Fuel Poverty

Lord Bourne of Aberystwyth Excerpts

Thursday 28th January 2016 Lords Chamber

[Baroness Donaghy]

To ask Her Majesty’s Government what is their estimate of the number of households currently in fuel poverty; and what action they intend to take to reduce that number over the next five years.

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change and Wales Office (Lord Bourne of Aberystwyth) (Con)]

My Lords, the latest fuel poverty statistics indicate that 2.35 million households were in fuel poverty in England in 2013, which was down from the previous year. The average fuel poverty gap—the measure of the debt for fuel poverty—also fell in that year. Our intention now is to focus our efforts more effectively on those in greatest need, and from 2017 a reformed energy company obligation will focus on the fuel poor.

[Baroness Donaghy (Lab)]

I thank the Minister for his Answer. I asked the Question in memory of Lord Ezra, who will be much missed, and who asked this question on a number of occasions. Is it true that one pensioner dies of a cold-related illness every seven minutes in winter, and that the complexities of tariff switching to save money would defeat a mathematician? Will the Government act to place a legal obligation on suppliers to put appropriate pensioner households on the lowest possible tariff, and will they ask Ofgem to develop a backbone?

[Lord Bourne of Aberystwyth]

My Lords, I certainly associate myself with what the noble Baroness said about Lord Ezra, who is certainly much missed. Indeed, one of his great interests was fuel poverty. In relation to measures that can be taken by the Government, as I have indicated, we are now focusing the energy company obligation, which has a value of £640 million every year, on the fuel-poor. Previously it has not been the sole criterion but by 2018, with de minimis exceptions, it will be, which will make a material difference. As the noble Baroness will know, we are also awaiting the CMA report, which we certainly hope will be robust; we are very much on the side of consumers and want to get bills down.

[Lord Howell of Guildford (Con)]

My Lords, I join in the tribute to the late Lord Ezra, with whom I worked. Can my noble friend say how many fuel banks to help people on low incomes with fuel costs currently operate in the United Kingdom, and can he also say what is the latest DECC estimate of the total amount of green charges, levies, capacity payments, national grid emergency payments, and all the rest, which will add to the average domestic fuel bill over the next five years—as in the Question?

[Lord Bourne of Aberystwyth]

My Lords, I thank the noble Lord for his interest in this and his tribute to Lord Ezra. I will get a detailed breakdown of the position on fuel banks to him, because I am unaware of that. As regards the position on fuel bills, he will be aware that the last reported figures, which will be for last year, show that bills are coming down and that we are saving because of the impact of changes on policy costs; the average household will save £30 on policy costs. We are bearing down on that, but in relation to the fuel poor specifically, obviously action is needed, which we are addressing through the energy company obligation and the warm home discount scheme.

[Baroness Featherstone (LD)]

My Lords, I also pay tribute to Lord Ezra. On 1 April 2018, the regulations on energy efficiency in the private rented sector, which is the worst-offending sector, will come into being. That will mean that it will become illegal for a landlord to let a property if it does not meet the E grade standard. Can the Minister update the House on what progress he has made on working with landlords to achieve this most important measure in time for the commencement date?

[Lord Bourne of Aberystwyth]

My Lords, first, I welcome the noble Baroness, which I omitted to do on her first question to the Front Bench on this subject. In relation to progress on the issues she addressed, obviously we are looking very closely at the position of social landlords; that is part of the general review we are carrying out of the energy company obligation in relation to fuel poverty. As she rightly says, it is an important part of the mix, but we are bearing down heavily on bills, which are falling for the first time for five years according to the latest recorded figures, and will continue to do so. But, more importantly, we need the necessary action we are taking through the £1 billion energy company obligation and the warm home discount.

[The Lord Bishop of St Albans]

My Lords, one concern is prepaid meters, which are an expensive way of paying for fuel. Will the Minister update the House on what progress is being made to promote the five principles agreed between Consumer Focus and the largest energy groups some years ago—I think it was back in 2011? Furthermore, will Her Majesty’s Government ask the large energy companies to reconsider income-differentiated tariffs again?

[Lord Bourne of Aberystwyth]

My Lords, the right reverend Prelate is right in relation to prepayment meters—they are a concern. He will know that the advent of smart meters is beginning to see an end to prepayment meters. Several energy companies have announced that they will be phased out because, for the first time ever, we will have accurate billing for all households by 2020. We very much hope that they will be a thing of the past, and I am sure that the whole House will welcome that.

[Lord Palmer (CB)]

My Lords, in this day and age is it not a scandal that any household is living in fuel poverty?

[Lord Bourne of Aberystwyth]

My Lords, yes, of course it is; I share that sentiment. It is a problem throughout the United Kingdom, not just in England, and it is being addressed by the Governments of the respective parts of the kingdom. That is why we are focusing, with the sole consideration of fuel poverty, on the recast energy company obligation, which will be in force by 2018. I think that the whole House should take pleasure in, and credit for, that.

[Lord O'Neill of Clackmannan (Lab)]

The reduction in gas prices that has been announced by the energy utilities is welcome, but is it in fact the maximum that they could cut, given the dramatic fall in the price of both oil and gas? Are the Government monitoring the situation to ensure that consumers get early redress in relation to what has been a high price level for too long in this area, given that basic gas prices are considerably lower now than they were when the prices were first set?

[Lord Bourne of Aberystwyth]

My Lords, the noble Lord will be aware that my right honourable friend the Secretary of State has indicated that we are looking to the energy companies to reduce their prices. Two of them, E.ON and SSE, have today announced reductions and we are looking to others to do the same. We also await the outcome of the CMA report, as I have indicated. We hope that it is a robust report because we are very much on the side of the consumer and want bills to be affordable.

Forests: Coal-bed Methane Extraction

Lord Bourne of Aberystwyth Excerpts

Monday 25th January 2016 Lords Chamber

[Baroness Royall of Blaisdon]

To ask Her Majesty’s Government what assessment they have made of the social and environmental impacts of the potential extraction of coal-bed methane on forests such as the Forest of Dean.

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change and Wales Office (Lord Bourne of Aberystwyth) (Con)]

My Lords, as part of the 14th onshore oil and gas licensing round, Southwestern Energy Ltd was formally offered two petroleum exploration and development licences within an area encompassing the Forest of Dean, each earmarked for coal-bed methane development. A strategic environmental assessment was undertaken for all areas offered for licensing applications in that round.

[Baroness Royall of Blaisdon (Lab)]

My Lords, the hydrogeology of the forest is complex. The former mine workings are flooded, and there are still freeminers working underground. Labour introduced environmental safeguards for the Infrastructure Bill, but those have been downgraded, disregarded or weakened. The assessment to which the Minister referred is regarded by many to be flawed and inaccurate. Have there been independent risk assessments into coal methane extraction that consider all health and environmental impacts that have been observed elsewhere and have been considered specifically in relation to the Forest of Dean? If so, have they been made public? I would be grateful if I could have a meeting with the Minister and his officials, together with some colleagues from the Forest of Dean, to discuss this further.

[Lord Bourne of Aberystwyth]

My Lords, as I have previously mentioned to the noble Baroness, I am very happy to have that meeting along with officials. The system is extremely robust; this is but the first stage in the process. Consents will be needed before anything can go forward—for planning, from the Environment Agency, along with scrutiny by the Health and Safety Executive, an access agreement with the Coal Authority and consent to drill from the Oil and Gas Authority.

[Lord Hayward (Con)]

Can my noble friend confirm that any application for coal-bed methane extraction will be subject to a full and rigorous process, which will include receiving all independent reports, following the same process as applications for other forms of methane extraction?

[Lord Bourne of Aberystwyth]

My Lords, I can certainly confirm that that is the process. Only one commercially running coal-bed methane extraction operation is going on at the moment, and there have been no issues since 2007, when it started, with regard to health and safety or contamination.

[Baroness Featherstone (LD)]

My Lords, what evidence-based case is there for applying far less stringent environmental controls and protections to coal-bed methane than to hydraulic fracturing?

[Lord Bourne of Aberystwyth]

My Lords, the process for coal-bed methane is essentially parallel with that for fracking. There are no separate considerations here—or in so far as they are separate, it is only because of the slightly different technology. Both have extremely robust systems. In addition, if fracking was involved where we have coal-bed methane, a separate system of protections and consents would be needed.

