UK industry, with its emphasis on economy in this field, or we could see overall increases in global warming contributed by other countries which, for instance, are still using dirty coal.

The associated debate introduced by the right reverend Prelate the Bishop of Liverpool is also taking place now, but I will, if he will forgive me, reserve my contribution until our report has been produced soon. Our overriding recommendation is for one Minister to be responsible for security of supply. The Government, in their Energy White Paper, put forward four aims which the House of Commons Select Committee criticised strongly. The Government accept that there is tension between these goals and have now made Malcolm Wicks responsible for energy issues, with a particular focus on sustainability. The responsibility for security of supply is still shared with Ofgem.

The recent blackouts in New York, California and Italy illustrate the serious nature of these effects on industrialist societies. I hope that security of supply will rise on the Government's agenda and that the Minister will have final responsibility for ensuring it. The day the lights go out in people's homes, together with their domestic machinery, when industry is disastrously affected, hospitals put out of action and electrically operated trains stopped is too dreadful to contemplate. Someone has to carry the can.

The committee welcomed the use of wind power as a renewable source, but at the same time recognised that there are several snags in its use. In the first place, it is intermittent, but, unlike tidal power which occurs regularly twice a day, wind power is both intermittent and unpredictable. In January, it would be possible to experience an anticyclone lasting several days when there would be very little wind power available anywhere in the UK at a critical cold time. The vital point, in conjunction with reliance on wind power, is to have efficient, firm and available standby power.

Our North Sea fields of oil and gas are rapidly diminishing and in the foreseeable future we shall be a net importer of fossil fuels. Gas will have to be pumped thousands of miles across several countries, and could be subject to sabotage. Of course, it will also produce CO2.

I am glad that the potential use of nuclear power is rising on the agenda. The Government have appointed CoRWM to report next summer on the safe storage of nuclear waste. That waste has to be dealt with in any case. It will not go away and needs an all-party agreement on its permanent, safe storage, probably deep underground, for several thousands of years. In the mean time, nuclear power does not produce CO2.

We have a good record of safety in this country in our nuclear power stations. We must plan ahead for future use of nuclear power and continue to develop our professional skills in that area. We cannot afford to lose them. If we do not take action ourselves, we shall probably import nuclear power from France, where 70 per cent of the country's power comes from that source. It certainly needs to be exempt from the climate change levy here.

Wind farms, of course, are controversial, as they are likely to be placed in beautiful environments which people will not want ruined. They will need roadways, lorries and cranes for their construction, both onshore and offshore and that consumes energy. Most of the sites are in the north of our country, while the greater use of electricity is in the south, so the distribution system will need strengthening again across open countryside for the electricity to be delivered safely to its users, which will probably also be controversial locally.

All this lends emphasis to the need for diversity, both technically and geographically, in renewables. I am glad that the Government are now taking much more interest in tidal power and will look again at the provision of a tidal lagoon at Swansea. If that were successful as a demonstration project, other lagoons could be constructed elsewhere. The provision of the £50 million Marine Renewables Deployment Fund will help.

We recommend using coalmine methane rather than allowing it to leak into the upper atmosphere as a bad greenhouse gas. The Government have now exempted it from the climate change levy and in the future I hope it will be exempt from phase two of the European Union Emissions Trading Scheme. They are also considering the case for extending eligibility to energy from waste projects. Those polices will help to promote renewable diversity.

We recommended the use of biomass, accepting that it is heavy and needs to be available nearer to the power stations where it is used, otherwise energy is used in its transport. The Government have responded more favourably to that idea. They say applications have increased as a result. They are also accepting the use of those fuels to create heat as well as electricity, which is another vital point which should encourage the use of community heat and power by local authorities in new developments.

Solar power in Britain can be expensive, but there is no doubt that its application to navigational aids and installations such as parking meters, bus shelters and street lighting is valuable where there are allied savings in maintenance of fuel supply. We welcome research on energy storage, but as the Renewable Energy Foundation says it is never likely to be capable of storage on an industrial scale.

Finally, we welcome the Clear Skies £10 million DTI-funded initiative to enable local authorities and schools and so on to benefit locally from energy saving projects—another of our recommendations. Schoolchildren coming home and turning lights off to save energy can set habits for present and future generations. Personal benefit is an excellent encouragement; the carrot is better than the stick.

A lot of people in this country do not appreciate the vital need for economy in the use of power and the elimination of its waste. No one can relax his efforts. I underline that our emphasis in our report is on practicalities. That means action by the Government in all these fields, not just words.

Photo of Lord Chorley Lord Chorley Crossbench 5:05 pm, 23rd June 2005

My Lords, I sympathise with my noble friend Lord Oxburgh and other noble Lords in deploring the delay in discussing his committee's admirable and practical report. A further six months elapsed before the Government's rather complacent response was produced. I do not know whether it is a record that there had to be another response last Monday.

I propose to comment briefly on two aspects of the wind energy issue. That is a rather narrow front, but, as far as I can see, it is the only show in town for the Government, at least for the next 10 years. My first point arises from the issue of reliability of supply and the interesting lessons the committee learnt from its visit to Denmark and from the subsequent studies by Mr Sharman—who is referred to by the committee—on the Nordic-German interconnection system. To me, they were a real eye-opener. I fear that I must restrict myself to one aspect of them only, and I shall touch on the interesting points made by the noble Lord, Lord Jenkin of Roding, in connection with intermittency and reliability.

Much is made of the problem of back-up. However, I am sure that the more interesting issue is not the probability of no wind or too much wind, but the situation that arises when the wind turbines have to be curtailed because of lack of demand. The noble Lord, Lord Jenkin, referred to this. The real difficulty of balancing the system under any of these circumstances when the wind capacity is greater than 10 per cent of the total system capacity is well known. It was referred to in the report and by the noble Lord, Lord Jenkin.

Perhaps less appreciated is the effect on load factors. The committee quotes a 21 per cent load factor for Denmark and the same source, Mr Hugh Sharman, has arrived at a figure of 16 per cent for Germany in 2003. As I understand it, that is for the interconnected system of Denmark, Germany, Sweden and Norway, which is quite a big system. Nevertheless, the committee thought that 30 per cent would be a fair assumption for the UK. They may be right, but there are all sorts of factors involved. However, 30 per cent is surely a pretty low load factor by any standard for any capital-intensive plant, and it is difficult to think of plant that is much more capital-intensive than a modern wind turbine.

But that is not the real point. Surely, the sole rationale for this expensive electricity is CO2 avoidance? Therefore, as load factors fall to 30 per cent or below the CO2 saving falls pari passu and the CO2 rationale goes out of the window, as it is reduced. Furthermore, the profitability of the wind farms will also be diminished and there will be a much higher degree of uncertainty. That may well affect future contractors, and I was interested in what the noble Lord, Lord Oxburgh, had to say about it in the medium-term future.

Presumably that risk factor will be all the greater for offshore because of the greater investment required. And note that these risks do not arise from there being no wind or too much wind, but from the conflicting interplay between demand and supply, minute by minute, which results in curtailment. There are huge diurnal variations in demand that simply have to be balanced—coped with. When you have a lot of wind capacity on the system, the number of occasions when the wind energy output has to be curtailed obviously increases; at some point they will increase dramatically.

