Decarbonisation target range

Energy Bill [Lords] – in a Public Bill Committee at 2:15 pm on 4 February 2016.

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‘(1) Section 1 of the Energy Act 2013 is amended as follows.

(2) Leave out subsection (2) and insert—

“(2) The Secretary of State shall by order (“a decarbonisation order”) set a decarbonisation target range, which shall be reviewed annually thereafter.””—

Brought up, and read the First time.

Photo of Alan Whitehead Alan Whitehead Shadow Minister (Energy and Climate Change)

I beg to move, That the clause be read a Second time.

The new clause relates to the undertakings that were provided in part 1 of the Energy Act 2013 about setting a target for decarbonisation of the energy sector by 2030. Part 1 of the Act makes it clear that the Secretary of State has a duty to ensure that the carbon intensity of electricity generation in the United Kingdom is no greater than the maximum permitted level of the decarbonisation target range. That is a clear undertaking in the Energy Act to set a decarbonisation target range, requiring the Secretary of State to take related actions.

At the time, it was made clear that that measure was in line with the Climate Change Act 2008, to ensure that the contribution of energy to decarbonisation was sufficient and would not drag down other sectors, and would add to the basket of decarbonisation measures required for the UK to meet its way station targets and the final 2050 target. That is a very important part of the Energy Act.

That target was put in place at that time and becomes important with the emergence again of our flexible friend, the Conservative manifesto. It has been said in another place that the commitment in the Conservative manifesto to no new and distorting targets covers everything. I anticipate that the Minister has a reference to that manifesto in front of her ready to go. I say to her kindly that that target is already there and has been since the Energy Act 2013.

The only issue outstanding then was not whether there should be a target but what the target range should be. Clearly, no new target is simply an exemplification of that target range. Under the legislation, it is up to Ministers, via secondary legislation, to clear up that small matter of the target range. One may say that is not a particularly small matter, since it is within the gift of Ministers to decide whether the target for decarbonisation is strong or not.

During the discussions that took place during the progress of that legislation it was clear that Members across the Committee envisaged that the target should be strong and in line with carbon reductions making a proper contribution. I say that because I have another letter, which I fear the Minister will not have. It is a letter from a fellow Minister in her Department sent on 18 September 2015 relating to this Energy Bill. About decarbonisation range targets, the letter says:

“As you will know, under the previous administration”— which was, of course, a Conservative Administration, with a few others—

“a power was taken within the Energy Act 2013 which gives the Secretary of State the ability to set a ‘decarbonisation target range’ for the electricity sector, for a year ‘not before’ 2030. This allows a target to be set on the same date or after setting the Fifth Carbon Budget which must be set before end of June 2016 (measured in emissions intensity in grams of CO2 per kWh)…it is the intention of this Government not to exercise this power. This position is consistent with our manifesto pledge not to support additional distorting and expensive power sector targets.”

That is where the flexible friend comes in.

That letter from a Government Minister in the other place appears to say that, whatever the Energy Act 2013 says, the Government will not do anything about it. They are not going to set a decarbonisation target range at all and, for not doing that last bit of business relating to the 2013 Act, they are going to use the excuse that, as in the manifesto, it is somehow swept up by new and distorting targets for the future, which patently it is not.

We now have a position where, in order to ensure that the provisions of the 2013 Act are properly carried out and that the decarbonisation target range becomes clear to all, and is hopefully adhered to thereafter, the response to the onerous task of setting that decarbonisation target range is to do nothing at all—let us not forget that the decarbonisation target range could be whatever the Government decide it should be, so it could be a gentle target or a stronger target. That is not good enough. It is clearly incumbent on the Government to take action on the decarbonisation target range through secondary legislation, and this amendment would marginally change the wording of section 1 to give stronger guidance to do that, rather than what might be argued as slightly weaker guidance that a Minister in the other place clearly thinks is sufficient for him to jump clear of the obligation.

The new clause would provide that the Secretary of State should set a decarbonisation target and discharge section 1 of the 2013 Act. I trust that the Secretary of State, sorry the Minister—I have promoted her—understands the importance of that section and will take this modest amendment in the spirit in which it is intended, to ensure that the Act is carried out, and will act accordingly.

Photo of Andrea Leadsom Andrea Leadsom The Minister of State, Department of Energy and Climate Change 2:30, 4 February 2016

I do have the letter. On reading it, a power is taken, but we take all sorts of powers in case we need them. Is it not simply the case that, because we are doing well against our own targets, we do not necessarily always want to legislate? I find it completely counterintuitive to say that, just because we have a power, we should therefore legislate to use it. That is just not the case. My noble Friend Lord Bourne made it clear to the shadow Energy and Climate Change Minister in the other place, Lady Worthington, that, in line with our Conservative manifesto, which I am pleased the hon. Member for Southampton, Test quoted accurately:

“We…will not support additional distorting and expensive power sector targets.”