[Baroness Young of Old Scone (Lab)]

My Lords, the Government rode rather roughshod over the environmental conditions that your Lordships’ House believed should be applied to fracking and responded by saying, “Oh well, in that case we’ll make sure that we protect areas of outstanding natural beauty and groundwater protection zones by doing it at 1,200 metres under those sites and no closer to the surface”. The coal seams in the Forest of Dean are at 450 metres from the surface, and many are much closer than that. Can the Minister confirm, or not, that the environmental restrictions that apply to fracking apply also to coal-bed methane extraction in the Forest of Dean—and, if not, what environmental protection conditions will apply? Was it wise to issue a licence when many of the environmental impacts had not been assessed in detail for this particular application until after the licence had been granted?

[Lord Bourne of Aberystwyth]

My Lords, coal-bed methane is not as deep as 1,200 metres. So, obviously, that is a separate consideration; we are not talking about fracking. In so far as there is fracking, if it is fracking in addition, there will be the additional protections that are available. But, as I have indicated, there are also planning consents, Environment Agency consents, Health and Safety Executive requirements, access agreements from the Coal Authority and consent to drill from the Oil and Gas Authority. We have a very effective, robust system of protections of which we can be proud.

[The Lord Bishop of St Albans]

My Lords, this Question raises a much broader issue, which concerns many people, about the protection both of the ancient forest lands and of the forestry estates. Could the Minister update your Lordships’ House on what progress has been made towards the appointment of the new public forest body, which was the recommendation of the independent forestry report? If no progress has been made, what role is, for example, the Forestry Commission taking in protecting this land, which the public hold so dear and for which they have such great concern?

[Lord Bourne of Aberystwyth]

My Lords, I am always grateful for people exaggerating my powers, but this is very much outside my brief in relation to forestry. I will ensure that the right reverend Prelate gets a full response on the subject, and I know that the Government take it seriously.

[Viscount Ridley (Con)]

My Lords, does the Minister agree that if this country had not switched to fossil fuels in the last couple of centuries, the Forest of Dean—and every other forest—would long ago have been cleared for fuel? I declare my energy interests as listed in the register.

[Lord Bourne of Aberystwyth]

My Lords, what I would say is that we, as a nation, must determine that we shall have secure energy, and energy that is not imported. If we do nothing about coal-bed methane or, more broadly, about fracking, by 2030 we will have to import 70% of our gas rather than the 45% that we import now.

Paris Climate Change Conference

Lord Bourne of Aberystwyth Excerpts

Thursday 17th December 2015 Lords Chamber

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change and Wales Office (Lord Bourne of Aberystwyth) (Con)]

My Lords, this has been a debate of very high quality and I thank the noble Baroness, Lady Miller, for raising this topic in the House and setting out how important it is for the whole world, which it certainly is, and presenting the case with such clarity and vision.

As noble Lords will be aware, I repeated a Statement in the House on Tuesday, after the Secretary of State had reported to the House of Commons on Monday. I absolutely agree with the points made by the noble Lord, Lord Prescott, about the inspiration at Paris of many political leaders and others, including businesspeople and Members of this House. He singled out in particular Vice-President Al Gore—I think that people remain Vice-Presidents—and the noble Lord, Lord Stern. It is absolutely true that they made outstanding contributions, as did others. The noble Lord is also absolutely right about the role of negotiators. He mentioned Pete Betts, who had a key role to play, as did Ben Lyons and others who worked fantastically hard.

The Paris agreement is an historic achievement and takes a significant step forward towards reducing, on a global scale, the emissions that cause climate change. The right reverend Prelate paid tribute to France and the French for staging this conference as effectively as they did with their considerable diplomacy. In the light of the dreadful terrorist attacks, that was no mean feat. Not many nations could have pulled that off but I absolutely agree that the French did. I also agree with what he said about the role of faith, with people of many different faiths coming together to help build this agreement, which we as a world succeeded in achieving in Paris.

As has been said, the agreement protects not just our environment but our national and economic security, and that is true worldwide. It also brings with it new opportunities for growth, innovation and well-being. For the first time ever, all parties to the United Nations Framework Convention on Climate Change, representing nearly 200 countries, made a commitment to act. The noble Baronesses, Lady Northover and Lady Miller, and the right reverend Prelate also made the point about the role of small nations alongside large ones. One heard as much at the conference and on its fringes about the Marshall Islands and Tuvalu, quite rightly, as one heard about China, India and others. I met representatives from Greenland, for example. It was a truly international agreement that has set out a clear, long-term goal for the world to achieve net zero emissions in the second half of the century. The long-term goal sends a strong signal to investors. That is important globally because of the likely—almost inevitable—reduction in the cost of many renewables because of the fact that nations and businesses around the world will be investing in them.

From the United Kingdom—and, indeed the EU—point of view, we had three major objectives: a rules-based system, which this is; a long-term goal, which we have achieved; and a review system, which again we have achieved. In fact, there are two systems of review. We were part of a “high-ambition coalition”, which also included the United States. I think that the noble Lord, Lord Giddens, raised questions about the role of the US. We are certainly hoping that this agreement will be ratified while President Obama is in office, and I think that is the likelihood. Obviously we cannot influence domestic policy in the United States, much as we may on occasion be tempted to do so, but we are sure that it will be validated and passed there.

The agreement is based on the INDCs—that is, the contributions—of 187 countries. This level of commitment is unprecedented and the review cycle, which I have mentioned, is central to the ambition. The noble Lord, Lord Giddens, asked how that would be enforceable. It is enforceable in that every five years, countries will come back. It is a question of whether they restate their ambitions or ramp them up; that will be central to the way that this develops.

As investment grows, the costs of low-carbon technologies will come down. The noble Baroness, Lady Miller, asked about battery technology. That is vitally important; for example, we are looking across government at electric cars and zero-carbon cars. I come back to the importance of the clear investment signal.

The financial aspects of this agreement are also important. There is to be $100 billion of support a year from the public and private sector, which will help developing nations, particularly small island developing states. On enforceability, again, some states will be ensuring that they meet their objectives because they will be getting financial assistance to do so, so the two will go hand in hand. There are obligations in the agreement to come back with mitigation measures every five years and to take part in the global stock-take, which will also happen every five years but on a different cycle.

The UK is, as I think was said, a substantial donor. We already have £3.87 billion in the International Climate Fund, helping millions of the world’s poorest. The noble Baroness, Lady Northover, referred to this absolutely important point and asked whether we were able to give a guarantee that this will not go to any projects that have a carbon element. A carbon-proofing system is being applied in the ODA and we will be watching that like hawks, because we are the first developed country to commit to end coal-fired power stations. That is very significant and was commented on repeatedly at Paris. It sends out a clear signal. We are at some stage going to have to send out a similar signal about gas, of course, although that will not be just yet, as we need gas to transition to the lower-carbon—ultimately zero-carbon—economy that we want. Clearly, the worst fossil fuel is coal, but gas is a fossil fuel, too, so that will need to be addressed. As a nation we will have to face up to that.

The noble Baroness, Lady Sheehan, referred most graphically to the global dimension, in a speech of moving personal reminiscence and very reflective thought, setting out her personal commitments. I am sure that we will hear much more from her on these issues as she participates in the life of the House. It was an excellent and outstanding maiden speech, on which I congratulate her massively.

During the two weeks of the conference, we saw a huge mobilisation of business—the first time really, I think, that it had happened on this scale. I am sure that the noble Lord, Lord Prescott, will back that up. We have not seen the involvement of business at previous conferences on the scale that we saw in Paris, which had the presence and indeed the support of the Governor of the Bank of England—Mark Carney—Michael Bloomberg, Richard Branson, Paul Polman and a whole host of national leaders in business and other fields.

Forestation was mentioned. We have played a significant role in relation to REDD, and have committed money to Colombia, which has a very good record on halting deforestation. It is part of a progressive alliance, and we have committed money there as well. One should acknowledge the outstanding and not inconsiderable role here of His Royal Highness the Prince of Wales. He saw this issue before many others, and his support, both generally at the conference and over time, has been extremely important.