I turn to my second topic, the landscape and planning issues. Here I find myself very much in agreement with the noble Lord, Lord Haworth. I was pleased to note that in paragraph 8.15 the committee agreed with the evidence submitted by the CPRE that,

"policy on renewables development should . . . sit within a wider framework of land-use policy at all levels of strategic planning".

I am sure the committee is right when at paragraph 8.19 it states:

"We do not believe that urging developers to engage in"— to quote PPS22—

"'active consultation and discussion' will in itself secure public support".

I do not think that the committee realises the real horror and the fierce objection of local communities to these huge industrial monsters on their doorstep. The new generation of these behemoths will be bigger than St Paul's and will almost reach the same height as the top of the spire of Salisbury Cathedral. As we all know, that can be seen for miles in all directions.

It is not just a matter of local objections. Many of these new or proposed wind farms are in fine, open, upland landscapes. Again, the noble Lord, Lord Haworth, referred vividly to this in regard to the Highlands. The new generation turbines simply dwarf these landscapes. Little consideration has been given to the environmental effect of the massive road works that are nowadays necessary or—again, as the noble Lord, Lord Haworth, said—the grid systems which have to connect them. Anyone who has been, for example, to the Cefn Croes wind farm in north Wales will know exactly what I mean on that point about the road works.

This is not just Nimbyism on the part of local communities. The danger to the enjoyment of these wild landscapes concerns everyone. It is a national concern. Nor is it just a technical question of designated landscapes, that is to say, national parks, AONBs, SSSIs and so on.

It is a matter of concern that the admirable concept of buffer zones in the old PPG22 has been emasculated by the new version in PPS22. The goalposts have been moved with a vengeance. That is all justified in the name of sustainable development. Yet protecting fine landscape is just as much within the Government's own definition of sustainable development in PPS1 as is producing clean energy.

There are, moreover, wider and more direct consequences—the effect on tourism and the local economies. Many wind farm sites lie on the edges of national parks. Other fine landscapes are involved. Tourism is increasingly becoming the most important economic activity. The sight of these massive structures can hardly be said to enhance the appeal of the attraction for open-air activity of all sorts—the walkers, the climbers, the boaters or even just the ordinary motorist—in these areas. If you lose the tourists you lose a lot of local GDP. That is against a background of declining agricultural prosperity. These upland areas are weak economies and we should not put them further at risk.

If we are not careful we will put at risk the livelihoods of the people who live in these fragile rural economies. And we will do so to achieve a distinctly modest abatement of CO2 emissions, achieved only at a considerable cost to electricity customers. Can we not be a little more holistic and a little more joined up?

Photo of Lord Davies of Oldham Lord Davies of Oldham Deputy Chief Whip (House of Lords), HM Household, Captain of the Queen's Bodyguard of the Yeomen of the Guard (HM Household) (Deputy Chief Whip, House of Lords)

My Lords, I am sorry to intervene, but we must conclude our speeches as soon as eight minutes shows on the clock. We are five minutes overdue at present; that is reducing the time in which the Minister can reply.

Photo of Lord Winston Lord Winston Labour 5:15 pm, 23rd June 2005

My Lords, I was sorry to hear that intervention from the Front Bench, as this is possibly one of the most important debates that we could have at this time. It is really rather shocking that it has been limited to three hours, when so many experts have spent the best part of a year considering an issue facing not only our society but that of the world.

I am grateful to the noble Lord, Lord Oxburgh, for his excellent chairmanship of the committee, and for the expert advice of Professor Dennis Anderson and Dr Chris Elliot, who were immensely helpful during the preparation and maintenance of our inquiry. I also want to draw attention to the Select Committee's report of 2000, chaired by the noble Lord, Lord Jenkin, Science and Society. He drew attention to something of extreme importance to our deliberation. That is that we face a growing suspicion of technology in Britain. The 1999–2000 report was effectively stimulated by the crisis over CJD, but since then we have had the triple vaccine, problems over nuclear waste—which are not being effectively answered by government—foot and mouth disease and many other scientific issues.

Among the most important scientific issue ever to face our society is global warming. In fact, at a science conference for the public just a week ago in Cheltenham—the science festival—the government's chief adviser, Sir David King, suggested that it was the most important crisis facing the world today. It was interesting to see how many of his audience, all lay people, agreed with him. I am very glad that the noble Lord, Lord Chorley, and my noble friend Lord Haworth have already drawn attention to this problem, but I want to draw attention to only one paragraph in our report. We recommend to the Government themselves to initiate and promote full and public dialogue both at national and local levels on the advantages and problems of renewable energy.

Frankly, the government response to that small but essential paragraph is lamentably poor. The DTI refers us to its website, "It's Only Natural", at www.dti.gov.uk/renewables. I suspect that few people in the United Kingdom would bother to dial up that website, to which I shall return in a second.

People now generally agree that global warming is a problem—incidentally, at the Cheltenham science festival, on a vote, 92 per cent of the audience recognised it as being very important, probably as important as any other scientific issue facing us—and that was before Sir David King spoke and that non-scientific audience had had a chance to hear what he had to say. It was also interesting that more than 50 per cent of that audience—as I have seen at other science festivals—supported nuclear power.

By comparison, almost 80 per cent—as the Government have reported from the result of their MORI poll—are in favour of wind power. But once deliberation went to the understanding of wind power, it was clear that few members of the public have a clue what are likely to be its real disadvantages and limitations, as we have heard so eloquently described this afternoon.

My noble friend Lord Whitty, in his brave speech, if I may say so, said something very important. He said that behaviour will not change of itself. He called for more regulation, for fiscal methods, market changes and so on, all of which I think are absolutely correct if we are to have better energy efficiency and use of power and some way out of the morass that we face.

However, for that to be accepted, we must also have public engagement. As far as I can understand it, the Government's idea of public engagement is a kind of loose communication typified by the website. The website features four areas of public news. In the "events" section, it draws attention to conferences; trade promotion service events; the Regional Heartlands pilot tour; and the renewable energy science quiz. The website mentions, I think, five events—one in London, one in Aberdeen this year, one in Paris, one in Germany and two in China. In the trade promotion events section, which will be of limited interest to the public anyway, it lists one in England, one in Aberdeen, two in China, one in France, one in New York, one in Malaysia and one in Toronto. When you click on "Regional Heartlands Pilot Tour", the website tells you:

"The DTI renewable energy tour is now over. Please check this page regularly for further information".

That message also applies to the renewable energy quiz science venue tour.

I am afraid that we are not taking public engagement seriously, and that is a good example. In any case, engagement does not mean just simple education by communication; it means listening to the response of the public. It is not a cheap endeavour; it requires expertise. At present, we are not having any dialogue. We are having very limited communication and, above all, the Government have taken no steps, as far as I can see, to measure the impact of what they are doing in public education.

