Electricity and Gas (Carbon Emissions and Community Energy Saving) (Amendment) Order 2011

Debate between Baroness Smith of Basildon and Baroness Parminter

Wednesday 14th December 2011 Grand Committee

[Baroness Parminter]

My Lords, on our Benches we certainly support the measures in the order. I have three quick questions for the Minister.

It is important that the Government are seen to support a fair and workable distribution of conditions for suppliers participating in environmental and social schemes. In looking at the options, did the department consider a more tapered introduction, say with a small 50,000-strong block of customers rather than the cliff edge of 250,000? If it was considered, why was that approach not adopted? If it was not, might it be as the Government look at future schemes in the area?

My second question is: what estimates are there of the number of new suppliers that will enter the market as a result of this change in regulation? There is no guarantee that smaller suppliers will mean a reduction in the price of a householder’s bills, but we all know that we need to try to cut energy bills and end the dominance of the larger six.

In that regard—supplementary to it—I say that the Minister might find it hard to answer that question because, even if we change this regulation, that will not be the only barrier that prevents people coming into the market. Many of the other barriers, such as liquidity, are outside the Government’s control. Might the Minister take this opportunity to comment on what negotiations or discussions he has had with Ofgem about some of those other barriers to entry into the market, and about whether it intends to act on them in the near future?

[Baroness Smith of Basildon]

My Lords, I thank the noble Lord, Lord Marland, for his introduction. This change is relatively moderate, minor and technical but it is generally welcomed. The issues that I want to raise are similar to those raised by the noble Baroness, Lady Parminter. Although I welcome the change, I am not sure how much impact it will have, and I have given some indication to the noble Lord of the questions with which I shall probe him for explanation.

Raising the threshold of CERT and CESP from 50,000 to 250,000 customers will benefit smaller suppliers that have reached, are about to reach or are just over the threshold and would struggle to meet the obligations imposed on them, but how many energy suppliers will that affect? I assume that the department has made some assessment or estimate of how many energy suppliers have reached that level and will benefit from not having to fulfil the obligation under CERT or CESP at this time. Any information that the Minister has on the scale of the impact and an indication of the number of companies or customers would be welcome.

The noble Baroness, Lady Parminter, also raised the issue of the impact there could be on bills. Has any assessment been made of the smaller companies, having been relieved of the obligations, passing on the savings that they make to customers? If smaller companies no longer have those obligations, presumably that will assist them with their profit margin. Is it expected that the customer will receive some benefit? My understanding is that, in effect, the larger companies pick up the tab of the obligations not being undertaken in future by smaller companies. Is there any expectation of additional cost being passed on to the customer from the larger companies?

It may be more to do with my lack of computer skills than the DECC website, but I could not find the consultation there. The Minister rightly laughs at me, but I challenge him to find it. I was interested to see whether any responses to the consultation had not been satisfied by the order. The issue that has been raised already is tapering, but I am not sure about it because I could not access the consultation. Did the Government consider tapering the threshold for obligations? Even under the new proposed higher level, which we welcome, there is still an issue about there being an absolute limit at which substantial obligations come into force. Were there representations and responses from the smaller suppliers about a more gradual and graduated approach? If so, were they considered by the Government and what was their reason for rejecting any such taper?

The impact assessment commented on the costs. Is there any impact on carbon or is this measure carbon- neutral? Paragraph 3 of the Explanatory Memorandum, which is headed: “Matters of Special Interest to the Joint Committee on Statutory Instruments”, made the point that there was a delay in the Government announcing their intention to pursue this order change —that was announced in June—because they were considering wider possible changes to the CERT scheme. They are ongoing and are being pursued at the same time as the amendments presented here because they are under strict time constraints. If the Minister could expand on that and say anything about the changes that the Government are looking to introduce, that would be helpful.