I will try to deal with some of the other points. The noble Baroness, Lady Young, mentioned insulation. She is absolutely right, and we are committed to 1 million more homes in this Parliament. The noble Lord, Lord Judd, referred to demand reduction, which is important and which we are looking at. The smart meter programme commits us to that. Building standards were mentioned. I hate acronyms but one that is probably quite appropriate is a very interesting project called BAPS—buildings as power stations—which I visited just outside Swansea, run jointly by the university and private industry, with involvement that is almost totally British. These buildings do not cost an awful lot to erect, and the department is looking at this because it helps with the housing situation as well. So there are things to be looked at there.

I will try to cover some last points very quickly. The noble Baroness, Lady Parminter, asked about the importance of engaging with the National Infrastructure Commission. I assure her that we are doing that, particularly on the issues she mentioned, which are covered by one of the work streams. Work is still going on to finalise the terms of reference but clearly it is clearly a very important commission in terms of large-scale projects and in terms of the messages that it sends out.

I very much welcome the role of the noble Lord, Lord Stevenson, and his modesty in claiming that he does not know a lot about these things. He seemed to me to know quite a lot. I agree with him about the significance of these issues and the fact that we have to think across government—which I hope we are doing—to look at the challenges that lie ahead, which are significant.

I thank noble Lords very much for their participation in the debate and once again in particular the noble Baroness, Lady Miller, for bringing it forward. It is a very timely and important debate, and I am sure we will return to these issues again and again. I certainly hope so, because this very important issue has been ramped up significantly by the highly successful conference in Paris. We should never forget that. We talk about the road through Paris—it is not an end in itself but a staging post—but, that said, we can give ourselves two pats on the back for Paris. However, the job is not done and there is still much to do. That will often be through the reviews—both through the global stock-take which starts in 2018 and takes place every five years, and through individual countries coming forward with their contributions every five years starting in 2020.

Onshore Hydraulic Fracturing (Protected Areas) Regulations 2015

Lord Bourne of Aberystwyth Excerpts

Tuesday 15th December 2015 Lords Chamber

Moved by

[Lord Bourne of Aberystwyth]

That the draft Regulations laid before the House on 16 July be approved.

Relevant documents: 3rd Report from the Joint Committee on Statutory Instruments, 8th Report from the Secondary Legislation Scrutiny Committee. Considered in Grand Committee on 24 November.

Motion agreed.

Paris Climate Change Conference

Lord Bourne of Aberystwyth Excerpts

Tuesday 15th December 2015 Lords Chamber

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change and Wales Office (Lord Bourne of Aberystwyth) (Con)]

My Lords, with the leave of the House, I will now repeat a Statement made by my right honourable friend the Secretary of State for Energy and Climate Change in another place. The Statement is as follows.

“Mr Speaker, it gives me great pleasure to report to the House on the United Nations conference of parties in Paris last week. COP 21 has delivered a historic new global climate change agreement that takes a significant step forward towards reducing, on a global scale, the emissions that cause climate change. For the first time, nearly 200 countries have made a commitment to act together and to be held accountable. In doing so, this agreement will help protect not just our environment but our national and economic security, now and for generations to come. As the Prime Minister said in his speech at the start of conference,

‘instead of making excuses tomorrow to our children and grandchildren, we should be taking action against climate change today’.

I am proud to say there are no more excuses. With the Paris agreement, we have shown that the world has committed to action.

This deal is unequivocally in Britain’s national interest. It moves us towards a level playing field at a global level within which the United Kingdom’s society and businesses can thrive, as we transition to a low-carbon economy. This is a deal we are wholeheartedly committed to, recognising that action by one state alone cannot and will not solve climate change. It is what we do together that counts.

I would like to say that this is a moment that all parties in this House can take significant credit for. Together, we passed the Climate Change Act 2008, which set an example to the world of what ambitious domestic climate action looks like. Together, since Copenhagen in 2009, we have supported a long, difficult and complex negotiation, which has brought us to this point. I want to pay tribute not just to the Prime Minister and my colleagues across government, but to my predecessors as Secretary of State for Energy and Climate Change for all the hard work they put in to bring us to this point.

As a country, we should be proud of the role we have played, leading in the EU, working closely with major global players, including the United States and China, and leading many of the negotiations. My department, with the FCO and DfID, has worked tirelessly to build the political conditions and the capacity to enable countries to act. The United Kingdom team in Paris last week showed commitment, passion and resilience. When Laurent Fabius asked me to chair the finance session at 4 am on Friday morning, I was well supported, and when I left at 6.30 in the morning, the team stayed to write up the conclusions and send them to the presidency. That, Mr Speaker, is commitment.

The United Kingdom played a key role in building alliances and shared positions, especially with the most vulnerable countries, to ensure that pressure for ambition could be maximised. This deal in Paris was not done to us; it was done by us. Indeed, it reflects many of the elements that we as a country have already committed to as part of the Climate Change Act. Of course, Paris is not the end of the road. We cannot sit back and say, ‘Job done’—far from it. Paris is the beginning. Now, the hard work to implement the agreement begins.

I turn to what the nearly 200 countries have agreed. First, we have set out a clear long-term goal for the world to achieve net zero emissions by the end of the century. That long-term goal sends a strong signal to investors, businesses and policymakers that the shift to a global low-carbon economy will happen and it provides the confidence needed to drive the scale of investment required. We have confirmed our collective ambition to limit global temperature rises to below 2 degrees, and we have agreed a further aspiration of 1.5 degrees.

However, the current level of commitments by individual countries will not meet that ambition. So, crucially, countries will come back to the table to assess overall progress towards the 2 degrees goal in 2018 and every five years thereafter. As investment grows and the costs of low-carbon technologies come down, the Paris process will provide not just the opportunity but the political pressure to step up individual countries’ emissions reductions targets. Starting in 2020, countries are expected to update their own plans to cut emissions and will be legally obliged to do so again every five years, thus providing regular political moments to scale up ambition.

This agreement is not only comprehensive in its scope; it also recognises the role of both developed economies and emerging economies in helping the poorest and most vulnerable countries to protect themselves from the effects of climate change as they transition to a low-carbon economy.

Over the last five years, the United Kingdom’s £3.87 billion International Climate Fund has been helping millions of the world’s poor to better withstand weather extremes and rising temperatures. At the United Nations Secretary-General’s summit in September, the Prime Minister announced a significant uplift to increase climate finance by at least 50%, with £5.8 billion of climate finance over the next five years to support poor and vulnerable countries to adapt to climate change and to curb emissions. This is part of a global commitment to mobilise $100 billion per year from both the public and the private sectors to protect the most vulnerable and support economic growth from 2020. Other developed countries, including Germany, France, the United States, Japan and Canada, have all recently announced increases in their climate finance as well.

As important as the Paris agreement is, we will achieve our ultimate ambition only if it acts as a catalyst for transformational action from all parts of society. That is why it has been so important to see real action over the last month from business and civil society. For example, a new international initiative, ‘Mission Innovation’, will see some of the biggest global economies, including the United Kingdom, the United States and India, doubling their investments in clean energy research and development. Crucially, private investors will join us in this endeavour to bring down the costs of low-carbon technologies.

Here in the United Kingdom, we have committed to double spending in clean energy research and development, so that by 2020 we will be spending in excess of £400 million. This pledge has been matched by 19 other countries worldwide. This is in recognition of the fact that we will tackle climate change only if we find technologies that are both clean and cheap. Let me tell you that the announcement I made last month—that I would set out proposals to close coal by 2025 and restrict its use from 2023—added to the momentum in Paris.

The Paris agreement truly marks a historic turning-point. It builds on the Kyoto protocol and, for the first time ever, provides the comprehensive framework in which not just developed countries but almost every country of the world has committed to take the global action needed to solve a global problem. Of course it was hard fought; of course it required compromise to bring everyone with us; of course it has not solved every problem in one go.

Now, we have to set about implementing the commitments made, but we should not underestimate the significance of what has been achieved. All parties have recognised that economic and global security requires us to tackle climate change. All have come together to commit to a single goal: net zero carbon emissions by the end of the century. All have agreed to set out plans to curb emissions and be held accountable for their actions. We have made a huge step forward in meeting our responsibilities to this and future generations. As the excellent executive secretary to the UNFCCC, Christiana Figueres, said, ‘I used to say we can, we must, we will. Now I can say we did’”.

