Called-in Planning Decision: West Cumbria

Debate between Lord Deben and Baroness Worthington

Thursday 8th December 2022 Lords Chamber

[Lord Deben (Con)]

My Lords, I declare an interest as chair of the Climate Change Committee and a former Minister who had to do precisely this: act in a quasi-judicial manner. So I have to say to my noble friend that it would have been perfectly possible for the Secretary of State to turn this down and not agree with the inspector. Can my noble friend explain how the Government are going to say to the rest of the world that they preferred the judgment of a generalist planner to the expert advice of the Climate Change Committee, the International Energy Agency, my right honourable friend Alok Sharma, who led our delegation for net zero at COP 26, and, as the noble Baroness opposite referenced, the chairman of the Climate Crisis Select Committee? It seems we prefer the reference of a planner to all the expert advice that the Government have.

Secondly, how do the Government maintain that this is carbon neutral when it does not take into account the burning of the 85% of this coal that will be exported? We do not know whether it will go to the European Union or to countries that have no interest in fighting for climate change; it could go anywhere.

Thirdly, can my noble friend the Minister explain something? There is a plenty of coking coal in the world. No one is going to dig less coking coal because we are doing it. How do we know that we will be able to compete with them? After all, they are not going to do it to the standards of which my noble friend has spoken.

Why did the Government not say no to this and instead ensure that the 500 jobs would be replaced by jobs in new renewables and nuclear generation? This shows the rest of the world that, when push comes to shove, we do not up stand up for what we promised.

[Baroness Worthington (CB)]

My Lords—

Automated and Electric Vehicles Bill

Debate between Lord Deben and Baroness Worthington

Report stage (Hansard): House of Lords
Tuesday 5th June 2018 Lords Chamber

[Baroness Worthington]

My Lords, I shall speak briefly to this group of government amendments. I thank the Minister for listening to our interventions on the topic. At the moment, we do not have good oversight of how the market will develop; we have what I feel is a somewhat unnatural market in infrastructure, as the Government have chosen to focus on charging infrastructure without sufficient attention to whether there are enough cars for people to buy and use affordably to make use of that charging. As a result, we may have boom and bust in the charging infrastructure. We must keep those two important aspects in parallel: both the charging infrastructure and the cars. In the absence of a more natural market with more cars, it is very important that we have the regulations to ensure that where charge points are installed, they are maintained, so I am very grateful to the Minister for tabling the amendments, and fully support their intent.

[Lord Deben (Con)]

My Lords, I just want to tell my noble friend how helpful I find the amendment and how useful it is. The climate change committee has drawn attention to the fact that one reason for the lack of uptake of such motor cars is people’s feeling that they cannot rely on a charging system to travel around the countryside. The amendment is an important addition to that provision.

However, I remind my noble friend that one issue here is that people are very suspicious of the correctness of the information given to them by the motor car industry generally. Therefore, this support will be invaluable. We are still being told things about motor cars which are not true. The figures being put out for the performance of motor cars—including electric motor cars—are very different from the reality. It is in that atmosphere that the amendment is important.

I hope that the Government will recognise that in other areas in this business, too, regulation is not an imposition but an encouragement. Good regulation is a good thing. We are against bad regulation. In this area, we need regulation that gives people confidence in what is for most of them a very new technology. I thank my noble friend but also urge her to recognise that we need similar support in other areas if we are to get the change which we will need. I remind her that the Government have set far too far a target for the eradication of new petrol and diesel-driven vehicles: 2030 is necessary if we are to meet the fourth and fifth carbon budgets, so there is a real need to get on with things which will encourage people to buy these motor cars.

Carbon Budget Order 2016

Debate between Lord Deben and Baroness Worthington

Tuesday 19th July 2016 Lords Chamber

[Baroness Worthington (Lab)]

My Lords, I add my congratulations to the Minister on taking up her new role, which combines energy with her previous role of business. I declare an interest: as a civil servant I took part in the drafting of the Climate Change Act. I am delighted to see that these orders are tabled today.

The Climate Change Act is, I believe, a world leader. Its depoliticised structure gives it flexibility and strength; it can bend, so it does not need to break. The level of the fifth carbon budget was announced on 30 June, one of the most extraordinary days in one of the most extraordinary weeks in British politics. The reason is that the Climate Change Act creates a legal metronome, providing a long-time structure that rises above such short-term perturbations, even when they are so all-consuming.

In this context, the Government are to be praised for agreeing to the targets proposed by the Committee on Climate Change and on setting a budget that is on average 57% below 1990 for the period around 2030. However, there are many unresolved issues surrounding the carbon budgets and how they are accounted for.

During the recent Energy Bill, we had a long debate about the fact that, after 2020, there will no longer be any specific targets that require us to continue investing in low-carbon energy infrastructure. This is because the EU targets dictating the build-out of renewables will cease to apply. The noble Viscount, Lord Ridley, alluded to this in his speech, and indicated that we might be overcomplying with our renewable electricity target. I point out to the Minister that we are underdelivering on the two other portions of that target, so it is not right to say that we are going to be overcomplying with the EU legislation.

That aside, the fact that there are no renewables targets may not be a bad thing, but we need targets that will help to ensure that we see investment in low-carbon technology across the spectrum, including nuclear and carbon capture and storage, where I know there is more common ground between both sides of the House in supporting those technologies.

The noble Lord, Lord Teverson, also alluded to that issue and mentioned the EU emissions trading scheme, which will of course carry on. As things stand today, we will continue to use that trading mechanism to count towards our budgets—that is to say, we will use the overall allocation of EU emissions allowances as a measure of whether we have stayed within our budgets, rather than the actual emissions occurring here in the UK. We propose to fix that loophole by making clear that for the fifth carbon budget actual emissions will be counted, not offset emissions using EU allowances. A vote on this issue was won twice in this House but overturned in the Commons. I continue to believe that this is a necessary change of policy, and ask the Minister to seriously consider starting an immediate review of the current accounting rules so that early guidance can be given about how the fourth and fifth carbon budgets will be accounted for. That is even more critical, given the uncertainty that has been triggered by the recent referendum.

As things stand, we will not find out precisely how budgets can be met until a statutory instrument is passed after the start of the budget, so in 2029. This provides no clear guidance for those wishing to invest in UK infrastructure and is suboptimal, to say the least. I believe it will prevent actual investment in physical UK infrastructure from coming forward. The noble Viscount, Lord Ridley, has constantly referred to the cost of tackling climate change, but it is also true that one person’s cost is another person’s investment.

Although the Energy Bill sounds technical, and to a degree it is, I stress that this issue is not secondary to the search for a return to true economic growth; it is of central importance. If we find ourselves in a situation where future trade rules are set by the WTO, we will still be constrained in what we are able to do to stimulate economic growth. However, addressing environmental threats justifies government intervention under the WTO. Reinvesting in our energy systems and infrastructure provides one compelling WTO-proof way to rebalance the economy and stimulate real-world growth.