We need to tackle the issue in the schools. This year, I have given talks in, I think, 18 or 20 schools to pupils of all ages—from primary school to A-level—so I think that I know something about what I am saying about science understanding. It is clear that children learning from the national curriculum have no concept of the disaster that might face them in two or three decades' time. That is our responsibility, and it is what the Government must focus on and come to terms with, as they speak to and listen to the public.

Photo of Lord Dixon-Smith Lord Dixon-Smith Spokespersons In the Lords, Environment, Food & Rural Affairs 5:22 pm, 23rd June 2005

My Lords, I join other noble Lords in thanking the noble Lord, Lord Oxburgh, and the right reverend Prelate for initiating this debate. Energy policy, if it is driven by anything nowadays, must be driven by sheer necessity, if we wish to do anything about climate change. It was a particular pleasure this afternoon to hear the noble Lord, Lord Whitty, with whom I have argued on so many occasions, and to find myself, for once, in wholehearted agreement with him.

We already have a deep problem in this country. We have moral pretensions to lead others on this issue. I would not have a problem with that, provided that I felt that we were genuinely leading. The awful truth is that, only two days ago, a press release from the European Environment Agency showed that carbon dioxide emissions increased throughout Europe in 2003 and that the largest contributor to that was the United Kingdom. We cannot hold our head high in the international forum, if that is the situation.

I hope that the noble Lord, Lord Oxburgh, will forgive me if I concentrate my remarks on the right reverend Prelate's proposition. I have had the privilege of serving on the Science and Technology Select Committee; the committee members develop an expertise that I have no pretensions to keep up with. However, there is congruence.

The first point that I want to make concerns an installation called the South East London Combined Heat and Power plant. It is a state-of-the-art installation created 10 or 12 years ago. All the planning obstacles were overcome to provide an installation that would incinerate waste and provide electricity and provide heat to the houses with which it was surrounded. It was a remarkable planning achievement.

The plant has worked very effectively. Waste has been disposed of and electricity has gone into the grid. But not one single house has received any warmth. There was no agreement between the site owners and the local authority on how that difficulty should be overcome and who would be responsible for plumbing the heat round the area. Unfortunately, there was no regulatory system to give any encouragement or inducement and there was no financial inducement to bring it about. That is a scandal. I was amused on speaking to someone at lunch today. He lived close to the site of the old Battersea power station and his apartment was still plumbed to receive heat. Unfortunately, there is no longer a power station there to provide it.

I turn to a different scandal in which we all, in a sense, share the blame. The noble Lord, Lord Methuen, has remarked on my recent Written Question to the noble Lord, Lord Sainsbury, and the Government about heat waste from power stations. I asked how much heat was dispersed to the atmosphere. It is worth reading out the reply:

"For the UK as a whole, in 2003 electricity generators' fuel inputs . . . totalled 86.66 million tonnes of oil equivalent, which is . . . 1031.1 TWh".

One terawatt hour equals one billion kilowatts, which means that we add nine zeroes to the positive digits. It continues:

"For the same period, total generation . . . production less pumped storage . . . was 398.8 TWh. From this it may be inferred that 632.3 TWh [of energy] . . . was used in the generating process".—[Hansard, 20/6/05; col. WA 152.]

Now there is a question of exactly how much of that was the generating process and how much was waste heat. My guess is that it all escaped as waste heat.

What does that really mean? Who understands what a terawatt hour is? It means that when I switch a one kilowatt heater on to warm a room in my house, I pay for the electricity generating industry to use another one and a half kilowatt hours of power in order that I receive my one. When I think about that I find it very difficult to think that we are running an efficient system and, in the modern context, running an ethically sensible system.

I have to accept that there is not much one can do about that. We are dealing with a history where all of the power stations have been put in the most remote parts of the country. Although heat can be moved about, it cannot be moved that far. Of course, there could be a response. The Government could say clearly that in all future planning matters, energy will be an overriding factor in planning decisions. In particular, that ought to be the case for electric generating plant. It gels with paragraph 3.22 of the committee's report, which states:

"A further consideration, strictly speaking outside the scope of this Report, is the fact that CHP generators allow biomass, or for that matter any combustible fuel, to be used more efficiently, producing overall energy efficiency of around 80 per cent, rather than the efficiency of generating electricity alone, which is typically between 30 and 40 per cent".

The fact is that when things need to change, the greatest obstacle is past practice and, more importantly, past investment. I have to accept that there is not much that can be done in a hurry about these matters. But something has to be done. I have to say to the noble Lord, Lord Haworth, who expressed concern about the Highlands, that I have considerable doubts about the benefit of generating electricity in the outer isles to supply London, as it would involve huge transmission costs and losses. We must radically review our approach to electricity generation.

I have an aspiration different from the Government's target of a 60 per cent reduction in 1990s carbon emission levels by 2050. My aspiration is that there should be zero mineral hydrocarbons by 2050. I know that I will not live to see it, but it should be our target if we are to behave responsibly and get global warming under control. Anything less will not achieve that goal.

Photo of Lord Tombs Lord Tombs Crossbench 5:30 pm, 23rd June 2005

My Lords, I want to concentrate today on one simple question: why do we need renewable energy? The answer seems obvious: it is because of the fears of global warming and resultant climate change, and also, in government eyes at least, because of our Kyoto commitments.

But now the question begins to get more complicated. Perhaps we should first ask why our national efforts are concentrated on wind power, demanding huge subsidies met by the electricity consumer alone, despite the fact that replacement of fossil fuels by renewable sources is a national policy. No measures are proposed to apply a levy to gas or transport users to enable their fuels to be replaced or even used more efficiently. How can that be, given that transport is the most profligate producer of CO2 and that gas is a direct competitor of electricity in some fields?

The answer is, I think, both simple and discreditable. It arises from the fact that wind, the most readily available renewable energy source, finds its outlet through electricity and so can be easily promoted through electricity regulation. For the Government, that provides a very convenient and rewarding source of funds not subject to Treasury scrutiny—a degree of freedom never previously experienced by spending departments, and an unforeseen and unfortunate consequence of the privatisation of the electricity industry.

As a result, the renewable energy effort is very incomplete, despite the fact that some government resources are available for development projects. Those projects, many of them familiar to us for several decades, are a long way from commercial exploitation and will certainly prove very expensive.

But since wind is the only practical game in town at present—in the Government's eyes at least—let us dwell for a moment on its economic situation. The Government's own estimate is that the subsidy, not the cost, of wind power until 2020 will be some £30 billion. The fact that such a sum can be spent in that way stems in part from the lack of Treasury oversight but perhaps more from the freedom of multiple departmental committees to reach consensus conclusions in what might be generously described as a policy vacuum with no effective ministerial leadership.

We are all familiar with the description of a camel as a horse designed by a committee. Given the plethora of committees involved in renewable energy, one might expect their outcome to be a white elephant, or perhaps a herd of white elephants. In that connection, and in an effort to put the wind subsidy of £30 billion in more accessible terms, let me point out that that sum would provide 40 Millennium Domes or 1,200 brand-new city academies.