--- Later in debate ---

[Lord Bourne of Aberystwyth]

My Lords, I thank the noble Lord, Lord Grantchester, for his comments and welcome him for the first time to the Front Bench in this House in his new role. I wish him well.

The noble Lord is right to talk about the significance of Paris. It is crucially important. He is also right to talk about the importance of small states. All nations came together and during the debates and negotiations there was as much, if not more, mention of the Maldives, Tuvalu and the Seychelles as of many larger states—and quite right, too, as they are very vulnerable countries that should touch the conscience of the world. The United Kingdom had a particular interest in guarding their interests, as the Prime Minister set out at the start of the conference.

The noble Lord is right also to say that we should pay tribute to France for what it did, not only for its diplomacy, which was extraordinary, but for managing the conference, particularly given the particular security and terrorist problems that it faced. It was an outstanding achievement. I thank him also for what he rightly said about the consensus around this issue among the parties here. That was right.

On domestic policies, I can say with all honesty that, as far as I am aware, the only time at any of the meetings I attended when domestic policies were mentioned was in the context of the closure of coal. This was borne out by our negotiators to whom I spoke. It certainly captured the world’s imagination. That is not to say that other issues are unimportant, but it was significant and a key moment when this country moved first on that issue.

The other important point in relation to what happened in Paris is that it gives a clear investment signal to the whole world which will help reduce costs still further. They are on a cheap spiral and are coming down anyway and no one wants to see subsidies for a long period. There may be disagreement about when they are phased out, but a clear message was sent out. I note what the noble Lord said about Friends of the Earth—they have never been particular friends of any Government—but I stress more the importance of the strong welcome given by the CBI to what was agreed.

We were fully signed up to and pressing for the 1.5% goal to which the noble referred. It did not come as something that we did not want; it was good news. Not all countries were pressing for it and I can certainly remember attending meetings where I spoke up in favour of it, as did many other EU countries and progressive allies. We certainly wanted it and we will now develop policies in the light of the challenges that we face. However, they are already on course to deliver this sort of change.

Moving on to the contribution of the noble Lord, Lord Teverson, I thank him for his kind words and the warm welcome he has given to the conference; it was very gracious and generous. He mentioned the role of France, and both Laurent Fabius and Ségolène Royal played an enormous role in organising this agreement so successfully. He mentioned global emissions peaking in the near distance moving forward, which is absolutely true, as well as the slight blurring of the issue between developed and developing countries. That is right and it is something that the EU and the UK were pushing hard for because many states are developing quickly, and, without the invidious dimension, some do not look like developing countries any longer, thank goodness.

He also mentioned domestic policy. I can only refer him to what I said earlier, but I can reassure him on the two issues he finished on. First, Paris is not an end in itself: that is true. It is the road through Paris that is important, hence the five-yearly stock-take that will start in 2018 when we will assess how much progress we have made in relation to reducing emissions on a global basis, as well as the other five-year cycle when we will come back and, it is hoped, ratchet up our ambitions—or, in the case of some states, perhaps restate their ambitions.

The noble Lord made a point about energy efficiency, and I agree totally that it is the energy we do not use which is important. As a country, we probably need to do more on demand management. There is a manifesto commitment to insulate or improve 1 million homes in terms of their energy efficiency, and we are certainly committed to that. The smart meter programme, which I was looking at this morning, will help deliver energy reductions, as will our work on boilers and cars. All this continues.

[Lord Stern of Brentford (CB)]

Does the noble Lord agree that the UK delegation, including himself and the Secretary of State, played a strong role in what happened in Paris? They were everywhere and the UK’s position was largely respected. I was fortunate enough to be badged with the French delegation, and they were enormously appreciative of the work done by the UK. That appreciation is founded on two things. One is respect for our climate legislation and the great institutional strength that that gives to this country in its clear commitment to bring down emissions. I hope that the noble Lord will also agree that it is founded on our commitment to 0.7% of GDP being spent on overseas aid. That puts us in a stronger position than some other countries and allows us to contribute very powerfully.

I hope that the noble Lord will agree that the private sector contribution to the Paris meeting was very strong, and that private sector leadership is the growth story of the future in terms of the transition to a low carbon economy, as it will be at the top of the agenda at the World Economic Forum to be held in Davos in January. Again, I thank the noble Lord for the part he has personally played in that outcome.

[Lord Bourne of Aberystwyth]

I thank the noble Lord, Lord Stern, for his kind words, and I am certainly happy to accept the compliment. I welcome very much the role he has played. Indeed, when I last saw him on the television, he was featured not only with the French delegation but also with the former Vice-President of the United States, Al Gore. The noble Lord has done seminal work which demonstrates that we can have falling emissions and economic growth, and I think that that is now widely accepted. It was an absolutely prescient report.

It is true that the position we play in relation to overseas aid is crucial. It gives us a powerful means of talking to many other countries and seeking to be as helpful as possible. I mentioned earlier the small island developing states and the particular challenges they face. The legal framework we work within is also important. Finally, the last point he made about private sector leadership is vitally important. The Governor of the Bank of England spoke powerfully at the Paris conference, which is not something that has happened previously. The private sector demonstrated leadership, particularly when Michael Bloomberg, Paul Polman and many others said that this is an agreement which they warmly welcome. It is not just about non-governmental organisations and politicians, it is very much about the business world as well. Again, I thank the noble Lord for the role he played at the conference, which I know was considerable.

[The Lord Bishop of Salisbury]

My Lords, I, too, congratulate the Minister on the achievements in Paris and the part that the UK Government played. The faith communities organised, among those from the wider public sphere, to gather in Paris. Forty-four pilgrims walked from London; seven walked from the Danish-German border; and 22 cycled from Copenhagen. As they travelled on the journey to Paris, they gathered with them the support of the communities through which they travelled and in which meetings were held. This culminated last week with the presentation of a petition, with signatures from 1.83 million people, to Christiana Figueres and President Hollande by 20 of us in the faith communities. This is a deal that many people wanted. Ban Ki-moon, Secretary-General of the UN, said that it was the most complex and largest talks he had ever been part of. The sense of achievement is therefore very great in having pulled off the Paris agreement. The UK’s contribution through climate finance was particularly significant.

However, over these last months, the Government have given mixed signals about the commitment to renewable energy. Therefore, there is a question about how the Paris agreement will be implemented domestically. That which was hard fought and hard won now needs to be hard wired. I would like to ask the Minister how, over these next few months, he sees the Government acting across the areas of public policy in order to make sure that this agreement is hard wired into all our thinking and acting across the whole area, not just within DECC and those involved in the environment and climate change. What steps will be taken to ratchet up the UK’s ambition in the way that the Paris agreement envisages so that we become more ambitious about what we are trying to achieve?

[Lord Bourne of Aberystwyth]

I thank the right reverend Prelate very much for his kind words and note, in particular, the lead that he has given through the Lambeth declaration and the fact that that pulled together people of many faiths. There was also a massive role of the Muslim climate group in supporting this. The participation of faith in all this, not least from His Holiness the Pope, was significant. I thank him also for what he said about climate finance. The contribution that this was able to make to the debate, and speaking to people, certainly was significant. Obviously, it is important for developing countries, particularly the most vulnerable countries, because there are degrees, as we are all aware, of poverty. Some small island states in particular need an awful lot of assistance on adaptation as well as mitigation.

The right reverend Prelate asked about the domestic agenda. Again, I refer him to what I said previously about falling costs, which is certainly true. The costs, particularly of solar, are spiralling down very quickly. Given the very clear signal that has been sent out worldwide, we can expect that to continue. The Paris agreement is significant in many respects. It is significant that the world has come together in the positive way in which it did but, on the specific, it is very important that it signals the end of the carbon economy. It is only a question of when. That message going out worldwide to business and being welcomed by business will mean that costs fall.

What are we doing within DECC? First, many DECC officials are taking a little bit of a break, having been up around the clock for the past couple of weeks. That said, work is already going on to see how this is delivered but, of course, the work had started before. We are already looking across government at what we need to do on cars and housing to meet our carbon targets. That work will continue but it is important that this is not just a one-nation issue; this is across the whole world. Hence, the importance of the five-year stock takes and the five-year reviews.