It is not just good economics to take action on climate change; it is also good politics. People care about climate change. Irrespective of what we have heard here today, they care, and it is not just the politicians who—the Minister referred to herself in this context—almost unanimously voted in favour of passing the law in 2008, it is not just the NGOs and it is not just progressive business voices; it is also the general voting public. We especially care when our homes and businesses are flooded or damaged by storms. We care when we cannot escape the stifling heat or unusually cold temperatures.

However, we also care on a deeper level. We want the next generation to have access to opportunities we did not have. We want to believe that we worked hard for a reason. If people believe their lives are going to be worse, their worries greater and their chances more limited by a world destabilised by an unstable climate, that will be a source of anger and frustration. The impacts of unchecked climate change will be felt widely by children alive today, with impacts growing, potentially exponentially, over time. It is our moral duty to act now, in full knowledge of the risks we are storing up, to reduce those risks as fast as possible.

I will briefly echo the words of the noble Baroness, Lady Featherstone, on the Paris agreement. The fifth carbon budget is our own version of the Paris agreement. It covers the same period and is in sync with the levels we would expect to take under that target. The noble Viscount, Lord Ridley, is looking at me quizzically, but his statements were full of errors, because it is not true to say that all EU member states were expected to take a 40% target. There is such a thing as redistribution of the effort across the member states. Therefore, it is not true to say that everyone would be on 40% and that we are necessarily going further than that.

I end with a question about the Paris ratification. Recent analysis has shown that we are tantalisingly close to seeing Paris become law this year, and the UK could make all the difference. Can the Minister say when her Government plan to initiate the legal process of ratification, and if it will not happen immediately, why not?

[Lord Deben (Con)]

My Lords, I declare an interest as chairman of the Committee on Climate Change. I remind your Lordships that the committee has a statutory requirement to provide the most cost-effective way of reaching the statutory commitment of cutting our emissions by 80% by the year 2050. I also remind your Lordships that that is not as ambitious an end as the Paris climate change agreement demands. Therefore, far from being ahead of other people, we have a sensible programme to reach somewhat less than will have to be reached under the climate agreement.

My noble friends Lord Lawson and Lord Ridley do themselves a disservice when they suggest that, because Britain has so small an amount of emissions, we do not count. Yet in their arguments for Brexit, their whole point was that Britain counts on its own. I merely suggest that if we say, “Well, other people can get on with it, but we won’t”, we let down future generations in a way which I hope my noble friends will sometimes be concerned about. They are seeking to stop this generation protecting the next generation, which is why the Climate Change Act has been, and remains, supported by all parties. That is why it is so important to have a system of budgets, as we have, so that everyone understands where we are going and the speed with which we hope to go there.

I have no idea whether the new arrangements will be better than the last as regards Ministers, but I warn my noble friend Lord Lawson that he has underestimated the commitment of Greg Clark as Secretary of State. I do not think he has read what Greg Clark said about his commitment to climate change, or the commitment to oppose climate change which is clearly on the record from our new Prime Minister. As the independent chairman of the Committee on Climate Change, I shall keep both of them down to their words. However, I merely remark that there is no way of dealing with these situations unless business is part of it—so I am not instinctively opposed, particularly as infrastructure, too, has to deal with these issues. I am pleased to see that the chairman of the infrastructure commission has made it clear that he will seek to deal with infrastructure within the context of the carbon budget.

I remind the House that we have reduced our emissions significantly, largely in the power sector. These are not exported jobs going somewhere else; we have done it. Sometimes I wish that my noble friends would appear at the presentations from the Committee on Climate Change. They would find that many of the things they have said are just not true. We have shown that there is no offshoring and that the poor are much more damaged by climate change than any other section of the community.

When my noble friend Lord Lawson refers to the poor, I remind him—I have looked carefully at his Budgets—that the poor did not feature large in those Budgets. But those who care about the poor, and the people who talk about the poor because they work for the poor—all those international organisations, from Save the Children right the way through to CAFOD and Oxfam—are quite clear that climate change is the biggest danger to poor people that exists, and therefore we have to deal with it in a cost-effective way.

Of course there is some argument about whether we should have this little bit of flexibility. However, it is flexibility based on the principle that some of the forecasts may not be accurate, because it is a long way ahead, and in those terms the Committee on Climate Change has accepted that that should be so.

I could of course answer each of the points that my noble friend Lord Ridley has made, but I do not want to cut out my other noble friend who sits next to me, so I will finish by saying this. Brexit is important but not central. This is our Climate Change Act—the Act which leads the world and which makes Britain the sort of leader that my noble friends thought we ought to be when they talked in the Brexit debates. I think that Brexit is a terrible mistake, but I know that the Climate Change Act puts us in a position genuinely to make a proper contribution for the next generation, and it is there that the jobs will be.

I end with a very simple point. Economic self-harm would be not having the Climate Change Act. That is what you would do if you did not want new jobs and green jobs, if you did not want to sell abroad because you have green products and if you did not want to be the kind of country that leads the world. Self-harm is denying the Climate Change Act. I am proud that all-party support has today enabled the Government to implement the fifth carbon budget as proposed by the Committee on Climate Change.

Energy Bill [HL]

Debate between Lord Deben and Baroness Worthington

Wednesday 14th October 2015 Grand Committee

[Lord Deben]

My own view is that there is a significant argument as to whether that was “the promise”; it was the mechanism that was put forward. My concern now is about a perfectly reasonable assumption that the Government, in looking at the circumstances, have decided that the way in which the system works has to be severely altered. In doing that, I am concerned that we do not deal unfairly with companies that have entered into significant costs on the basis of what the law appeared to them to be. Why do I say that? I do not have a position to argue on behalf of the companies but I have a duty to argue on behalf of the future of our policies towards climate change. That means we have to ensure that the British Government are always seen as absolutely dependable. I warn that if we do not get that right, we will find ourselves in the position that some other Governments appear to be in. In general, the Government seem to have done precisely what they ought to in these amendments and I commend the Minister for putting them forward in this way. I speak in support of what he has done here.

However, during the course of the debate and discussions, the Minister will have heard a number of particular examples which sound as if they fall on the wrong side of the lines that have been drawn. My experience from many years as a Minister is that having one occasion which looks pretty unfair causes very considerable angst, not just to those people but much more widely, so that that one occasion begins to undermine the way in which the Government are seen. I want the Minister to look carefully just to make sure that where some of the examples which the noble and learned Lord, Lord Wallace, presented earlier are reasonable, we should find some way through.

Secondly, I do not know how much the Minister has to do with planning permission personally. I declare an interest in the sense that I help people to do planning permission for sustainable development—not anything to do with energy but on other things. Planners can take a very long time and when one is trying to work with them on a joint agreement, all these rules about having to provide an answer in four months can so easily end up as 14 months, and sometimes as 24 months. But you do that because you really want to get an answer which everyone is happy with. I therefore hope the Minister will recognise that if there are circumstances where it appears that another arm of government has made it impossible for people to meet the real and sensible restrictions which he is laying to achieve his ends, he will look particularly carefully at those circumstances. One area where people feel very unhappy is if they feel that one bit of government has made it impossible for them to meet the arrangements which another bit has perfectly properly put forward, so I hope he will look at that.

