My Lords, first, I thank the noble Lord, Lord Browne, for initiating this debate. I shall probably disagree with many of his points, but I shall discuss that later.
The politics of climate change has been dealt with in minutiae by many of us who have taken part in these debates over the past few years—we have had the Climate Change Bill, the Energy Bill and numerous debates. It is most encouraging to speak in a debate in which there has been no question that climate change is happening. That is a step forward in this House, where it has been much more a question of how fast changes should take place. My problem with the politics of climate change is that we are still discussing targets, as thought setting them will be the solution. I realise—and the excellent speech of the noble Lord, Lord Hannay, made it clear—how important these targets are at an international level and that they have their place.
However, I have an issue which was borne out when dealing with the Energy Bill and through going to a large number of conferences. We are setting targets that might not be achievable for a number of reasons—technology, and because we and other countries are setting targets that we know none of us will meet. That is a real problem. My view of the politics of this is that we should instead be thinking about building the infrastructure. We should also understand what the targets really mean, because we are talking about an 80 per cent reduction in emissions. Some scientists are talking about an even greater reduction, because we may well have already passed the tipping point.
That means, in reality, that people will be unable to live their lives in the way that they are now. We must seriously change how we live our lives, but that is not being taken on board. It is not a bad thing—for example, SUVs were not around 10 or 15 years ago on the school run, and they probably will not be around in a few years. People will have to change how they lead their lives.
I found the recent announcement on the Heathrow expansion very depressing, but perhaps it is only me who feels like that. Although the arguments were put in favour, I have been to many conferences where there was talk of us running short of peak oil in the next 20 or 30 years. However, the Heathrow expansion will take at least a decade to come into commission and it will have a certain lifespan. Where will the traffic for Heathrow come from in 20 years? There certainly will be no cheap awayday flights to Prague. Flying will, by necessity, become very expensive and we will probably return to the situation of 30 years ago, when only a small number of people could afford to fly. Therefore, we will be building an infrastructure which will break our carbon barriers, but will never live up to expectation. It is a short-term commitment to how we view growth in the economy.
This is why I have a slight problem with the speech of the noble Lord, Lord Browne. I very much take on board that the only game in town is the ETS and carbon trading. It is to be welcomed that President Obama is talking about widening the trading fields. However, perhaps unusually, I am a carbon-trade sceptic. I do not believe that carbon trading itself will lead to a reduction in the amount of carbon dioxide produced, because there are many flaws and pitfalls in the system. If we are to throw ourselves at market forces, we only have to think about the banking crisis to realise how that can go horribly wrong. The noble Lord, Lord Smith, mentioned recession. How often have I seen reports in the press recently that big green projects were under immediate threat because of recession? We are saying, "Okay, we have market forces, and we have these targets, but if there is a problem in the economy we cannot meet the targets because we cannot afford them".
I have met a large number of carbon traders who have not given me a great deal of hope on the issue. However, carbon trading could work well on a macro level. I do not believe that market forces will be the real driver; it will be regulation by the Government. I have spoken to a large number of power companies over the years which have talked about what type of power stations they will build and how they will meet the so-called decarbonised electricity grid. Most of the companies say that they are hanging back and not making decisions because of the real issue of whether they can meet the carbon targets set by the Government, who have not come forward with them. That creates a real problem in the system, because if no new power stations are built, we cannot see how the electricity sector will be developed.
I very much hope that we look at this issue in the future. My problem is that while I believe that coal should not be part of the mix because of its carbon content, I cannot see a way of meeting our energy requirements without including coal. Therefore, the only way that we could include coal would be through carbon capture and storage technologies. However, the problem is that we are only talking about one demonstration plant, we are not realistically saying how we can use that technology in all power stations within a certain time frame. We are talking about 20 or 30 years ahead. The world does not have 20 or 30 years. I very much welcome the efforts undertaken by the Chinese Government. They have already put forward, and are starting to construct, more than one demonstration plant. It is unfortunate that a few years ago we said that we were going to build a demonstration plant and export that technology to the world, whereas it very much looks as though that technology will be exported to us over the next few years.
Looking to the future, the Government have made some positive gestures. We talked at Question Time about the use of light bulbs which will save some 5 million tonnes of carbon. It is one of the changes that people will have to get used to. Indeed, there will be a spur to the market place; the papers today reported a new type of light bulb which will be extremely bright for 75 per cent less energy. That is important.
There are areas where the Government have failed, especially in the Energy Bill. I was disappointed that the Government have not moved forward on smart meters, considering the speed that such a programme could be rolled out. One issue is that Ofgem has not worked out what sort of market model there should be—whether meters should be given to individual customers or whether the programme should be carried out street by street. Holding that system up on that basis is unfortunate, because that would be one of the greatest ways of bringing about behavioural change.
We shall have to bring about behavioural change. I have been doing a great deal of work on energy efficiency in houses, especially regarding energy performance certificates. The Government, in meeting their targets, will have to introduce regulations that produce more than the carrot of economic benefit for people if they carry out the change. At some point, they will have to think of imposing a regulatory stick if people do not change; for example, not allowing them to complete on conveyancing if a house is not insulated to the correct levels, and making it impossible to sell a house with a G-rated, rather than an A-rated, boiler. Such changes could be simple to make, and if they were put into the process, people would carry them out without thinking about them. As with light bulbs, they would be a requirement and, therefore, people would undertake them.
Some future technologies could help and one of them, in which I declare an interest, is anaerobic digestion. I have just become the chairman of the Anaerobic Digestion and Biogas Association, whose aim is not to set up a working group to discuss what sort of standards it should be reaching but to build, over the next 10 to 15 years, 1,000 AD plants in this country. This is an old technology. Germany has more than 3,500 plants; Austria and Italy have 400 plants apiece; Denmark has a few hundred; and, of large-scale plants, we have 10. When we talk about carbon, we should think not only about the electricity grid but about the gas grid as well, because that is a massive source of carbon dioxide. It has just been shown by the national grid that 50 per cent of our domestic gas could come from anaerobic digestion. If Germany can produce that many plants, we should be able to do so. It is a mature technology that can be brought here to deal with many of our waste issues.
I want to end by talking about the politics of this matter. There is one big problem affects every Government. We talk about moving forward as quickly as possible but every single industry involved in energy efficiency, low-carbon products or microgeneration that I have talked to always has problems with regulation. Yesterday, I was lobbied by a company called Living Fuels, which takes waste chip oil from prisons, schools and other organisations and puts it through a power station that can produce six megawatts of power. I should declare that when I met the people from that company yesterday, I paid for tea. I say that just in case, in the present climate, people think that I am doing this for any other reason.
The company uses a fuel called LF100. The problem is that there was a court case to decide how the fuel should be designated, which affects how it should be dealt with. It was decided that the fuel should be designated in a specific way, and the court said that the Environment Agency and Defra should work out regulations to allow the company to move forward. The trouble is that the company has now been waiting eight and a half months for those regulations to be brought forward and, until that happens, it cannot do anything. That could kill a fantastically good industry. The trouble with waste oil is that it goes down the drains and costs the water companies millions of pounds to clear. I will pass on the details to the Minister and hope that he can meet representatives from the company. One problem with the politics is that sometimes regulation gets in the way of moving towards a low-carbon economy.