[Viscount Ridley (Con)]

My Lords, I hate to pour cold water on this love-in but perhaps I may remind the Minister that the only thing legally binding on countries which are increasing their emissions in this agreement is that they must produce voluntary plans. Paris therefore represents the end of a 20-year attempt to get agreement to legally binding emissions targets. Will he confirm that this leaves the UK as the only country with a legally binding target on emissions? Will he remember the Chancellor of the Exchequer’s pledge that this country should go no faster in this respect than other countries? Will he therefore consider adjusting our policies to fulfil that pledge in the interests of those working in the industry and those struggling to heat their homes this winter and in future winters?

[Lord Bourne of Aberystwyth]

My Lords, I am also disappointed that my noble friend has ended the “love-in”, as he calls it. If this is regarded as something that states will just cast away, it is significant that it was such a hard agreement to drive and achieve—if it really was, as he perhaps implies, just a piece of paper and not worth the paper it is written on, why was it so hard an agreement to reach? Only one state stood apart from this process and that is North Korea. I suggest that this is no time for strategic alliances with North Korea. This is a world problem that needs a world solution. The agreement is a step on that road.

[Baroness Worthington (Lab)]

My Lords, I congratulate the Minister on the role he played in Paris, alongside the right honourable Amber Rudd and her team. I also pay particular tribute to Pete Betts, who was the lead negotiator of the DECC team and, indeed, represented the entire EU in the negotiations. He has been an amazing builder and crafter of consensus on this issue.

It is clear that Paris marks a watershed and a new beginning because it is the first time that 190 countries have said that they are all on the same page and they all will take action on this. The noble Viscount pointed out that this is a different deal, and it is for a reason. It is a fantastic example of catching the exact balance between ambition and flexibility to allow maximum participation. We would have achieved nothing in Paris if we had gone trying a top-down, dictatorial approach to bringing emissions down. It is only by building consensus in the way that Paris did so successfully that we have managed to achieve this deal.

I will touch on one issue relating to the implications of this for the UK and, indeed, for the EU. It cannot be the case that Paris is such a significant moment, yet we say that there is nothing more to be done here and that we are already doing everything that we can. Indeed, the text in Paris is quite clear: all countries that can reduce emissions must do so, including before 2020. My question to the Minister is: will you instruct the Committee on Climate Change to look again at our framework to see whether we can do more? I am certain that we can; we have certainly been overachieving our targets in the first of our budgets, carrying a lot of hot air forward. Let us take that hot air out, increase our ambition and continue to lead. It is only through leadership that we can show the rest of the world that this is possible, as we have been doing to date and continue to do.

Once again, I congratulate everyone involved on achieving such a huge and monumental result, including the noble Lord, Lord Stern, who was one of the great architects of this approach, which has delivered a fantastic result.

[Lord Bourne of Aberystwyth]

I thank the noble Baroness very much indeed for her typically generous comments and associate myself with what she said relating to the noble Lord, Lord Stern, and the entire team in DECC. She rightly mentioned Pete Betts. I spoke to him today; he is up and fighting the case, even given the massive involvement that he had. I also mention in that context Ben Lyon, who was also a key negotiator. They and the entire team worked incredibly hard.

The noble Baroness is right that this process at Paris represents a bottom-up approach, rather than the top-down one that we had in Kyoto. I therefore think that it is entirely the right approach. It is not right to say that this is not legally binding. Finance is obviously connected with performance. This is a treaty that we have every reason to believe will be adhered to. As she says, it is important that the United Kingdom steps up to the plate. We have provided strong leadership and we will continue to do so. We in the department are looking at ways to reduce demand on electricity, as we always do: we are looking at the cars issue across government, at what we can do through DCLG and so on.

The noble Baroness mentioned the Committee on Climate Change. My noble friend Lord Deben is in his place. As I understand it, the committee previously wrote to us and indicated that if it needed to reassess in the light of Paris it would do so and come back to us in the new year. I presume that that is still the position. Again, I pay tribute to what he did out in Paris because I know that he was also very strong there in supporting what was happening.

[Lord Deben (Con)]

Would my noble friend accept that the Paris result was remarkable and unprecedented, and that those who would cast doubt upon it are only undermining the way private industries know that they will have to change if they are to meet the world in which they will have to compete? The Climate Change Committee will give advice to the Government on what changes need to be made but, in the mean time, I hope my noble friend will accept that the fifth carbon budget is a crucial part of this continuum and that we need to have legislation on it as rapidly as possible. Does he also accept that he has promised that we will look again at the way we insulate homes and deal with energy efficiency? Will he also make sure that it is part of the policy that no new houses are built which have to be retrofitted very soon because they do not meet the sensible requirements of the Paris commitment?

The Minister ought to be congratulating himself. It is not a love-in to say that Britain has played a very important part in an unprecedented decision. The whole world has said that we know we have to act and those who refuse to know are undermining the future of our children and grandchildren. I say that particularly to those of my colleagues who continually undermine the duty we have.

[Lord Bourne of Aberystwyth]

My Lords, nobody should doubt the commitment of the Prime Minister and the Government to this agreement. The Prime Minister was out there at the start, clearly underlining support and the importance of protecting the small island developing states. He has welcomed this strong agreement. There is no shame attached to this country giving a lead on these issues, as we have on many others over the ages: we should be proud of it. I note what the noble Lord said about the fifth carbon budget. We will be looking at that and responding to it in the first half of 2016, according to the deadline which is set out. There was a commitment to insulation in the manifesto and there are ongoing developments in energy efficiency. The smart meter programme, which is coming on and will be delivered in totality by 2020, will be a strong driver of that policy.

[Baroness Liddell of Coatdyke (Lab)]

My Lords, this is a very considerable achievement. I have been haunted by the image of being at a meeting of the Pacific Island forum and a Minister having to leave suddenly, her parents’ house having been inundated because sea levels have risen much more rapidly than anticipated. The small islands in the Pacific have been on edge about the consequences. The Minister referred to the need for investment. What measures are the Government prepared to take to restore the confidence of the investment community in this country? Just three or four weeks ago, a major investment in carbon capture and storage was pulled out from under their feet. A member of a board which has proper respect for due governance and risk analysis would have to take into account the uncertainty there is now about energy investment decisions. What measures are the Government prepared to take to restore that confidence?

[Lord Bourne of Aberystwyth]

My Lords, the noble Baroness is quite right about the importance of the small islands in the Pacific and elsewhere, such as the Seychelles and the Maldives. It was brought home graphically to me when I met representatives from Tuvalu in the House of Lords during the summer. They said that two degrees was not going to be enough to save them from total obliteration. Although there is a measure of self-interest, it is to the credit of the world that there was a sense of international responsibility for these issues when they came up in Paris.

On the investment issues which the noble Baroness rightly raised, £122 billion is spent annually in the UK on the low carbon economy. It is of extreme and growing significance and we are well aware of it. I repeat that this global agreement has been much welcomed. It gives certainty and sense of direction worldwide, not just in the UK. We have significant investments in the UK which have taken heart from the Government’s decision. An example is Siemens in relation to offshore wind. The point is well made that economic leaders need certainty. I would not disagree with that and it will, obviously, inform our policy.

[Lord Lawson of Blaby (Con)]

My Lords, the problem is that the Statement that my noble friend read out bears only the most tenuous relationship to what is actually happening in the real world. Is he not aware, for example, that back in the real world India has just announced plans to double its coal production by 2020? Is he not aware that in the real world, more than 2,500 coal-fired power stations are under construction, particularly in India and China but elsewhere around the world? Whether he wants to see decarbonisation or not, does he agree that, bearing in mind the effect on fuel prices, which affect fuel poverty and the competitiveness of British industry—one thinks of the recent closures in the steel industry in this country—it makes no sense whatever for us to decarbonise faster than the rest of the world?

[Lord Bourne of Aberystwyth]

My Lords, I am very well aware of the massive deployment of coal. That is one reason why the world needed to come together to see how it will address that issue. It is also true to say that in both India and China there is massive deployment of renewables. I think that the deployment of solar is about to overtake coal in India, so I recognise the issue. That is why we need to address it. I hope the noble Lord agrees that we do need to address it; I was not sure whether that was the inference of his question. I understand the particular problems with steel, for example, that he mentioned, but this issue is not related simply to energy but also to overproduction. I also recognise that every country has to protect its own patch and its own interests. As I said, there is an element of self-interest in different countries coming to this agreement in different ways, but there is a real sense of international responsibility and a real sense that if we had not acted in the way we did in Paris, we would face very serious problems in the future. There are still challenges but this was a very important milestone, and a very important milestone for the United Kingdom in the role it played.

