Energy: Climate Change — Motion to Take Note (Continued)

– in the House of Lords at 5:24 pm on 2nd November 2010.

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Photo of Lord Whitty Lord Whitty Labour 5:24 pm, 2nd November 2010

My Lords, I, too, am all in favour of Anglo-French co-operation and I should like to see some on the climate change agenda, so perhaps we can revert to that. I should be grateful for the break in the debate, otherwise I might have been tempted to respond in detail to the tour de force by the noble Lord, Lord Lawson, and the last time I did that I got completely slaughtered. However, the House should recognise that the difference between the noble Lord and most of us here is that he does not accept, even with the usual caveats, the burden of evidence of man's contribution to global warming. I do and I am glad to say that the Government do. I therefore thank the noble Lord, Lord Lawson, for differentiating himself so clearly from the Government and I congratulate the Government on differentiating themselves so clearly from the noble Lord on this matter.

Photo of Lord Lawson of Blaby Lord Lawson of Blaby Conservative

I accept that there is a possibility and a probability that manmade carbon dioxide emissions have had some impact on the very slight rise in the temperature in the 20th century. I do not deny that. I keep an open mind on the science. Even if that is accepted, the policy decisions do not follow; they do not add up. That was my point.

Photo of Lord Whitty Lord Whitty Labour

I thank the noble Lord for that clarification. Behind his scepticism about the policy, however, there is a doubt about the science. The noble Lord often makes good political and economic points but essentially his assessment of the science and the challenge that the science presents us with is different from the view taken by both the previous Government and this one.

Despite the climate sceptics' view, there is largely cross-party consensus on the importance of climate change and the present Government's commitment on the road to 2050 via 2020. There is largely consensus that we need a mix of energy sources from nuclear to renewables, which means nuclear and renewables, not nuclear or renewables. That is a positive sign for this country at a time when, as has been said, there is a danger that in the United States a political veto will shortly be handed to the climate change deniers and when China insists on playing such a dangerous geopolitical game on this most serious of subjects. As a result, any progress at Cancun is seriously in doubt. The fact that I am on the same page as the Government on this does not necessarily mean that I agree with everything that they are attempting to do.

Before getting on to that, I should probably declare a few interests. I am the chair-shortly to retire-of Consumer Focus, which, along with our predecessor organisation Energywatch, has often expressed consumer interests in energy policy. Even a few weeks ago, we managed to gain for consumers about £70 million from one of the major energy companies, only to find out two weeks later that we were about to be abolished. It is important that the consumer interest in this debate should be reflected. I also declare an interest as honorary president of CHPA and chair of a CHP company. As we will refer to Warm Front in a moment, I should say that I have a past interest as an adviser to Eaga, but that is no longer so. I am a member of the Environment Agency board, which reminds me that some departments did not do quite as well as the noble Lord's department out of the CSR settlement. Measures to adapt to climate change-principally flood defences-failed to get adequate resources in the outcome of the CSR. The noble Lord and his colleagues in DECC are to be congratulated to an extent.

My main concerns in this debate are threefold. Like the noble Lord, Lord Teverson, I think that the drive on energy efficiency is still insufficient, not just in the household sense but more broadly. Secondly, there is a serious social and distributional dimension about the issue of who pays for the cost of adapting and mitigating climate change. Thirdly, there is not yet any clarity on the Government's review of the role of Ofgem.

Energy efficiency applies not only to end use but in the generation system. We have some pretty inefficient generators in the distribution system, in which there is major leakage, and, of course, in homes, factories and offices. I was grateful, I think, to see a commitment by the new Government to increase decentralised energy, which helps to bring energy nearer to its point of use, but in general there has not been a lot of emphasis on the totality of the system and on the improvements in energy efficiency that we should be able to see.

At the household end, the Government are committed to the green deal. I welcome the concept of the green deal, but we need a lot more detail. Who will deliver it? How will householders be persuaded to go for it? Are supply companies to be involved in the delivery? Unfortunately, they are not the most trusted by householders and consumers. The banks clearly have to be involved, but I do not think that they should be the major agent either. There has been talk of Tesco and the other major supermarkets delivering. I am not sure whether that is on the Government's agenda. There could be specialist managers-indeed, the installers and manufacturers of improved energy-efficiency and insulation materials and gadgets could be the actual deliverers.

The key thing to remember is that the whole concept of the green deal is for an individual householder voluntarily to enter into a deal to make some expenditure on the basis of a loan that will be paid back through lower energy bills. That is key, but it requires trust-trust in the initial audit of the energy efficiency or otherwise of the house; trust in the terms of payback; and trust in how the customer service to that householder is carried out, because it can all be spoilt if a wall is unnecessarily knocked down or even if a carpet is messed up and the installer fails to recognise the interests of the consumer in the household.

There is also a lack of clarity about who potentially benefits from the green deal. Owner-occupiers, in one sense, clearly would if they were in the building for a significant time. Theoretically, at least, they could benefit if they sold the building, because the value of the house should at least reflect its future energy consumption bills. It is not so clear when it comes to tenants and landlords. The question of who benefits depends on who pays the bill and it is not at all clear how this will apply in social housing in local government and housing association properties.

That brings me to the nub of the problem so far as the distributional aspects are concerned. There is an increase in fuel poverty. I was once the Minister who set the targets for fuel poverty and for the first few years we made significant progress on that front. We are now miles off achieving those targets and I think that a realistic reassessment of the targets is necessary. However, we must reiterate and back up a commitment to eliminating, so far as possible, fuel poverty from our society. The Government's major move on this front has been effectively to run down and abolish Warm Front. There was some criticism of Warm Front and no doubt its delivery and scope could have been improved, but it was a major contributor not only to reducing fuel poverty but also to improving the energy efficiency of some of our least energy-efficient buildings. It is not replaced by the green deal. It is not clear how the green deal applies to those who are fuel poor and would not wish to take out that loan or do not own the property in which they live. Nor is it replaced by the price support system that the Government say will operate within the tariff structure-in other words, there will in effect be some subsidy to the supply companies, bringing on what we might previously have called a social tariff, although I do not think that that terminology is of interest to the Government. That helps-it helps to lower the current price-but it does nothing to improve the energy efficiency of the building and therefore the future bills.

Fuel poverty is growing. In the medium term, it is almost certain that energy prices will rise. They will rise because of world market conditions and they will rise because of government policy in, effectively, placing the cost of greening and decarbonising our energy supply on the consumer. On one level, I do not dissent from that policy, but it has consequences. In particular, it has distributional consequences on the very poor. It is not clear whether the green deal will do anything significant on that front.

The central problem is that this is a regulated industry-a very heavily regulated industry, according to some-and the net effect of the regulation is counterproductive. I would be interested to hear from the Minister what the Government expect from the current review of Ofgem. I have often been critical of Ofgem. The noble Lord, Lord Mogg, who is not in his place, sometimes gets very sensitive about it. However, I am not in favour of the abolition of Ofgem, nor am I in favour of limiting its remit. It has been improving on both the social and the environmental fronts. However, there needs to be a radical if not revolutionary approach to the way in which tariffs are structured in this country. It remains the case that the more energy you use, the lower the unit cost of energy. It also remains the case, either because of the tariff or because of the way in which you pay, that, by and large, poorer households pay more per unit of energy than better-off households. Both on social and environmental grounds, that is counterproductive.

The objectives of energy policy-on security, decarbonisation and affordability, including reducing fuel poverty-must depend on us delivering a step increase in energy efficiency. Unless the Government and Ofgem and the remit that this Government give to Ofgem are directed at producing a tariff structure that encourages energy conservation and energy efficiency and removes the disproportionate burden of energy costs on the poorer households in our society, we will not achieve any of those objectives. I hope that, in the review of Ofgem, the Government will bear in mind that the combination of the noble Lord's department and Ofgem can deliver a radical change of strategy for us. I hope that they do deliver it.

Photo of Lord Jenkin of Roding Lord Jenkin of Roding Conservative 5:35 pm, 2nd November 2010

My Lords, I, too, should begin by declaring a couple of interests. I am the honorary president of two organisations connected with the energy industries-one is the National Skills Academy for Nuclear, and the other is the Energy Industries Council-but I do not think that anything that I am going to say will impinge on their valuable work.

I agreed with the noble Lord, Lord Grantchester, on one thing-here I must challenge the view put forward by my noble friend Lord Lawson-which is that I do not think that anybody can now seriously doubt the weight of the scientific evidence about global warming. What I think my noble friend Lord Lawson leaves out of account is the huge cost and damage of the effects of that. If he doubts that, perhaps I may suggest that he read the report of the Adaptation Sub-Committee of the Committee on Climate Change, which is a sub-committee presided over by the noble Lord, Lord Krebs, who without doubt is one of the most distinguished scientists in this House and indeed in the country.

I do not want to talk about adaptation; I want to talk about mitigation-the measures necessary to try to reduce the human input of carbon into the atmosphere. I think it right that one should be seeking to aim to make the energy industries as carbon free as possible, however difficult that may be. It will take a long time, I have no doubt on that, but I support the view that policy should move in that direction.

Today's debate could cover a very large canvas but I have time in this short speech only to touch on a very few points. The first point that I would like to make and put to my noble friend on the Front Bench is that I hugely welcome the emphasis in 2050 Pathways Analysis-on which my noble friend organised a very useful briefing for a number of us before the Recess-and, in particular, its emphasis on 2050. As my noble friend will recognise, in the past I have argued that energy policy, and indeed even more climate change policy, has to have a very long perspective. It takes a very long time, to use a hackneyed phrase, to turn the tanker round. I therefore very much welcome that.

However, when one looks at the national policy statement for nuclear, which is one of the documents published with the pathways document and contains a large number of changes from the original draft statement, one sees that it concentrates only on the period up to 2025. What is the logic of setting a framework that takes us to 2050 if on one of the most important parts of the whole effort you are only going up to 2025? I am reinforced in this view by a very interesting paper that was published in the journal Science and headed "Generating the Option of a Two-Stage Nuclear Renaissance". In that paper, Robin Grimes and Bill Nuttall say:

"We suggest that the first stage of this process will include replacing or extending the life of existing nuclear power plants, with continued incremental improvements in efficiency and reliability"- and that is happening. They continue:

"After 2030, a large-scale second period of construction would allow nuclear energy to contribute substantially to the decarbonization of electricity generation".

Is it not already implicit in the 2050 pathways paper that there will be more nuclear generation? Nuclear generation is low-carbon, an established technology and highly reliable, unlike wind power, which is intermittent. It cannot possibly be right to be planning on the basis of nuclear only up to 2025. I wonder whether my noble friend will comment on that, particularly if there is to be any chance of achieving the purposes of the longer-term analysis.

I very much welcomed the Statement by the right honourable Chris Huhne on 18 October, which set out the Government's policy very clearly and has been widely welcomed by the nuclear industry. The Statement makes it perfectly clear that nuclear will be taken forward and must be a major contributor to low-carbon energy production. However, I have one question on this for the Minister. In the Statement, Mr Huhne said that there will be no subsidy for nuclear,

"unless similar support is also made available more widely to other types of generation".

I am not sure that I quite understand the implications of that.

We are already promised a floor price for carbon, which will help all low-carbon energy sources-in particular, new renewable sources-but I would welcome an indication of what might be done in support of that. There is a growing view that a carbon floor price will by itself not be enough to attract the huge sums of investment that will be necessary. In one representation that I have had, what is being called for is,

"a suite of energy or capacity signals or payments that reward the characteristics required in new generation investment, for example low carbon energy or secure and predictable energy supply".

Will my noble friend say whether the Government are considering capacity payments? They would be very useful not only in nuclear but, for instance, if we are going to have standby generation to supplement wind power when the wind is not blowing.

That takes me to wind power, on which I want to be brief. I read in the Independent the other day that, for every completed onshore wind farm, no fewer than 18 have been abandoned or turned down. They are hugely unpopular and very expensive. When I look at offshore wind farms, where the costs are several times higher, I seriously begin to doubt whether the huge emphasis placed on wind power by the previous Government and by the coalition Government is wise policy. There are other forms of renewable energy that are every bit as environmentally acceptable but that can operate at a substantially lower cost. One of them is nuclear, but there are others; for example, the use of biomass. I have had a representation from one of the companies complaining bitterly that so much subsidy is going in the direction of wind power. It is subsidy paid by the consumer, as I am sure the noble Lord, Lord Whitty, recognises. One of the problems of the pricing is that the fuel-poor pay the subsidy on wind power whereas other sources based on biomass and so on are a good deal cheaper. I hope that the Government will look at this because I do not believe that it is viable in the long term.

We suffer from a plethora of different incentives and support mechanisms covering widely different forms of energy generation. In a complaint that was reported in the Times the other day, people were saying that it may be that the big companies can steer their way through the complexity of the system, but the increasing number of small and medium-sized companies that are coming into this world find it intensely confusing. As I have asked before, is there not a case for trying to simplify the system? If one is going to provide support, subsidy or incentive-I much prefer the word "incentive"-to encourage the kind of generation you want, it should be as simple as possible and apply so far as possible across the board. I hope that my noble friend will be able to give us some assurances about that.

Finally, I shall say a word about carbon capture and storage. There was disappointment on the part of the CCSA about the comprehensive spending review. My noble friend will recognise that as a whole the department has done rather well out of the spending review and has secured a number of really important targets and policy statements. The one I particularly welcome is the recognition of the longer-term nature of the spending by the Nuclear Decommissioning Authority in decommissioning and preparing for the handling of waste. That is something that I have argued for in the past, and I welcome it. It is interesting that not only does it reinforce confidence in the new nuclear programme, which is very necessary, but a recent report by the University of Cumbria has drawn attention to the regional and national significance of this huge programme of decommissioning in which we lead the world. There has been a lot of hype about that in other areas, but in this one we can point to that. The setting up of the NDA by the previous Government was an important step in this direction and it is important for all the supply industries that are based on it.