Lord Bourne made it clear in his letter that that is precisely why we will not implement the power, even though we have it. In summary, just because we have a power does not mean that we need to use it. We will only use it if we need to use it, or if there are good reasons to do so.

New clauses 11 and 7—new clause 7 has now been withdrawn—have the same underlying purpose. Both new clauses would require the Secretary of State to set a decarbonisation target range for the electricity generating sector. New clause 11 would also require the target range to be reviewed annually, and amendments with very similar effects were debated and defeated during the last Parliament and during the passage of this Bill in the other place. Lord Bourne clearly set out the Government’s position on this matter, as the hon. Member for Southampton, Test has just explained.

We are committed to ensuring that the UK continues to do its part to address climate change, in line with the Climate Change Act 2008 and our international and EU obligations. I think all hon. Members recognise that we have played a leading role in the Paris climate change negotiations and done everything we can. The UK on its own cannot change the future for climate change, but acting internationally we can. We are determined to do our bit as cost effectively as possible to make sure that our own energy is secure and affordable, as well as low carbon. Locking ourselves into additional expensive and inflexible targets relating to the power sector is not the way to do that.

There are too many things that we cannot predict about how the energy system will develop up to and beyond 2030, and the costs of getting it wrong would be picked up by consumers for decades to come. Yesterday we were discussing fuel poverty and how we must do more to keep costs down for consumers, and now Opposition Members are urging us to sign consumers up to a distorting and expensive power sector target. It simply does not make sense, and our manifesto was clear that we will not do that.

Instead, investors want to know that we have got clear, credible and affordable plans—that is what my right hon. Friend the Secretary of State set out in her speech in November—including the role that gas generation, nuclear power, offshore wind and innovation can play in decarbonising the power sector. The Government are now setting out the next stages in their long-term commitment to move to a low-carbon economy, providing a basis for electricity investment into the next decade.

The huge investment that we have seen so far is evidence that our approach is working. Between 2010 and 2014 our policies have secured an estimated £42 billion of investment in low-carbon electricity, including £40 billion in renewables, and we have more in the pipeline for the future.

Photo of Alan Whitehead Alan Whitehead Shadow Minister (Energy and Climate Change)

I take the point that the Minister made. On occasion Governments allow themselves secondary legislation opportunities, which are then placed in a cupboard and never seen again. I deplore the tendency in Bills to provide possible powers that are never acted on because the Government subsequently feel that it is not a good idea to do so. However, the provision in the Energy Act 2013 is not a small power that was put in the back of a cupboard. Part 1, section 1 is the part around which the rest of the Act hangs. Other parts of the Act that refer to other targets make complete sense in the end only if the decarbonisation range is properly put in place by the Secretary of State. It is not at the front of the Act by accident, but because, in order to make sense of the Act overall, it is clearly incumbent on the Secretary of State to set that decarbonisation range at some stage.

If we are doing so well and we want to stand by our Paris commitments, why on earth would we not set a range? What is there to lose? I am more worried about what the Minister says than I am that the Government are unwilling to come forward with a range, because it suggests that—in the light of all these other matters—perhaps there is the beginning of a conscious view that targets will not only not be met, but consciously veered away from in future.

Photo of Jonathan Reynolds Jonathan Reynolds Labour/Co-operative, Stalybridge and Hyde

Not only is there nothing to lose, but much to gain. Taking risk out of the investment picture for investors coming into our energy system will be a huge benefit. It comes down to the theme that we have returned to again and again in this sitting, which is that there is a lot of ambiguity about the Government’s position on these issues and a lot of investors telling all Members of Parliament that they simply do not trust the political will behind this.

Photo of Alan Whitehead Alan Whitehead Shadow Minister (Energy and Climate Change)

My hon. Friend makes an important point about how we settle the trajectory that we are on. It is a question not just of what tomorrow’s cost might be, but of the long-term cost and stability of our decarbonisation programme, and indeed the extent to which setting such targets and giving such certainty moves towards, rather than away from, what the Government have said about trying to meet targets in a low-cost way. Therefore, I am disappointed by the Minister’s response to this new clause, particularly as she appeared to give reasons in her own comments why the target decarbonisation range should now be set, but then concluded that it should not. For that reason, we would like to divide the Committee on this new clause.

Question put, That the clause be read a Second time.

The Committee divided:

Ayes 8, Noes 11.

Division number 13 Christmas Tree Industry — Decarbonisation target range

Aye: 8 MPs

No: 11 MPs

Aye: A-Z by last name

No: A-Z by last name

Question accordingly negatived.

New Clause 12