My Lords, as I develop my own arguments, the House will understand why I took so much pleasure in listening to the speech of the noble Lord, Lord Donoughue.
The gracious Speech informs us that the first priority is to strengthen Britain’s economic competitiveness and that the Government will continue to invest in infrastructure to deliver jobs and growth, with legislation to update energy infrastructure. With those central themes in the gracious Speech, it is unhelpful that we find ourselves debating energy alongside health, agriculture, culture and education. My noble friend Lord Deighton, opening yesterday’s economic debate, made no mention of energy, despite the fact that he has a key role in the nuclear negotiations with EDF and that having the right energy policy is a fundamental requirement for economic competitiveness, a fact acknowledged by my noble friend Lord Freud opening today’s debate.
One commentator recently wrote:
“British energy policy is once more on the move. In 2006, the then Labour government set up an energy review, which was a much needed, comprehensive overhaul of policy. Now, seven years later, the Energy Bill … is inching its way through the legislative process”.
If a review of an equally fundamental matter of wartime policy had been started in 1939, it would have been inching its way forward in 1946, long after the war was over.
During the debate on the previous gracious Speech, which followed on the publication of the Science and Technology Select Committee’s report in 2011 on nuclear research, I quoted our conclusion:
“A fundamental change in the Government’s approach to nuclear R&D is needed now to address the complacency which permeates their vision of how the UK’s energy needs will be met in the future”.
I acknowledged that the Government’s response, accepting almost all our recommendations, appeared to represent a fundamental change in approach. I welcomed the change but expressed serious concern about energy policy and the possibility of an acute energy security crisis.
Since then, the Government have published the nuclear industrial strategy, The UK’s Nuclear Future, which attempts to offer reassurance. It states:
“New nuclear power is essential to meeting the Government’s objective of delivering a secure, sustainable and low-carbon energy future”.
Most of the initiatives that the Select Committee proposed have at least been started but the crucial decisions are still to be taken. We have to stop inching forward. Decisive moves are required urgently, as my noble friend Lord Jenkin of Roding emphasised. Before the Summer Recess we need to have an Energy Act and well before then the conclusion of the negotiations with EDF, although, because of the calamitous way that these matters have been handled by DECC, the outcome may be a 40-year burden on consumers of a high price negotiated with a company whose financial ability to deliver is in doubt. It is hard to be optimistic about other nuclear plant decisions involving Wylfa and Oldbury.
Those negotiations are being conducted in a world where energy economics have been transformed by the shale gas revolution. During the debate on the Select Committee report, I spoke about the importance of that revolution. The chairman of the Select Committee, the noble Lord, Lord Krebs, sharply observed that without carbon capture and storage there was enough shale gas to,
“fry us all many times over. So shale gas has to go with CCS, which is an unproven technology, whereas nuclear is a tried and tested technology. We must therefore not relinquish our commitment to nuclear because of the hope of shale gas with CCS, unless we are prepared to fry”.—[ Official Report , 16/06/12; GC 228.]
I am as committed to the need for nuclear as is the noble Lord, Lord Krebs, but I believe that on this point his analysis was flawed. All the evidence is that the replacement of coal by shale gas, without CCS at present, is already making a very substantial contribution to reducing carbon impacts in the United States.
Furthermore, we need competitive economies if we are to finance the technological advances that are likely to make the greatest contribution to the reduction of the threat posed by global warming. It is folly to waste our limited resources on forms of renewable energy that are never going to make more than a miniscule contribution. The madness of continuing to encourage the construction of high-cost, onshore wind farms that devastate the landscape should be self evident but, sadly, the madness persists. There are plans to ignore public opinion and to do immense damage to a great area of mid-Wales and adjoining parts of Shropshire, referred to by the noble Lord, Lord Berkeley of Knighton, in a splendid maiden speech, while in north Norfolk a giant wind turbine has been approved by a planning inspector against the wishes of local people, their elected representatives and English Heritage. So much for localism.
In his maiden speech, my noble friend Lord Ridley made the superb contribution that those of us who have followed his career have come to expect. He spoke of the importance of making energy affordable. In a recent article, he made the point that cheap energy is the surest way to encourage economic growth and emphasised that,
“if we do not treat the shale gas revolution as a huge opportunity for Britain, then it will become a dire threat to our economy: if we do not dash for cheap gas, we will lose much of what’s left of our manufacturing to countries that do”.
He is right.
Dieter Helm, professor of energy policy at Oxford and a fellow in economics at New College, suggests that the energy debate is stuck in a rut. Policy-makers are arguing about a narrow set of existing technologies while all around them the world is changing. He urges fresh thought about possible technological advances. He writes:
“Some are like fracking—already largely in place, but needing a push. This category includes battery storage and smart grids and meters. We have within our grasp the ability to store electricity and to make the demand side active rather than passive … current renewables like wind turbines, rooftop solar and biomass stand no serious chance of making much difference to decarbonisation”.
He concludes that we must reverse the dash for coal and that only gas can do this at the global level over the next couple of decades. He presses the need for a long-term stable and rising price—a carbon tax, reinforcing investment for research to develop the future renewables: next-generation solar, geothermal, gravity and nuclear. After hearing my noble friend Lord Ridley, I am sure that he would have added gasification of coal to the list.
The British Government must, at the very least, ensure that the Commission does not put last minute blocks in the way of our own vital decisions on energy. Surely, as Dieter Helm’s comments imply, there is room for a switch in the EU’s energy policy that both improves competitiveness and is more sensible in terms of climate change mitigation. Here in Britain we really have to get out of the rut. It needs more than a shove. Yesterday, my noble friend Lord Deighton said that the new transport infrastructure was needed now. The need for the new energy structure is even more urgent. The Department of Energy and Climate Change has been dragging its feet. Its attitude has been negative and even obstructionist, particularly in seeking to discover the real potential of our shale resources and in combating the scaremongering tactics of opponents on so many energy initiatives, a point well made by my noble friend Lord Jenkin earlier today.
There is now the need for decisive action both by the departments directly involved—BIS and DECC—and by the Prime Minister and Chancellor who must take whatever steps are needed to ensure that we do not miss the opportunity that shale gas and nuclear provide to get the British economy moving again.