Diversion of resources on that scale can only realistically render the UK less competitive with its overseas competitors. We are all aware of the development plans and potential of, for example, India and China, to say nothing of established industrialised countries in Europe and America.

We are unique among those countries in our efforts to restrict CO2 emissions and there is no reason to expect that our approach will be mirrored by others. Are we then involved in a gigantic quixotic gesture without regard to our international competitive position? If so, then let us at least acknowledge that we are prepared to sacrifice our economy in a way that will have a minimal effect on the world's problem—a quixotic gesture indeed.

An approach that would simultaneously address the problems of climate change and international competitiveness would be the acceptance of a renewed nuclear power programme. Our present programme, which has served us safely and well, is nearing the end of its commercial life, with a resulting inevitable increase in CO2 emissions exceeding the promise of the renewable energy aspirations. We need leadership to promote the only available solution to the need for CO2 reduction at an affordable cost. Let me say—I have said it before—that a nuclear programme to save the same amount of CO2 as that hoped for from wind generators would cost in total less than half the subsidy envisaged for wind generation.

What kind of fantasy land are we living in? I know the Government will say that the PIU report of 1992 did not conclude that nuclear power was cheaper than wind power. I have read that report and I found it astonishingly superficial and na-ve. There are authoritative analyses of comparative costs available world-wide which deserve—but do not receive—serious and professional evaluation. Not least of those reports is that of the Royal Academy of Engineering last year.

There is a need for a more open-minded approach in government to this problem and I welcome the rumoured intention to revisit the policy which has led to the exclusion of the essential contribution of nuclear power, ineffectively disguised by the claim that the option is "being kept open"—those magic words. The actions of government over the past eight years have been of neglect, delay and downright hostility, all of which must be brought to an end. The problem is much too serious to be decided by ill-informed prejudice. I claim some experience of this subject and I plead for a return to the leadership which any government owes to the nation on such issues.

I fear that the Minister will attempt to brush aside the points I have made, but I ask him at least to drop his customary references to "market forces", which are nullified in practice by government intervention and bias. What we have is, at best, a highly directed market designed to promote an irrational policy. This cannot go on.

Photo of Lord Moynihan Lord Moynihan Conservative 5:37 pm, 23rd June 2005

My Lords, as a former Minister of Energy in two Conservative governments, with the honour of being the first chairman of the Government's Renewable Energy Advisory Group, I worked with a strong team of officials to launch the first major policy by a British Government to support the development of renewable energy technology; namely, the non-fossil fuel obligation.

As to declaring my interests, I am a patron of the British Wind Energy Association and a director of Clipper Windpower plc—a company which, for the record, has neither developed wind farms in the UK nor sold turbines into the UK market. I am also a director of the Rowan Drilling Group of Companies.

I am a long-standing supporter of government policies geared to support renewable energy and a lifelong believer in the importance of cleaner energy sources, from the expansion of natural gas in contrast to oil and coal-fired power generation to the development of policies to promote low-cost renewable energy technology. I am also a proponent of new build nuclear plants once the issues of cost, decommissioning and safe waste disposal are satisfactorily resolved.

However, let us be under no illusion. New build nuclear will at best come on stream between five and 10 years from now and new build nuclear is irrelevant to the immediate contribution renewable energy can make to our supply base. The debate between nuclear and renewable is, as the noble Lord, Lord Whitty, stated, redundant in the context of our 2010 energy goals. We will, however, need both in the long-term future energy supply base.

The current supply base also demands attention. It will become increasingly over-exposed, as the noble Baroness, Lady Sharp, stated, to imported natural gas, an interconnector which can and does flow in both directions; to a European meteorological pattern which, on the whole, has bitterly cold spells on either side of the Channel simultaneously; and to an historic paucity of political priority given to the Norwegian dimension of our energy needs. With no gas storage of any significance and a desperately tight market, we can only pray that the next two winters, before significant new build LNG is landed at high cost into the UK, will be bereft of prolonged cold spells which will lead to brown outs. Such is the underestimated severity of the energy crisis we face. The immediate outlook is bleak, serious and demands high-level government preparation today.

The report from the Science and Technology Committee which is being debated today is essential reading for all who share my concern that it is incumbent on government to recognise the vital importance of renewable energy to ensure security of energy supplies through diversity of supply. I congratulate the noble Lord, Lord Oxburgh, and his committee on their work—for their clarity, precision and the academic rigour of their report.

The political dimension under consideration is clear and international in scope. International agreement is needed for coherent regulatory and policy frameworks to support market development, including removing barriers, the concept of internalising external costs for all energy sources and allowing fair competition. Governments must also tackle subsidies to conventional energy sources that are distorting many existing energy markets.

Let me attempt to focus on a number of issues raised in the context of wind energy, rightly recognised by your Lordships as one of the principal technologies capable of providing a solution to our national renewable energy obligations—not above 10 per cent, not in low wind-speed countries such as Germany, not with 20 per cent, 22.5 per cent, 25 per cent load factors, but here in the United Kingdom. Through public awareness programmes and education, we need to dispel myths which for too long have taken their place at the high table of misinformation.

One such issue which touches the morning paper nerve as I read the national press, is the much publicised question of the causes of bird fatalities. In 2002, Erickson et al wrote a study in the United States entitled Summary of anthropogenic causes of bird mortality. Out of every 10,000 premature bird fatalities, more than 5,500 die as a direct cause of the built environment—buildings and windows. Some 800 deaths are attributable to high-tension power lines, 700 to vehicles and less than one in 10,000 to wind turbines. More than 1,000 are due to the activities of the domestic cat. As strong a proponent as I am of bird life, it may be a little unwise of me to return home tonight and suggest to my children a policy advocating the removal of the family cat.

While the onshore wind power market is expected to demonstrate substantial growth in the near term, my personal view is that the future for wind energy does not lie principally onshore. It is in the offshore market that the Government can and should take a global lead. It is offshore where consistent winds are found. It is offshore where the legitimate concerns of visual intrusion are minimised.

The contribution of wind energy in the marine environment is far reaching. Just three 2.5 megawatt machines over a 30-year certified lifetime would generate sufficient electricity to substitute 1 million barrels of oil equivalent for power generation. Some 75 machines on the horizon would equate to a substantial oil discovery in the North Sea, with massive environmental savings.

For me, what lies at the heart of the report is the joint recognition by the Government and the committee that continuing to reduce the costs of those technologies which are closest to market is of paramount importance. The challenge now, as it has been for 10 years, is technological and commercially driven. It is to drive down further the cost of energy; to design low wind-speed turbines which can operate commercially in lower wind-speed areas; to increase exponentially the geographical capture of the wind resource through a new generation of turbine.

There are many who believe that scaling mechanical items in wind turbine design has reached design limits; that once you scale up from a 1.5 megawatt machine, the cost curve will increase. In recent years, there have been few technological breakthroughs in the industry. Companies have, not unwisely, followed the alternative route and scaled up to achieve improved margins and profitability. But to tackle the offshore challenge and build turbines in the 4.5 to 7 megawatt range and higher, the industry will need to address the all-pervasive challenge of low rpm and high torque putting extreme structural stress on the gearbox and bearings. Efficiency, reliability and durability will be the hallmarks of the next generation of machines capable of reducing the cost of energy. With two thirds of the projected growth of annual European wind power deployment predicted to come from offshore over the next five or more years, the Government's focus should be on continued co-operation with the industry—not just to marinise land-based turbines but to roll out a new generation of fit-for-purpose, low cost of energy marine wind turbines.

