Lord Cameron of Dillington
Main Page: Lord Cameron of Dillington (Crossbench - Life peer)Energy Bill
Lord Cameron of Dillington Excerpts
Lord Cameron of Dillington
My Lords, I support this amendment. I will not repeat the much more eloquently phrased words of my noble friend Lord Oxburgh and the noble Lord, Lord Jenkin. All that I should like to say is that power generation is a long-term game. From start to finish, a major power plant takes between seven and, let us say, 12 years to get from conception to being able to produce power. For instance, Hinkley Point C, which is in my county of Somerset, has already been on the planning board for 10 years and probably has another nine or 10 years to go before it takes off—if it does take off—and produces any power.
However, Parliaments last for five years and Ministers almost certainly last for even less time. I notice that the current Secretary of State seems to be saying that there will be no power cuts in 2016. It is extremely likely that he will not be there in 2016 to lose face if there are any power cuts, or not to lose face if there are none. Meanwhile, as the noble Lord, Lord Jenkin, has put much more eloquently than I could, civil servants seem to come and go, seemingly without the baton being passed between them. No one is playing the long-term game. Therefore, this amendment is much needed because never again must we find ourselves drifting into the abyss of potential power cuts.
Lord Crickhowell
My Lords, this is the first occasion on which I have spoken on this Bill, although during the Queen’s Speech debate, I made remarks very similar to those made by the noble Lord, Lord Oxburgh, and others about the crisis that we face in the energy industry. On this occasion, I am prompted to rise for three reasons, all of which involve personal experience. The first has already been referred to by my noble friend Lord Jenkin. He served with me and the noble Lord, Lord Oxburgh, on the Science and Technology Committee, which looked at nuclear research and development. As he said, it was one of the most dismal experiences that many of us have had.
In our report, we spoke of the extraordinary discrepancy between, on the one hand, the view of some senior government officials and the Secretary of State and, on the other, the views of independent experts from academia, industry, nuclear agencies, the regulator and the Government’s own advisers. A fundamental change in the Government’s approach to nuclear R&D is needed. We went on to recommend an R&D road map and an R&D board. As my noble friend has already pointed out, it must be said that the Government went a good way to meeting a great many of our recommendations. Although they did not set up the advisory board in quite the way we proposed, as a quango, they did set up a body under the chief scientist armed with the advice of experts of just the kind that we were suggesting, with the power and duty to report in public and to make recommendations. On that particular issue, we have made progress. There is a considerable similarity between the recommendations that we made on that occasion and the amendment that the noble Lord, Lord Oxburgh, has tabled: essentially, we need an independent expert body, not just to advise the Government but to advise them in public and on the record so that Parliament is aware of what is going on and can take some action accordingly.
I cannot emphasise enough the importance of advice given publicly. Reference has already been made to the plethora of consultancies. I have some knowledge about the work of these consultancies; I have good contacts with those who give advice in this field to the Government, and indeed to Governments around the world. One prominent firm says that it now dreads being asked to give advice to DECC because it realises that that will involve a great waste of time. What happens is something like this: the department is faced with difficult problems; there is a lack of long-term continuity and expertise, as well described by the noble Lord, Lord Oxburgh; and there is the agonised fear among the officials involved that they may be held responsible for any advice given to Ministers that turns out to be faulty, so they commission a consultancy. At long last and after due deliberation, the consultancy firm produces a report, which causes perhaps even greater consternation within the department because it actually gives advice and makes recommendations. Officials then think to themselves, “This is even more dangerous because this advice looks potentially extremely worrying, and we may be blamed even more for what we do”, and the whole thing goes on. Sometimes yet another consultancy is called in and the whole department gets bogged down in a sort of quagmire.
I know that the Government say that they are doing something about this. I am a member of the Constitution Committee and when the Minister for the Cabinet Office, my right honourable friend Francis Maude, came before us, I raised this issue with him. He said, Oh yes, of course we are aware that there has been a problem of this kind. We are aware that there are far too many consultancies and that the whole system is getting bogged down, but we are doing something about it. We are taking action, and it’s no longer going to happen. I wish I thought that was true, but I fear that it is not. It is therefore vital that we take steps to ensure that consultancy advice is given by real experts from outside the department, and given publicly.
