Energy Bill [HL] — Second Reading

Part of the debate – in the House of Lords at 1:56 pm on 22nd July 2015.

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Photo of Lord Foulkes of Cumnock Lord Foulkes of Cumnock Labour 1:56 pm, 22nd July 2015

My Lords, it is a great privilege to follow my good friend and mentor, my noble friend Lord Judd. I share his concerns about the excessive use of energy late at night in this place and elsewhere. When he comes to visit me, he will see that I go round the house switching things off all the time, which I confess is much more to do with Scottish thrift than energy saving—although the energy saving is a consequence.

I get really annoyed with government, Ofgem and others saying that if I want the lowest tariff, it is easy for me to switch supplier. Why should we have to switch supplier to get the lowest tariff? I say as a trustee of Age Scotland—I see in her place my good friend the noble Baroness, Lady Greengross, with whom I worked at Age Concern—why should elderly people, or anyone, have to through the bother of switching suppliers to get a lower tariff? Why cannot we ensure that the lowest tariff is supplied anywhere? It seems very strange.

It is also very pleasing that quite a lot of Scots are participating in this debate—three from the Labour Party and, shortly, we will have a contribution from the Scottish Liberal Democrats—because it is a matter of particular concern to Scotland. I shall come back to one particular aspect of that later. Before that, I join in the widespread expressions of concern that the Government have ended new public subsidies for onshore wind farms, with no more renewable obligations certificates for wind from 1 April next year. Ending it one year earlier than planned is shifting the goalposts and has caused investors and potential investors great dismay. In 2014, wind provided only 5% of the total of our electricity needs, yet the Cabinet Office Minister Matthew Hancock said in March 2015 that subsidies would not stop until 10% was reached. That promise has been broken. Now we have the announcement about solar today—and, presumably, we will have amendments to the Bill to deal with that, too. I hope that the Minister will let us know how we are going to deal with that when he replies.

This Bill is harmful. Already £350 million has been spent on projects that may now not be financially viable. That is a terrible waste of resources. On top of that, the July Budget scrapped the climate change levy exemption, which results in a double blow to renewable energy production in the United Kingdom, and a loss of investor confidence, which puts investment decisions in renewable energy in doubt. Renewable energy may also now become more expensive as we move away from wind to other more costly forms, such as tidal energy, in order to try to meet the Government’s 2020 target. DECC claims it has enough subsidised projects in the pipeline to meet the renewable energy commitment. Perhaps the Minister could spell these out. Can he name these projects that are in the pipeline? It is no good just saying that they are there without indicating what they are.

Finally on this point on a Scottish aspect, since 75% of independent renewable energy onshore wind production is in Scotland I found it disgraceful that Holyrood was not even consulted, let alone involved in this decision. I hope the Minister will apologise for that lack and make it clear that in any future energy decisions that affect Scotland the Scottish Government will be consulted and, indeed, involved. We have this wave of nationalism at the moment, which I am totally opposed to, and it is fuelled by the lack of consultation and involvement by this Conservative Government and their predecessors.

I now come to the entirely different matter of environmental degradation in Scotland. I sent a message to the Minister saying that I was going raise this. In 2013 Scottish Coal and Aardvark TMC—two east Ayrshire mining companies in my former constituency—went into administration. There is now massive environmental devastation in east Ayrshire as a result, with an estimated 2,000 hectares of disturbed land and 22 voids filling up with water and with unstable cliff faces. Restoration liabilities are estimated to be over £160 million. One operator with some foresight and sense, Hargreaves, has submitted a proposal to the Government for carbon price support tax exemption which is similar to the scheme for coal slurry. That would support opencast coal restoration projects. It also has the support of the wider coal producers’ organisation, Coalpro. The reason why this should appeal to the Government, and the Treasury in particular, is that it is largely self-funding since stimulating activity would generate significant tax revenues. Since the March Budget the Chancellor has signalled his intention to work with the Scottish Coal Taskforce. As I say, I have given the Minister prior notice so I hope that he can say today whether the Treasury will support the Hargreaves proposal to deal with this dereliction facing the mining communities in east Ayrshire.

I will now say a word about nuclear power. I started off many years ago as a nuclear sceptic but I became convinced of the value of nuclear power, not just because of the greater safety and the fact that there is not as much waste now as there was in the old reactors, but because it can contribute towards our climate change targets. However, I have a specific question, of which I have again given the Minister prior notice. With Hinkley Point poised to proceed to construction, we are now increasingly aware of the massive costs involved in nuclear power construction and the fact that the companies doing this will need a huge amount of insurance. I have some concerns about this, and others have expressed concerns directly to me. Can the Minister tell us whether there is sufficient capacity in the United Kingdom and the European Union insurance market to meet the requirements of operators and contractors for planned UK nuclear plants? Can he also say whether the UK and EU insurance markets are competitive, ensuring not just the best price for customers who operate and plan to operate nuclear power stations in the United Kingdom but the interests of consumers as well? I hope that he will indicate whether the capacity and the competition are there.

Finally, I will say a few words about the Climate Parliament of which I am a trustee. There are two other trustees in this House. One is the noble Lord, Lord Bell, the Conservative publicist and philanthropist; the other is the noble Lord, Lord Alderdice, former Speaker of the Northern Ireland Parliament, now a Liberal Democrat Member. It is about the only thing we have in common, incidentally, but it is a good cause for us to be working together on. The Climate Parliament works with parliamentarians around the world to encourage development of renewable energy and we are planning to develop a group within this Parliament in both Houses. This Bill and the July Budget sadly lead to a greater reliance on carbon-intensive fossil fuels rather than renewable energy and that is why the role of the Climate Parliament is very important.

One of the things that the Climate Parliament has been looking at recently—I attended a meeting in Lucerne that it arranged in which we discussed this—is a global green grid. That is difficult enough to say but easier if you are Scottish because you can get your Rs—sorry, the letter R is better pronounced. It is a bold and imaginative proposal and it is supported by the Climate Parliament. Renewable energy has problems of transmission costs and the variability of the nature of sun and wind. The global green grid is one solution to this. It would use smart grids to connect different sources of renewable energy into a reliable supply linking together renewable energy production both within countries and internationally. That would ensure permanent reliable access to energy where wind is blowing in one place and the sun is shining elsewhere, linking them up together. Europe is already developing its own green grid but now China, the world’s leading renewable energy producer, has made a proposal for a global green grid to help the world to produce 80% of its energy from renewables by 2050.

As technology is improved, renewable energy becomes cheaper and more reliable while fossil fuels become limited and more expensive in the long term. I hope that we will support this kind of thing because British energy policy should avoid short-sightedness and look to encourage investment in renewables technology to help us meet the 2020 target, to fight climate change, and to secure a clean, cheap and sustainable energy supply for the future.