Electricity Market Reform

Part of the debate – in the Scottish Parliament at 4:20 pm on 13 January 2011.

Alert me about debates like this

Photo of Jim Hume Jim Hume Liberal Democrat 4:20, 13 January 2011

I am grateful for the opportunity to sum up for the Liberal Democrats in this afternoon's debate. It has been a very constructive debate, and that must be welcomed.

It is just a few months since we debated Scotland's move towards a low-carbon economy. At that time, I said that climate change must be tackled head on to avoid our leading industries being severely impacted by prolonged periods of extreme weather. Never has that been truer, when we consider the hit that our businesses took in December and the carnage that our commuters faced in the transport network.

The path to achieving a low-carbon economy need not be a painful one. It should be seen to present opportunities that are ripe for exploitation. Although electricity market reform is a vital component in our efforts to tackle climate change, it also serves as one such vehicle of opportunity. Indeed, I know that the Scottish Government shares that view and agrees with the Secretary of State for Energy and Climate Change that the reform offers a once-in-a-generation opportunity to restructure the vital electricity market.

The consultation document that the Department of Energy and Climate Change published recently is important both because of the scope of its ambitions and because, frankly, time is of the essence. That has been clear today. We are in a period where numerous coal and nuclear power stations are nearing the end of their lives and will leave gaps in energy generation that need to be plugged. One such power station—Cockenzie, in the south of Scotland, just east of here—is scheduled to close by the end of 2015. It is important that power companies are mindful of local sensitivities when they plan their next generation of power stations, as well as considering the potential impact on communities such as Cockenzie when existing stations close.

In the past, some members on the Government benches have got a bit hot under the collar over nuclear power and its inclusion as one of the means of low-carbon generation. However, for all Governments, there will be circumstances that dictate that things cannot always be done as planned. Those are not my words, but those of the Deputy First Minister—on Twitter, of all places. I welcome her admission that Governments cannot always fully legislate according to their manifestos, as they would wish. However, for the avoidance of doubt, I state what the Scottish Liberal Democrats have been saying for some time—we are still opposed to new nuclear capacity in Scotland and we firmly believe in maximising the benefits of Scotland's enviable renewables potential, which the Minister for Enterprise, Energy and Tourism mentioned when he commented on the EU remarks.

The publication of the consultation and the reforms that are contained within it only serve to further strengthen the Lib Dem and Conservative coalition Government's green credentials after just eight months in power, as Iain Smith remarked. The Government committed £1 billion to carbon capture and storage pilot plants in the comprehensive spending review. I welcome the energy secretary's visit to Longannet in Fife yesterday, as did Liam McArthur in his opening speech. Members should also be aware that our party is lobbying strongly for the green investment bank to be situated in Scotland, and I welcome the energy secretary's positive comments in that regard yesterday, when he appeared before the Economy, Energy and Tourism Committee, which is chaired by Iain Smith. Due to our renewables potential and Edinburgh's position as a financial powerhouse, Scotland is the obvious fit.

David Stewart noted that E.ON has announced a 9 per cent increase in electricity prices, which makes it the fifth of the big six to announce substantial price increases this winter. Perhaps the most attractive aspect of the reforms in the consultation is the certainty that they would create in the market. For example, carbon price support and feed-in tariffs will provide certainty over the cost of running polluting plant and the revenues for low-carbon generation, and certainty breeds investment. Given the number of new generation power stations that will be required to keep the lights on, the measures will remove the existing bias in favour of fossil fuels and incentivise investment in low-carbon generation. By implementing such reforms, we will be able to achieve the key aim of securing our energy supplies and insulating ourselves from the volatile fossil fuel prices that are so often blamed for increases in electricity and gas prices. It is vital that any reforms protect customers while encouraging investment in low-carbon technologies. The consultation strikes the right balance.

Significant investment will be required from the power sector. It is important that the sector plays ball to drive through the reforms to the market for the benefit of consumers who are penalised annually for trying to heat their homes. That happens not only in the Highlands and Islands, as David Stewart said, but across the whole of Scotland, including of course my area, the South of Scotland.

As we begin to make significant inroads into decarbonisation, the demand for electricity will rise dramatically, given that it will be required to meet more of our heating and transport needs. The reforms are crucial. I hope that the Scottish Government will work closely with the Liberal Democrat Government to shape the final proposals—[Interruption.]—I should have said not Liberal Democrat Government but coalition Government.

I am glad that the minister has welcomed the UK Government's work, which is, of course, led by the Lib Dem Chris Huhne. I am glad to hear that there is to be a follow-up session next month. We all look forward to some positive remarks coming out of that.