Energy: Security

Lord Bourne of Aberystwyth Excerpts

Thursday 10th December 2015 Grand Committee

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change and Wales Office (Lord Bourne of Aberystwyth) (Con)]

My Lords, first I thank my noble friend Lord Bowness for raising this important topic in the House, and the noble Lords who participated in the debate. I thank particularly the noble Earl, Lord Erroll, for ensuring that participation has gone up 25% just by being here. We are most grateful for that.

Because of the reference by the noble Lord, Lord Grantchester, to what is happening in Paris and the importance we all attach to that, before coming to the substance of this importance debate I will first say a little about that. I was there until yesterday evening, so I know that very good progress is being made. Issues of domestic policy do not often come up, but in so far as they came up in any meeting that I attended, the thing that seemed to have caught the attention of other participating states—every state in the world bar North Korea—and that had landed well and pleased other states, was our decision to withdraw coal-fired power stations by 2025, in so far as that is achievable while ensuring energy security. That brings us back to the substance of this debate, which is clearly about secure energy, so let me say something about that and then try to deal with some of the points made. Where I cannot deal with them—that will certainly include the answers given by my noble friend Lady Verma earlier this year—I will ensure that a full response is sent to all those participating in the debate.

Secure energy supplies at affordable prices are a critical issue for any country or region, and I welcome the opportunity to discuss the role which the Energy Community treaty and the Energy Charter treaty play in our energy security, which is the essence of both treaties, though they come at it with different types of provision.

In 2013, to put this in context, the EU energy market imported 53% of its energy requirements, a figure which may well grow in the future. As such, access to secure supply sources is key, a point which all noble Lords who participated in the debate have made. This is particularly the case for gas, of course. As a commodity which can be supplied only by pipelines that are laid and from import terminals that exist, it is, and should be, a focus for EU energy security improvements. A total of 29% of the gas consumed by the EU comes from just one country; namely, Russia. It is also the key supplier to many countries close to the EU where customers have no choice of supplier. They also have less power to determine the price, timing and amount of gas they receive. In short, they have insufficient energy security.

The better connected the internal EU gas market is, and the stronger the links across the area, the easier it will be for gas to flow where it is needed at affordable prices. The Energy Community treaty and the Energy Charter treaty are two important tools to address this issue. Perhaps I may turn first to the Energy Community treaty of 2005 which was set up to extend EU energy market liberalisation to non-EU countries such as Montenegro, Albania, Serbia, Moldova and Ukraine. Assisting these countries to liberalise their energy markets in line with the EU approach has multiple benefits. These include making trading across borders easier, and helping to attract investment into much needed energy infrastructure. Assisting the liberalisation of these markets is particularly advantageous to the United Kingdom and EU energy security as the non-EU countries that are party to the agreement are situated on significant routes between gas and oil producers such as Azerbaijan, Kazakhstan, Russia and the Middle East, and customers in the EU. It is for this reason that the United Kingdom is a strong supporter of the Energy Community treaty.

We engage fully with the objectives, but of course it is the EU that is a member rather than member states as such, so we attend EU meetings to make policy on Community objectives. At the moment, the Energy Community is focusing on additional EU energy legislation such as the energy efficiency directive to ensure that it is properly enshrined in the Community. It will have particular value in reducing emissions in countries such as Ukraine, which is the least energy-efficient country in the whole of Europe. Other reforms include strengthening the dispute settlement procedure and strengthening our engagement with Parliaments and civil society organisations. We consider the reform programme that is being put in place within the Energy Community to be sensible because it will improve the functioning, usefulness and transparency of the Energy Community treaty. These are basically the outcomes of the October Ministerial Council, and the EU position is very much in line with the UK position, so the UK is wholly on board for that.

In essence, the Energy Community treaty aims to improve competition, encourage liberalisation and support energy consumers. It is a key way of reducing the market power and associated political influence of any single energy supplier. With greater market integration and investment in new infrastructure, gas should flow to where it is needed following price signals rather than political signals. This is very central to our aims. The secretariat, which is essentially funded by the EU, holds significant expertise on both Energy Community members and on EU energy regulation. It is a trusted leader on reform in the region. We believe that this expertise is already benefiting south-eastern European states, and therefore the whole of the EU, so it is making a significant contribution to energy security.

For example, Serbia, Ukraine and Albania have transposed the EU’s third energy package, which includes market reforms and is challenging the dominance of the incumbent energy suppliers. Ukraine has also adopted gas liberalisation laws in compliance with EU laws. The Government are committed to playing our part in this process, and to that end we have funded a project with the Energy Community secretariat that assists Ukraine in improving its electricity market legislation. That is a key stepping stone in Ukraine’s wider reform process. Ukraine’s energy sector is a major source of revenue but it is also, as I have indicated, extremely inefficient and poorly regulated, wasting valuable resources and putting off external investment. This is one way of demonstrating the United Kingdom’s commitment to the Energy Community and its treaty.

Let me move now to the Energy Charter treaty, which has many similar aims but is a quite separate organisation. It was agreed in 1994, essentially in the wake of the break up of the Soviet Union, to promote international investment in the energy sector in eastern Europe and central Asia. It established legal rights and obligations with respect to energy investment and the trade and transit of energy goods. As has been said, there are 54 treaty members, including European and Asian countries, as well as EURATOM. Groups have signed or acceded to the Energy Charter treaty. Russia provisionally applied the treaty until 2009, but Members will be aware that there is a dispute at the moment in relation to Yukos, and Russia is no longer a treaty signatory having come out of the treaty process.

The treaty enshrines in law a mutual commitment not to discriminate against foreign investors. If an investor has a claim against a member of the treaty in relation to the provision of energy—by pipeline or whatever—this provides the mechanism for settling that, and there are rights and obligations set out in the treaty to help with that.

Another key area of the treaty’s provisions is energy transit. Building on World Trade Organization rules, the transit provisions oblige participating states to take the necessary measures to facilitate the transit of energy. Essentially, those measures are between states—for example, between the states of central Asia and the states of Europe. Therefore, the treaty deals with investment-type disputes between individual investors and a state, and also provides mechanisms between states in relation to energy transit. There were some specific questions about how we engage fully with this, and we do that both through the EU and as a separate member.

There were also questions about the conference—I think it has just happened rather than is just about to happen. This year, it was in Georgia, and last year it was in Astana in Kazakhstan. Although it is open to Ministers to go, for a number of years, the general process has been for a Minister not to go but to send a messenger. That happened this year and last year, and we were represented at higher executive officer level. I think many other nations do that too.

Although the conference is important, I am sure noble Lords will appreciate that, this year, we had the run up to what has been a very important process in Paris. That has engaged politicians across the board and, in particular, the Government. In the case of the Government, my right honourable friend the Secretary of State has been in Paris practically throughout the process, and I have been there for a considerable time. Therefore, the Minister of State has necessarily been doing a great deal of business in the United Kingdom, not least with regard to the flooding situation, to which they were central to helping deal with that and the necessary action that has followed. However, we have been well represented at the conference.

I will ensure that noble Lords get a detailed response as to exactly what happened in Georgia. An annual report is published, and those noble Lords who picked up the pack—I see that the noble Lord, Lord Grantchester, has his—will have seen a copy of the report on last year’s conference. We will make sure that we get a detailed breakdown of what happened this year for noble Lords.

My noble friend Lord Bowness asked what was happening in the process of making changes to the Energy Charter and updating it. The process has been largely about updating the language; I do not think that there is any fundamental change. For example, it has not been updated since the USSR was no longer the USSR, so there has been a tidying-up exercise. I do not think it is much more fundamental than that but, if I am wrong, I will certainly let noble Lords know when I write to them. That is the basic position.

I hope that that has dealt with most of the points. If I have missed anything, I will ensure that we pick it up in the write round. I once again thank my noble friend Lord Bowness for bringing forward this very important issue. I will ensure that he gets a full reply in relation to the points raised in the questions to my noble friend Lady Verma, and any other points that I have missed. I thank noble Lords for contributing to the debate on this key issue.