In this context, I happened to notice in Country Life of 3 August an editorial on the setting up of the new arrangements for English Heritage and the so-called National Heritage Protection Service, which is taking over the principal advisory role to government. The leading article asks: who is effectively to argue its case? If heritage protection is to have any teeth at all, the article says, it now needs to return to the ministry. I cannot think of a more disastrous piece of advice. It is quite certain that if that happened, that would be the last that we heard of the advice, which would be lost for ever in the maw of government, and the work of English Heritage would be almost forgotten.
Lord Cameron of Dillington
Perhaps I may remind the noble Lord of the regional advisory committees. Certainly, the North Sea RAC is probably one of the greatest successes of the common fisheries policy in the past 10 years. It really has worked.
Lord Cameron of Dillington
The noble Lord was talking about the common fisheries policy. The North Sea regional advisory committee has been a huge success, and probably is the greatest success, of the common fisheries policy in the past 10 years.
Lord Teverson
I absolutely agree that there are places for advisory boards. There are examples of where that works and I am a member of some advisory boards. However, they tend not to do quite what I believe this body is around to do. I accept much, although not all, of the analysis of the noble Lord, Lord Oxburgh. The issue is that we have to get a much better way of governing at department level. We probably have to reform how the Civil Service works in terms of corporate memory. I have spent much of my life in the private sector and my experience is that its corporate memory is probably far worse than that of government. Perhaps it is not true of some in the oil and energy industries, but certainly in many industries there is not a lot of corporate knowledge. Certainly, there is no more than there is in government departments.
It may have been more of an executive authority but in the rail industry, which perhaps has similar levels or timeframes for investment, the Strategic Rail Authority was brought into existence by the previous Government and abolished because it did not work in relation to departments. Ultimately, departments had to take control. Of course, we have now seen problems with franchising but I do not think that the SRA was the answer to that.
Another area in which I would criticise the detail of this amendment is that the list of areas it looks at avoids energy efficiency and demand management, which are fundamental parts of how we think about the economy. Although I agree that it could be varied in the way it is written, from the description of this committee, I worry that it will again look particularly at building or planning energy in terms of capacity and generating capacity. It is interesting and dispiriting that two weeks ago, when the National Grid asked for tenders for demand reduction and for the demand-side response to looking at the future possible energy crisis, there was generally a very negative reaction from the press and wider than that. That is exactly how we should look at this area. We should not necessarily look at planning for more and more plant, although that would be part of it, but look at the demand side as well.
As regards why we are in the situation we are, I suspect that we will get through it although I entirely accept that the margins are less than we would want them to be. Through the Climate Change Act and the whole area of the climate change challenge, we have changed direction quite substantially in what we expect our generating and our energy industries to do. With not a U-turn but certainly a 45-degree turn on what we expect from our generating industry, it does not necessarily surprise me that, through that policy change in areas where there are long gestation periods in investment and planning, we have this difficulty at the moment. That is not necessarily a function of the way in which government works—necessarily imperfect though it is.
My noble friend Lord Deben mentioned the climate change committee. To me, that is the most important committee in this area by far. It may not be a complete substitute and it clearly is not for the energy side, but the Government really need to take notice of it. On the broader agenda, the climate change committee as set up and put into legislation is a good way of doing it. In terms of infrastructure planning, the case is far from proven.
Lord Jenkin of Roding
I say this with some hesitation and with great respect to the noble Lord who has just spoken. It is not right to say that there is no place in the world where CCS is working. A couple of years ago, some of us paid a visit to the BP research centre at Sunbury, where we were given a very interesting demonstration of their plant in Algeria. BP is extracting gas from very widespread gas deposits, stretching over perhaps 20 to 25 miles in various pockets. There is a substantial refining operation that includes CCS, and the resultant CO2 that is extracted is then pumped straight back into the gas reservoirs from which the gas has been extracted. The gas supplied for the market is then piped to the coast and goes across the Mediterranean. The noble Lord, Lord Kerr, will perhaps be able to explain his gestures. It is a single plant, I accept that, but it has been made to work and it is economic for the company that operates that gas field in Algeria.
BP also made the point that there are CCS plants in the Far East. One does not know what the circumstances are, commercial or otherwise, but there is a lot of work going on internationally on this. I started by being sceptical about the Government’s competition and the £1 billion that they have put up. I have become persuaded that, although it has taken an incredibly long time to get underway, they now have two very firm takers that are going to develop CCS. I think therefore that the noble Lord’s guess of 15 years may be unduly pessimistic.
