Renewables Obligation (Amendment) (Energy Intensive Industries) Order 2017

Debate between Lord Deben and Baroness Featherstone

Thursday 30th November 2017 Lords Chamber

[Lord Deben (Con)]

My Lords, I declare an interest as chairman of the Committee on Climate Change. I thank the Minister for her introduction of this order. I do not wish to make comments on the best way of doing these things; that is a matter for the Government. I want to underline some of the points my noble friend has made. The first is on the effect of the actions of the Government on domestic fuel bills. Although this is largely—indeed, almost entirely—concerned with industry, it raises again the canard that somehow or other our green measures mean that people pay more in their bills. But, of course, they do not. The Climate Change Committee has carried out very extensive work on this. I think 85% of the population have a combined tariff and are paying some £9 a month more because of our green measures, but their bills are £20 a month less because of the energy efficiency actions that have resulted—in large part from those measures.

That was hugely attacked by those who do not believe in climate change, but they could find nothing wrong in the mathematics. That was their finest argument which has now been removed from the case. On these matters, we ought to be using facts rather than emotion, and we should be clear about it. If we have more efficient equipment, better boilers, better toasters and, if I may say so to Sir James Dyson, better vacuum cleaners, people will not need to use as much electricity, and this has been very notable.

I am glad that my noble friend raised that question because it is important for people to recognise that we have this in mind all the time, not least because the Climate Change Committee has a commitment to protect and help those who are in energy poverty. I do not want anyone to think that we do not think about it as a permanent part of how we work these things out.

She also said that the purpose of the order is to ensure that heavy energy users will still find it possible to manufacture and export from this country, and will not be forced elsewhere. The Climate Change Committee regularly investigates this, and has shown that there is no evidence that our green measures are driving anybody abroad. It is a matter that we have to look at all the time. It is not static. We have constantly to look at this, and I am pleased that the Government have taken these measures. However, I have to say—because it would be unfair not to from my independent position—that they were pretty slow in doing it, and we had to assure the industry that it was coming. When the committee looked at the effects of the reductions in compensation provided in that case, it seemed to us that by and large they were satisfactory—indeed, more than satisfactory if one had concern about it. I must say that it is not always the view of the industry, but it would say that, wouldn’t it? We have more or less got it right, and I want to say so, because sometimes I have to be pretty tough on what the Government have been doing. In this particular case, in the way in which it has been implemented—apart from the tardiness—it has been very effective.

I want to finish by saying something about industry itself. I was sorry that my noble friend did not raise this matter, but it is no good if industries which rely on a great usage of energy think that they are merely let off the hook. The reality is that we all have to fight the battle against climate change. If you are a heavy user of electricity, or, indeed, of energy in general, there is a heavier weight on your shoulders to reduce that use, be more efficient, use newer technologies and ensure that you use alternative methods of producing goods if they are available. It is also very important that these industries do not overstate their case as in many cases the energy costs which go into producing their products are nothing like as high as is suggested. We have chosen these industries because they are remarkable, in the proper sense of that word, in that they have high energy costs. However, that does not excuse any of them not seeking to reduce their costs and emissions.

I am not attacking the industries concerned as some have been extremely good but that behaviour is not universal. There is a tendency for people to say that someone else ought to help them. However, it is important and apposite to repeat that we are all in this together. Climate change is happening and everybody has to oppose and fight it. None of us can get off the hook by saying that we are a special case. Therefore, I hope that my noble friend the Minister will do her best to remind these industries that the community accepts that this burden has to be carried more widely, but in return it demands that they become more efficient as that is the only deal on offer.

In that regard, I hope that my noble friend will look very carefully at any changes that she intends to make following the publication of recent reports and the like as this area is very complex. We spend a lot of time looking at these issues and we have to be careful about some of the solutions that are put forward which appear easy or arise from prejudiced approaches. We need to be very clear that we need to listen to the whole range of advice before we make changes. Therefore, I am pleased that the Government have taken some time to decide exactly how to approach this issue and that they will look for other ways to satisfy the problem to which she referred, while ensuring that they act within the European Union rules. I hope that she will not mind my saying that it will be a great sadness for Britain when we do not have these rules as we will then be dealing with other people who are kept within sensible returns by what is on the whole a very good system in the European Union. That matter is for another day, but I hope that my noble friend realises that I am not going to let her off the hook on the subject of Brexit, which is, of course, the most disastrous policy that any of us have dealt with for many years.

[Baroness Featherstone (LD)]

My Lords, the noble Lord, Lord Deben, made some of the points I intended to make although he is somewhat more forgiving than I am. I want to put on record concerns about the exemption for the eligible energy-intensive industries from a proportion of the indirect policy costs of the renewables obligation scheme. Obviously, I can understand why it seems desirable to remove any cost to our industries that might make them less competitive. However, what would make them most desirable would be to reduce their costs by addressing the need to decarbonise, even in the most challenging of those industries. I am concerned by the message that this measure sends out—namely, that to an extent these industries are being made a special case, as the noble Lord, Lord Deben, said, and that environmental measures are dispensable when they come up against competition.

To meet our 2050 ambition to cut emissions from UK industries from 100 to 27 metric tonnes of carbon dioxide, we need to address the issue, not circumnavigate it. Obviously, that is challenging, as certain materials—such as those in steelmaking—require a lot of energy to reach the required temperatures, and certain materials developed for industrial use create emissions because of the chemical processes that they must undergo.

I know that the Minister referred to some of the things that the Government are doing, but they must encourage and, in a sense, force the issue. They need to make industries take action to reduce their carbon footprint, and push them to find suitable low-emission substitutes for materials, introduce radical resource efficiency programmes and reverse supply chains, as well as look at energy efficiency for industrial plants and CCS programmes.

The reallocation of financing for the exemption means that it will fall on those who have done nothing to deserve it. I am a great fan of the “polluter pays” principle, rather than it being put on the “canard” of energy prices, as the noble Lord, Lord Deben, said. The exemption is not the biggest of deals; I think some 130 companies will be affected by the scheme. As I said, it is not merely about the money; it is the fact that companies are being let off the hook and not being forced to do the right thing.