The third thing I hope the Minister will do is that when he talks about these things he will remind people of the enormous success of the policy, as I mentioned earlier. This policy has achieved a great deal. Britain was hugely at the bottom of the heap in the amount of renewable energy it had. We have done extremely well, which seems something to be very cheered about. I am pleased that my noble friend Lord Howell, as he always does, referred to this great industry. The renewables industry is a great industry and has emerged from circumstances in which it was rather laughed at by many people. It is now a serious industry with serious results and, importantly, providing for the absolute demand that we have to combat climate change—which, as I think almost all of us accept, is the biggest material threat to mankind.

As I have said on earlier occasions, these amendments—although they may not all be right—are important in order to emphasise that the Government have to follow what they have already done with their own amendments. They have to make sure that at no point does it look as though they have let people down, because it is very important for future policies that that does not happen. However, they are also important because they are testament to the fact that this Government have achieved so much, and I think that it is necessary for the wider community to become more interested in ends than in means.

I finish by saying that assessing Governments’ commitments on the basis of whether they happen to accept a particular way of doing something rather than on whether they are achieving the end that you want is a great mistake. We ought always to recognise that it is difficult to be government and it is easy to be opposition; it is easier to be green in opposition than it is in government. The judgment must be: have the Government achieved the end to which they have committed themselves? At the moment, the jury is out because we do not know the alternative ways of proceeding. However, it is perfectly reasonable for a Government to decide that it is no longer sensible to subsidise in one way rather than another or to subsidise in one way rather than have no subsidy. All that matters is that the Government can stand with their head held high and say, “We have met our obligations”. There are some examples here which I think it would be a mistake not to look at very carefully; otherwise, all the good intentions of these amendments might be much undermined.

[Baroness Worthington (Lab)]

My Lords, I am grateful to the Minister for introducing this session of the Committee. I should start by declaring an additional future relevant interest. I am in negotiations about taking up a position with an American charity that will be working on climate change and energy. I have not signed anything yet, but I think that it is material and that therefore I should declare a potential future interest.

I am grateful for all the contributions to this debate and, again, to the Minister for his introduction to these clauses. I am particularly grateful to the noble and learned Lord, Lord Wallace, for—as has been said before—his forensic description and critique of the amendments as we see them today. I say at the outset that we are, as I am sure are the Government, committed fully to decarbonising the UK energy system at least cost in a way that ensures that we maintain security of supply and, one hopes, engenders an industrial revolution that we can be proud of and export to the rest of the world. Within that, people will know that I have no particular love of any particular technology. I take a very broad view towards the groups of technologies that should be considered as we go forward in this endeavour.

In that spirit, I want to ask the Minister some specific questions relating to the amendments but also to a wider context. I am sure he appreciates that we are dealing with a somewhat febrile environment. There is now sufficient investor disquiet that people are watching very carefully for signals from the Government that this is not about the wholesale disruption of the renewables industry, and we must do everything that we can to reassure the industry that that is not the case.

I shall start with the more specific questions relating to the amendments. As was raised earlier, there are some anomalies. They may arise from the fact that it feels, in the words of the noble Lord, Lord Howell, as if we are in a liquid legislation situation, where we seem to be getting rather large chunks of detailed and complex legislation with relatively little time to assess it. I am therefore genuinely looking forward to the Minister’s responses because some of these anomalies seem to be substantial and we need a response.

The Government made this announcement on 18 June, in the first few weeks of government after the election, and then set about consulting. That is not normally the way around that we would expect a Government to behave, but there we are. We are where we are. Then, in the Minister’s own words, they consulted industry and hundreds of stakeholders. To my knowledge, however, although maybe I have missed it, we have not seen the synthesis of the results of that consultation. In normal proceedings, the Government would conduct a consultation and get the results back, and we would all be able to look at what everyone had said. As far as I am aware, we have not had that. That puts us at a great disadvantage. There is distinct informational asymmetry since the Government have been involved in all these conversations but Members of Parliament from other parties have not had that luxury. We have therefore found ourselves, in the past few days since these rather detailed amendments came forward, having to consult a large number of people to absorb their concerns, even though we have very little to go on in terms of being able to place them in context. Noble Lords will have noticed that we have not tabled any amendments to the amendments. This is because until this morning we have been receiving people’s feedback on these complex issues.

As the Minister said, this is a complex issue. Had the draftspeople who were writing the manifesto in April and May before the election realised quite the implication of those few words in the manifesto, would we have seen them appear? Regrettably, they have led to this huge amount of complexity and disquiet and a feeling among some investors that they have not been handled with due respect. They have seen what they thought were very sensible investment decisions being completely undermined by what to them was a very sudden and surprising announcement with very little signalling that it would take place.

The government amendments are intended to clarify, but unfortunately they just raise more anomalies. This has been raised already, but it might just be worth reiterating a couple of points. We have a situation now where the grace periods will apply to projects that have had a negative decision in planning overturned at appeal. That seems to fly in the face of Clause 65, which says that local people should have the final say. Here we have a situation where a project that clearly was not very popular has been appealed and is now going forward. Such projects will continue to be eligible. However, where we have the reverse—an approval by local planning but no written documents, so we have gone through the democratic process and had approval but have not yet received the written information—the guillotine comes down and you cannot go forward. That seems to be a very odd situation. Similarly, you may have got your approval, but if you have asked for a variation and are waiting for clarity on it, that too falls foul of this artificial 18 June deadline. I would like the Minister to respond to those concerns and explain why the guillotine is being interpreted in this way, which seems to conflict with the overall desire of the Government to keep local government and local decision-making at the heart of this.

Then we move on to the issue of whether investment has been frozen out by the uncertainty created by bringing forward this clause. Again, as a general point, this could have been so different had we not embarked on this endeavour, but there we are. We are where we are. I am repeating some of the technical questions that have already been asked so eloquently by the noble and learned Lord, Lord Wallace. We question why only lenders who have investor-grade credit ratings qualify. That seems quite restrictive and could freeze out very good potential creditworthy lenders who happen not to meet that particular criterion.

We would like to know exactly how the investment freezing will be interpreted. Do you have to prove that you have been frozen out for the entire time of the legislation from the start to Royal Assent, or just a part of that? How much of the delay counts and what does not count?

My final point has already been raised. Once you have proof that you have been frozen out, you have to show this by a certain date—I think it is March 31 2016. How long will it take before you get a reply? You have to have already built your project by December 2017. There is nothing in here to say that there must be a time limit by which any final decision is made. It could drag on. It has been said before that some of these things drag on for reasons outside government control. We need more clarity on how that will work practically. I know that it seems slightly odd to be arguing over and/or, but it is material about whether we are talking about a grace period for grid and radar delays or whether it is just grid as one category and radar as another. We need clarity on that.

Energy Bill [HL]

Debate between Lord Deben and Baroness Worthington

Monday 14th September 2015 Lords Chamber

[Lord Deben (Con)]

My Lords, it is not for the chairman of the Committee on Climate Change to comment much on the means whereby we reach the targets which have been set by the committee. That is not its role. The committee’s role is to set the targets and to insist that they are met. That is one of the difficulties of being the chairman because my instinct is to comment on all these things with enthusiasm and some pretty clear views, but that is not what I am statutorily allowed to do.

