Energy Bill [HL]

Debate between Baroness Smith of Basildon and Lord Lea of Crondall

Tuesday 8th February 2011 Grand Committee

[Lord Lea of Crondall]

My Lords, now that the point has been put in terms of a mechanism, I begin by not having any knowledge about whether a conflict is likely. Assuming that it is conceivable, as in the case made by my noble friend Lord Whitty—my noble friend Lord O’Neill has questioned whether it is just either/or as regards renewables having preference—I thought that the general philosophy with which we deal with energy policy is that we put a price on market externalities. In other words, we level the playing field financially, whether that is through Kyoto, carbon tax or something else. Everyone pays the same price through a carbon tax or something like that, but once you have done that, you do not make a separate judgment about preferring renewables to hydrocarbons. That market externality to meet our medium-term targets should be incorporated into the fiscal system. We are gradually doing that through the myriad consultations about carbon price floor, entry tariffs, the document produced by the Treasury before Christmas entitled Carbon Price Floor, and so on.

If I could take the suggestion that has just been made a stage further, the word “criteria” is not just a mechanism because the Department of Energy and Climate Change cannot be left just holding a pup, it has to know the criteria on which it has to operate. How far is it that this famous level playing field can be made level by not treating all forms of energy alike? That is not what we mean. We are trying to make the level playing field level on the basis of market externalities which are made into financial quantities in the tax and subsidy system. We do not need to do it twice. As I understand it, that would be the criterion.

You cannot just ask the department to have a mechanism without stating so that there is no ambiguity how the market externality is translated into a level playing field price. I hope that that can also be fed into the thinking and the way in which my noble friend Lord Whitty takes forward this thought in his amendment.

[Baroness Smith of Basildon]

My Lords, I hope that noble Lords will forgive me for not standing up because I may fall over. I thank the Minister for his comments and for his good wishes to my foot, which were gratefully received. I hope that he will not mind if I do not take him up on his offer to take my wheelchair through the voting Lobby. I will rely on my noble friends to ensure that I get into the right place. On a serious note, I am grateful to him for agreeing to suspend last week’s Committee sitting so that we could sit today and I could be here. I am grateful to noble Lords for their indulgence on that.

I thank my noble friend Lord Whitty for bringing forward this amendment. It has invoked a lively discussion. I am not sure that there is as much disagreement between us as might seem apparent from some of the debates. We are all trying to seek a sensible energy mix and to ensure that there is access for all forms of energy. The Government have targets for renewable energy. If those targets are to be met there has to be some certainty for the renewable energy industry.

It is worth reminding ourselves that my noble friend’s amendment is not anti-oil or anti-gas—I did not see it in that way at all—but tries to find a way in which both can coexist sensibly on a level playing field and one does not undermine the other. Like the noble Baroness, Lady Parminter, I pay tribute to the work of RenewableUK, which has been trying to seek the kind of protocols, or guidance, required that means that problems can be addressed before they arise so that we do not have to move to the position we would have to under this amendment.

However, there may be cases where a proper disputes procedure has to be in place to ensure that we are not in the position that we are at the moment. If oil or gas is always a priority, there will be a difficulty in ensuring investment in renewables. Indeed, the amendment talks about a site that is developed or operated for renewables, or is intended to be developed or operated, or for transmitting electricity from renewables,

“in respect of which the Crown Estates that have granted a lease license, agreement to lease or agreement to license for that purpose”.

It is not just a site that has been chosen but a site that has been granted a licence already.

The proposed new clause says that the Secretary of State is not able to grant a licence for activities within an offshore renewable energy site without the agreement of the holder of the lease, licence or agreement. One problem is that, with no disputes procedure, there is no compensation for a licence-holder if their licensed renewable site is to be overridden for access to gas and oil.

I do not think that there is much disagreement. There is, and has been, a clear wish within this Committee to ensure that we maximise all our resources for all energy sources. However, I have concerns that, if some kind of dispute procedure or something along the lines suggested in the amendment is not put in place, the Government could be unable to reach their targets on many renewables. If a licence can be revoked purely on the order of a Secretary of State, that lack of certainty will lead to a lack of investment.

I understand that the Minister may have concerns about the wording and the way forward. It would extremely helpful, however, if he could take this away and give some thought to the principles behind the amendment to look for a way forward that gives certainty to licence-holders of renewable energy sites.