The DTI's technology programme reaffirms the commitment to support businesses investing in new and emerging technologies. That is welcome. Offshore wind turbines appear to fit this programme well, but were, sadly, omitted as being a priority by the Technology Strategy Board, and I would welcome the Government revisiting this omission.

It is my belief that the UK is best suited to lead the offshore wind technology challenge world wide. The Government start from a position of being genuinely committed to the challenge. The senior civil servants working for Joan MacNaughton number among the most respected in the sector world wide. Our R&D support is being strengthened. We have a legacy of proven expertise in the oil and gas supply and service sector, and of supporting a high UK content in offshore wind technology. When I was Minister for Energy in 1990, a typical onshore wind turbine would generate electricity at a cost in excess of 7p per kilowatt hour, assuming a 20-year life, 7.5 metres-per-second wind speed at hub height, and a 15 per cent required rate of return. Now the sector is capable of operating at 3.5p/kWh onshore. To see that sort of technological and commercial development, Exxon would indeed be proud.

Photo of Baroness Miller of Chilthorne Domer Baroness Miller of Chilthorne Domer Spokesperson in the Lords, Environment, Food & Rural Affairs 5:45 pm, 23rd June 2005

My Lords, it has been enormously interesting to hear a description of a possible framework for a future to which Britain could look with enthusiasm. But we have heard also a great deal about the currently enormous waste in the energy sector. Those were the two themes that ran through the contributions this afternoon.

It is a privilege for me to be able to take part in a debate to which so many eminent contributions were made, not least the opening contributions of the noble Lord, Lord Oxburgh, and the right reverend Prelate the Bishop of Liverpool. I was struck by the great emphasis that both placed on the urgent necessity to create the right framework for large-scale investment in our energy future, and not only because it would be good for Britain. I believe that all the captains of British industry agree on that. In May, there was a very interesting programme on the BBC about the possibility of the UK missing the Kyoto target. It well made the point that Britain could become a world leader in low-carbon technology if the Government supported long-term policies to combat climate change. We could have exportable technologies that would be very good for our balance of payments and technology base.

The right reverend Prelate the Bishop of Liverpool also painted a good picture of why pursuing this route would be not only in our own interests but, more importantly, in those of the world. The impact of climate change will be felt not only by us, but, to a much greater degree, by the world's poorest countries, where it will be unimaginable.

I was very heartened to hear in advance of this debate a report from the US on the Senate's debate on climate change, led by Senators McCain and Lieberman. They initiated it in an effort to change opinion, both in the US Senate and in the US generally. The change of heart that is beginning to take place in the Senate, led by those two Senators in particular, is extremely encouraging. It is a very good base on which to build as we move into the G8 summit. I hope that the Prime Minister will be able to build on it as well. So many positive comments were made in that debate.

Also in advance of this debate, I was pleased to hear that Malcolm Wicks, Minister with responsibility for energy, is launching a consultation on micro generation and its place in the UK's energy future. My noble friend Lord Ezra has for years promoted the idea of micro generation and quite rightly so.

All parties in the House seemed to share a sense of frustration, so well expressed by the noble Lord, Lord Whitty, that although many of the technologies are in place, progress has been much slower than we would have liked. So often when we raise an issue in this House—for example, tidal power, which has been mentioned several times this afternoon—the reply has been, "Well, it's too expensive at the moment. There are environmental considerations". Of course there are environmental considerations, but we have to pilot these ideas and get round some of these problems.

Several noble Lords, including my noble friend Lord Methuen, spoke well about the possibilities of tidal power. The noble Baroness, Lady Platt, made the point that it is a very predictable technology. Living as I do on the edge of the Severn Estuary, I would say that it certainly is. But the private investors to which the noble Lord, Lord Oxburgh, referred, need that policy encouragement from government before they are willing to invest in that sort of technology, which is still commercially risky. At a time when the Government have seemed to prevaricate in their attitude, the atmosphere of uncertainty does not bring forward any private finance.

The other theme that ran very strongly through this afternoon's speeches was that of waste. The noble Lord, Lord Cameron, talked about waste energy—which was a different form of the waste issue but a very important one to consider. It is almost incredible that we still landfill as much as we do, when you consider that that is a possibility. In saying that, I am aware that my own party's policy is not at the moment in favour of incineration—so I am expressing a private view. But I believe that it is something that we must consider in future.

Noble Lords also contributed on the issue of waste, explaining the waste that happens as we transmit electricity over long distances. I was very struck, back in 2004, when the DTI published its UK Energy in Brief information, which included a pie chart that showed losses of the UK's energy mix run at 33 per cent. If only we could start to capture some of that which is lost—and the noble Lord, Lord Dixon-Smith, referred to the loss of heat from power stations—we would be a considerable way towards closing the energy gap to which many noble Lords referred.

Addressing wastage is a crucial part of what we must do. That point was highlighted by a question from my honourable friend Norman Baker on the theme of "Stand-by Britain", highlighted today in the Independent. He was talking about the sort of loss that occurs because we are all careless about how we use energy at the moment—leaving our TVs and washing machines and every possible appliance on stand by. I believe that it is for the Government to try to change behaviour through information campaigns, but it is also for them to help industry to look at designs for intelligent appliances that turn themselves off unless they are instructed to be on stand by. How can it be that every year we commit to the atmosphere 1 million tonnes of carbon because of being "Stand-by Britain"? That is disgraceful.

In the few minutes left to me, I turn to one particular part of the report that was especially interesting. I thought that the entire report was interesting, but this is a part that I should like to ask a question about. I refer to the current lack of support for community-based and smaller-scale projects. Paragraph 98 of the government response says that the Government share the Committee's desire to ensure that community-based and smaller-scale projects are supported, and they say that they are developing a micro generation strategy, but the timescale is fairly short before the community renewables initiative is due to finish in March 2006.

At the moment, many communities have the will to develop a range of renewables strategies, but they lack the advice on how to do it. There are very few readily available advisers that a parish, town or district council can turn to. But more than that, they lack the ability to raise the sort of finance that they might be interested in investing. I put it to the Minister that one possibility would be to have a form of community grant guarantee, similar to that brought in as export credit guarantees. We could have community energy guarantees. It would not be a case of a community asking for a grant; it would raise its own finance and invest the money. However, it needs some form of guarantee before approaching the market to raise the money. There is an enormous future in tying in different kinds of generation such as wind power or tidal power to local communities. In that way some of the objections that have been raised could be overcome.

In conclusion, the report of the committee of the noble Lord, Lord Oxburgh, contains many useful pointers to the way forward. Communities would very much welcome a government response on the matter that we are discussing.