However, it might help the Minister if I say this. This may be a formulation that works; I am not sure. There are complications in it which might lead the Government not to want to do it. I want to say a word about a decarbonisation target, which the Committee on Climate Change has recommended. It has done so because a decarbonisation target would give security to those who are investing in low carbon technology, and above all in low carbon generation. One of the problems that all Governments have to face is that the timetable of private industry is very tight. First there is the timetable for how long a particular managing director will be in place and what is going to happen over the next two or three years—I am told that it is generally about three years. The second timetable is an important one, covering the length of time major investment takes between thinking about something and actually delivering it.

One difficulty—it is one which the Committee on Climate Change emphasised in its report to Parliament this year—is that most of the measures we have in place will fall off the cliff in 2020. We are now talking about “tomorrow” in the investment cycle because people often have an investment cycle which lasts certainly for five years and very often for seven or eight years. The committee sought to ask the Government to ensure that we knew where we were going to be in a progressive way after 2020. The Government have made it clear that certain things will continue, but not how much and how long. That security is important for investment.

The second point is that it is occasionally the belief of all politicians that if they promise something in 2050, everyone will believe it and proceed to get there. But I remember an embarrassing debate in this House when I pointed out that the previous Labour Government had an energy Bill from which they had removed every date except 2050, and I worked out that there was not a Member of the Government who was likely to be alive when the one promise that had been made would be delivered. That is a dangerous position because if we are to be taken seriously, we ought to make promises that will be delivered at least in our likely lifetimes.

What I want to put to the Minister is simply this: we need to have some sort of interim point between 2020 and 2050 towards which people can work with some confidence, and we have suggested a carbon intensity target for 2030 entirely on that basis. I hope that the party opposite will not be upset by this, but one of the reasons I want the target is because I am a capitalist and I do not want to judge what is going to be the best way of achieving it by 2030; in other words, I want to be as unrestrictive as I can. I just want to deliver the ends, and that is why I always talk about targets, not means. I do not know what mixture of means will enable us to reach the target, and that is why I am less enthusiastic about those who insist upon this proportion from renewables, that proportion from other low carbon technologies and this proportion from nuclear. I have always felt that a portfolio is what we want, and if possible I want an unprescriptive target because we do not know the ways in which we are going to achieve it. But we must give people the confidence that if they pursue those ways, there will be a proper return from the market on the investment that they have carried through. That is why a carbon intensity target is a valuable thing. I hope that the Government will wish to do that in 2016, for reasons we all now know. A carbon intensity target would be unprescriptive, but it would give real confidence.

This amendment, on the other hand, is much more precise. It gives a role to the Committee on Climate Change, for which I thank the noble Lord, and I am sure that if we were asked to carry through this role, we would do it to the best of our ability. But I wonder whether this particular mechanism is the best one. There are complications which the Government might want to think about, but I hope that in discussing it, the Government will not cast aside the need—I think it is that—for a decarbonisation target for 2030 to give people the confidence to plan. It is no good saying that they know that our emissions must be cut by 80% by 2050. Frankly, it is true and statutorily based, and we all think it is important, but it is not going to drive investment. That is why a decarbonisation target for 2030 is important. I doubt whether this is the right way forward, but I am pleased that it has been tabled as an amendment, not least in order to ask the Government to think hard about the needs of investment and confidence.

[Baroness Worthington]

My Lords, I am grateful to my noble friend Lord Whitty for introducing this amendment and to the other noble Lords who have spoken in favour of it—or if not directly in favour, at least in favour of us having a debate about decarbonisation. I recall that a similar amendment was tabled by my noble friend Lord O’Neill of Clackmannan during the Committee stage of the Energy Bill in 2013. We had a good debate at the time, and the arguments which were put forward were important then and are even more important now. I say that because we all engaged with the Energy Bill in good faith. We raised our concerns and we went forward on the basis that we hoped that we had a system that may be a transition to something more market-based and slightly less interventionist in order to encourage us to decarbonise our electricity system.

I apologise for stating the obvious, but the reason electricity is so important is that once it is fully or substantively decarbonised, it can then be used to decarbonise transport and heat in an effective way. It is not the only way, but it is one way. It is the sector with possibly the most commercially available technologies and certainly the widest range of known technologies, certainly at this stage, to help us. That is why electricity is focused on and why we have a 30% target for renewable electricity as opposed to 10% or 12% in the heat and transport sectors. It is right to focus on electricity.

This idea is definitely worthy of merit and I do not disagree with the noble Lord, Lord Deben, when he says that we have in the past debated a broader definition of the decarbonisation obligation or decarbonisation target. In fact, that was rather exhaustively dealt with in the debates around the Energy Bill in 2013. The way it was left was that the Government may introduce a decarbonisation target for 2030 in line with the fifth carbon budget being set. I very much look forward to hearing some strong words from the Minister stating that that is still the Government’s intention: that a decarbonisation target will be set in 2016 once we have that fifth carbon budget in place.

For all the reasons given by the noble Lords, Lord Deben, Lord Teverson and Lord Whitty, we lack a moment of clarity to help shake people’s investment decisions beyond 2020. We have renewable targets to 2020, as part of the European renewables directive, but beyond 2020 there is big uncertainty as to what low-carbon technologies, if any, will be supported by the Government. Therefore, there needs to be a framework. Why I like the idea of a decarbonisation obligation on the Government and on suppliers is because it does exactly what the noble Lord, Lord Deben, said, which is to create a market-based system.

I often find myself wondering whether I am Alice who has stepped through the looking glass. Here we are in a world where the Government—a Conservative Government—are presiding over virtually the renationalisation of the energy system. There is no element of the energy system that is not now reliant on the Secretary of State to sign a contract of some sort or another, perhaps with the possible exception of some of the interconnectors, but even there it is quite highly regulated. Now any new clean capacity needs to be signed off by the Secretary of State with a contract for difference, and all the existing capacity receives capacity payments also through the Secretary of State’s gift. Here we are, very oddly, presiding over pretty much a state-run energy system, and here I am on the Labour Benches saying that we need a much more market-based system that allows more choice and for capital to flow to the most cost-effective ways.

It is an odd situation but that is where we are. So I press the Minister to help us to understand whether the Government share our objective, which is to move towards a slightly less interventionist system with more ability for a broader set of players to dictate how we meet our targets, which means the Government setting the framework, and being clear about our objectives, but allowing a wider pool of people to find those solutions for us at least cost.

Amendment 35A is an interesting idea which proposes that rather than the Government taking on the obligation and the target, they should be passed down to the supply companies. It has some merit. It is worth noting that suppliers have been obliged to report on the carbon intensity of their electricity supply for some years now. They have a fuel disclosure requirement and an infrastructure and reporting mechanism that enables them to do that with certificates of origin. That enables them to calculate the carbon intensity of their electricity annually and report to Ofgem. Those numbers then probably sit on a website or in a document. Very little attention is paid to them, which is a great shame because we are encouraging these data to be collected but doing very little with them. If we were to look at those numbers, sadly we would see that carbon intensity has remained stubbornly similar over the past decade. We did very well in decarbonising when we had the dash for gas and replaced a lot of our old coal, but since then carbon intensity has just moved around, largely dictated by commodity prices where gas prices are higher than coal or vice versa. So there has not really been a grip on carbon intensity.