We are now going to have only one CCS demonstration project. There will be another four but, without funding, what will become of them? I hope that the Minister will be able to say something about that. We need a clear statement of the Government's longer-term policy intentions in the area of carbon capture and storage. As my noble friend Lord Lawson rightly said, there are huge supplies of coal and gas around the world. The other day, I learnt that most of our coal is now imported from huge open-cast mines in Russia. The coal is shipped to Murmansk and then comes here by sea, but that is only part of it. There are enormous supplies. If they are going to be used, and if one is going to try to tackle the problem of carbon, carbon capture and storage seems to be enormously important. I hope that at some stage soon my noble friends will be able to say something about this as their general policy. There was a lot of hype from the previous Government about us leading the world in this field. That is not true. There is carbon capture and storage in America, north Africa, India and China. Unless we get on with it, we will not play a part in it. This is something that Ministers need to take into account.

I have said more than enough. We will have plenty of time and other debates in future on the new statements of national policy that will come before us in due course and on the proposed energy security and green economy Bill, but I have made a number of points to which I hope my noble friend will respond.

Photo of Lord Hunt of Chesterton Lord Hunt of Chesterton Labour 5:50 pm, 2nd November 2010

My Lords, I welcome this opportunity to debate government policies about the critical issues of the UK's future energy supplies and use in relation to climate change. The Statement set out by Chris Huhne, the Secretary of State, is very helpful. Without urgent action, the supply of reliable and economic electrical energy is in some doubt, although we have been hearing that perhaps with extra fossil fuels the doubt is postponed more into the future. But what is in doubt is the UK's commitment to reduce its greenhouse gas emissions as part of the general international programme in this direction. I declare an interest as emeritus professor at University College London and chairman of an environmental consulting company.

As other noble Lords have emphasised, energy and climate mitigation policies are linked to other equally important policies-health, economic growth and equity, the preservation of the environment, biodiversity, and safety against natural disasters and accidents. Joined-up policies are not just an aspiration with economic incentives, subsidies and endless interdepartmental committees. A systematic approach showing transparently how the critical issues are connected together with uncertainties and timelines is required.

As many noble Lords will remember, the effectiveness of such an approach was first demonstrated in the United States engineering programmes in submarine building and space of the 1950s and 1960s. But in 1964, the House of Lords caught up and sadly noted that the Trend report on the future of UK science, which has not been looked at again in that depth, recommended the synthesis of cybernetics, model systems and computer methods. The Lords noted that they were not given very high priority. Lord Shackleton noted that the degree of co-ordination in science-and, he could have added, government policies-was completely lacking.

Since then, however, the value of these methods of dealing with complex and wide policies has been used extensively by large companies. Now, research is being pushed by the European Community and, finally, the UK research council, the EPSRC. This new aspect, which is being considered in project co-ordination at UCL, is not just about how to construct a monstrous computer programme that includes everything, but about how to construct model systems that are designed to help decision-making on particular policies and how to make use of all the relevant science and technology. I was impressed, for example, by the methodology in the recent report by the climate change Adaptation Sub-Committee, which used the idea of a ladder of measures in its critical examination of the threats to the UK of climate change, such as flooding, heat waves, sea-level rise and changes to the natural environment.

But the most important development in the politics of UK energy has been the acceptance by the Liberal Democrats of the need for nuclear energy as part of the mix of energy supplies. I am sure that EDF Energy-I sat on its advisory committee-and other major suppliers will now be able to build power stations on time and on budget, as EDF is doing in Normandy, provided that all the regulatory arrangements are agreed and provided that they do not change during construction. That was the reason for the delays in the Finnish power station. In the past year or two, when I have addressed meetings in the UK, the United States and Japan, there has been a growing understanding of the need for nuclear power and it has grown in popularity.

The Government should now mount a campaign to explain their policies and how they have a long-term vision of how nuclear policies and science and technology will evolve. A hesitant start will not encourage the best engineers and scientists to specialise in nuclear technology and science. As one sees in France, exciting connections are made between this area of science and technology and solid state physics, applied mathematics and environmental science.

In the old days in the House of Lords, Lord Marshall, former head of the Atomic Energy Authority, and Lord Hinton, former head of the CEGB, were great champions of every aspect of nuclear science and technology. I suggest to the Minister that DECC should encourage its leading civil servants and the chief scientist, Professor MacKay, to have this role again both within the UK and internationally. The only really strong international spokesman is Mr Sokolov, the deputy director-general of the International Atomic Energy Agency, whom I have met this year. The UK should be much more prominent in the scientific and technical meetings of the IAEA, perhaps holding one of its conferences in London and not leaving it all to France-a reference to this afternoon.

With 20 to 30 new countries about to launch into nuclear energy, there is a real opportunity for the UK nuclear industry, which I understand from DECC has some promising niche areas. One hopes that Sheffield Forgemasters will still be viable to participate in this, despite the damaging withdrawal of the government ban soon after they came to power.

There are two main concerns about nuclear power that the Government should understand. It is essential that the monitoring of nuclear radiation and its effects on human health, even if it is very small, must be open and trusted. The UK had the world-respected, quasi-independent National Radiological Protection Board, which then became the Health Protection Agency, first led by the former chief scientist, Bill Stewart. This was an excellent example of hiving off the policy of dealing with government through semi-independent bodies, endorsed by the Wilson Government and carried forward by the Thatcher Government.

Will the Minister explain how the Government's decision to merge the Health Protection Agency into the Ministry of Health will not lead to some loss of confidence in the reliability and independence of radiological data and prediction? Professionals are not at all happy about this situation. One asks why, if it is necessary to have a semi-independent body for monitoring economic data and forecasts, and for the effectiveness of clinical treatment, as we heard yesterday, the same does not apply to the activities of the Health Protection Agency. A clear statement is necessary for reassuring the public on this controversial aspect of the environment.

The second issue emphasised by the Government's Statement is the long-term storage of nuclear waste, which, as is currently planned, will be buried in underground storage. So far there are no explicit plans to ensure that this waste will be able to be retrieved when the technology develops to reprocess the waste. A lot of people will have a different view of nuclear energy if there is some commitment to use technology for this purpose.

Large teams in China are working on combined fusion and fission technology, which could use lower-grade nuclear materials, such as thorium, but could also process existing wastes. It could also be more flexible than pure fission in order to combine with other kinds of renewable energy. I am glad to say that there is now a growing interest in this in the UK. I declare an interest as a member of an advisory committee of Tokamak Solutions, which is aiming to develop this technology.

This and the previous Government's low-carbon energy policy is to encourage a wide range of methods and to ensure where possible that they are complementary to each other. In the development of offshore wind energy, the UK's area of international excellence lies in the economic engineering and planning by leading consultancies, and in the great testing facility in the north-east where there is considerable concern that this facility, which is being copied in Japan, is in danger because it was largely funded by the regional development agency. Will the Minister comment on this?

However, there are many other areas, especially manufacturing, where Germany and Denmark are more in the lead. Surely, the rational policy for Europe, just as we heard this afternoon, is to have a network of top-class energy centres that collaborate in pre-competitive research. We have a number in the UK, as do Denmark, the Netherlands and so on. These centres could contribute to better progress in energy efficiency, low-carbon technologies for carbon sequestration, electric cars, large electric batteries for communities and so on. This would not be new. Europe has established extensive collaboration between world-class centres in aeronautical engineering that underpin the great success of Airbus and its adventurous plans for the future. I helped to set up ERCOFTAC, which was one of the European communities supported by industry and universities. We should have the same for energy.

The use of biomass, bioreactors and afforestation, as mentioned by the noble Lord, Lord Grantchester, are all equally important contributors, particularly at a local level, but connections to these policies are proving very difficult and different parts of Whitehall deal with them. For example, will DfID contribute to the poor communities and local governments worldwide that are preserving their forests, as one sees in the Amazon? We also have to think of our poorer communities in the UK, as the noble Lord, Lord Whitty, mentioned, in the low-carbon energy policy.

Much UK housing has very poor insulation, which is much worse than in social housing in Germany. I was a city councillor and I visited German council housing. German representatives came to Cambridge and were really shocked at our poor council house insulation, which has not got a great deal better. It is clear that significant progress will be made as a result of recent measures, but will the Minister tell us what will happen when insulation and better heating are installed, and if rents increase? Will this lead to families in houses at the upper limit of housing benefit being moved, which would be a very serious matter?

I return to human-induced climate change, which only economists seem incapable of understanding, although the noble Lord, Lord Stern, is a notable exception. Its increase and its impacts on the poorest communities in India and Africa can be reduced most effectively by limiting emissions, albeit over many decades. I understand that the noble Lord, Lord Lawson, wants to allow emissions to increase unchecked, and therefore I assume ultimately to spend funds on saving these communities from the most damaging effects of climate change. That could be very expensive indeed. The only country that is really following this is the Netherlands, which published a report a couple of years ago. It expects its dykes to rise to six metres, but it has a coastline and an economy that makes it feel that it can afford that. In other parts of the world, areas will simply be abandoned.

The noble Lord, Lord Lawson, was not correct to imply that China is doing nothing. In fact its forest coverage is increasing, it is developing many new areas of technology and it has five or six carbon trading centres to push its industries to greater efficiency. China does not want to follow the rules, as it were, or international agreements, but it is certainly making progress.

I welcome the Government's commitment to climate change mitigation and adaptation, and their wide-ranging energy policy. I hope that the Minister will emphasise the importance of greater European collaboration in energy technology, again building on what we have heard this afternoon. At the Cancun climate conference, will the Government emphasise the importance of all types of low-carbon energy-including nuclear energy, which was overtly omitted from Copenhagen-and will they also emphasise the importance of integrating energy mitigation and adaptation policies with those of afforestation and the preservation of biodiversity?

Photo of Baroness Maddock Baroness Maddock Liberal Democrat 6:01 pm, 2nd November 2010

My Lords, like other noble Lords, I welcome the opportunity to take part in this important debate and have a couple of interests to declare. I am a vice-president of National Energy Action, a charity that works to eliminate fuel poverty, and president of the Micropower Council. Given what most of us in the Chamber today believe about climate change, reducing energy consumption and moving to sustainable sources of energy must be two of the key strands of our energy policy. For far too long we have been profligate in our use of energy and have failed to build energy-efficient buildings to high standards. If we had been doing this over the past 40 years, we certainly would not find ourselves facing many of the problems that we face today. This point was well made by my noble friend Lord Teverson.

It is amazing that British households still use more energy for heating than Swedish households. For too long, we have taken up measures on a rather small scale and have not been clear enough about the long-term direction of our policy. This has meant that many in the energy business and individuals have not always been willing to invest in technologies. This is the case with microgeneration, an area that I want to cover in the rest of my remarks in order to highlight some of the issues preventing the mass take-up of these technologies.

Microgeneration is the small-scale generation of low-carbon heat and electricity by householders, small businesses and community organisations such as churches and schools. By generating their own heat and power, the microgenerator can save money on bills and help to protect the environment at the same time. According to a government-backed report, microgeneration has the potential to produce as much electricity in a year as five nuclear power stations. The report was commissioned by the former Department for Business, Enterprise and Regulatory Reform in 2008. It also states that with the right incentives, some 10 million microgeneration systems could be installed by 2020. This would provide nearly 5 per cent of the UK's electricity, saving 30 million tonnes of carbon dioxide. So it is clear that microgeneration can play an important role in making progress towards our renewable energy targets, as well as in job creation throughout the United Kingdom. Indeed, the noble Lord, Lord Grantchester, mentioned this in his speech opening comments.

By supporting the microgeneration sector, the Government can create new jobs, revitalise manufacturing industries, help the UK export market, and of course improve our energy security. Microgeneration also has the unusual benefit of engaging citizens directly in their energy supply. This often heightens their awareness of the UK's renewable energy targets and encourages surrounding neighbours to consider microgeneration technologies of some sort. Microgeneration would be only part of ensuring Britain's energy security, but I believe that it does have a place, after energy efficiency measures, to heighten consumer awareness and engage citizens in a way that no other energy supply option does.

What is stopping the potential uptake of microgeneration? The issue of permitted development is a major barrier to both air source heat pumps and micro wind turbines. This was supposed to have been resolved by July this year, but the Government failed to comply with a statutory deadline to introduce micro wind and air source heat pumps into the planning system. At the time, a spokesman from the Department for Communities and Local Government stated that the Government were absolutely committed to laying this right before Parliament and that it would be laid before Parliament before the Summer Recess. However, it was not. This is a major barrier to air source heat pumps and micro wind as it means that those who want to install these products have to seek planning permission first. I would be grateful to hear from the Minister, when he winds up the debate, exactly when this issue can be resolved. It has been going on for a long time, not only with this Government but with the previous Government.

Another barrier to the mass uptake of microgeneration is the uncertainty surrounding financial incentives, although some of this has improved. Before the comprehensive spending review announcement, there was much speculation about feed-in tariff levels and what might happen before the review date in 2013. That speculation arose from the lack of government certainty, and it causes crises for investors, manufacturers and consumers, especially if consumers fear that they will not get the tariffs they were promised. I hope the Government recognise that they need to learn from the past. They must set the post-2013 tariff levels with much thought, and sooner rather than later, because creating certainty is important in that it will allow those affected to adjust what they are doing accordingly.

Clarity around the renewable heat incentive, mentioned by other noble Lords today, is also key. Although the renewable heat incentive announcements were very much welcomed by the microgeneration sector, the detail is yet to come. I do not know whether the Minister is in a position to give us a little more detail on this today. I see that he is shaking his head.

A large barrier to microgeneration uptake is the lack of capital among consumers, especially among the more vulnerable fuel-poor ones. It is important that all citizens should have the opportunity to access these technologies, but to achieve this, capital is key. The Government have announced the phasing out of the Warm Front scheme, also mentioned by other noble Lords. I understand that it is largely to be replaced by the green deal, so again we await further information on the details of the policy.