Photo of Baroness Miller of Hendon Baroness Miller of Hendon Spokespersons In the Lords, (Also Shadow Secretary of State for Scotland - Not In Shadow Cabinet) 5:55 pm, 23rd June 2005

My Lords, like other noble Lords I thank the noble Lord, Lord Oxburgh, and the right reverend Prelate the Bishop of Liverpool for the excellent way in which they spoke to their respective Motions. The noble Lord, Lord Oxburgh, discussed the report produced by the Select Committee. The right reverend Prelate in the main discussed energy efficiency but also mentioned renewable energy. It clearly makes sense to debate both Motions together. Their concurrent interest in energy subjects is symptomatic of the concerns of many Members of your Lordships' House. Those concerns have been expressed in many previous debates and Questions. Indeed, many experts are speaking in today's debate.

This is not a party political matter. Concerns have been expressed by noble Lords on all sides of the Chamber. Indeed, the two Motions that we are discussing were initiated respectively by a Cross-Bencher and a Member of the Bishops' Benches.

I am sorry to say that the Government's responses to previous debates seemed to be rather optimistic. I hope that we shall consider that the Minister's reply to the debate today will indicate that the Government will deal with these matters. That is not a political point as noble Lords from all sides of the House have mentioned it.

The excellent report of the committee of the noble Lord, Lord Oxburgh, is worthwhile in that it highlights the problems and the effectiveness, or otherwise, of the solutions that the Government support.

The committee rightly discusses wind power which plays a major part in the Government's plans for renewables. However, as the committee points out, apart from the environmental problems on land and the differing ones for offshore installations, the major problem is the fact that wind blows only intermittently. My noble friends Lord Jenkin and Lady Platt emphasised that point. As the report says, that means that there will have to be a conventional generating capacity as a standby for those times when the wind does not blow, which will be expensive. Alternatively, there could be an agreement with some users to accept a possibly interrupted service, which would permit them to pay a lower tariff.

The Energy White Paper, Our energy future—creating a low carbon economy, set the scene for the Energy Act 2004, the report that we are discussing and the problems to which the right reverend Prelate referred. There is no doubt that the aim of the policy was to ensure security of supply together with low carbon emissions. Not having low carbon emissions results in the real problem of climate change, which the right reverend Prelate discussed. The debate ever since has concerned how we can achieve those two objectives.

The report was not able to consider the nuclear option. I was very interested to hear what the noble Lord, Lord Tombs, said on the subject. It is clear from the report that although many kinds of renewable energy are being considered, the Government are placing most of their hopes on wind power for the replacement of nuclear power. However, what is not generally appreciated is that the intermittency factor means that wind power can never be a consistent and basic source of electrical supply. I suggest that all it can do is to enable replacement of more conventional fuels at favourable times; in other words, when the wind blows you may be able to close down a gas-fired station for a few hours.

Biomass is another renewable that receives the attention of the committee under the attention-getting headline "Chicken litter vs chicken feathers". The committee points out that the generating plant must be situated close to the source of the fuel, otherwise the CO2 emitted by the lorries transporting it around the country would absorb a significant proportion of the savings that the process is supposed to make. While producing crops that can be burned for fuel may produce welcome income for farmers, the local communities are unlikely to welcome the erection of a power plant in the rural area.

The committee came to the conclusion that the Government's projections for biomass as a contribution to our energy needs are perhaps over-optimistic. The Government response claims that between 5 per cent and 6 per cent of UK energy demand in 2020 could be generated from that source. Unfortunately, the response simply does not answer the committee's question—how realistic are the projections? I define the questions more specifically. Who will plant the crops? Who will build the plants? Where, and at what cost? The Government admit:

"Development of energy crops for energy generation is a difficult issue".

Those of us who are used to Whitehall-speak know what that really means. Unfortunately the long grass, into which this concept is clearly being kicked, is not itself capable of being burned for fuel.

On a personal note, I recall that my late father, who was a furniture manufacturer, had a problem disposing of large quantities of sawdust. He solved it by burning it in specially adapted boilers, saving both on his fuel bills and on the cost of having the waste hauled away. Unfortunately, it took a long time to recover the cost of the plant. However, with some help from the Treasury—which experience tells me is unlikely to be forthcoming—other businesses producing flammable waste could be encouraged to do the same.

As the committee comments, climate and latitude limit the use of solar power as a significant contributor to our power needs. On another renewable source the committee says:

"We do not believe that it is feasible for wave or tidal generation to contribute significantly to meeting the Government's 2010 target. However there is no technological barrier to tidal barrages making a significant contribution by 2020".

The Government's response admits to,

"High generation costs . . . that have little or no prospects of reduction".

The Government also admit to the,

"Significant impact on the local and regional environments".

Time does not allow me to comment in much more detail on the committee's report, but it points out with unerring accuracy the practical problems of renewable energy technology, and we broadly concur with its conclusions.

I turn to the equally cogent contribution by the right reverend Prelate the Bishop of Liverpool. As much as methods of generating electricity are essential to our economy and the well-being of the population, it is axiomatic in business that the first thing to do to make a profit is to stop losing or wasting money. Many noble Lords have spoken about the loss of power in conventional matters. The same principle applies to meeting simultaneously our energy needs and our Kyoto commitments. Energy efficiency can be encouraged by the Government not just by warm words but with practical help: for example, a reduction of VAT—so far as EU regulations allow a sovereign nation to do so—on materials and work used for conservation of energy or for energy-efficient plant. Also, a landlord's energy saving allowance would enable private landlords' relief on capital expenditure for installing loft and cavity wall insulation in rented accommodation.

A major cause of CO2 emissions, as has been mentioned frequently this evening, is our beloved motorcar—despite the development of ever-more efficient vehicles that are counterbalanced by the fume-belching 4x4s. That is a particular form of nimbyism; there should be fewer cars on the road so that I can drive mine more easily. Increasing air traffic is an equal, if not even greater, cause of CO2 emissions and damage to the ozone layer. Something must be done about the number and frequency of cheap flights to all destinations; except for those to where I want to travel. That is the problem. The noble Lord, Lord Whitty, talked about better behaviour. The noble Lord, Lord Winston, mentioned how he goes around the country speaking on the issue. All that is good, but people are not listening at the moment.

Although solar power has been largely dismissed as a factor in the renewables programme, as we have heard, it can make a small contribution to saving electricity. In Israel, many houses have solar batteries on their roofs. At least they heat the water. In New York, there is a landmark building that runs its lifts—its elevators—largely off the panels on its roof.

It has been pointed out to me that this is a timed debate. I am well aware that if I do not sit down at the appropriate time, the Minister will not have time to make his contribution. I shall leave my final three pages because I could not get through them short of gobbling them up, which would mean that people would not be able to hear them. I think that most noble Lords would rather hear the noble Lord, Lord Sainsbury.

Photo of Lord Sainsbury of Turville Lord Sainsbury of Turville Parliamentary Under-Secretary, Department of Trade and Industry, Parliamentary Under-Secretary (Trade and Industry) (Science and Innovation) 6:05 pm, 23rd June 2005

My Lords, I thank the noble Baroness for making that point, because I want to cover a lot of issues.

