Energy Bill

Part of the debate – in the House of Lords at 9:30 pm on 22 October 2008.

Alert me about debates like this

Photo of Lord Jenkin of Roding Lord Jenkin of Roding Conservative 9:30, 22 October 2008

My Lords, I have listened to the noble Lord with interest, having refreshed my memory of what was said in Grand Committee on this subject. I was amused by his description of the National Emission Reduction Plan. It is just as well it was not called the British emissions reduction programme as the acronym would be even less attractive.

Following the debate that took place in Grand Committee, I too have tried to find out what lay behind the Minister's reply. I found that there are some quite powerful arguments against what the noble Lord, Lord Teverson, proposes. There is a widespread recognition that the most efficient way to control CO2 emissions is at least to do so on a Europe-wide basis and eventually there may be a more international—a more global—system. At the moment, it is run through the EU Emissions Trading Scheme. That is what the Government, against much criticism in which I have not joined, have taken as the basis for how they will ensure that this country plays its part under that scheme.

Cap-and-trade schemes are the most efficient way of achieving that. That is the ETS. The noble Lord mentioned the Stern report, which I quote to support my case rather than his. It emphasises the importance of using market instruments to reduce CO2 emissions and states:

"In practice, cap-and-trade systems ... control the overall quantity of emissions, by establishing binding emissions commitments. Within this quantity ceiling, entities covered by the scheme—such as firms, countries or individuals—are then free to choose how best—and where—to deliver emission reductions within the scheme".

In effect, I think that is the basis of the argument against individual cap and trade.

I understood what he said about refrigerators, cookers and so on. You have a system of graduated test approvals. Like most people, we have just had to replace a dishwasher and we got an A-rated one because that is the most energy efficient. However, it is quite impossible to run power stations like that. Within the system as a whole, the noble Lord made the point that a power station which emits CO2 means that everyone else has to cut their emissions by more. The answer is if it is emitting too much CO2 it will be uneconomic because of the way in which the Emissions Trading Scheme works: it will have to pay very large charges on that, therefore, it will be less competitive than those which do not emit. In a sense, nuclear power is bound to become much more effective because it has a very low emissions trajectory.

I think Stern supports the case I am making, rather than the case made by the noble Lord. Emissions standards will also add to regulatory risk as the ability of regulators to change standards progressively will create additional uncertainties.

I have also heard it suggested that if what the noble Lord suggests were to become law, it would promote a second dash for gas, because that is a relatively low-emission technology, at a time when, as we all know, we are going to import more and more gas from increasingly unreliable sources. I find myself coming down against the noble Lord's amendment, and I hope the Government will share my view.