It is clear that energy efficiency will be key, but it is still unclear whether microgeneration will be included in the green deal as the step on from energy efficiency. Given the consumer behaviour-changing characteristics of microgeneration, the opportunity would be lost if it were left out of the green deal entirely. Again, I hope that the Minister can say something about this when he winds up the debate.

The final barrier to microgeneration that I am going to touch on today is the lack of public awareness of the various microgeneration technologies, and of course the benefits of them. This is something that needs to be addressed both by the Government and by the industry. I know that the Micropower Council is working closely with its members to formulate a plan of action in order to reach consumers and demonstrate to them how microgeneration naturally follows on from energy efficiency.

I hope the Minister will agree that microgeneration has an important part to play in an energy strategy designed to combat climate change. It certainly fits in well with his opening comments about the security of supply and a low-carbon economy. I hope when he winds up the debate that he will have time to address some of the issues I have raised.

Photo of Lord Giddens Lord Giddens Labour 6:09 pm, 2nd November 2010

My Lords, I thank the noble Lord, Lord Marland, for initiating the debate and for the commendable brevity of his introduction-it was short and to the point. I also commend him for his commitment to his work in his post as Minister.

I enjoyed the intervention of the noble Lord, Lord Lawson, who is not in his place. I would go so far as to call it a tour de force-if one can have a tour de force where most of what one says, if he will forgive me, is wrong or questionable. The noble Lord seems to question the authenticity of the science. He thinks that climate change has levelled off and most of his subsequent points and claims stem from that view. However, he is definitively mistaken. The most thoroughgoing climate and weather monitoring organisation in the world, in some part based on space and satellite technology-the National Oceanic and Atmospheric Administration of the United States-has shown that 2010 will be the warmest year in sea and land temperatures since reliable records began. It has analysed data from scientists in 40 different countries, using 10 different indices. All show that climate change is happening and is almost certainly caused by human intervention. It is important to recognise that these studies are based not on modelling but on direct observations.

The risks posed by climate change are all too real and, unlike most other global risks, are irreversible. That is an important point because, once the greenhouse gas emissions are in the air, we know of no way of getting them out again. Because of its implacable nature, this problem is quite different from most of the other global problems that we face.

The coalition is absolutely right to seek to institute measures to reduce our carbon emissions and to call on other industrial countries to lead the way in doing the same. The noble Lord, Lord Lawson, pointed out that on a federal level the United States has been unable to supply the leadership that the world needs. Fortunately, an enormous amount is going on below federal level in the United States, at a regional level, in cities and in individual states-for example, Colorado has an entirely commendable zero carbon plan that is both realistic and interesting.

Climate change should be seen as much as an economic and security issue as an environmental one. Innovation is going to be at least as important as regulation, and countries and businesses that are in the vanguard will prosper in economic competition. This is one of the points on which I disagree fundamentally with the noble Lord, Lord Lawson, as he knows. There is an entire new frontier of economic competition in which the UK must attempt to be at the forefront. The transformations that will occur in the energy industry-not only in renewables but in other areas-will be far reaching and we must not be left behind.

At the moment, this country is absolutely not in the vanguard of these innovations. Even though I sit on the Labour Benches, I have to say that Labour achieved very little in practical change. Of course, the party set up a framework for the future-the Climate Change Act and the Energy Act are important-but in terms of practical achievement there is not a great deal. The UK is currently next to bottom in the proportion of energy mix delivered by renewables.

I applaud the Minister for his determination to change the situation and the coalition for adopting a non-partisan policy. I hope that my party will do the same. It is highly important that climate change should be a non-partisan issue. In the United States, policy has been paralysed by an almost complete politicisation of the issue. Noble Lords will perhaps have seen reported in the Guardian yesterday that only approximately 14 per cent of Republicans accept that climate change is real and caused by human activity, compared to almost 60 per cent of Democrats. We must avoid that political polarisation here. I am pleased that so far we have done so and that the coalition has contributed actively to that. Unlike the noble Lord, Lord Lawson, I support the overall themes and thrust of the coalition's policy.

However, there are plenty of problems around and I ask the Minister to comment on a few of them. First, it is distressing-to me anyway-that the budgets of the DECC and Defra have been slashed so radically. How is that compatible with dealing with what, in the introduction to the Government's report on climate change, is said to be the most fundamental global problem that we face? How is such a devastating cut there and elsewhere compatible with the thrust and commitment that we need, as well as the labour power, from these two key departments?

Secondly, in its letter to Chris Huhne of 9 September 2010 the climate change committee strongly reaffirmed that a step change in policy is necessary. In this document and in its previous report, especially, it calls for a revolutionary change in policy if the country is to reach its 2020 target of 15 per cent of UK energy generation from renewables. I ask the Minister whether the current policies are radical enough. Where is this step change going to come from? I would be grateful if he could identify for me the combination of policies that will produce the step change that the climate change committee has several times restated is necessary.

The Severn barrage, with which the Government have decided not to go ahead, was an area of radical policy that would have contributed to such a step change. In response to a Starred Question in the House on 19 October, the Minister said that the reason for the Government's decision was the cost, which amounted to £30 billion, but I am not sure that that is the case. I would like him to comment further on that, because there is the upfront cost and the overall cost implication for the country of not going ahead with the project. Cost cannot be measured only in terms of what you pay now; it also has to be measured in terms of potential benefits-and the benefits would have been formidable from this single project. I would like the Minister to explain what the cost benefit showed, because it does not appear in his response to the Question.

Thirdly, how much progress has been made with reforming the climate change levy? As I understand it, the relevant legislation will be in the projected Finance Bill 2011. However, as the noble Lord hinted in his introduction, do not energy companies and investors need clear signposts before this? There are plenty of signs that companies are not proceeding with the kinds of innovations that they might otherwise develop because of the fairly long lapse in the introduction of these changes and because they do not know what the context of their business in the future will be.

Fourthly, how much attention are the Minister and the Government giving to lessons that can be learnt from other countries? I have in mind especially Portugal's E4 programme, which was launched in 2001 with the aim of creating a consistent, integrated approach to energy. It has been amazingly successful. Portugal is, of course, a small country and it has a little more sunshine than we do, but it now gets 40 per cent of its electricity from renewables. That is an increase of 28 per cent in five years. This is interesting because in the pre-existing cases of countries that get a high proportion of their electricity mix from renewables, such as Denmark and Sweden-they were driven by energy security considerations in response to the oil crisis of the late 1970s-it took something like 25 years for their policies to unfold. Many have drawn the inference that this is difficult to do and that we are therefore talking about a long-term project, but the case of Portugal shows that that is definitively wrong. It is possible to make very large changes in a short time. We should be ambitious. We have a 15 per cent target, which the climate change committee has recently reiterated, but let us look at what Portugal has achieved and what it is planning, which is to source 80 per cent of its electricity from renewables within the next six or seven years. It shows that it can be done.

This being the second time that I have crossed swords with the noble Lord, Lord Lawson, on these issues today, he will know that there are many areas where I disagree with him. One is China, on which he is absolutely wrong. China has a developed climate change plan, initiated by its Government. The Chinese Government are very worried about the consequences of climate change, pointing to the melting of the glaciers from which the main rivers of China come, which will affect hundreds of millions of people. It is not right to say that the Chinese are simply blind to this issue-very much the opposite is the case. It is not right to say that China is building one coal-fired power station every week and is simply on a fossil-fuel trajectory. As was mentioned in our earlier discussion, the Chinese are closing down a lot of their older coal-fired power stations because they want to contribute to decarbonising their economy. China is taking the lead in wind power and solar power, not simply, I think, because that is where it sees a competitive advantage-although it certainly does-but because the Chinese Government are conscious of the need to transform their energy mix out of concern for both energy security and climate change issues.

This country has to be in the lead in technological innovation in respect of our energy mix. If we are not, we are likely to be the beached whale or the dead duck in the global competition that is now developing.

Photo of Lord Reay Lord Reay Conservative 6:22 pm, 2nd November 2010

My Lords, I am grateful to my noble friend for enabling us to have this debate. He does not shrink from listening to views that are at variance with those which he as a responsible member of the Government has to advance-as he again made clear today.

I first refer to some good news that has recently come from my noble friend's department. It really does look at last as though we are likely to see eight new nuclear power stations in operation starting from about 2018. The previous Government, of course, had already started down this road, after having lost 10 years when, despite enormous parliamentary majorities, Tony Blair made no attempt at leadership on the subject. I therefore congratulate the Government on taking us a step further down the road towards energy security and, if one has been persuaded that it is important, towards further carbon emission reduction. I hope that we will one day go further still down the nuclear road.

I was also pleased that the Secretary of State modified the usual mantra of "no subsidies for nuclear power" by acknowledging that a cap would have to be considered for clean-up liabilities, due in part to international treaty obligations. But the Government continue to gloss over the subsidies which wind power, in particular, has enjoyed and, without which, no investment in it would be taking place. The Secretary of State for Energy and Climate Change even said in the other place that studies had shown that there had been,

"a dramatic reduction in the cost of onshore wind. The result is that it is competitive in a free market with other sources of energy".-[Hansard, Commons, 27/7/10; col. 875.]

In that case, one might ask, why subsidise it? Perhaps my noble friend could tell us when the Government intend to reduce the subsidies for wind power if it is now becoming so efficient.

So-called wind farms are not wind farms; they are subsidy farms. Developers are promised that they can sell all the electricity that they can produce at about twice the market rate and, if they are offshore producers, at three times the market rate. That is what the ROC system is paying for, or rather what the electricity consumer is paying for, at an annual cost of well over £1 billion. That cost is expected to rise to £6 billion by 2020 or until the Treasury intervenes, whichever moment comes first. Why should the Treasury intervene? It is because those subsidies are effectively a tax on the electricity consumer, both business and private, the proceeds of which go not to the Treasury but to developers, including energy companies, to enable them to carry on an otherwise uneconomic activity. From them, they go to landlords, including the Crown Estate. They remove a taxable opportunity from the Treasury and, in time, will reduce the tax base by making industry less profitable. They will undoubtedly drive parts of it out of the country altogether.

The Government are also fond of saying that wind power contributes to our energy security. The logic of this claim is equally incomprehensible since, as wind is not available on demand, there will always have to be sufficient power available from other sources to meet peak demand, just as there would have to be if we had no wind power.

Apart from disingenuously trying to give the impression that the market will choose between nuclear and wind power on a level-playing-field basis, the Government are insinuating, equally unconvincingly, that a level playing field operates within the planning system. Replying to a debate on onshore wind farms in Westminster Hall last month, the Minister of State at the department, Mr Charles Hendry, said:

"In the spirit of fairness, we all believe that it is right that if an application is turned down at one level, people should continue to have a right to appeal for a redetermination".-[Hansard, Commons, 13/10/10; col. 138WH.]

This seems very misleading. In the first place, it is not people, in the sense of local communities, who have the right to appeal against local authority planning decisions. If the application by the developer is granted, there is no appeal against that decision. It is only the developer who has the right of appeal if his application is turned down. That might be thought not unreasonable, but any idea of fairness is made a complete mockery of by the subsidy system. If a local planning authority's rejection of a planning application is appealed against, the issue normally goes to a public inquiry before a planning inspector. That is a very expensive procedure. The inquiry typically goes on for several weeks, with legal representation on all sides. The developer, very likely to be a large foreign-owned energy company, has the comfort of knowing that, if he wins, he will earn in the order of £0.25 million per year per 2 megawatt turbine in subsidy alone, and that, if he loses this appeal, he may win the next. Local objectors, if they organise themselves to oppose the appeal, will have to find in the order of £50,000 to £60,000 to meet the cost of expert witnesses and the very cheapest of lawyers. The local authority will have to find even more, perhaps in the order of £100,000, to fight the appeal. This is an incentive to local authorities to allow applications in the first place.

Nevertheless, despite this pressure applied by the Government through the subsidy system, and despite the pressure applied directly on local planning authorities to get them to accept responsibility for achieving the Government's renewable energy targets, there has recently been a most heartening tendency across the country for wind farm applications to be rejected at one stage or another in the process.

An unpublished report, apparently produced by the Renewable Energy Association, which is the trade association for the wind industry, was referred to in several newspapers last week. It apparently declared that in the face of increasingly organised opposition throughout the country by what amounted now to more than 230 local campaign groups, planning approvals for onshore wind farms had fallen to an all-time low, with only one in three applications getting the go-ahead from councils.

I live in a beautiful part of the country in the north-west, the Lune Valley, in a corridor between areas of outstanding natural beauty and two national parks, an area celebrated by Ruskin and Turner, which has been targeted by wind farm developers. In the past year or so, four applications have been turned down, one of them at a public inquiry, yet still the developers keep coming back. Most recently, an application was made for 20 monstrous turbines on high ground six kilometres inside the area of outstanding natural beauty of the Trough of Bowland. It was emphatically-indeed unanimously-turned down by the planning committee of Lancaster City Council, despite there being two members of the Green Party on it, following a strong recommendation to do so by their planning officer and strong pleas to do so by various statutory consultees, including Natural England.

However, the developers, who have no experience in the business but deep pockets, have appealed. Have they calculated that the local authority, at a time of cuts in local authority grants, will not have the stomach for an expensive full blown public inquiry and may offer them a compromise? Most probably.

It is a sad sight to see Mammon subverting democracy-in this case, local democracy-and the Government cheering on the sidelines. As yesterday's White Paper on local growth reveals, the Government are proposing to bribe local authorities to grant more approvals by allowing them to keep the business rates so generated. As the campaign groups are for the most part not motivated by money, unlike the developers, they will certainly not disappear, so the effect will simply be to sow even more discord than there is already in local communities.