I absolutely agree with my noble friend Lord Deben that CCS must be an essential part of our armoury if we are going to get anywhere near our 2050 target. Anything that can encourage this must be right, and for that reason I, too, support this amendment.
Lord Cameron of Dillington
My Lords, I support the amendment. CCS is very important. While most of us here—I am happy to note that there have been some notable exceptions in previous Committee sessions—are in favour of decarbonisation and the UK becoming a leader of the world in renewable energy, I think we would all hope that we can become leaders in the world in CCS because, frankly, there are huge economic possibilities if we can pull it off. China is a very good example; contrary to the often-put theories of the noble Lord, Lord Lawson, China is deeply concerned about climate change. The Chinese actually produce a new nuclear power station every week but still have more energy produced by wind than nuclear energy, and they are concerned.
Lord Deben
Did the noble Lord notice today’s announcement by the Chinese that they were considerably upping their investment in photovoltaics in order to make sure that there would be a great deal more sun power? This runs entirely contrary to the claims made by the noble Lord, Lord Lawson, when he spoke to us on that particular issue.
Lord Cameron of Dillington
I thank the noble Lord, Lord Deben, for endorsing my point. I was going to say that, unfortunately, China’s ravenous need for more and more power means that it has found it difficult to produce that power without building more and more coal-fired power stations in the short term. China will be a really big marketplace for CCS if we can pull it off.
As I understand it, one of the future supplies of gas, underground coal gas, could be the cheapest way of removing the carbon dioxide—although, again, as the noble Lord, Lord Kerr, said, these techniques have yet to be proven on a large scale. Before the fuel is burnt, it becomes a largely hydrogen mix, which, as noble Lords will know, produces an effluent made up mostly of water. UCG—underground coal gas—could be a fuel of the future. If we can get CCS involved in UCG, it would be an economically beneficial project for the UK to carry off. We must support CCS to the best of our ability in terms not only of adequate funding but of latitude in the regulations to allow it to overcome its teething problems.
Lord Gardiner of Kimble
My Lords, I thank the noble Baroness, Lady Worthington, for introducing this chapter of the Bill. I hope that noble Lords will understand that when I first studied the Bill and saw that Clause 47 opens with a formula, I was rather bothered. Providing that we can all keep to layman’s language, I will try my best, but if we go into formulae, I may need more advice.
I thank the noble Baroness also for tabling this amendment, which seeks to provide carbon capture and storage projects with an exemption from the emissions performance standard during their commissioning and proving period, with any exemption limited to a maximum period of three years. I am grateful, too, to all noble Lords for their contributions to this interesting debate at the beginning of this part of the Bill. I continue to learn a great deal.
The Government believe that CCS will have a critical role to play in reducing emissions in our country, allowing coal and gas, including that produced from indigenous sources, to continue to be part of our future low-carbon energy mix. The Government share the noble Baroness’s enthusiasm for CCS and want to see it deployed at scale in the 2020s, competing on cost with other low-carbon technologies. Our CCS programme is designed to drive forward the rapid commercialisation of CCS and includes £1 billion of capital funding for the first projects under the CCS competition. I note that we have two preferred bidders, Peterhead and White Rose; obviously, we will need to consider their progress.
My noble friend Lord Jenkin talked about CCS working abroad. It is advancing particularly in America and Canada. Those projects are combined with enhanced oil recovery, which improves the economics of the projects. Some of the circumstances of Europe and this country may be different, but those examples suggest that progress is being made around the world.
The noble Baroness will no doubt be aware that the original draft Bill contained provision for giving CCS projects supported under our CCS competition an exemption from the EPS. The purpose was to provide CCS projects with some flexibility in relation to the limits imposed on the operation of a plant by the EPS in order to help manage the inherent risks associated with trials of a first-of-a-kind technology. However, during pre-legislative scrutiny of the Bill, concerns were raised around the scope of the exemption provisions, in that the use of broad exemptions could undermine the purpose of the EPS. The Government looked at this again and decided, on balance, that these concerns could be addressed by managing any EPS-related risk through the CCS project-funding contract issued to a project under our CCS competition.
However, there have been a number of developments since last year with our CCS competition, which has stimulated industry to bring a number of proposals for CCS projects. The Government are therefore keen to encourage the development and deployment of CCS, irrespective of whether it is part of the CCS competition, so we have already been considering options for how we might provide CCS projects with some flexibility under the EPS during the early commissioning phase.