The Government welcome the Science and Technology Committee's report on the practicalities of meeting the Government's environmental and renewable targets. I thank all speakers in the debate, particularly the right reverend Prelate the Bishop of Liverpool and the noble Lord, Lord Oxburgh, for their constructive contributions on energy efficiency and renewable energy. The report rightly challenged us on some key issues of our energy policies and gave us a lot to think about.

We could debate many issues this evening, but I thought it would be most useful to concentrate my remarks not on the overall issue—I think we agree on that—but on where the Government and the committee have different viewpoints. First, I shall deal with the question of energy crops, a point raised by the noble Baroness, Lady Miller of Hendon. The committee considered that the Government's projections for the contribution of energy crops were overoptimistic. We have asked the consultants to re-examine the numbers, and it is clear that the committee's report is right. We will write to the committee to set out the position as we now see it.

Next I shall take the question of the generating costs. The committee called on the Government to commission independent and authoritative research to provide comprehensive costs for generating technologies. The Government have properly published a number of major studies of different generating technology costs. Inevitably, they change as a result of many factors, including developments. However, we will look at the evolving work on the issue and keep generating costs under review.

A small but important point raised by the report was on tidal lagoons. The committee urged the Government to publish the report on tidal lagoons, to promote greater public debate on the advantages and disadvantages of such schemes. The Government are persuaded by the merits of the committee's argument. We will undertake to review the available information and, if we can get the permission of the people who compiled it and on whom it was gathered, we will look at publishing the report so that people can see it. However, I should make it clear that there is no question of reconsidering the scheme. The figures in the report were clear that it was a highly expensive scheme. We feel that it makes no sense to invest in technologies when the costs remain extremely high. It must be sensible to invest in technologies when they begin to make some commercial sense.

The noble Lord, Lord Oxburgh, raised an important question on priorities and the security of supply. The committee's report raised concerns about security of the UK's electricity supplies, which is an issue that invokes strong opinions. Noble Lords will be aware that the maintenance of secure energy supplies is a fundamental goal of the Government's energy policy, as we made clear in the energy White Paper. The committee would like it to be the main goal of our energy policy, but we believe that we should not give priority to any one goal. We wish to achieve all four goals set out in the White Paper. Noble Lords will also recognise that my right honourable friend the Secretary of State for Trade and Industry and the independent regulator Ofgem have statutory responsibility for ensuring the security of our electricity supplies.

I totally agree with the noble Lord, Lord Oxburgh, that the lights cannot be allowed to go out. However, I cannot agree with his rather frivolous comment that you could let baked beans go out of supply in stores. Some of us regard that as an equally serious issue.

Capacity margin is a further question. Your Lordships have expressed the view that the Government should prescribe a level for the capacity margin, technically defined as the proportion by which available generating capacity exceeds expected peak demand. We are not convinced that anything would be gained by the Government doing so. We believe that the key issue here is the market framework which the Government and Ofgem have put in place to ensure that market participants have every commercial incentive to make that calculation and to get it right.

Under market rules, if an electricity or indeed a gas supplier finds himself unable to put into the national distribution networks as much as his customers take out, he faces severe financial penalties. Consultation is also now under way on a proposal to make those penalties even more onerous. That is a strong lever to ensure that market participants make sure they are able to provide the supplies for which they have contracted.

It is clear that renewable energy has an important role to play in reducing carbon dioxide emissions and the committee expressed concern about the ability of industry to deliver the Government's target of 10 per cent of electricity supplies from renewable sources of energy by 2010. But there is now enough evidence of investors coming forward to enable us to achieve our targets, provided the barriers to renewables—that is, grid supply, capacity, planning issues and the barriers of the MoD—can be addressed in time. As has already been mentioned in the debate, the DTI has created a dedicated 2010 target team which is responsible for ensuring that the key barriers can be addressed. I can however assure the noble Lord, Lord Haworth, that there is no question of steamrolling the opponents. That is not the way of the British Civil Service.

Recent successes include acceptance by the MoD of the recommendations of the Eskdalemuir study, which should enable objections to more than 1 gigawatt of renewable projects to be lifted. In addition, as the Government highlighted in their response to the committee, the National Audit Office report looked at our plans and concluded that the Government might well achieve 9.9 per cent of electricity supply from renewable sources of energy by 2010. That is very close to the 10 per cent target which I believe is attainable if we can remove the barriers. Last year was a record year for wind generation, with 240 megawatts being built. We expect to double that in 2005 and to see a continuing trend upwards, which means it is very likely that we can meet the target.

I am particularly pleased that in the debate the noble Lord, Lord Haworth, made what is to me one of the key points. That is simply that if we run down nuclear by 2020, we will have certainly gone back on CO2 emissions over the first 20 years of the programme. There is no way in which we can achieve more than 20 per cent renewables by 2020. If at the same time we lose 25 per cent of nuclear energy over the first 20 years of the programme, we will have gone back on CO2 emissions. That is not a satisfactory position. That is why we must be looking at other ways of improving our performance. Also, as the noble Lord, Lord Methuen, rightly pointed out, it would leave us dependent probably on imported gas for 70 per cent of our needs. That, too, must be seen as a vulnerability. The extent of that vulnerability is to be debated, but that there is a vulnerability is unarguable.

Noble Lords will be aware that the Government's main mechanism for supporting industry's delivery of a 10 per cent target is the renewables obligation. While the committee had concerns that the obligation would act as a cap on renewables because of the potential cliff-edge on renewable obligation certificates, the Government have been addressing this issue in the context of the review of the obligation. We expect to publish the statutory consultation paper on the review of the 2005 renewables obligation in September in concluding our proposals on future levels of the obligation. The noble Lord, Lord Oxburgh, raised a new version of the scheme, which we will certainly consider.

I shall briefly describe what the Government are doing on energy efficiency. The right reverend Prelate the Bishop of Liverpool will see that we are doing a great deal. He implied that we are doing very little but, in fact, we have a very substantial programme. The bill for supporting renewables will soon run at about £1 billion. That is a sign of the great commitment of the Government to renewables. Of course, research, which we are ramping up, is only one of the costs. We should also bear in mind the very substantial investment—the key investment—which is being put in by the private sector; Centrica plans, for example, to invest £750 million in renewables.

We also recognise that increased energy efficiency must make an important contribution if we are to achieve our energy policy goals. The energy White Paper made it clear that energy efficiency is likely to be the cheapest and safest way of addressing all four of our energy policy objectives. The Energy Efficiency Action Plan, published in April 2004, estimated that annual carbon savings of 12 million tonnes could be made by 2010, and suggested that energy efficiency could contribute around half of the additional 15 million to 20 million tonnes of carbon savings likely to be needed by 2020. The action plan set out and described a challenging set of detailed policies and measures to improve energy efficiency to an unprecedented level across the economy.

Through the EU Emissions Trading Scheme, climate change agreements, climate change levy, and other targeted tax allowances, including those for combined heat and power, our most energy intensive industries and the power generation sector have strong incentives to reduce their emissions in the most cost-effective way. We are working in partnership with business to deliver the 8 million tonnes of carbon savings by 2010 that were targeted from that sector.