It will be taxpayers' money thrown with the deliberate purpose of overwhelming those who are trying to protect not simply the value of their homes but our finest landscapes, famous throughout the world, a magnet for tourists, one of our precious national assets. What is that great sacrifice for-of the living standards of ordinary families, of the competitive health of our industries, of our future prosperity, of our scenic fame? It is supposedly in the cause of reducing our carbon emissions, but once you have taken account of all the emissions produced in the manufacture, installation and maintenance of the turbines, and then of the same with regard to the fossil-fuelled power stations, which are being inefficiently ramped up and down in response to the fitful generation of wind power, it is highly unlikely that we will get any carbon emission savings at all.

The wind industry is a subsidy-driven farce, a distraction from the serious pursuit of energy security and a complete negation of what the Government insist is another of their priorities-the promotion of economic growth. The subsidies will cost far more jobs in the rest of the economy by raising the cost of energy than they will ever produce in the wind power industry itself. It is deeply depressing to see the Government still feeling obliged to keep in existence this green albatross.

Photo of Lord Haskel Lord Haskel Deputy Chairman of Committees 6:34 pm, 2nd November 2010

My Lords, I put my name down to speak in this debate because climate change seems to have taken a back seat recently-a back seat to the economics of the comprehensive spending review. I welcome this debate to re-emphasise its importance. I also broadly welcome the Minister's opening remarks about continuing the nonpartisan work on the security of supply and the green economy.

The Minister also spoke about value for money. I am not sure what he means by that. Incidentally, I wonder whether he has consulted the 100-page book in the Treasury which lays out the value-for-money rules in public expenditure. To plan future energy policy, it seems to me that there are four things for the Government to do: first, win the climate change argument; secondly, plan a future supply of low-carbon energy; thirdly, forecast the way that we will use it; and, fourthly, learn how to influence our behaviour so that points two and three will work.

The Minister had nothing to say about winning the argument. My noble friend Lord Grantchester hinted at it, and the noble Lord, Lord Lawson, explained exactly why winning the argument is urgent and never-ending. It is difficult, and changing economic conditions encourage scepticism. The noble Lord, Lord Lawson, spoke of the USA. I agree that the midterm election in the United States does not bode well for the climate change argument. It is difficult to know how scientists can win the argument in America when the other side claims that it is acting on God's will.

However, the Royal Society, in its helpful document summarising the science, lists those aspects of climate change on which there seems to be wide agreement: how surface temperature has changed; how concentrations of CO2 have increased; and how those effects are related to human activity. The Government have to stick to those basic arguments and make the case that unless we act, this trend will continue. The sceptics argue over by exactly how much the Earth's temperature will change, but I do not think that that is an argument for government. The argument for government is the effect that all this will have on sea level, on agriculture, as my noble friend explained, on communities, on ecology, and that it is irreversible, as my noble friend Lord Giddens explained. I know that we already have laws about carbon reduction, but even so, it is necessary to engage with and keep winning the argument.

I agree with my noble friend Lord Whitty. Planning the supply of energy over the next 40 years means having a mix: coal and gas, bioenergy and renewables, nuclear, and anything else that comes along. Despite what the noble Lord, Lord Lawson, said, decarbonising the energy supply will require a substantial and sustained investment in research and in equipment, and investment in a smarter and more efficient distribution method. We need to rethink our whole network to accommodate the electrification of sectors which do not use electricity at present, such as delivering electricity to fuel car cells from offshore wind farms. Does that mean a bigger network or a more local network? Probably, a more local one.

The noble Baroness, Lady Maddock, spoke of microgeneration. I was speaking to people at NASA recently, who are talking about supplying small nuclear generators buried in the ground which will supply a cluster of buildings for 20 years without servicing. The noble Baroness is right. Such green technology is an important area for growth.

Several noble Lords have reminded us how much of our energy is imported, and the security and source of those imports is a matter of constant concern. That and climate change enormously influence our future energy policy. Planning the supply of energy is intimately tied up with our forecast of how we use energy. Most expect a substantial increase in the electrification of heating and transport, but the production has to be decarbonised. At the same time, we must reduce our use of energy and use it more efficiently, which means lifestyle changes and changes in our behaviour. Perhaps the most important sector for decarbonisation is transport-electrification of road transport and, at the same time, getting people off the road and on to rail-but the message in the CSR is mixed. We are promised more rail electrification but, at the same time, fares are going up. Some parliamentarians are campaigning against the proposed new high-speed rail scheme to Birmingham while the Mayor of London, instead of increasing the charge for road use, is reducing the congestion charge area.

Changing and influencing behaviour is most easily done by pricing. It seems to me that the Government are not only missing an opportunity in the CSR but sending out a mixed message which will only make things worse. Influencing lifestyle and changing behaviour is certainly part of energy policy. Downing Street has a special unit studying behaviour change and it will be interesting to hear from the Minister about how that unit anticipates influencing our behaviour so that we use less energy. The acronym they use for the elements that have been found to impact on our behaviour is MINDSPACE. The Minister will have to be careful with this acronym, as it is going to be easily misinterpreted because there is something rather sinister about it. There is probably somebody blogging about it as we speak.

To influence behaviour, you have to make value judgments and those values are open to all kinds of political interpretations. Is it appropriate for the state to influence behaviour and set the limits of personal responsibility in this way? This is a very controversial area. However, when limited to the effects of climate change, to the use of less energy and to the acceptance of new technologies and the necessary change in lifestyles involved, MINDSPACE could be on pretty safe ground. I hope that the Minister will continue to champion climate change and security of supply as a driver for energy policy and I wish him every success in this important work.

Photo of Lord Smith of Finsbury Lord Smith of Finsbury Non-affiliated 6:42 pm, 2nd November 2010

My Lords, I begin by declaring an interest as chairman of the Environment Agency. It is a pleasure to follow the noble Lord, Lord Haskel, because the starting point of this debate has to be recognition of the reality of climate change. In a way, it is also a pleasure to follow on from the earlier remarks of the noble Lord, Lord Lawson, because he highlighted some of the essential issues that we need to address. He appeared from his remarks to accept that there has been some warming over the course of the past 100 or 200 years. He appears to think that that process has stalled over the past 10 years or so-and with that analysis I am afraid I cannot agree. He also says that he has an open mind on whether the science tells us that there is going to be much more climate change to come. I find the science much more compelling than he does, but the problem I find with his argument is that he says, "Even if that is going to happen, it doesn't matter". I am afraid that it does matter.

In the Environment Agency, we are at the very point where environmental and climate change has its greatest impacts on people's lives. We try and cope with flooding and flood risk. We try and cope with eroding coasts in Lincolnshire, Yorkshire and East Anglia and with the difficulties that are going to face farmers, industry and households in the east and south of the country in 20 years, when river flows are 50 per cent lower in summer months than they are now. These are going to be the realities of climate change. One does not have to look just at the dangers that face people in Bangladesh or the Maldives, or in Kenya or central Australia to see what climate change is likely to bring. We look at what is going to have an impact here, so I am afraid that to stand up and say, "We in this country will benefit from climate change", profoundly misunderstands the nature of the threat and the impact that climate change is going to have.

There have of course been huge disappointments in the global response to climate change, especially at Copenhagen last year. I fear that the political disaster which I suspect is unfolding in the United States as we speak will make that challenge even worse; on that point, at least, the noble Lord was right. Yet that does not mean that we should simply walk away from the issue here in the UK or ignore our responsibility to continue to do what we can-not just to prepare to adapt to the challenge that climate change will bring us but to do everything that we possibly can, here in this country, to try and contribute to combating the causes of climate change in the first place. That is where energy policy becomes so important.

Any sensible energy policy in the light of this challenge has to be based on the triumvirate of renewables, nuclear and abated fossil-fuel technology. We do not particularly have time on our side in this. If we do not get a move on with renewables, do not develop the carbon capture and storage technologies that we need if we are to abate fossil fuel production and do not get ahead with building a new generation of nuclear power stations, we will end up with an energy gap in between 10 and 15 years that will, I suspect, prompt a dash for unabated gas in the same way that we responded a few decades ago. We do not have that much time to get this right, but we need to do so and the Government, I know, have the right intentions in this.

I want to touch briefly on three crucial issues. First, on nuclear I have to confess that I used to be a nuclear sceptic, but climate change has made a realist of me and I recognise that nuclear has to be part of the answer. However, there is one crucial issue to which we do not yet have the answer; what to do with the high-level, highly radioactive and very long-lasting waste that nuclear fission produces. There are proposals for the creation of a deep, secure repository for high-level nuclear waste, but the Government have been talking about the possibility of that not happening until 2040. That is far too long a timescale for us to be looking at. We need to get a move on, with a much greater sense of urgency, in securing the future safety and safeguarding of that high-level nuclear waste.

Secondly, on renewables we are not doing nearly enough at the moment on tidal and wave power development. The Government made absolutely the right decision not to go ahead with the original proposals for the barrage on the Severn estuary. This is the one point on which I find myself in disagreement with the noble Lord, Lord Giddens. Building a wall across the estuary from Weston-super-Mare to Cardiff would have caused untold damage to the ecology of not just the Severn itself but the Wye and the Usk as well. Not just the bird life but the fish life and the entire ecological stability of that river basin would have been affected. We have to make sure, however, that we can tap in to the extraordinary power of the Severn Estuary along with other estuaries, and more generally the waves and tides that surround our island. We are almost uniquely blessed with this potential resource of energy generation, and putting in place the research for the reefs, fences and underwater turbines that could be providing us with solutions in this respect is something to which we need to devote much more attention and energy.

Thirdly, there is the development of carbon capture and storage technology for traditional fossil-fuel power stations. We were, of course, going to have four demonstration projects-that is still the Government's stated intention-but RWE has now pulled out of its development of a coal-fired power station at Tilbury, E.ON has pulled out of a coal-fired power station at Kingsnorth and Powerfuel has postponed its proposal for Hatfield in South Yorkshire, all of them saying that economic and financial considerations have made them either pause or abandon their proposals for abated coal technology. We are left with a small but rather important pilot that Scottish and Southern is putting in place at Ferrybridge and the one large-scale proposal, which is for a retrofit by ScottishPower at Longannet in Fife, adding CCS to an existing and relatively old power station. It is important that that proposal goes ahead, but one project on its own is not enough.

So what will happen now? Have we abandoned the principle of a levy in order to fund carbon capture and storage projects? Are we going to see any other coal-fired power stations with full-scale CCS attached? Heaven forbid that we should see any coal-fired power stations unabated, with no CCS attached. What does this mean for the potential economic wealth-providing export opportunities that the development of CCS technology could bring us as a country?

Perhaps most importantly of all, are we going to see carbon capture and storage developed and supported by the Government for new gas-fired power stations? If gas is indeed going to be the preferred energy source coming forward from the industry, and there appear to be indications that that may well be the case, then the need for CCS for gas to be tested, trialled and put into operation at scale will become essential.

Over the next 10 to 15 years in this country, we face a potential energy crisis if we do not do the right things over the next few years. We face a climate crisis over the next 40 years. There are some solutions to both of these crises, and a synergy is possible between those solutions. The Government must rededicate themselves to achieving them.

Photo of Baroness Noakes Baroness Noakes Conservative 6:54 pm, 2nd November 2010

My Lords, it is a pleasure to follow the noble Lord, Lord Smith. I must say that I disagree with much of what he said, particularly at the beginning of his speech, but we agree on the need for nuclear, if perhaps not for quite the same reasons.

I do not share the view that the consensus on climate change is the last answer on the science, particularly with regard to the causes of any global warming. I am not a scientist, but I have seen enough alternative analysis posing challenges to the prevailing view to be clear that the consensus is not an absolute one. I do not buy the inevitability of the consequences and therefore the need to act now. I have been heartened that institutions such as the Royal Society are now open to wider debate, and if the IPCC follows the recommendations of the InterAcademy Council-that is a big "if"-its next assessment should be a more balanced one.

In my contribution to today's debate, I shall not rehearse the arguments that go to the heart of the science. Instead I should like to focus on costs of the policies that are being introduced to combat climate change and on the impact of those costs. Most of the policies that we are implementing today were developed at a time of economic plenty when many, including the previous Government, were convinced that growth and prosperity would carry on indefinitely. Today's economic circumstances are quite different. We live in an age of budget cuts, rising government debt and expenditure cuts. Businesses are struggling to survive, and the outlook for household incomes is uncertain. There is, I submit, a legitimate debate to be had about whether the costs of action on climate change are affordable in today's environment.

The previous Government estimated that their Climate Change Act target of reducing CO2 emissions by 80 per cent by 2050 would cost £18.3 billion every year for the next 40 years. That is, our country will spend three-quarters of £1 trillion by 2050. To put that in context, that is roughly equivalent to the whole of the public sector debt that we inherited from Labour when we came to power earlier this year. Of course, the costs are not being picked up by the Government. We will not see them as higher taxes; rather, they are being absorbed elsewhere in the economy and will end up with consumers.

I shall take the example of feed-in tariffs. These tariffs benefit those who invest in various forms of favoured small-scale renewable energy by providing a non-market price for that energy. It is certain that these tariffs have skewed investment decisions. The mere fact that a whole industry has grown up around third-party installation, designed to milk the tariffs, is a testament to the effectiveness of the policy of encouraging investment in small-scale renewables. However, the cost of those feed-in tariffs is not borne by the energy companies-they simply pass them to energy users. I applaud the Government's spending review for acknowledging that the tariffs will be changed from 2013 to make the scheme more affordable. I hope that the Government will take the opportunity to return those tariffs to something much closer to market pricing principles.

Of far greater economic importance are the subsidies that are paid to large-scale renewable energy. In particular, the operators of offshore wind farms are rewarded at double the rate of those of onshore wind farms through the renewables obligation certificate system. This clever system pumps subsidy into favoured forms of renewable generation, almost invisibly. The cost, though, is very real and lies hidden within the energy bills of consumers.