The noble Baroness’s amendment is tightly prescribed and would limit the duration of the exemption so that it was explicitly consistent with the overall purpose of the EPS. Undoubtedly there are positive advantages to the approach reflected in the amendment. As I understand the way of things, therefore, I would like to give much further consideration to the amendment ahead of Report. I repeat my thanks to the noble Baroness and ask her if she will consider withdrawing her amendment.
Lord Oxburgh
My Lords, I support this amendment and the points made by the noble Lord, Lord Deben. It would be very interesting if the Minister could tell the Committee what he regards the implications of sticking to 2044 as a date would be, because it has totally excruciating consequences for the generation pattern in other parts of the system if our legal obligations are to be met.
Lord Cameron of Dillington
My Lords, I, too, support this amendment. I will not repeat all the arguments that I and others have already given for the 2030 decarbonisation target. I seem to remember the Government’s response to that was, “Yes, probably a good idea but not yet”. Frankly, their emissions target of 450 grams per kilowatt hour in 2044 is just laughable. Bearing in mind that even if all our electricity is produced at that time by unabated gas, in 2044 our emissions would be around 300 grams per kilowatt hour. I cannot understand why this figure has been put in the Bill. It is absurd to set such a target for 2044.
To save me jumping to my feet on the next amendment we will discuss, I would like to say that I would prefer to see a target of 300 grams in 2029. I prefer to combine the two amendments, which would make a lot more sense. As the noble Baroness, Lady Worthington, has said, we have to keep driving this CCS agenda. As I said in the previous debate, we have to be economically ambitious here, so I very much support this agenda and I look forward to hearing the Minister’s response.
Lord Teverson
My Lords, I, too, have great concern about the very late date here. It seems that this, perhaps ironically, is the one area where I would hope to put a maximum, which might be 450, in primary legislation but give the Secretary of State discretion to tighten that standard through secondary legislation as years go by. I would expect to do that in most other areas of life, perhaps through European legislation for car emissions, white goods and all those things where we expect to tighten emission and efficiency limits over time. If a number is put in the Bill for the next 31 years, obviously it could be changed by primary legislation but that would take time and would be difficult. Rather than mess around with an EPS, we might as well just say, “We want to stop any coal generating after 2020 and we will let the rest of it do what we want”. That is the effect of writing the Bill as it stands.
Lord Gardiner of Kimble
My Lords, I am grateful to the noble Baroness for tabling this amendment, which has prompted a further debate on this additional aspect of EPS. During our debate so far, there has been a good deal of consensus among noble Lords on ensuring that the UK remains an attractive option for those looking to invest in a low-carbon electricity sector, and on the importance of gas generation. Noble Lords have also noted that the key to meeting that objective is providing investors with certainty about the regulatory environment that will govern their assets.
The Government’s gas generation strategy, published in December, set out our view that, along with low-carbon generation, we expect gas generation to continue to play a major role in our electricity mix over the coming decades as we decarbonise our electricity system, providing flexible back-up to increasing levels of intermittent generation. It also said that we are likely to need significant investment in new gas plants, in part to replace older coal, gas and nuclear plants as they are retired from the system, with much of that investment likely to be in the 2020s. It is therefore vital that we provide investors in new gas plants with the degree of certainty needed to ensure investment comes forward. Certainty over the EPS is part of that, and grandfathering the EPS limit until the end of 2044 will—
Lord Cameron of Dillington
A gas power station produces emissions of 300 grams per kilowatt hour, coal 600 grams. Hence we have the target of 450 grams. So, if we are trying to encourage more gas, why must we have an emissions target of 150 grams per kilowatt hour more than the 300 that gas emits?
Lord Teverson
Perhaps there is something I misunderstand here in the argument. This is not just about grandfathering, as I read it, it is about new plants in 2044. It will still only be 450. To get investor certainty, yes, we need the grandfathering, because once you have built the plants, as with cars, you are stuck with that. I would accept that once you have built them you would expect them to go through their normal life before any major refurbishment; you would expect that to stay at the emissions limit applying when that plant was first operated. However, this includes new plants, as I understand it, right up to 2044. That is not related to investor certainty, because plants at the moment would have grandfathering rights, but if we moved this date later on we could have different rules, and that would not affect investor certainty.