In closing, noble Lords will know that we are, as a country, focused on three essential aims: affordable energy, secure energy and green energy. The top priority, as set out by my right honourable friend the Secretary of State in her recent speech, is energy security. This debate, therefore, has been particularly timely and helpful.

Draft Wales Bill: Silk Commission

Lord Bourne of Aberystwyth Excerpts

Monday 30th November 2015 Lords Chamber

[Lord Wigley]

To ask Her Majesty’s Government how many of the 61 recommendations of the report by the Silk Commission (1) have been included in the draft Wales Bill, (2) are still under consideration; and (3) have been rejected.

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change and Wales Office (Lord Bourne of Aberystwyth) (Con)]

My Lords, the Silk commission made 61 main recommendations, which break down into 100 discrete proposals. Over 75% of these are being taken forward in legislative form in the draft Wales Bill.

[Lord Wigley (PC)]

My Lords, is the Minister aware that last month Sir Paul Silk gave evidence to a Committee of this House and expressed his “immense disappointment” that the draft Wales Bill fails to deliver on the unanimous cross-party agreement of the Commission on Devolution in Wales—of course the Minister himself was a distinguished member—and that the Bill does not reflect its recommendations, noting in particular the lack of devolution of policing to Wales and the failure to legislate on resolving disputes between the UK and the Welsh Government? Will the Government now take note of this, and as it is a draft Bill, will the Minister give an assurance that the final Bill will implement such proposals?

[Lord Bourne of Aberystwyth]

My Lords, it is worth noting that, as the noble Lord has just said, this is a draft Bill. As my right honourable friend the Secretary of State has emphasised, consultation is going on. The primary aim of the Bill is to take forward not the Silk recommendations but the St David’s Day agreement, which represented a political consensus.

[Lord Morgan (Lab)]

My Lords, the St David’s Day agreement and the Silk commission reported strongly in favour of the Welsh Assembly and Government having reserved powers. The draft Wales Bill is less clear on this point and this has led to very fierce criticism from the Welsh Government. It is noticeable that Government after Government treat Wales, which is strongly committed to the union, much more ambiguously than Scotland, which is not so committed. The noble Lord is a staunch and honourable supporter of Welsh devolution: why are his colleagues so evasive?

[Lord Bourne of Aberystwyth]

My Lords, it is not fair to say that progress is not being made on this issue. As the noble Lord is aware, the draft Wales Bill represents a move forward in favour of a reserved powers model. Work is continuing on that, as we speak, in discussions between the Welsh and UK Governments. It is not an easy thing to resolve, but significant progress is being made.

[Lord Thomas of Gresford (LD)]

Will the Minister explain why the Government are prepared to devolve air passenger duty to Scotland, notwithstanding the effect that may have on Newcastle, but will not do so to Wales? South-east Wales, and Cardiff Airport in particular, might benefit very much from this.

[Lord Bourne of Aberystwyth]

My Lords, devolution of APD is not a straightforward issue, as I am sure the noble Lord is aware. In Scotland, most people who travel by air do so from Glasgow or Edinburgh. In Wales, most people would not necessarily travel from Cardiff Airport. For example, people in the north would not think of doing so. In addition, the significant issue of state aid has to be looked at. Those are the two main reasons why it was not taken forward.

[Lord Lexden (Con)]

My Lords, what would the Government’s view be of any proposal to reduce to 16 the voting age for elections to the Welsh Assembly?

--- Later in debate ---

[Lord Bourne of Aberystwyth]

My Lords, my noble friend is perhaps aware that the draft Wales Bill gives power over this issue, and over elections to the Welsh Assembly in general, to the Welsh Government. That being the case, this is a matter for Cardiff and for Wales to determine.

[Baroness Morgan of Ely (Lab)]

My Lords, tomorrow Wales will become the first UK country to adopt the soft opt-out approach to organ donation. This was approved by the National Assembly for Wales, after a long and comprehensive debate and widespread public consultation. Will the Minister clarify whether the Assembly could have introduced such a Bill under the new measures proposed in the draft Wales Bill; or would it have been forced to go cap in hand to a Minister in Westminster to ask permission because, as the First Minister has claimed, the Government are trying to roll back the devolution settlement for Wales?

[Lord Bourne of Aberystwyth]

My Lords, the First Minister has recently acknowledged that significant progress is being made on the draft Bill. In terms of the consenting provisions, if there is an aspect of legislation from this House to apply in Wales, it needs a legislative consent Motion and vice versa. It is not one-way traffic. Because we are a United Kingdom, it is important to preserve the consenting process. Discussions are going on on the precise scope of that process.

[Lord Harries of Pentregarth (CB)]

My Lords, talks on reserved powers are continuing. Will the Minister give an indication of the timetable for these talks coming to a conclusion?

[Lord Bourne of Aberystwyth]

My Lords, as I have indicated, significant progress is being made. I remind noble Lords that this is an ongoing process. It is not anticipated that this draft Bill will become a firm one until the end of next year. There is, therefore, a good period of time. I repeat that significant progress is being made and I am very happy to update the House as and when the process is concluded.

[Lord Cormack (Con)]

My Lords, my noble friend will know that many of us in this House are concerned about piecemeal changes to the constitution and to the franchise. Is it not a pity that the power to give votes to 16 year-olds has been granted to the Welsh Assembly before the Parliament of the United Kingdom has been able to come to a considered conclusion on the matter?

[Lord Bourne of Aberystwyth]

My Lords, I understand my noble friend’s views on this matter but I repeat that issues relating to election to the National Assembly for Wales are to be devolved in totality. It is a significant move to Wales, just as it is to Scotland, and it is for Wales to determine that issue.

[Lord Rowe-Beddoe (CB)]

My Lords, will the Minister clarify a point that he made in an earlier answer—namely, what is the state aid problem with the devolution of air passenger duty to Cardiff and not to Scotland?

--- Later in debate ---

[Lord Bourne of Aberystwyth]

My Lords, I recognise that the noble Lord has significant expertise in these areas, particularly in relation to Cardiff Airport. However, perhaps I may inform him that there is a significant issue in terms of competition from Bristol Airport. There is not a similar competition element in relation to proximity to Glasgow or Edinburgh airports.

Electricity Capacity (Amendment) (No. 2) Regulations 2015

Lord Bourne of Aberystwyth Excerpts

Monday 30th November 2015 Lords Chamber

Moved by

[Lord Bourne of Aberystwyth]

That the draft regulations laid before the House on 16 March be approved.

Relevant document: 3rd Report from the Joint Committee on Statutory Instruments. Considered in Grand Committee on 24 November.

Motion agreed.

Renewables Obligation Order 2015

Lord Bourne of Aberystwyth Excerpts

Wednesday 25th November 2015 Lords Chamber

Moved by

[Lord Bourne of Aberystwyth]

That the draft order laid before the House on 21 July be approved.

Relevant document: 3rd Report from the Joint Committee on Statutory Instruments. Considered in Grand Committee on 24 November.

Motion agreed.

Electricity Capacity (Amendment) (No. 2) Regulations 2015

Lord Bourne of Aberystwyth Excerpts

Tuesday 24th November 2015 Grand Committee

[Lord Bourne of Aberystwyth]

Moved by

That the Grand Committee do consider the Electricity Capacity (Amendment) (No. 2) Regulations 2015.

Relevant document: 1st Report from the Joint Committee on Statutory Instruments

[The Deputy Chairman of Committees (Baroness Garden of Frognal) (LD)]

My Lords, if there is a Division in the House, the Committee will adjourn for 10 minutes.

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change and Wales Office (Lord Bourne of Aberystwyth) (Con)]

My Lords, this draft instrument is an amending regulation to the main secondary legislation package for the capacity market scheme, part of the electricity market reform programme. The powers to make this implementing secondary legislation are found in the Energy Act 2013, which, following scrutiny in this House and the other place, received Royal Assent in December 2013 with cross-party support.

The two changes contained in the draft instrument are simplifications intended to make the process easier for applicants, and were overwhelmingly supported by respondents in the consultation, but before I explain them in more detail it may be helpful to the Committee if I say a few background words about the capacity market itself.