Another hidden cost comes from facilitating the use of renewable energy sources. The plain fact is that the wind does not blow all the time-indeed, the Department of Energy and Climate Change's own figures show that wind turbines achieve only 26 per cent of their capacity. It is normal for our country to have extremely cold days that have no wind during the winter. That means that power from conventional power stations will have to be available, on a highly inefficient basis, to meet peak demand, regardless of how much renewable capacity is installed in the country, so the system bears the cost of capacity twice over.

As my noble friend Lord Reay has said, all of this finds its way into higher fuel bills, which have a direct impact on both businesses and domestic consumers. DECC's own figures suggest that, by 2020, domestic energy prices could be one-third higher than they would have been without climate change policies. The picture is even worse for businesses, where the figure could be as high as 70 per cent. Businesses currently have to bear the climate change levy. In future they can look forward to the carbon reduction commitment, which the spending review has turned into another carbon tax, raising £3.5 billion over the next four years.

What will all of this do to our economic competitiveness? The UK does not have many natural cost advantages and it can do without being loaded with significant cost disadvantages. It might be okay if businesses around the world were bearing the same costs, but this is manifestly not the case. Are the developing economies adding this degree of burden to their businesses? Are the US or Russia doing so? Is even the whole of Europe so enthusiastic? Of course not. Copenhagen failed to achieve common action and I agree with my noble friend Lord Lawson that Cancun is also likely to achieve no agreement. I cannot blame any country for choosing not to burden its economy today with avoidable costs.

It is already the case that some businesses are ceasing to operate in the UK because of environmental taxes. To take one example, Britain is now a net importer of cement; it used to be a net exporter. Another example is data centres, which are high energy users. Even if they can achieve state-of-the-art energy efficiency, the carbon-related burden of high energy prices in this country, along with other levies, makes the UK an uncompetitive location. The Government are rightly emphasising the need to stimulate growth in the economy, alongside the necessary public expenditure reductions that were set out in the spending review. We will not achieve that growth if the UK is perceived as a high-cost location. We will also not achieve that growth if the regulatory ratchet is not set to reverse. Another regulatory burden comes with the CRC reporting and assurance requirements. Is the Minister aware that dealing with CRC compliance is a new growth employment sector? If that is what green jobs are, I do not think that we want them.

I turn to the impact of these policies on individuals. They will of course be hit by rising prices of goods and services, which will come as high energy costs hit producers. Individuals will also bear direct hits in their energy bills from the costs that the energy companies pick up. As I noted, these could rise by 33 per cent by 2020, and that is without any other real energy price effects in the economy. One impact may well be that domestic consumers are incentivised to use less energy, which would be a very good outcome. I agree with the noble Lord, Lord Teverson, that energy savings are desirable in their own right. However, it is unlikely that this will be enough to avoid a further increase in fuel poverty.

At present, it is estimated that around 6.6 million households in the whole of the UK are living in fuel poverty-more than a quarter of all households. The noble Lord, Lord Teverson, quoted the figure of 4.5 million households but that is for England alone. Fuel poverty increased hugely during the last decade as energy costs rose. The impact of climate change costs is regressive because energy costs form a disproportionately large portion of the income of poorer households. The money going into energy efficiency schemes for the poor was reduced in the spending review, with energy companies being told to pick up even more of these costs, for example on tariff subsidy and insulation. That may be convenient for the Government in public expenditure terms but there has to be a limit to how far energy companies can shift costs from one set of consumers to another. It seems implausible that these measures will make a significant dent in the 6.6 million fuel poor that we have in this country.

The Minister will recall that the previous Government were very fond of publishing targets with a great fanfare and then pretending that the job was done. They said that they would end fuel poverty for vulnerable groups by 2010 and completely eradicate fuel poverty by 2016. The 2010 target was missed and general fuel poverty was moving in the wrong direction. What is our new Government's attitude to reducing fuel poverty, and by when do they think it will be eliminated?

I do not expect an instant conversion from my Front Bench on the imposition of costs in the name of climate change. However, I urge my noble friend to look again at whether wearing a climate-change hair shirt serves the real interests of our nation.

Photo of Lord Haworth Lord Haworth Labour 7:05 pm, 2nd November 2010

My Lords, I thank the Government for staging this debate today; it is certainly timely. Last week I had the privilege of attending a very interesting seminar in London, organised by the Westminster Energy, Environment and Transport Forum, with the title "Nuclear Energy: Moving Closer to New Build". We may be moving closer but the rate of progress seems glacially slow. Indeed, one might say the glaciers are melting rather faster than we are making progress. The keynote speaker at the conference was Keith Parker, chief executive of the Nuclear Industry Association. He rightly identified the speech made by Tony Blair to the CBI in 2006 as the turning point in the chequered history of nuclear power in this country and as,

"the moment which historians will recognize as the crucial signal of a change of policy after two decades of gradual decline, after Chernobyl and after the denationalization of the energy utilities".

Unlike the noble Lord, Lord Reay, who was rather curmudgeonly on this point, I think that announcement remains one of the bravest, boldest and best decisions taken by that Labour Government.

Two years later, in January 2008, after the lengthy process of the energy review, the White Paper on nuclear power was published. It set the seal on Tony Blair's far sighted vision and gave new impetus to the nuclear industry. We are now, however, almost five years on and the best we can say-with last week's announcement from the Secretary of State for Climate Change-is that eight sites have been formally identified as suitable for the next generation of nuclear stations. It is progress but it is painfully slow. Meanwhile, we are heading rather faster towards something of a cliff edge, with the closing down of substantial generating capacity-starting within the next five years-of old coal-fired power stations and old life-expired nuclear capacity.

I welcome the publication of the whole suite of revised draft national policy statements on energy, which accompanied the Minister's Statement last week, as I welcome this debate. I am glad that we are getting on with it and I have no wish to pour cold water over welcome progress towards the new nuclear build. However, the conference I attended also raised a major question about the long-term sustainability of nuclear power on the basis of present policy.

The forum heard a presentation from Professor Colin Boxall of Lancaster University. He occupies the chair in nuclear engineering and decommissioning in the engineering department. His talk centred on the availability of uranium worldwide, and how long this finite resource will realistically last. It is not just us who have taken a key decision to develop a new generation of nuclear reactors. Last year, worldwide, there were 436 reactors in 31 countries, providing some 370 gigawatts of capacity. Rather more importantly, there are 50 reactors under construction in countries such as Japan, Korea, Finland, India and China. In addition to that, 137 more are on order or planned and a further 295 proposed-a total of 482 new reactors, which will more than double present capacity. It somewhat dwarfs our proposals for our eight sites. This is a major projected uplift in nuclear capacity worldwide and has big implications for uranium supply. The known resource of uranium in the ground is 5.5 million tonnes. It may well be that there is approximately twice that undiscovered-another 10.5 million tonnes-based on the geological characteristics of known deposits. More than 1 million tonnes of this had already been used up by the turn of the century, way before the great leap forward for nuclear.

I am sure that the House does not want to hear a long string of alarming figures from me based on possible projections of the rate of consumption of uranium. I could do so as I have a lot of figures here in my notes, but let me summarise them very crudely, though I hope without any unfairness or exaggeration. The 4.5 million tonnes remaining equate to about 70 years at the current rate of consumption and burn-up. At the historical growth rate of 1 per cent per annum, even the speculative resource will be exhausted in just over 100 years. At a modest future growth rate of 1.4 per cent per annum, the known reserves will be exhausted within 40 years and, at a wholly plausible growth rate of a little greater than that but still less than 2 per cent per annum, exhaustion of the known reserves will come as soon as 2045 and exhaustion of the speculative reserves before the end of the present century. I am happy to provide the Minister with these figures, but I am sure that they are available to his department and are unlikely to be seriously disputed. Indeed, a number of senior civil servants from both the Department for Business, Innovation and Skills and the Department of Energy and Climate Change heard the same presentation as me last week.

For the future of nuclear worldwide, not just in the UK, this is a serious issue of sustainability. Our nuclear programme, going forward, is based on the presumption that,

"any new nuclear power stations that might be built in the UK should proceed on the basis that spent fuel will not be reprocessed and that plans for, and financing of, waste management should proceed on that basis".

That quotation is taken from the 2008 White Paper, Meeting the Energy Challenge. The consultation document published around the same time by BERR states that the,

"base case for decommissioning and waste management costs associated with new reactor construction assumes that there will be no reprocessing of the uranium fuel, and spent fuel will be disposed of after it has been used".

In other words, "once through" is the preferred option. This was underlined again in the revised Draft National Policy Statement for Nuclear Power Generation (EN6) at section 2.11 dealing with radioactive waste management. This was published the other day.

On the basis of current policy we are going to run out of uranium rather quickly, probably before we run out of oil. Climate change and future energy policy are long-term issues. The effects will be felt long after we who are discussing these matters and taking decisions now are all dead, but we surely owe it to future generations to use our finite resources as sustainably as possible.

I am not in any way suggesting that the next generation of nuclear stations-the ones just around the corner-should be delayed while other ways of dealing with the uranium issue are investigated. That would be a sure way to see the lights go out in my lifetime. However, I hope that further consideration of issues relating to reprocessing and/or fast breeder technology will come under active consideration for the next generation after that, for stations which might be planned to come on stream after 2030. Fast breeders are likely to be something like 40 times more fuel efficient and would extend the lifetime of uranium fuel perhaps by-again, this is an estimate-3,000 years. Even at higher growth rates for nuclear than previously discussed, this avoids exhaustion. Such technology does something else as well: it significantly reduces the heavy metal residues and the radiotoxic burden which would need to be sent for final disposal in the proposed geological disposal facility. It would be a win-win situation. I do not begin to suggest that fast breeders would not be without associated problems. There is the question of cost, impact on the environment, the issues relating to nuclear proliferation-because of the separated plutonium-and other safety concerns, including transport. However, such technology would extend energy availability from uranium from maybe 80 years to more than 3,000 years. There would be a huge reduction of the waste heat load and radiotoxicity in the proposed repository from a quarter of a million years to 120 years and a reduced dependence on foreign oil, LNG and coal.

In the context of climate change and the long-term use of sustainable non-carbon energy sources, these are surely considerations on which the Government should have an open mind and an active and inquiring mind. I look forward to the Minister's response.

Photo of Baroness Parminter Baroness Parminter Liberal Democrat 7:15 pm, 2nd November 2010

My Lords, the scientific findings about humanly induced climate change and the damage that it poses are widely acknowledged, although clearly not by all in this House. It is therefore right that the Government should have stated that they intend to be the greenest Government ever. This ambition is a global necessity.

The record to date on delivering on that ambition is to be applauded and not just by those on this side of the House. Prior to the release of the comprehensive spending review, Michael Jacobs, a visiting fellow on climate change at the LSE and a former adviser to Gordon Brown, posed three tests for the Government. The three tests were: a green investment bank; the development of carbon capture and storage technology; and stimulating a British wind turbine manufacturing sector. We know that on all three the Government gave the green light.

However, with the UK responsible for only 2 per cent of the world's emissions, greater urgency is required on the international front. The Foreign Secretary recently called on foreign policy practitioners to,

"up our game in building a credible and effective response to climate change".

The Secretary of State for Energy and Climate Change is working with European partners to secure a 30 per cent reduction target in carbon emissions. I am grateful to my noble friend the Minister for his reply to my question in the House last week about the Government's efforts to ensure that China and the United States demonstrate the necessary leadership on this issue at Cancun later this year. As the noble Lord, Lord Giddens, said, trying to engender a greater sense of urgency on the international front will be as critical as delivering a sustainable energy policy within the UK.

Many barriers remain to delivering such a sustainable energy policy. I want to focus on just one: public acceptance of new energy infrastructure such as power stations and wind farms. Now is the time to address this issue. If we do not address it at an early stage, we know only too well that we will face public opposition at the last stage when energy infrastructure proposals appear to be dropped on local communities.

We need to move away from debates that pitch respective sides as zealots and reactionaries. As we at last become serious about tackling climate change, we need to find ways in which to bring the public with us on the journey of transition to a low-energy Britain. To that end, I respectfully ask my noble friend the Minister to reflect on two things. The first is to start talking to the public about the choices that we face in a way that people understand. Bluntly, the communication strategy of the Department of Energy and Climate Change can be summed up as one of graphs, charts and gigawatts. We need to give people a positive vision of what a low-energy economy could look like and what the options are in terms of the intensity of land use and the changes that we will make to our natural and built environment. Landscape is the lens through which we see how our country is changing.

Other groups are trying to engage the public in this way, giving options of how Britain might look in the future. One such attempt is that by the Centre for Alternative Technology with its Zero Carbon Britain 2030. Its picture is of a British landscape very different from that which we have now. Now is the time for the Government to give their vision and engage with the public in a debate about what Britain could look like. A 2050 energy pathways calculator may help some to understand the scale of the challenge of decarbonisation, but, frankly, the department needs to do much more, using language and images that the people of our country understand and can relate to.

Secondly, by creating the right planning framework for land use decisions, people can be appropriately engaged while investors are given the certainty that they need to bring forward the right proposals in the right locations. The Government have made a welcome first step, as the noble Lord, Lord Grantchester, said, in abolishing the previous Government's Infrastructure Planning Commission, but we now need certainty-and soon-about a reformed planning system. I hope that the Minister will work closely with his colleagues to ensure that the decentralisation and localism Bill gives local communities the ability to shape the places in which they live and work, respecting the value of the country's best landscapes and natural and historic environments while delivering a renewable energy revolution.

As part of that, continuing support is vital for innovative ways of engaging people in the planning process and for renewable technology capacity assessments at geographic levels to which the public can relate. Good examples of these are PlanLoCal, a programme of the Centre for Sustainable Energy, currently financed by the Department for Communities and Local Government, to encourage greater public access and participation in the planning process. Another example is Herefordshire's 2026 renewables capacity study. These examples give people a real sense of the physical impact on their communities and landscapes early in the planning process and help them to accept necessary change.

The scientific case is clear for ensuring that our energy policy responds to the challenge of climate change. The Government have shown their commitment to dispensing their international responsibilities and unlocking the infrastructure to deliver low-carbon energy. The time is now to engage the public in delivering the necessary energy changes to ensure that global warming does not change our country for the worse.