An obligation such as this would address that problem and mean that the full range of decarbonisation options, including fuel switching and phasing out of coal, would be incentivised in the most logical way forward. I am very grateful to the noble Lord, Lord Teverson. He and I have worked previously on the phasing out of coal and the use of performance standards to make sure that our old coal, in particular, is phased out in an orderly and certain way so that we can make room for clean investment. A decarbonisation obligation would help us to ensure that that transition out of coal took place. It is not the only way it can be done, but it would be a market-friendly way to meet the obligation because there would be an incentive not to purchase the coal that would count against the target. It would help to make it harder to hit the targets. The other benefit is that it would help renewables to stand on their own two feet and compete alongside other technologies. We would genuinely see which are both affordable and able to be supported by the general public.

Energy Bill

Debate between Lord Deben and Baroness Worthington

Monday 4th November 2013 Lords Chamber

[Lord Deben]

My Lords, the noble Lord, Lord Jenkin has rightly pointed to the crucial problem, which is: how do we deal with that period in which there is fear that the lights will not stay on? That is a proper fear to have and should be the first fear of any Government, because there is a responsibility to keep the lights on. There ought to be a second fear, too: namely, that we keep the lights on in such a way that the next generation has an even worse position, because we have polluted the atmosphere further and made the fact of dangerous climate change even greater. We naturally have to look at this very carefully.

However, on this occasion it seems that those who are most concerned with keeping the lights on, and I certainly put myself in that category, and those who are also concerned with climate change, and I put myself in that category, too, are in fact pushing at the same door. If we do not have a mechanism whereby it is sensible to invest in gas, that bit of the transition will not take place. That would seem to most of us to make it more difficult to provide affordably for the energy that we need.

The noble Lord, Lord Oxburgh, as so often, put his finger on one of the other problems. When we talk about these things, let us not confuse the cost of production with the price at which it is sold. Those of us who, like me, have represented constituencies, know how many people are close to the edge when it comes to warming their homes. The whole question of affordability is utterly crucial. However, the idea that if we burnt coal we would get cheap power is not so. We need to have a mixture—a portfolio of means of generation—in which gas will play its part.

We have heard a lot recently about the opportunities that shale gas will give us. I find both extremes unacceptable—from those who think it means the end of the world at one end to those at the other who feel that it will be a game-changing matter. They are both wrong, but there is a place for gas. If that gas were produced at home, that would contribute considerably, not to a lowering in cost because it would have little to do with that, but to greater energy sovereignty, which is worth while.

The question is how we move from a situation which we hardly imagined, because the bottom had not fallen out of the coal market, in which we have to provide for the transition from coal to gas to one in which we do provide for that transition. The difficulty is that I suspect both those who tabled the amendments and the Government are on the same side—both groups want to achieve this. The real question is that there is a kind of fear of letting go of nurse’s hand—that is, the coal—in case we do not get the gas. I would like to turn it around the other way: if we do not do this, I am not at all sure that we will get the gas. That is crucial. I hope very much that the Government will enable us to have a situation in which we provide for that transition.

I have been trying very hard during these debates to remain entirely independent because all I have spoken are the words that the Committee on Climate Change, which I chair, has put forward. The committee has made it clear that it feels that this kind of transition needs to be facilitated in this way. I do not want to make this a great division because I do not think it is one; it is a question of how we do this safely in the new circumstances to which the noble Lord, Lord Oxburgh, referred.

I very much hope that my noble friend will be able to give us confidence in the Government’s answering of this question if she is unable to accept the amendments that are put before her. If we do not do one or other, we will find ourselves unable to guarantee reasonable prices or the continuance of the lights being on because we have not made the transference that is essential in any case and which I thought everyone supported.

[Baroness Worthington]

My Lords, I was pleased to add my name to Amendment 74, and I support the other amendments in the group. At the start of this process way back in 2010, the Government said in a consultation document:

“The objective of the EPS is to ensure that while coal continues to make an important contribution to security of supply, it does so in a manner consistent with the UK’s decarbonisation objectives”.

The way that the EPS is drafted does not achieve that aim. The EPS was a response to the Kingsnorth protests against the building of a new, unabated coal plant. It was borrowed, but not fully, from similar regulations in California. The Minister, Greg Barker MP, can take credit for introducing this policy. However, in California they are clear that the limits that are placed on coal stations apply in the event of a coal station seeking a life extension. That is what this amendment is designed to do: to complete this process by adding that important missing element.

New coal was never the most carbon-intensive source of electricity; old coal is. The world has moved on since Kingsnorth. Low coal prices and high gas prices have caused higher operating levels at coal stations now than ever before. As a result, as the noble Lord, Lord Teverson, mentioned, we have seen UK emissions going up, not down, and our carbon intensity increasing last year, not decreasing. How are we going to hit decarbonisation targets if we do not have a tool in our armoury to do something about this issue? We could have a policy of carbon pricing, as the noble Lord, Lord Stern, has mentioned. However, carbon pricing policy has not addressed this issue, and will not. We need regulation.

Turning to the security of supply, 8 gigawatts of old coal capacity has recently shut. This has brought down our historically high overcapacity to a more modest level, yet our carbon intensity is stubbornly high, at around 500 grams per kilowatt hour. This is because the 12 coal stations that are still operating, representing 15 gigawatts of power, are base-loading. They are no longer providing back-up power in the winter peaks but are operating throughout the year and making their owners a considerable amount of money. The Committee on Climate Change has been clear that were we to get the merit order of existing plants right, we could shave almost 200 grams off that figure overnight without having to build a single brick or power station.

The 12 stations that I have mentioned have tightening air quality regulations in front of them, which will affect their operating post-2016. However, they have a range of options for what to do in the face of those tightening regulations. One is not to refurbish; they will then be required to close by 2023. Another option is to convert to biomass. The final option is to fit the filters that would enable them to comply with the air quality standards. They could then remain open indefinitely. In that situation, they would certainly wish to continue base-loading, since they would have made new capital investment on which they would want to seek a return.

The new air quality standards start in 2016. I am sad to say that Defra, the lead department, is in danger of not complying with those regulations because it is failing to provide enough detailed information about what these power stations are planning to do. This can be only because it is intent on giving the maximum flexibility while the details of the Bill are worked out, because the Bill contains another very important element that changes the fortunes of coal: the capacity mechanism payments. The capacity mechanism will give existing coal plants an up-front cash injection just at the time they need it to make those refurbishment decisions. Plants will be eligible for three-year contracts. We cannot be certain how much those contracts will be worth, but it will certainly be in the range of £80 million to £100 million or more over the three years. The cost of fitting the filters is a surprisingly similar number of around £100 million for a 1 gigawatt plant.