Finally, I welcome the Minister’s comments about how essential it is to have market reform if we are to do anything to benefit consumers and assist them with energy prices. As he said, this is just one step. It is a small step but it is welcome. If he can reassure me as regards the points that I have raised, I would be grateful.

Greenhouse Gas Emissions Trading Scheme (Nitrous Oxide) Regulations 2011

Debate between Baroness Smith of Basildon and Baroness Parminter

Tuesday 17th May 2011 Grand Committee

[Baroness Smith of Basildon]

My Lords, first I thank the Minister for the detail that he has provided on the regulations before us, and for outlining the considerable benefits of reducing nitrous oxide emissions. Along with our colleagues in the Commons, we support the regulations. We know that the emissions are highly potent and that, as he indicated, the global warming potential is more than 300 times greater than that of carbon dioxide. Clearly there will be great benefit from accepting the proposals.

We also know that reducing nitrous oxide emissions alongside carbon dioxide emissions by extending the EU ETS will become mandatory in the EU in 2013. As the Minister indicated, we are not the first country to seek early implementation to include nitrous oxide emissions. The Minister said that the Netherlands and Austria had taken action. I understand that Norway, too, has taken action, perhaps more recently. The regulations before us should provide incentives for early reduction, as well as lower long-term costs for the company involved.

I have a few questions which I was able to notify the Minister of, and which I hope he will answer. We share his optimism that the regulations will reduce emissions, and, we hope, much more quickly. It would be helpful if he described briefly the monitoring procedures that will be in place or are in place already. The Minister was very helpful in outlining the consultation with GrowHow UK Ltd, which is directly affected. Was there any consultation with anyone else, and were there any other responses to the consultation?

In conclusion, I will briefly ask the Minister about trading security. I am sure that he is aware of the cyberattacks earlier this year on European trading registers. The Government are confident of the security of the UK trading register, but are they confident that other countries have now achieved the same level of security, or will be able quickly to achieve that level of security? It would be helpful to know what discussions the Government have had to date with other European countries on the issue. In February the Government issued a Written Statement that stated:

“While it is important to ensure a minimum level of security now to ensure the opening of the registries, the UK will continue to press the European commission to ensure that registry security across Europe is raised above this level”.—[Official Report, Commons, 3/2/11; col. 50WS.]

It would be helpful to know what progress has been made since then. The Minister will understand that we have concerns about market confidence, and any reassurance that he can give about progress on European-wide security issues would be welcome.

I entirely concur with the Minister that there are economic benefits to these regulations. They make environmental sense and they have our support.

[Baroness Parminter]

We, too, welcome the inclusion of nitrous oxide in the EU Emissions Trading Scheme. As the noble Baroness said, nitrous oxide is a highly potent greenhouse gas. Its use in fertiliser accounts for a large share of our agricultural emissions, and agricultural emissions account for around one-third of all greenhouse gas emissions worldwide.

I have one question and one comment. The question concerns the impact on local air quality. The statement provided by the department states:

“It has not been possible at this stage to quantify any wider environmental impacts this option would have on ambient air quality”.

While the release of laughing gas into the local community may sound like a topic of fun, I would like to be reassured by the Minister that local communities will not suffer any degradation in their air quality once the abatement technology is introduced.

My comment is slightly off the point, so please forgive me if I stray too far. In recent months the Government have made it clear that great steps will be needed if we are to feed a growing world population. Therefore, the use of fertiliser in agriculture will increase substantially. This is very good news for this company and shows that the Government are right to tackle the problem now. However, it is not only the use of fertiliser in agriculture that results in our nitrous oxide emissions; it is also how we store our livestock. I refer to the storage of manure in intensively reared systems, and the urine and manure that the animals produce. Given that we have taken this very welcome step today to reduce our nitrous oxide emissions, will the Minister ensure that Defra, in looking at how we as a Government seek to meet the growing challenge of feeding the world population, tackles the problem of intensive livestock farming, which is a far greater contributor to our nitrous oxide emissions than the chemical industry?