Photo of Lord Stoddart of Swindon Lord Stoddart of Swindon Independent Labour 7:21 pm, 2nd November 2010

My Lords, I should declare an interest in that I was employed by the Central Electricity Generating Board for 19 years in a power station and I enjoy, if I may put it that way, a very small pension administered by British Energy.

It was welcome to hear the Minister say that he was going to listen to the debate. I hope that he takes heed of what is said and that his Secretary of State will do likewise. The Minister made one of the shortest speeches that I have heard from the Front Bench, which proves that he wanted time for other people to say what they felt about the Government's policy.

I and many other people are getting fed up-sick and tired-of being described as climate change deniers. That term has a serious connotation and we do not like it. It is associated with Nazism and the Holocaust and I hope that others, including my ex-noble friend, the noble Lord, Lord Whitty, will cease to use that insulting term.

The people who are described as climate change deniers do not deny climate change at all. That would of course be absurd, because there has been climate change for the past 4.8 billion years. Indeed, without climate change, we would not be sitting here, nor would there be many mammals about-if any other life on earth at all. No one is denying that there is climate change. What we say is that, although there will be climate change and some of it may well be manmade, in our view it is not exclusively caused by CO2 emissions. This is the problem that ought to be discussed.

The noble Lord, Lord Smith, said that he disagreed with the noble Lord, Lord Lawson, who made a magnificent speech, and criticised him for saying that there were some benefits from global warming. Of course there are benefits; after all, since the ice age, the global temperature has increased by 16 degrees Fahrenheit. If that had not happened, we would not be sitting here; we would be way down at the equator, because this country was uninhabitable.

D

It is refreshing to hear common sense, as always, from Lord Stoddart.

Submitted by David Wright

Photo of Lord Hunt of Chesterton Lord Hunt of Chesterton Labour

Perhaps I may comment. The Met Office in its computer modelling has certainly studied what would happen if no CO2 was produced by industry. When you take the CO2 out of industry, you find none of the climate change observed over the past 150 years. People have considered the noble Lord's point seriously; they have looked at it in great detail and that is their conclusion.

Photo of Lord Stoddart of Swindon Lord Stoddart of Swindon Independent Labour

Yes, I understand that perfectly and I accept that scientists are serious and knowledgeable people. However, they can be wrong and they have been wrong. In 1970, the same sorts of scientists were saying that we were going to have a new ice age. Suppose that we had then pumped lots of CO2 into the atmosphere so that we did not have an ice age. What then? The same scientists were predicting that places in the Himalayas would disappear within 50 years. They had to revise that prediction to 250 years. Not all that scientists say can be taken as gospel. That is why there should always be people who study these things and are able to challenge them. Therefore, I hope that the term "climate change deniers" will be dropped from the vocabulary on this question.

The Government have tried to get to grips with the problems that we face, but whether they are dealing with them correctly I do not know. I believe that there is far too much concentration on wind power, for example, because wind is the least viable option on practically every test. As the noble Baroness, Lady Noakes, pointed out, wind power will be expensive for electricity consumers-very expensive indeed. Wind turbines, offshore and onshore, are environmentally destructive. Do not make any mistake: the disturbance to the marine environment from building these monsters out at sea is serious. They affect fish life and the environment of various species and may well affect the industry. I do not know what will happen when the first oil tanker crashes into a wind turbine. I hope that it will not happen, but it may do so.

We have already heard that there is intermittent supply from wind turbines and that they do not usually supply energy when we most need it-when it is cold and in the winter. As regards maintenance at sea, especially in winter and the gale season, it will be difficult to get out there to maintain them when they break down, as they surely will. What is more, we also have to duplicate the power from the wind turbines, because we cannot guarantee that they will meet maximum demand. This happens in January or February, so that when we need them most, they are not available. The savings in CO2 must be balanced against the costs of their construction and of the construction of the backing power that must be provided.

Finally, wind turbines have a short working life. A power station such as Sizewell B provides the same output as 600 wind turbines. It provides a 92 per cent load factor and it has a working life of 60 years. I am glad to say that the Government are embarking on a nuclear programme, but it must be speeded up because, if we are not careful, we will find that by 2016 to 2020 we will be very short of power. As the noble Lord, Lord Jenkin, said, we need to have a programme beyond 2025 and we must solve the problem of the long-term storage of nuclear materials in safe sites and be prepared to meet decommissioning costs that will be very high.

I have not been greatly in favour of nuclear power. When I was a member of the Select Committee on energy, we visited Three Mile Island, and what we found was very frightening. However, times have changed and in this country the housekeeping of all our power stations, not just the nuclear ones, is very good indeed. I have revised my views and believe that, if we are going to solve our short, medium and long-term problems, we need a programme of nuclear energy.

We are contributing to experimental programmes on nuclear fusion. I wonder whether we are wasting our money. Lord Marshall always told me in our conversations that it was impossible. We might instead, as the noble Lord, Lord Haworth, pointed out, think again about fast-breeder reactors. It was unfortunate that the one at Dounreay was a failure. That was due to circumstances that could have been avoided. However, the matter needs to be looked at.

Finally, I welcome the aim of the Government to increase combined heat and power to 10,000 megawatts. That is altogether good and I hope that it comes about. However, when I was a member of the Select Committee on energy in 1983, we recommended a large increase in combined heat and power. The Government, instead of accepting what we said, set up the WS Atkins committee, which took 10 years to report. The result at the moment is that we have 3,000 megawatts of CHP. Of course, that is a very energy-saving system, which I hope the Government will proceed with quickly. We must understand that that will mean smaller power stations near the urban environment.

Overall, I welcome the Government's statement. There are some defects in it, but I hope that they have listened to what has been said in this debate, in particular by the noble Lord, Lord Lawson.

Photo of The Duke of Montrose The Duke of Montrose Conservative 7:35 pm, 2nd November 2010

My Lords, today we have a chance to debate two vitally linked issues. An advantage when considering the energy element of policy is that the area can be reviewed and considered statistically and scientifically. Recently, the International Energy Agency estimated that global energy use will triple by 2050. A potential consequence of this is that the energy that we need to buy may become scarcer and even more expensive. Many noble Lords have spoken about the technology of new generating capacity. The noble Lord, Lord Haworth, touched on the question of our existing generating capacity that is becoming increasingly antique. Somewhere in the region of 12 gigawatts that comes from coal and oil-fired generating plants will become obsolete by 2015. Nine out of 10 of our nuclear plants are due to be decommissioned by 2023.

As we heard, the challenge of constructing a policy around the other element, which is climate change, is that the science and statistics move into a much more speculative field. How do we predict from historical and current records how an increase in greenhouse gases will affect the climate in which we live? One element that concerns me is that we are told that currently about half the CO2 that is emitted into the atmosphere is reabsorbed by the oceans, presumably producing a balance between the CO2 in the atmosphere and that in the oceans. It would seem that one of the inevitabilities of an increase of CO2 in the atmosphere, let alone an increase in temperature, is an increased amount of absorption, and because of that an increase in the acidity of the oceans. This throws up a great many worrying aspects before we even consider whether it will have an effect on changing the climate. My noble friend Lord Lawson was curtailed in his remarks on what he foresees for the world, but that was one element that he did not touch on.

Noble Lords will be aware that consideration that international action might be needed to address this issue led to the 1997 Kyoto Protocol, which contained definitions of a batch of greenhouse gases. Most Governments, including our own, signed up eventually. Following this, the most obvious approach to a remedy, which most countries grabbed hold of, was to increase the production of energy from renewable resources. In the UK, as we have heard from various noble Lords, we now have renewables obligation certificates, the climate change levy and the EU Emissions Trading Scheme, and we are also beginning on the carbon reduction commitment. The trouble, as noble Lords such as my noble friend Lady Noakes pointed out, is that these all add to the cost of our energy. A paper from Civitas that I saw recently reckons that they will add anything from 33 per cent to 43 per cent to our energy bills. I ask the Minister to analyse where we stand in relation to the costs imposed on other countries. If we thought that we should just go on using energy in our traditional profligate manner, this would be a very severe imposition. A number of our competitors are tied to similar schemes, but the other challenge that it gives us is to use our energy even more efficiently than our competitors, if the market that they are working in does not have those charges.

The key purpose of the Kyoto Protocol was to tie countries to a certifiable reduction in their gas emissions by 2012. It envisaged that many countries would meet their targets through national measures, as we have attempted to do. The recently published The Hartwell Paper from Oxford characterises this approach as trying to convince the world that the industrial revolution was sinful and that we must therefore atone, and it says that humanity is unlikely to find this an attractive form of motivation. At a global level, such an interpretation is possible, but that is not where the proposals in Kyoto stopped. First, by linking nations and thereby individual industries into a market mechanism, it added the most fundamental motivation that economics can provide. It added a financial incentive to the simple attraction of a more efficient use of energy through a system of emissions trading. Along with that, it offered two other instruments, in the form of the clean development mechanism and joint implementation, which incentivised countries in the developing world to consider reducing emissions without tying down their future industrial development to actual quotas.

In the event, as noble Lords will be aware, the biggest greenhouse gas-emitting nation in the world- the US-refused to ratify the Kyoto protocol, but the signs are that this is changing. The noble Lord, Lord Giddens, might be interested to know that there are a growing number of state-led initiatives in the US-he mentioned one-which culminated last Friday when the California Air Resources Board published the final draft of a market-based system to cut the state's emissions to 1990 levels by 2020. As the saying goes, where California leads, perhaps the rest of the US will follow.

In the rest of the world generally, the mechanisms provided by Kyoto did receive implementation. In accordance with the United Nations Framework Convention on Climate Change principle of "common but differentiated responsibilities", the developing nations, which happen to include three of the world's larger economies, were not obliged to take on emissions reduction targets during the Kyoto period. They were, however, granted the right to participate in the clean development mechanism and they were encouraged to reduce emissions through payments for certified emissions reductions. My noble friend Lord Teverson and the noble Lord, Lord Hunt, were praising China for its energy-saving activities; as things stand, according to the UN framework convention, China has registered projects that will reduce emissions by 239 million tonnes of CO2 equivalent per annum. The figure for India is 44 million tonnes per annum. These efforts are not insignificant and in themselves are equivalent to half the UK's annual emissions. Of course, this is not an excuse for us to do nothing but it is already 30 per cent greater than the reduction that we are committed to achieve by 2020.

This is not just an issue involving the developing countries. As my noble friend on the Front Bench has done this afternoon, my right honourable friend in another place, in his speech on the comprehensive spending review, made clear his purpose for,

"Britain to be a leader of the new green economy". -[Hansard, Commons, 20/10/10; col. 962.]

By the efforts of the UK enterprise and financial sector, London is now the foremost world centre for trading within a global carbon market. The value of this market in 2009 was reported to be $144 billion, and it is capable of earning valuable finance for the UK.

Given that there was failure to reach any kind of replacement agreement at Copenhagen in December 2009, there is every chance that the architecture for these promising international markets could lapse. Further, since Copenhagen, speculation about the future of this market has been rising and there are signs that the enterprise and enthusiasm are beginning to drain away.

It was most reassuring this afternoon to hear my noble friend state the Government's commitment to look for a framework for a solid carbon price. Can the Minister tell the House whether one of the Government's priorities at Cancun will be to put in place some successor to those market mechanisms? Further, will the Government push to ensure that Cancun provides an immediate message to stakeholders in this market that private sector financial and entrepreneurial resources will be further harnessed under any post-Kyoto agreement? The stance taken by Her Majesty's Government will be critical for injecting some much-needed confidence into those who participate and for continuing to ensure that the UK remains at the forefront of global carbon markets.

Photo of Lord O'Neill of Clackmannan Lord O'Neill of Clackmannan Labour 7:44 pm, 2nd November 2010

My Lords, we seem to have reached the point in this debate where everything that could be said has been said but not everyone who could say it has already said it, so I am going to offer a few more points.

There are always three guiding rules in energy policy: first, security of supply; secondly, affordability; and, thirdly, environmental sustainability. It is significant that the last of these three has assumed the almost overarching significance that it currently enjoys. However, it would be wrong to suggest that this is something of a novelty. In the past, we have had clean air Acts and the fiscal triumph of taking lead out of petrol, which was achieved by the Labour Government in the late 1970s, when Denis Healey-the noble Lord, Lord Healey-imposed taxes to make it inconvenient and expensive to have lead-

Photo of Lord O'Neill of Clackmannan Lord O'Neill of Clackmannan Labour

I think that it was started by Denis Healey, as well as by the noble Lord. That of course gives some credibility, at least in part, to the environmental credentials of the noble Lord, Lord Lawson, although some of the points that he made earlier today might draw that comment into question. However, we will move on from there.

Certainly, British Gas's great programme of changing from town gas to North Sea gas and linking up all the households was in some ways far more ambitious than the metering programmes that we have been talking about this afternoon. Opportunities have consistently been taken by Governments, state enterprises and others to take account of opportunities, some of them environmental. However, now we do not have the luxury of taking advantage of opportunities, and I think that we are required to be socially and environmentally responsible in taking account of changes in our climatic conditions.

It is certainly true that in the past we have been rather complacent in the UK. Nye Bevan once said that Britain was self-sufficient because it was an island built on coal and surrounded by fish. The common fisheries policy put an end to one, and the other was the demise of the coal-mining industry-for reasons that we do not need to go into tonight, but some of us still carry the scars from personal and constituency experiences. The coal industry in the UK is not currently in a position to re-emerge. It may at some stage if new technologies are properly developed to take advantage of the stocks that remain, but we are dependent on coal imports and at the moment the prices are relatively reasonable. However, by 2015 we will have to confront the large plant directive requirements and put to one side a number of the coal-fired stations. Alternatively, if we keep them going, we will do so at considerable expense because of the charges that will be imposed.