If they decide to make these capital investments and tip into this compliant state, this will reduce their thermal efficiency even further. Are the department and the Minister aware of how inefficient these stations are and quite how much of the heat is escaping as lost energy into the atmosphere? That is quite apart from the carbon load that is also being added. Fitting these filters would also increase the operating costs of these plants. The chemical plants necessary do not operate for free.

The Government’s policy is not to support the application of an EPS to coal seeking life extensions, and no doubt we shall hear some of the reasons from the Minister. Other noble Lords have touched on the security of supply issue. As long as this question over 15 gigawatts of coal is allowed to remain unanswered, how can any investor in replacement capacity move forward? If you are not sure how many plants will be operating and whether they will be base-loading, you will find it very difficult indeed to make the case for investment in new capacity and to bring mothballed capacity back on. I will not go into too much detail on this but we have all had representations from gas investors saying that they support this amendment. We should just remember that, in a carbon-constrained world and under a carbon-budgeting system, every coal station that remains on the system displaces two gas stations because gas can operate with half the emissions of coal

Energy Bill

Debate between Lord Deben and Baroness Worthington

Thursday 25th July 2013 Grand Committee

[Lord Deben]

Did the noble Baroness also notice that the sector much outpaced every other part of the economy and was particularly strong in the United Kingdom, when compared with comparable economies? When the naysayers, who are not represented today—as they rarely have been in this Committee—talk about these matters, it would be good just to remind them that nowhere else in the economy is there development going on like this.

[Baroness Worthington]

I thank the noble Lord for his timely intervention. I could not agree more. It is a shame that those statistics were not trumpeted more. We would all feel very proud that that happened at a time when the rest of the economy was not doing so well. It was not just that there was good growth in that sector but it positively affected our balance of trade. There are very few sectors in which we can say we have a positive balance of trade with China, but in this sector we can. As the noble Lord alluded to, the global average rate of growth in this sector was only 4%, while we were at 4.8%. Tiny nation though we are, our growth in this sector is outstripping much larger nations. We are up in the top six countries in this sector. I am sorry that I am waxing lyrical slightly here but it is important. We are a nation of innovation and entrepreneurial spirit. We were the country that brought the Industrial Revolution to the world; let us not forget that. Let us hope that we will remain at the forefront of this industrial revolution. I know that that sounds like a grand introduction but it is pertinent to this part of the Bill. We really need to make sure that this sector is protected and that no unintended consequences are meted out to it as a result of the Bill.

Why is there an issue? It is probably fair to say that it was already emerging. The renewables obligation has been a good policy that has driven a lot of investment, but we were already hearing that independent generators were finding it difficult to secure power purchase agreements. At the heart of this issue is the problem, alluded to many times throughout our deliberations in Committee, of the vertical integration of the big six. There is no liquid, open competition in generation. We have an oligopolistic system of six vertically integrated companies that dominate. It will come as no surprise that on this side of the House we believe that the time has come to address that. We would have preferred to see genuine market reforms that required the selling of power into a competitive pool, which would be good for competition, liquidity, the independent generators and the consumer. We know that the Government are not yet there but we hope they will join us soon.

It is true that the Bill helps to make the case even stronger for splitting apart that vertical integration because we are moving into a system of contracts for difference. We are moving away from the arguments in favour of vertical integration, which are that you need it to secure finance and build new capacity, but when you have a CFD the argument is, by and large, weakened. There is also a big intervention in the capacity mechanism. The time is therefore coming, if not now then very soon, for the issue to be properly addressed.

I want to say a word about Amendment 55AGA, to which the noble Lord, Lord Roper, has spoken. These proposals, though welcome, come quite late in the day. As has been mentioned, we have known about this problem for two years and yet here we are addressing the issue on the eighth day in Committee and on the final stretch. I think it was the noble Lord, Lord Jenkin, who said that it feels as though we are making things up as we go along. I would not say that it was as bad as that but it does feel as though these measures have been considered quite hastily. Making this a negative resolution risks the ire of the Delegated Powers Committee, which has not yet had a chance to consider it, and we strongly urge acceptance of Amendment 55AGA in order that we may properly scrutinise this complex and rather late addition to the Bill.

I should have said at the start that I want to pay tribute to my colleague, Alan Whitehead, in the Commons, who helped raise this issue. I apologise on behalf of my noble friend Lord Grantchester, who was going to speak to the amendment. He cannot be in his place today but he wishes us every speed.

I have explained why there is an issue and, in the spirit of collaboration and seeking to make the Bill as strong as possible, I should perhaps now explain what I think the solutions are. First, we know that the industry wants to find a resolution to this issue. It is very keen to work with the Government and would like to have proper consultation with the department. It has been mentioned to us that the organised consultation process was slightly opaque. I know that five of the renewables trade associations, as a group, have written to the department requesting more clarity in the consultation process around the detail of these provisions. They are worried about communications not being consistent and they are worried about the timelines. They need reassurances from the department and a clearer process of involvement.

Further to the point made by the noble Baroness, Lady Liddell, this should also include investors, who are absolutely at the heart of the issue. Clause 44 is about facilitating investment and not about liquidity, which is dealt with in Clause 43. It is very important that the consultation process fully involves the investors who will be necessary to get these projects under way.

I have not spoken about the GPAM alternative. I am not sufficiently across the details to know whether the GPAM is a better option than the backstop power but the wording of the government amendment limits the options. At the moment, Clause 44 gives a broad power to do what is necessary. The government amendments would remove that flexibility and narrow it down to the PPA. The PPA may be the right answer but I am not certain that that narrowing down is a good idea. I have been critical of the breadth of some of the powers but in this case, given that it is still in development and that consultation is necessary, I urge the Government to keep open the option of making a different type of intervention if necessary. That would tweak the government amendment. It is important that we do not put all our eggs in a basket that is still being made when we are not quite sure whether it will work.

The industry itself can find solutions. The big six are obviously dominant but there are other players such as independent suppliers who can give PPAs. Unfortunately, the creditworthiness of those suppliers is an issue.

Energy Bill

Debate between Lord Deben and Baroness Worthington

Tuesday 23rd July 2013 Grand Committee

[Lord Deben]

My Lords, this is an occasion when the Committee in the House of Lords is particularly valuable to the Government, because this is the moment when, perhaps, unexpected things in legislation can be found. There was a time when that used to happen in the House of Commons; it does not happen any longer, because of the way in which it has changed its mechanisms for dealing with these things—I think rather shamefully. So it is in our hands.

My noble friend will probably be pleased that we have debated this subject, because it is something that causes very considerable concern outside. If the mathematics stacked up, we might find ourselves supporting the very thing that we do not want to support. No one is suggesting for one moment that the Government intend that, but the consideration of the Bill leads one to discover those things. I remember sitting in the Minister’s position in the House of Commons, on a number of Bills, when one was very grateful for a discussion because issues were raised which made you think again about how you were going to do things, simply because one had not thought about that particular outcome. Although no doubt she will have some answers to this, I think that there is a real issue here that might be solved in a whole range of ways, which is why the noble Baroness is moving this probing amendment.