In the household sector, building regulations and the energy efficiency commitment are leading the way, as part of a broader package of polices, to improve residential energy efficiency. There has already been significant progress: for example, improvements in the housing stock between 1997 and 2001 have resulted in annual carbon savings of 1.7 million tonnes. In 2002, through the building regulations, we raised the minimum standard for the energy performance of new buildings by 25 per cent. By the end of this year, we aim to raise the standard again with the introduction of a further revision to the building regulations and the implementation of the EU energy performance of buildings directive.

We have not been idle since publishing the Energy Efficiency Action Plan. It has been reinforced by further measures and commitments, including ongoing work to encourage innovation in building design and construction through a code for sustainable buildings, which, from April 2006, will be a requirement on all new homes funded by government or their agencies, including through relevant public/private partnerships; an additional £10 million for the community energy programme, which is helping to overcome the barriers to and encouraging the uptake of community heating schemes across the UK; an additional £10 million to the Energy Saving Trust to support the development of its new sustainable energy network, which will provide advice and promote the take-up of sustainable and efficient use of energy in the home; increased funding to the Carbon Trust to ramp up their work with business on delivering a low-carbon economy; a £12 million climate change communication initiative to change public attitudes to climate change; and a £20 million fund to support technological innovation in energy efficiency.

I now turn to a number of specific points raised by noble Lords during the debate. The noble Lord, Lord Oxburgh, raised the issue of bioethanol and my noble friend Lord Whitty mentioned the transport dimension. The Department for Transport is taking forward work on a biofuels strategy to deliver carbon savings in the transport sector. Among the options being considered is a road transport fuel obligation which could promote the use of biodiesel and bioethanol for transport.

The noble Earl, Lord Selborne, raised the difficulties of biomass. I remind noble Lords again that Sir Ben Gill is leading the Biomass Task Force which, in its one-year study, will seek to stimulate biomass supply and demand in a bid to help to meet renewable energy targets and to boost farming, forestry and the rural economy. The task force is expected to submit a final report to the Government in the autumn. If there is anyone who is suitable to take on all the bureaucratic rules that inevitably surround these schemes, it is Sir Ben Gill, who has the right experience to do that.

The noble Baroness, Lady Sharp, asked whether with wind power we are putting all our eggs in one basket. The answer is that, at the moment, it is the one source of renewable energy that makes commercial sense to invest in. At this point, we should be putting most of our efforts on renewables into wind power. As far as research is concerned, there are a number of other technologies in which we ought to invest in demonstrators and research. However, to put money into them at a stage when, in many cases, they are way out of court as far as commercial considerations are concerned would be an obvious mistake.

The noble Lords, Lord Jenkin and Lord Chorley, raised the question of the intermittency of wind power. We accept that intermittency must be managed, but surplus capacity has to be maintained because of plant failure. That applies to all technologies. As the noble Lord said, the 2010 target can be met with limited changes to the operation of the grid. In the longer term, the geographical dispersal of wind farms, shifts to more farms offshore where there is greater wind. The development of storage techniques and demand management should help to deal with the problem.

The noble Lord, Lord Whitty, raised the question of the machinery of government. This issue always comes up. I think that we should not keep changing the structure of government and should make certain that the processes work.

The noble Lord, Lord Cameron of Dillington, raised the issue of energy from waste. The Government recognise the benefits of energy derived from waste. Indeed, it is an issue covered by the review of the renewables obligation.

The noble Lord, Lord Winston, made the point that we need the participation of the public. I think that there is not quite as much growing distrust of technology as he implied. There is a growing understanding that many of our environmental problems will be solved only by science, technology and innovation. But I entirely agree with him that we need to bring the public into this debate. We have a series of schemes under the Sciencewise project, which is developing public participation. We will make certain that the public will be able to participate fully in the energy debate in the next couple of years.

Despite what the noble Lord, Lord Tombs, said, I do not think that we are showing a lack of leadership on this subject. As the right reverend Prelate the Bishop of Liverpool made clear, this is a major issue. It is not a quixotic gesture to put extra funds into this area. We need to look at all sources of energy, including nuclear, on the basis of what they can contribute to our three goals, and not take any of them believing that it can solve the whole problem.

The noble Lord, Lord Moynihan, raised some important questions. I think that he is wrong to feel that there is a crisis and that we might run out of energy. As one can see from this debate, it is not a question of running out of energy. If we do not go ahead on nuclear, or if we do not reach our targets on renewables, we will see what we are seeing at the moment. The generators will go on building on the basis of energy from coal and gas, and we will see, as we saw in 2003, emissions go up because of the way that the generators solve the problem.

Finally, I thank noble Lords for an interesting debate on the future of the UK's energy policy, and particularly on energy efficiency and renewable sources of energy. The report by the Science and Technology Select Committee and the debate today have provided much food for thought. I know that my honourable friend the Minister with responsibility for energy will reflect long and hard on the views expressed by your Lordships.

Photo of Lord Oxburgh Lord Oxburgh Crossbench 6:24 pm, 23rd June 2005

My Lords, we have had a good debate today. I begin by thanking the Minister for his detailed and informative reply, and, indeed, for sharing with us a considerable amount of the Government's forward thinking in this important area. I have to say that I gained considerable encouragement from it.

I also thank noble Lords for their gracious reception of our report. I hope that our two specialist advisers, who are with us today, Professors Anderson and Elliott, and, indeed, our clerk will feel that their efforts in supporting us were worth while. We certainly had some excellent and vigorous discussions among the group in trying to sort out the complexities and the subtleties of the ROC system and other aspects of renewable energy and its support.

The most encouraging thing that I have heard today is the unanimous agreement that we have a major challenge in coping with atmospheric CO2 and climate change. I have not heard that questioned; that is enormously encouraging. The issue is urgent. Now the question is: what are we going to do about it? The Government have made a start. But this is where—traditionally in this country—the system has broken down. We have had good ideas, we have had committees and good recommendations, but then we have fallen down on the implementation.

Photo of Baroness Farrington of Ribbleton Baroness Farrington of Ribbleton Government Whip

My Lords, I intend absolutely no discourtesy to the noble Lord, Lord Oxburgh. Unfortunately, because earlier speakers took longer than the allocated time, we are now two minutes over time. I apologise most sincerely to the noble Lord and hope that in future all noble Lords in a timed debate will be as helpful as possible. My noble friend the Minister lost two minutes of his reply time because of other noble Lords speaking at length.

Photo of Lord Oxburgh Lord Oxburgh Crossbench

My Lords, I thank the noble Baroness. I shall be as brief as I possibly can, but there are a few things that have to be said.

Photo of Lord Brabazon of Tara Lord Brabazon of Tara Chairman of Committees, House of Lords

My Lords, I must now put the Question. The Question is that this Motion be agreed to. As many of that opinion will say "Content"? To the contrary "Not Content"? The "Contents" have it.

On Question, Motion agreed to.