Certainly, our oil and gas supplies from the North Sea, which are often forgotten, will continue to make a sizeable contribution. They will not so much add to self-sufficiency but they will put us in a relatively better position than a number of the countries, particularly on the continent, that we hold up, sometimes unrealistically, as the whited sepulchres of renewables and the like. They had to go for renewables in the way that the French had to go for nuclear in the 1970s when they realised that they were going to be dependent on neighbours on whom they could not always depend for oil and gas. At the end of the Cold War, Germany had the industrial imperative to find something to fill that gap in its economy, which had been filled hitherto by the need to defend the country and to service the troops.

Therefore, while to an extent the UK can be accused of a degree of complacency, I think it is fair to say that, at least in part, our exploitation of our North Sea oil resources, perhaps rather foolishly in the late 1980s and early 1990s when we had the dash for gas, was understandable. However, we have to take account of the fact that we will not have as much oil and gas as we had before and that it will be difficult for us to secure those commodities in the world market in the way that we have been able to do in the recent past. The jury must still be out on the optimism of some people in relation to the significance of the Shell reserves and whether they will be exploited, and with regard to the attitudes of some of the countries that have them.

Certainly it is fair to say that we need to address the issue of gas storage in the UK. In his commendably short speech the Minister referred to the fact that permissions have been granted for new exploration, usually in areas of the North Sea that are a bit less hospitable. We have gone for the low-hanging fruit. It will be more expensive and more difficult, and it may not necessarily give us what we want. Equally, we have to recognise that while we do not need the 90-day supply that the Federal Republic might require in terms of gas storage, we need more than we have at present. We are getting to the stage where the Government have to make a choice. Will they stick with a market-driven solution or will they try to set a target for the amount of storage facilities that we require? Frankly, the market cannot be left to work this out on its own and I do not think that Ofgem has done us a great deal of good in that area. It has not been sufficiently robust or rigorous in its thinking. The Minister could come back to us on that in his reply.

I speak as the chair of the Nuclear Industry Association and I welcome the Government's commitment to the programme of replacement build. I realise that there are some problems and we will have to agree to disagree at this stage on the uncertainties of the planning regime. There are some questions about the national policy statement but that will be for another day when we can have a detailed debate. I am a little disappointed that at present at least two of the 10 stations have been put into the long grass. I realise that there were problems. It was a greenfield site and there were planning considerations, but there could have been a bit more boldness on the Government's part in relation to these two stations, which were relatively short distances from one of the hubs of the north-west nuclear industry at Sellafield.

At the weekend at the Scottish Labour Party conference, Iain Gray MSP, leader of the Scottish Labour Party, who may well be the First Minister after the next election in May, made it perfectly clear that he wanted Scotland to continue to generate nuclear power in the foreseeable future. Will the Minister talk to his coalition colleagues in the Scottish Office and tell them that there are sites at Hunterston and Torness which should be considered? I am not arguing for both of them as we could probably have too much nuclear power in Scotland, but if both of them close we will not have enough. Certainly, the optimistic noises that come out of the Scottish Government relating to renewables are fanciful, to say the least. We know that there are tremendous opportunities for wind, provided that we can secure planning permission and provided that we can get the infrastructure and supply chains organised to get into the North Sea. I do not think that they have been properly addressed or studied with the rigour that such challenges will require. Nevertheless, they are important, and tidal power could be as well. The idea that Scotland could somehow provide 80 per cent of its energy requirements from what are at best maturing technologies is fanciful.

At the same time, I recognise the contribution that Longannet, for which I have a great affection, has made. It was the power station to which the miners in my constituency delivered the coal 24 hours a day, just about 365 days a year. It has been the powerhouse of Scottish electricity generation-2,400 megawatts. It is a massive station which at the moment has flue gas desulphurisation equipment installed. That was very important when we were dealing with acid rain considerations, as we were 20 years ago. That reduced the thermal efficiency and output of the station. We have to remember that, whatever form of carbon abatement or carbon capture and storage kit that we install, it will be expensive and reduce the efficiency of the station. Therefore, it will make the electricity coming out of that station ever more expensive. It will have fairly long payback times as well. We have to be a wee bit cautious when we look at the economics of CCS. The consensus is that this technology will become available around 2020 or 2022. That is perhaps only one of the forms because of the way in which the Government have structured the competition. I am a little cautious about the CCS option there.

Anything that involves massive capital expenditure in utilities requires a stable regulatory framework. As yet I do not think that investors have confidence that the Government have it right-they have not got it right because they have said very little. I know that in future we will get it but, for the investment to be achieved at the scale we want, we will need to get a degree of investor confidence that will come only from clear regulatory intentions that will give us the stability for peace of mind.

I realise that I am almost out of time but I want to make one last point as a national office bearer of fuel poverty charities. At present, we see that £80 is accounted for in every domestic bill by subsidies to renewables. That is imposed in a rough and ready fashion and it is not fair to disadvantaged households. The Government need to look again at the question of social tariffs and how they will be provided in future. Equally, when we consider the green deal, as we will when the legislation is introduced, the devil will be in the detail. A lot of reassurance needs to be given and the Government have gone part of the way by announcing that they will be rigorous in their approach to private landlords in the implementation of certain aspects of this policy. The Australian experience is helpful in indicating what not to do. There is a lot of worry and anxiety among the fuel poverty lobbies and the most disadvantaged about what will happen to their fuel bills. They think, with some justification, that it is not fair that they should have to pay a disproportionate price for the recognition that we all have to accept of climate change and the need for carbon abatement.

Photo of Baroness Smith of Basildon Baroness Smith of Basildon Shadow Spokesperson (Energy and Climate Change) 7:58 pm, 2nd November 2010

My Lords, I suspect that I am not alone when I say that I have enjoyed today's debate. I have greatly appreciated the expertise, experience and the huge amount of knowledge and commitment from noble Lords from all sides of the House. I am grateful to the Minister for bringing this debate forward today. I suspect that it is a bit of a taster for the debates to come on the energy security and green economy Bill.

The debate has made clear the widespread and overwhelming evidence of the man-made impact on climate change. It is one of the most challenging problems facing us and has the potential to devastate nations and reshape the world as we know it. It is clear that we must determine energy policy in light of these challenges. Notwithstanding the views and comments of the noble Lords, Lord Lawson and Lord Stoddart, and the noble Baroness, Lady Noakes, we cannot see energy policy just in terms of the financial costs. There are social and environmental costs which bring with them different financial costs.

Tempting as it is to respond on each and every point of the observations made by the noble Lord, Lord Lawson, I believe that other noble Lords, particularly the noble Lords, Lord Hunt, Lord Giddens and Lord Smith, have already addressed them with ample scientific evidence. I will, however, challenge one point. If we take no action on climate change, who will pay the highest price? It will be the poorest and the least able to cope and respond, whether at home or abroad. Extreme impacts will take the greatest toll on the poorest in the world. If we do nothing, the worst scenarios will come true. People around the world will be displaced by freak weather conditions and floods and then it will impact on everyone across the world. We should bear that in mind.

The noble Baroness, Lady Parminter, commented on having to persuade the public and to bring home to people the message about what we are facing. We should take the opportunity to thank the individuals and organisations that are working tirelessly in seeking to educate the public and lobby governments and other organisations about climate change and related issues. This is a continuing process. We do not have all the answers and it requires a proper assessment by Government of both the national and international interests. Governments must be prepared to work with everyone to meet our international commitments, and to step up and take a leadership role when required.

Despite scepticism in some quarters, we support the Government in trying to make progress at the Cancun climate change talks. The Government will need to have the courage of their convictions. I know that the Leader of the Opposition, Ed Miliband, has offered Chris Huhne, the Secretary of State, the benefit of his experience and expertise-indeed, he says, of the scars he received from the previous talks in Copenhagen.

I was rather surprised at one of the Minister's comments-when he said that the Government have stated their aim to be the greenest Government ever "whether you like it or not". Can I assure him that we do like it and that we hope they achieve it? In our role as an Opposition we will support measures that seek to achieve it, and scrutinise and press for action where the Government fall short of that objective. I would also add that resources must follow promises, otherwise those promises are worthless. So we look forward to seeing and scrutinising the energy security and green economy Bill which will seek to address some of the issues raised today. However, we on this side of the House find it reassuring that many of the Government's policies in the coalition agreement were first undertaken, initiated or planned by the Labour Government. For example, the targets that have been set for moving to a low-carbon economy have remained. The commitment to smart grids and smart meters, the need for an energy mix, the commitment to zero-carbon homes by 2016, the creation of the green investment bank, the renewable heat incentive and feed-in tariffs and substantial investment in the development of low-carbon technologies, including offshore wind and manufacturing at port sites-all these and other commitments remain, and we welcome that.

However, as has been highlighted in the debate today, there are some areas that remain unclear and give us cause for concern about either policy or implementation. Where we have concerns, we will press the Government to address them. I hope that the Minister will be able to be address the points raised in today's debate, and I am sure that we will return to them when the Bill comes before us.

The noble Lord, Lord Haskel, and the noble Baroness, Lady Parminter, emphasised that we have to win over hearts and minds in order to change behaviour. The noble Lord, Lord Haskel, pointed out some contradictions in government policy in this regard. I think that there is a far greater awareness of the issue, but it is still very difficult for the individual to appreciate that their individual actions can and do have an impact. I hope my noble friend Lord Giddens will not mind me mentioning that in his book The Politics of Climate Change he describes what he very modestly calls the Giddens paradox. This paradox is that for most people the dangers posed by climate change are not visible or tangible in normal everyday life-but if we wait until they are, it will be too late. Both he and my noble friend Lord Hunt of Chesterton succinctly and eloquently spoke of the scientific evidence and the economic implications of the opportunities.

As my noble friend Lord Giddens made clear, that makes it even more imperative that Governments take action and take the lead. There has to be a policy thread that runs through Government and not just through the actions of one department. For example, when Ministers in DECC are working with the energy companies on the green deal, I hope that they are at the same time talking to their colleagues in DCLG about building regulations and about the private rented sector. When DECC is developing proposals for increasing renewable energy, there needs to be-as we have heard from a number of noble Lords tonight-ongoing discussions with the DCLG about planning issues and consultation. If the Government are to have any measure of success in their stated aim of being the greenest Government ever, policy development in DECC cannot be taken in isolation.

I want to touch on two of the key issues raised today by a number of noble Lords-security of energy supplies and the cost of energy for consumers. There are twin goals to secure the nation's energy supplies, as the noble Lords, Lord Jenkin and Lord O'Neill, pointed out. We need to ensure new investment for a low-carbon future in both renewables and nuclear and we have to maximise the potential of our remaining coal, oil and gas resources in a way that meets the renewable targets set by the Labour Government and supported by this Government. We need to remove carbon from our electricity supplies. Our response to that challenge when we were in government was the mix-the trinity of clean coal, renewables and nuclear. I agree with the noble Lord, Lord Whitty, that we are pleased to see the continuing support for this principle from the coalition. As always, however, the devil is in the detail, and there are some matters on which we seek further clarification.

On coal, there are great advantages to coal-fired power stations and the role they play in electricity generation, but only as part of the mix of a low-carbon economy. That is why the investment in carbon capture and storage is so important. My noble friend Lord Smith of Finsbury raised a number of questions. It would be helpful if the Minister could also update the House on a couple of other matters as well: the details of the levy to fund CCS and also whether he intends to deliver more than one commercial-scale CCS demonstration project. It would also be very helpful if he could tell us what progress there has been on the energy performance standard. We will want to scrutinise this because the Government have to ensure that they do not impede investment by creating uncertainty.

The noble Lord, Lord Grantchester, also raised the changes made to the carbon reduction commitment which are of great concern to industry. This is due to start next year and was intended to be a self-financing fund designed to reward companies with high energy consumption that reduce their energy use. Under the CSR the estimated £3.5 billion raised will go directly to the Treasury. The Minister will understand the concerns about this. We would welcome his assurance that this amount will not be swallowed up by the Treasury-which the noble Lord, Lord Lawson, indicated would be a good thing-but that the full amount will be used for its intended purpose. This was not meant to do anything other than pay to reduce carbon.

The nuclear issue has featured high in our debate today and has been welcomed by noble Lords across the House. It has been a difficult issue for the coalition, but the Government have confirmed their support for the nuclear power industry. It is clear that very powerful arguments were made to overturn the entrenched opposition expressed by the Secretary of State, Chris Huhne, before he was in Government. On 9 May he said,

"Our message is clear. No to nuclear, as it is not a short cut, but a dead end", but everyone is entitled to change their mind, and that is to be welcomed rather than criticised. Where I remain puzzled is on the position on nuclear subsidy, which was raised by the noble Lord, Lord Jenkin of Roding. It would be helpful if the Minister could bring clarity on this issue.

In May, the Secretary of State, Chris Huhne, wrote that:

"No private sector investor has built a nuclear power station in anywhere in the world without lashings of government subsidy, since Three Mile Island and Chernobyl".

However, on 18 October, when announcing the potential sites for new nuclear power stations, he said on subsidies:

"To be clear, this means that there will be no levy, direct payment or market support".-[Hansard, 18/10/10; col. WA 56.]

Then Charles Hendry, the Minister of State at DECC, said in a speech last week:

"We published what we mean by subsidy because we've been absolutely clear that there will be no subsidy and we want to set out now what that means".

If it is so clear, why does the Minister need to explain what it means? Given the Secretary of State's previous statement that it is not possible to build nuclear power stations without lashings-his word-of government subsidy, the Minister will understand the confusion being created on this issue. It would be helpful if he would clarify what no subsidy means. Does it mean no subsidy or does it mean some subsidy at some point? I encourage the Minister to take on board the comments and suggestions made by my noble friend Lord Hunt of Chesterton about promoting and explaining nuclear energy to a wider public and taking an international lead on this.