I do not think that many would call me a Thatcherite, but the idea that we were spending money to keep in operation entirely outdated systems would rather run against the grain of what I understand to be the view of the present Conservative-led coalition. I do not think that anybody in the coalition, whether from the right or the left, can possibly think that it is a good idea to continue with a mechanism that is manifestly unacceptable. I am sure that the Minister does not intend to do that.

I hope that the Minister will accept that there is sufficient doubt about how this might work out to make it important between now and Report to see whether there is a mechanism powerful enough at least to assuage those doubts. That is all the Committee can reasonably ask at this moment, but it is certainly something that we ought to ask and ask very strongly. If we cannot end up with that we may have to do find something ourselves at Report, but it would be very much better if the Government could reassure us and, if not, find something that will reassure us.

[Baroness Worthington]

I thank the noble Lord for his intervention. I want to clarify that I am not in any way saying that we should keep coal out of the capacity mechanism. I am stressing that we need to think very carefully about the design of the capacity mechanism so that it does not produce unintended consequences. I am also suggesting, as I have done in previous discussions, that there should be a back-stop measure to prevent the base-loading of coal should all the extra scenarios line up to make that the thing that they economically choose to do.

This is not about saying no to the capacity mechanism or to coal within that and I would not want to see coal closing unnecessarily. I want to see its role constrained to providing peaking and backup power rather than base-loading as it is today because it is so profitable.

Energy Bill

Debate between Lord Deben and Baroness Worthington

Thursday 18th July 2013 Grand Committee

[Lord Deben]

I thank my noble friend for explaining what it was that I said that was so damaging.

I would like the Minister to be concerned not merely with the commercial activities, although they are very important, but with what most of us think ought to be the way in which we develop housing in future, rather than across green fields. That means that we have to make it possible to develop on once-used land. One problem that is always brought to me when this comes up is the availability of utilities in general and, of course, electricity in particular.

Secondly, when we decarbonise our electricity system, the availability of electricity becomes even more important, as someone said earlier, because that is what we are trying to shift to. Unless we can put in place what is needed in advance, we will not be able to carry through the whole purpose of decarbonisation. When one looks at the present circumstances, we really are an 11th hour nation. We really do things at the very last moment. I have every sympathy with those who object to the present circumstances, in which nobody does anything until the situation is so disastrous that something has to be done or the whole thing will collapse. That is not a way to plan anywhere. Although no doubt my noble friend will tell me that it will all be dealt with—and here I declare an interest in that the consultancy I chair gives advice on sustainable development—my experience is that is not always like that. It is not always easy to have ready access to electricity supplies, in particular.

I commend my noble friend’s comments, but I hope that they will be taken in a wider sense—this is not just about London, there are other great cities where similar circumstances exist. We do not want people to build, develop and grow in places which are much less suitable simply because the electricity supply is not immediately available. That is a mistake that we have made in the past; I hope that we will not make it again.

[Baroness Worthington]

My Lords, I shall speak briefly to the amendment moved by the noble Lord, Lord Jenkin, on the future capacity question, because it is the first to address that. This may be a good opportunity for the Minister to provide us with some detail about the capacity mechanism and how it will operate, and to address the important issue raised by the noble Lord of the need to have a long-term view.

Perhaps this is the time to say that this part of the Bill seems to be lacking an awful lot of detail. We have tabled some amendments later which respond to the Delegated Powers and Regulatory Reform Committee’s comments, which were quite damning on this aspect of the Bill. It is lacking a huge amount of detail; a lot of questions still need to be answered.

I will not ask all of them here, but this discussion may be an opportunity for the noble Baroness to talk about how long the review of the capacity market is. The implementation plan is pretty useless when it comes to providing detail on this part, but if anyone is interested, I have discovered that it is all in the June document, Electricity Market Reform: Capacity Market—Design and Implementation Update. If noble Lords want even more detail, I suggest that they read the memorandum submitted to the Delegated Powers and Regulatory Reform Committee, because that has even more detail. Why that is not in the implementation plan I do not know, but we are where we are, we have to gather all this information and try to make the best of it.

It would be helpful if the Minister described the length of time for which the Government consider that the capacity market needs to operate and precisely how it will enable new investment. One of the key challenges is that the capacity market means everything to everyone. If you are an owner of an existing power station, you see it as your opportunity to keep that station open. If you own a mothballed gas plant, it will be the opportunity to get that back on the system. If you want to build new CCGTs, it is your opportunity to get those built. If you are a demand-side response producer, it is your opportunity to get that done. It is not clear how this broad set of measures will manage that conflict between existing owners, owners of mothballed plant, new owners and demand reducers. We as a Committee, representing the wider two Houses, deserve more information. I look forward to the Minister’s response.

Energy Bill

Debate between Lord Deben and Baroness Worthington

Tuesday 16th July 2013 Grand Committee

[Baroness Worthington]

I thank the noble Lord, Lord Teverson, for tabling this amendment, to which I have added my name.

I have previously described the measures that have been put down as a package. This is an essential component of that. I go so far as to say that I would be less concerned about the gas grandfathering if this amendment was accepted. This amendment addresses a very real risk and need. My worry about our current policy on coal is that a degree of complacency has started to take root, based on the idea that all the old coal is simply going to shut up shop and quietly disappear from the grid. Having worked for a power company that owns coal-fired power stations, I can tell your Lordships that these are incredibly profitable assets and the companies will do all they can to keep them operating for as long as they can.

A lot has been said, in the media and elsewhere, and in statements from the Government, about the lights going out and about this terrible problem of coal-fired power stations closing. Actually, as I have said before, the 8 gigawatts of coal that was required to close under the large combustion plant directive has already gone so we do not have a problem in the short term. In fact, we have 20 gigawatts of old coal carrying on. That is made up of 12 plants—the dirty dozen—that will be carrying on.

When the process of the Bill started, the premise was that new coal was the greatest threat. In fact, it says that in the consultation document. But that is fundamentally wrong. When it comes to managing carbon, old coal is far and away the worst source of emissions. These plants were built in the late 1960s and early 1970s—some of them are older than I am—and they have well paid back their initial investments. They have made the successive companies that have owned them a lot of money and it really is time to let them retire gracefully.

[Lord Deben]

Does the noble Baroness agree that the reporting of the dangers of the lights not being kept on is much encouraged by those who would wish to continue to use very old, very highly emitting generating plants? Will she remind everyone that those emissions are changing our climate as we speak and that the quicker they are phased out, the safer it is for our children?

[Baroness Worthington]

I could not agree more. These dirty dozen plants have very low efficiency and very high carbon intensity. They have been made more carbon-intensive by the fitting of scrubbing equipment to meet the requirements of the large combustion plant directive, so these are some of the worst possible sources of electricity when it comes to carbon.

The assumption was that those plants would be closing under the next round of air quality standards. However, the world is moving quite quickly and gas prices are at such a level and coal prices so low that it is now increasingly likely that these plants will refurbish, fit filters and seek to carry on.