I remind noble Lords that the capacity market will address our medium-term electricity needs and ensure that there is sufficient electricity supply towards the end of the decade and beyond. In brief, the capacity market will achieve this by making a regular capacity payment to providers who are successful in capacity auctions. In return for this payment, providers must meet their obligations to provide capacity, or reduce demand, when the system is tight, ensuring that enough capacity is in place to maintain security of electricity supply.

Ensuring that families and businesses across the country have secure, affordable energy supplies that they can rely on is our top priority. That is why we already have firm mechanisms in place, working closely with National Grid and Ofgem, to maintain comfortable margins on the system over coming winters.

Beyond that, it is essential that generators have confidence that they will receive the revenues that they need to maintain, upgrade and refurbish their existing plant, and can finance and build new plant to come on stream as and when existing assets retire. Equally, we want to make sure that those who are able—without detriment to themselves and the wider economy—to shift demand for electricity away from periods of greatest scarcity are incentivised to do so.

That is why we have the capacity market. The first auction, held in December 2014, saw a good outcome for consumers, as fierce competition between providers meant that we obtained the capacity that we will need in 2018-19 at prices below the levels that many had expected. That translates into lower consumer bills.

This instrument makes two minor changes to improve the capacity market, based on feedback from stakeholders. First, this instrument substitutes a new definition of “relevant grant” in Regulation 17, and secondly it extends from five to 15 the number of days in Regulation 59(3) of the 2014 Electricity Capacity Regulations, to permit providers a longer period in which to submit credit cover after receiving a conditional pre-qualification notice.

The amendment to the definition of “relevant grant” will ensure that grants, the purpose of which is to support feasibility studies or research and development in relation to carbon capture and storage, will not preclude participation in the capacity market. The essential feature is that the CCS support should not have provided effective material support which has put a provider at an advantage compared to others which have not so benefited. This will not be the case for such early stage grants for CCS purposes: hence the amendment. The second amendment amends the number of days from five to 15 to allow applicants, after receiving a conditional pre-qualification notice, longer to submit credit cover.

My department consulted on the two changes in March 2015 and received 22 responses. The vast majority of stakeholders who responded were content with the changes proposed. I look forward to hearing what noble Lords have to say on these proposed changes. I beg to move.

[Lord Teverson (LD)]

My Lords, it is the first time that I have spoken in any meeting of the House since the Secretary of State announced that coal was going to come to an end within 10 years, and I congratulate the Government and the Secretary of State on that announcement, which is a major step forward. I disagree with a great deal of government energy and climate change policy but that is an excellent move forward, and I would like the Minister to note that and pass it on.

I have a couple of questions about the capacity market, although I have no issues with this statutory instrument. Will the Minister update us on interconnectors and the capacity market? There have been plans to bring on demand reduction aggregators but in the short term rather than the long term. I would like to think that we can bring on institutionalised demand reduction and aggregation much more than we have done in the past, something which is very much in the Government’s interests. On the reduction of fossil fuels, I recall that quite a number of the successful tenderers for capacity payments were coal generators. Do the Government have any plans to exclude them as we move forward to auctions?

We are now down to a very low level of margin, yet the National Grid and the Government seem fairly relaxed. Does that mean that a 20% margin in the past has been a waste of expensive resource that was not needed and that we should have been managing on much smaller margins? I should be interested to hear the Minister’s response on those issues.

[Lord Grantchester (Lab)]

I thank the Minister for his introduction of the regulations. The amendment they contain is minor and uncontroversial, extending to carbon capture and storage the possibility that it could participate in the capacity market. The Government now seem to recognise the potential of CCS, as evidenced by the amendments recently agreed in the Energy Bill, now passed to the other place. They had previously not considered CCS as sufficiently relevant operationally to the capacity market, and this amendment allows that CCS projects which will in the first instance have received grant support or funding arrangements for early stage developments can now qualify for participation in the capacity markets. The essential feature is that this early stage support should not materially put the provider at an unfair advantage compared with others without that support. The greater matter is that any provider that can shift demand away from periods of greater stress without detriment should be encouraged.

I am content that this proposal was overwhelmingly supported by respondents to the consultation. Will the Minister clarify the Government’s intention a little further? While it is true that there is not as yet any deployed carbon capture and storage in this country, is it intended that CCS will eventually pre-qualify for capacity auctions in its operational phase?

It has been understood from the Government’s scoping document earlier this year that the operation of CCS plant operational support would take place through a form of modified contracts for difference rather than through capacity auctions. I would be grateful if the Minister could signal the Government’s intentions as early and comprehensively as he can to provide certainty about the direction of travel to developers. This amendment, and future intentions, could begin to allow the development of an industry that could be very valuable for the long-term use of fossil fuels. The noble Lord, Lord Teverson, has congratulated the Government on their plans to phase out coal generation, and we certainly support this direction of travel.

[Lord Bourne of Aberystwyth]

My Lords, I thank the noble Lords, Lord Teverson and Lord Grantchester, for their kind words regarding the speech given by my right honourable friend the Secretary of State, Amber Rudd, last week in relation to the withdrawal of coal-fired power stations, with the aim of doing that by 2025. It was most kind and gracious of them to say what they did.

I turn first to the questions raised by the noble Lord, Lord Teverson. Yes, we are looking at interconnectors, I think to Norway and Ireland, in addition to the existing interconnectors as part of the capacity issues that we are addressing, and we are looking at the possibility of them elsewhere, including Iceland. That is a large part of what we are doing.

The Statement on coal was of course subject to a consultation, as the noble Lord will know, which opens in spring next year, I think, subject again to ensuring that we have the necessary capacity in relation to gas-fired stations coming on stream. Still, a clear market signal was given in the speech. Demand reduction is a significant part of what we are doing, and of course there will be a demand response auction as well in the new year.

With regard to the system margin causing concern, there is a trigger for this. At the moment we are very confident of the 5.1% margin with regard to the announcement of the most recent one. To the noble Lord’s suggestion that a 20% margin is more than we need, I suppose the answer must be yes—that must follow. However, obviously one wants to stray on the side of safety so we are seeking to address this. Although the margin is comfortable, we have to look ahead. The next few years look comfortable but we need to bring on the new nuclear and look at other forms, such as small modular reactors and so on. That, too, is important.

I turn to the questions raised by my noble friend Lady Byford. First, on the consultation, I think I am right in saying—the team behind me will correct me if I am wrong—that out of the 22 responses, 21 were supportive.

[Baroness Byford]

That is a majority.

[Lord Bourne of Aberystwyth]

It is a huge majority that a lot of parliamentarians would be content with; it is roughly 95%, so it is pretty convincing. If the noble Baroness wants more information, I am happy to supply it.

The second question was a very fair one: what is a satisfactory margin? It is dependent on many factors. As I say, we are confident that 5.1% is a sufficient margin but it is on the tight side so we are trying to build in additional capacity. It is dependent on many factors, most obviously the weather, as well as political factors, such as where gas is coming from. I remember from my very first visit to the National Grid in Wokingham that someone, armed with the Radio Times, was trying to assess whether there was going to be additional demand on the system, such as England playing a football match. Notoriously, at half-time—or into penalties, as it inevitably goes—people go and put the kettle on. Work is done on looking at factors like that. So there are lots of additional factors, but 5.1% seems to be a sufficient margin although, as I say, on the tight side.

I turn to the questions from the noble Lord, Lord Grantchester. Regarding the ongoing position with CFDs, my right honourable friend the Secretary of State announced in her speech that there would be contracts for difference in 2016, and we will set out nearer the time what the technologies are; I suspect that some will not be there, such as onshore wind, but that is just a view. We will set out closer to the time the precise way that that will work. I very much welcome his kind words.

[Lord Teverson]

If the Minister will allow me, I would like to come back on one point. I welcome his comments on interconnectors; they are something that over the past five years or so the Government have got more into, and they are an important part of energy supply. I recognise what he was talking about. However, I had the impression that there was an impediment to interconnectors bidding into the capacity mechanism system. That is as I understood it but I may be wrong. If that is the case, are the Government trying to rectify it? It is an important area of increasing competition that could reduce the cost to consumers.

[Lord Bourne of Aberystwyth]

I was unaware that there was a problem. However, 2015 is the first year in which the capacity market extends to interconnectors, so we are anticipating some activity. I hope that that satisfies the noble Lord, who asked a very fair question.

[Lord Teverson]

I thank the Minister and welcome that response.