There are two other crucial areas-reforming the electricity markets and regulating carbon emissions from coal-fired power stations-that are unlikely to be in the Bill, but to be subject to consultations. Can Minister confirm whether that is the case and, if so, how long will they take?

My noble friend Lord Grantchester used his experience and expertise on renewables and emphasised the investment required and the wider commitment of government that is needed. He particularly referred to small-scale projects, as did the noble Baroness, Lady Maddock. The target is that renewables should provide 15 per cent of energy supplies by 2020, yet it was reported in the Independent that there are 230 separate groups against wind farms and that only one-third of applications get consent. I understand that part of the Government's answer to this is a cash incentive for councils that give planning permission, but the impact may be on the residents of another council area. I understand concerns about this, so I ask the Minister: what other action is being taken to address the concerns of those who have raised objections? It would also be helpful if the Minister could address the issues around planning consents and planning issues for small-scale generation.

Other issues that have been raised several times in the debate, particularly by my noble friend Lord Whitty and the noble Lord, Lord Teverson, were the cost of energy for consumers, energy efficiency and energy savings. Unlike the Government's welfare reform plan, we are very clear that the poor should not pay the most. Pay-as-you-save through the Green Deal is generally welcomed, but the Minister will know from our debate on Warm Front last week that we would like greater clarity on how this will operate. One of the observations about Warm Front was that more needs to be done to reach the poorest and those in the least fuel-efficient homes. Warm Front has helped over 2 million households but now, following government cuts, the money for this year will run out in December and the next two years will see the budget cut by two-thirds. I think we all agree that further measures are needed to protect the fuel poor. Given that the Green Deal will be consumer-led, what plans are there to ensure that it will be taken up by those in greatest need and in the least fuel-efficient homes? We also want to be reassured on the financial arrangements which will need to be in place before the Green Deal gets under way. For consumers to engage, they will need some certainty and guarantees about the costs, the savings and the payback period.

We also look forward to progress on smart grid and smart meters. They are already being brought in by British Gas, but is the Minister aware that, although the technology is available, the meters are not interchangeable between energy companies? Without legislation to ensure that meters can be made interchangeable, there will be no competition between companies because people will not be able to switch suppliers. I know that the Government will not want to bring in an anticompetitive measure, and I hope that this will be addressed in the forthcoming Bill.

Finally on consumer issues, can I express the very real concern from this side that Consumer Focus is being lost in the cull of quangos? The work of this organisation is invaluable. Since its inception, it has recovered £1.4 million for energy consumers, npower has had to repay a total of £70 million to 1.8 million customers who had overpaid in 2007, many consumers have saved money by using the accredited price comparison sites and many vulnerable consumers have been protected from having their energy supply cut off. I understand that Ministers intend Consumer Focus's responsibilities to be transferred to Citizens Advice. As a former Third Sector Minister and a strong supporter of Citizens Advice, I am well aware of the invaluable work it undertakes, but there are serious questions to be answered about how this will work in practice. Consumer Focus is a statutory body with a board and a chair appointed by the Secretary of State. It is answerable to Parliament and audited by the NAO. It has legal powers contained in statute. Citizens Advice is a charity. As such, does the Minister intend that Consumer Focus's legal powers should be transferred to Citizens Advice? Was any other way sought or consulted on for funding the invaluable work that CF undertakes? What discussions did departments have with Citizens Advice regarding the financing and expertise required?

While I am sure that Citizens Advice will be able to advise on individual consumer issues, it is a lot to expect for it, on top of its existing work, which is increasing, to understand the intricacies of how the energy market works. The Minister may recall that, at the time of British Gas privatisation in 1986, in the "Tell Sid" adverts, there was a commitment from the then Conservative Government that there would be a consumer watchdog. I urge the Minister to discuss this with his ministerial colleagues and to think again. I do not require an answer this evening, but it would helpful for a considered reply at another time because we feel strongly about the role of the organisation.

In conclusion, the new energy security and green economy Bill to come forward shortly will seek to address many of the questions and issues that have been raised today. I welcome the annual energy statement in which the coalition seeks to be measured and held to account on the actions promised in the statement. We share objectives with the Government on this and where they set out actions to improve energy security, we want to test the effect and efficiency of those policies, the environmental impact, and the social and economic impact. The poor must not pay the highest price for actions that need to be taken.

We will not seek to oppose for opposition's sake. We will seek to be constructive at all stages. It is in the interests of everyone in the country that the Government meet the energy and environmental challenges that face us. We will support the objective of the Government to be the greenest government. We will use our role-for now-as the Official Opposition to challenge, to test and to evaluate in order to make progress and to make improvements. Climate change is real. It is a huge challenge. But if we get this right, there are huge rewards. There will not be just a cleaner and more stable environment, but also a cleaner and more stable economy. That is a challenge we want to meet.

Photo of Lord Marland Lord Marland The Parliamentary Under-Secretary of State for Energy and Climate Change 8:15 pm, 2nd November 2010

My Lords, I am most grateful to noble Lords for their excellent speeches. I believe that the House is at its best in a debate like this. Any outsider who might ask about the purpose of the House of Lords need look no further than this Chamber where we have heard some of the finest speeches in the past few hours. I should like to thank my noble friend Lord Taylor of Holbeach, who has had to sit through the debate and assist me at every corner, which is a great support. At one point, I thought that he was going to lose the will to live.

I said that I wanted to hear from noble Lords and I have. I grasped one or two remarks very closely to my bosom because they were complimentary. One or two were not, which was not so pleasant. We have all listened to this debate and we can draw our own conclusions on the rights and wrongs of the subject matter and the views of noble Lords.

Many questions have been asked which I will not be able to cover tonight. Noble Lords would not expect me to because they will form part of our energy Bill. They are part of the research and consultation being carried out at the moment. I am afraid that I cannot address those points, and I will not. This debate is to give noble Lords the opportunity to tell me of the issues that concern them, and for us to address them. We should be prepared to work together on the energy Bill when it passes through this House first, which is fantastic. I consider this debate to be a card-marking exercise.

The noble Lord, Lord Grantchester, obviously has a great knowledge on the farming front. He quite naturally is interested in small-scale anaerobic digesters and biomass. We in the Government share his interest in this area and in supporting it. But many of the issues, such as localised planning and some of the noble Lord's farming issues, are not subjects for our department. They are subjects for Defra and CLG, particularly the small planning issues, which were also raised by the noble Baroness, Lady Maddock. Noble Lords will have to address those to the relevant Minister at a separate time and debate.

Without any question, the noble Lord, Lord Lawson, was a tour de force. Animals and mammals were mentioned. I was very interested in the remarks made by Bastiat, who was not someone of whom I had heard. The noble Lord is on very home territory when he reasonably says that CRC is money for the Treasury. The Treasury will make decisions about that money as it so wishes. It has been left with a substantial hole in its resources. There is no point in the opposite Benches tut-tutting because we cannot live on bread alone. The noble Lord, Lord Lawson of Blaby, also mentioned the development of shale gas. He is right, but shale gas is not in the UK, so it does not give us a secure energy supply.

I have to chastise my noble friend Lord Jenkin a little bit for his scepticism about carbon capture and storage, a subject also raised by the noble Lord, Lord Smith of Finsbury, in what was a superb speech. The point about CCS in a climate of economic hardship is this. We have negotiated with the Treasury some £1 billion of national funding, taxpayers' money, to develop what is considered by some to be a high-risk technology. If that technology pays off, it means substantial jobs and opportunities that will lead to further CCS endeavours and to CCS on gas because it has become a proven technology. Personally, I am happy to say that I am leading the negotiations with ScottishPower, and the initial reactions are very positive.

I am grateful to the noble Lord, Lord Whitty, or I would be if he was in his place, for his cross-party comments on support. He raised, as did the noble Baroness, Lady Smith of Basildon, the subject of Warm Front and the impact on fuel poverty. The fact is that fuel poverty has gone up under the support of Warm Front. The figures have risen from 3 million to 3.5 million in fuel poverty, so it is not working. That does not mean that it was a wrong endeavour. It was a genuine effort to try to improve fuel poverty, but it has not worked and therefore we have to improve on it. In our view, the green deal is an improvement. We will have the benefit of noble Lords' advice on this subject over the next few weeks, and it is incumbent on us all to work to improve the numbers in fuel poverty, which have gone out of control.

My noble friend Lady Maddock quite rightly talked about microgeneration, and we welcome her views on the renewable heat incentive. Again, we will discuss this in the coming months as the energy Bill makes its passage. I was disappointed that the noble Lord, Lord Giddens, a man I admire enormously, said in his excellent speech that he felt that we had not negotiated a good deal with the Treasury on our spending review. I do not think there are many in government who would share that view. We are keeping our heads low at the moment because in fact we have had an increase of over 30 per cent in capital expenditure and a very modest reduction to our budget. I would draw his attention to the government figures on this.

In the debate we have heard two views on the benefits or not of the Severn barrier, and I am afraid that the Government have sided with the noble Lord, Lord Smith of Finsbury, thinking that it will cause untold damage to the environment, and at a huge cost. We are grateful to have heard from the noble Lord, Lord Stoddart, about his first-hand experience and are delighted to learn that even now he is earning a pension from his former toiling. My noble friend Lord Reay raised his concerns about the proliferation of onshore windmills, but as he said himself, he must be gratified that it is very much down to local planners who listen to local people and communities. These are issues for local communities, and as he pointed out, the conditions have been tightened.

The noble Lord, Lord Haskel, made a learned speech. Normally he says "Get on your bike" to me, but today he was more generous in his comments and made the valid point, along with other noble Lords, that we have to have lifestyle changes in order to bring about a reduction in energy use. That is the easiest way to reduce the risk of climate change. We intend to push out smart meters and to accelerate the programme quite dramatically.

I return to the contribution of the noble Lord, Lord Smith of Finsbury. He is right about tidal and wave power, of which he has first-hand knowledge better than that of anyone else in the Chamber. This is another area that we should be pushing hard, and we will do so. We also intend to grapple with nuclear waste. I have been out to see a MOX plant in France to see whether it is suitable for purpose in Sellafield, and we are doing a lot of cost-benefit analysis on that to see whether it makes sense to reprocess the huge amount of waste.

My noble friend Lady Noakes took a measured approach to this debate. She rightly talked about costs to the taxpayer and whether that is being considered. It is of absolutely primary concern to this Government.

The noble Baroness, Lady Parminter, quite rightly said that we should consider the choices and educate people. We do, indeed, educate them. As I go round schools-probably not to the same extent as other noble Lords-I find that people are fundamentally educated about climate change and about not using electricity. Smart meters will educate them further. I have been given something by E.ON, which I should probably declare but they have been given to quite a lot of people, which shows how much electricity we are using in our house. It is shocking. We now have a penalty system where my children have to cough up some money if they leave their lights on.

My noble friend the Duke of Montrose made some excellent points about China and India. We must continue to progress our discussions with them in Cancun. I do not consider that Cancun will be a conclusive event, but it will continue the soft negotiation that is required to achieve all our ends.

The noble Lord, Lord O'Neill of Clackmannan, whom I consider to be Lord Nuclear, has quite rightly been gratified by some of the steps that we have taken on nuclear. I hope they have sent out strong language to the industry. On gas storage, I personally signed the planning permission for a 15 per cent increase in gas storage at a new facility in East Anglia, as I mentioned earlier.

I am not dealing with every point as perhaps I should because time is running out. I thank the noble Baroness, Lady Smith of Basildon, and welcome her to her task. Her involvement in this her first debate has been a pleasure. As she said, it will be one of many more.

A good many questions have been asked which I hope I have answered. I continue to be available to the House to answer questions at any juncture as we make progress through the winter months on the energy Bill, which I hope will be a triumph for the House.

I hope noble Lords will agree that we have moved at speed to deal with many of the issues with which we are confronted. I am concerned that some noble Lords do not understand the enormity of the task in front of us: we have an antiquated network; there has been a lack of investment in the good times and an overreliance on fossil fuels; and the increase in the price of oil by 80 per cent between 2004 and 2008 was outside our control. However, we must not be moaners; we must think positively. It is incumbent on us to all work together to provide a secure energy supply for a low-carbon economy in the future.

We must also be mindful of the fact that we are custodians for future generations. We must not look at this issue in isolation and by ourselves. I am heartened that those on all sides of the House indicate a testament to our collective doctrine and demonstrate a passion for getting our energy policy right. For our part, we intend to deal with the huge infrastructure issues that confront us and look forward to working with noble Lords during the winter months to progress and conclude the energy Bill.

Photo of The Duke of Montrose The Duke of Montrose Conservative

My Lords, an enormous amount of questions have been put to my noble friend. Will he write to noble Lords with the answer to any point he may not have covered?

Photo of Lord Marland Lord Marland The Parliamentary Under-Secretary of State for Energy and Climate Change

My Lords, I thank my noble friend the Duke of Montrose, but I have answered a lot of questions. However, if any are unanswered that I can answer, as I pointed out earlier, I will answer them. However, I do not see the point when we are about to have a considerable lock-in on the energy Bill and various debates, which will provide answers to these questions. However, if noble Lords feel that their questions have not been adequately answered in this exhaustive debate, I shall be happy to write to them.

Photo of Baroness Smith of Basildon Baroness Smith of Basildon Shadow Spokesperson (Energy and Climate Change)

I apologise for delaying the House. A number of questions were asked and not all were answered. I appreciate that some questions will have to wait for the Bill, but there were others that related to measures that will come into force before the Bill takes effect. It would be helpful if he could look at those-I am happy to remind the Minister if he is unclear as to which they are-and provide answers that could go in the Library.

Photo of Lord Marland Lord Marland The Parliamentary Under-Secretary of State for Energy and Climate Change

As I said earlier, I am happy to answer questions that noble Lords feel have not been answered and that are within my remit. The noble Baroness asked several questions that were not within my department's remit: for example, about Consumer Focus. I answered her questions on smart meters, but I am very happy to respond further if she or any noble Lord wishes to write to me.

Motion agreed.