I am sure there will be many arguments in the Minister’s notes that will tell him that closing the plants is something that the Government could not possibly do and there are too many risk associated with it. The first will probably be, “Oh, well, the lights will go out”. That would absolutely and categorically not be a result of the amendment. The amendment would merely place a carbon constraint on plants that are seeking a significant life extension beyond the period for which we currently anticipate them to operate. This would put us much more in line with the Californian legislation that we have based the EPS on. The Californian provisions apply if a company makes a significant investment in an existing plant that would seek to extend its life beyond five years. That is an important provision that is missing here, in our interpretation of the EPS.

It is not a question of the lights going out. As we have discussed, the EPS is drafted in such a way as to allow flexibility. It is an annual limit that is averaged out, so these plants would not necessarily close but they would not be able to base-load. That is the significant difference. Plants investing in life extensions today must accept that they cannot base-load indefinitely through the 2020s and into the 2030s.

Another note that I am sure the Minister will receive will say: “Well, they’re old plants; they’re reaching the end of their lives”. I would just point out that Uskmouth power station, owned by SSE and built in 1961, will be 60 years old in 2020. These plants can and do operate for very long periods, and they do not need boiler replacements in order to do so. They could replace every other element of the station and still be allowed to operate without being required to reduce emissions under the EPS.

I am sure that the other question that will be raised is that the amendment is not needed: “We do not need this to apply to old coal because we have other mechanisms designed to force coal off the system”, and among them I am sure the carbon price will be listed. I would just say that the carbon price is not a credible policy when it comes to investors making decisions on the lives of their coal plants, for a number of reasons: it is a financial Bill measure, it has no longevity and it has no future path beyond two years. I have heard from former generators that they cannot even sell their power on a PPA two years in advance from thermal plant because of the degree of uncertainty about carbon pricing. That is not going to force these plants to close.

Even if the price were maintained, the reason why they will not close is that these dirty dozen are equally distributed among the existing vertically integrated companies. The reason why that is significant is that if one of them opts one plant in, they may as well all opt them in because the companies can all just pass the cost of carbon through to their customers. As we have previously discussed, there is no genuine competition, so as soon as one opts in the other five may as well follow. Actually, it is five out of the six; Centrica has no coal. The other five, though, can all safely opt in a plant and pass on the costs without fear of competitive distortion. So, even with a price, that is not going to work with regard to ensuring that they are constrained.

People will say, “Well, you’re simply going to push up the costs to the consumer. Coal is cheap and we need to keep it running”. Actually, this is the cheapest way of staying within our carbon budgets. I have mentioned it before but the climate change committee has identified that we can save between 200 grams and 250 grams per kilowatt hour by doing nothing other than reversing the merit order of gas and coal. That is exactly what we are seeking to do. People say this will push the costs up but it in fact it is much cheaper than overinvesting in new capacity if it is not necessary.

It is also true that the carbon floor price is already pushing up the price. The difference between the two is that with the carbon floor price you have to pay the money irrespective of what happens; there is no guarantee that the carbon floor price will deliver any new investment or indeed any switch in the merit order. With the EPS, though, the price would go up only if coal was being driven off, so you would pay only if something was actually being delivered.

I am sure that there will be notes saying, “Well, the regulatory risk that this will create means that investors will never invest in Britain again because the rules have changed”. I am afraid that if you own one of these dirty power stations and you have been sweating this asset for so long, and then you think that you will never invest in Britain again because you are asked to comply with a carbon constraint, you are not living on the same planet as I am, or indeed as the majority of people are.

You must expect to face a constraint on carbon. You cannot operate these inefficient coal stations and expect to be immune from carbon regulations. This back-stop power is exactly what you would expect to be introduced, especially as this is how it is currently enforced in America, where this idea came from originally.

Energy Bill

Debate between Lord Deben and Baroness Worthington

Thursday 4th July 2013 Grand Committee

[Lord Deben]

As the climate change committee is mentioned in this amendment, perhaps I could refer to some of the things that have just been said. I declare an interest as chairman of that committee. This is obviously a probing amendment and I am sure that the Minister will want to look carefully at how it falls. However, it seems to have two elements that the Minister might wish to look at rather carefully. My noble friend Lady Verma is right to be very careful about additional burdens and I am one of those who believe in that, because there is no doubt that any kind of burden will be magnified. There is today’s announcement from the Taxpayers’ Alliance, for example, which has produced a figure for the cost of energy to a normal taxpayer. Instead of the £100 in 2020 that it will be, it is suggesting six times that by using figures which just do not stand up. Whatever we do, we will have that kind of attack.

The first thing that the Minister may find to be of value in these suggestions is that this information is already required. There is no additional information that needs to be acquired. Secondly, we also have a mechanism in place—the climate change committee—to provide the additional information that the Minister might want. Thirdly, it is a way in which one could signify the great importance that we attend and attach to electricity decarbonisation. It cannot be said too often that this is the key to the future. If we cannot decarbonise electricity, we have no hope at all of meeting the obligations that are statutorily before us. It is important to say this again and again because people seem very reluctant to understand why that is. But it is obviously true that if you have decarbonised electricity, you can in fact provide many of the things that people have grown used to having without destroying the climate. If you look at the issue, it means that we can have electric vehicles, particularly with smart metering and smart grids. However, we can also have all the other electrical machines, like the ones we all use today, without feeling that we are contributing to climate change. Therefore, it is absolutely essential to what we need to do, which is why the climate change committee has recommended that we should be very tough in showing that we have to meet decarbonisation and carbon intensity targets by 2030, congruent with where we have to be in 2050.

I hope that my noble friend will look at these amendments, not in the normal way of being contrary but as a contribution to strengthening the Bill without adding extra burdens on anybody’s shoulders. They have to do this anyway—and we would not be able to do anything if they were not doing it. The Minister may find it a useful contribution.

[Baroness Worthington]

My Lords, I wanted to make a few comments about how such an obligation might work. Of course, I completely concur with noble Lords who have spoken already; this is clearly a probing amendment, and a lot of work will need to be done to think through how it might work in practice.

The one thing that I would like to illustrate is that, on the fuel disclosure requirements that we currently have, 12 suppliers are required to report and many of those report very low carbon intensities because they are specifically green suppliers. Of those that are mixed suppliers, there is a very great difference between them; at the top end of the scale, we have Scottish Power in 2011, whose CO₂ intensity was 580 grams per kilowatt hour. At the bottom end of the scale you have EDF Energy, with 253 grams per kilowatt hour. Obviously, that is because the plant self-serves to those supply companies; they are both energy generators and energy suppliers, so they choose to use their own power. It would be hard to imagine giving one figure that they should all meet, but an obligation might be that they should demonstrate an improvement over time by percentage per annum on their current levels, as recorded over the past six years.

There are a couple of reasons why that idea might be a good one to explore. We know that there is an issue among independent generators, which fear that they will not be able to gain access to the market because of self-serving—the tendency to use your own plant and be vertically integrated. If they were required to shift to a low-carbon footprint and intensity, they would have an incentive to find those independent generators that can generate low-carbon electricity and reduce their footprint. That could knock off quite a few issues in one, if we looked at it in detail.

Another thing to commend that idea is that the measures in the Bill are designed to bring forward investment, but nothing is there to compel anybody to come forward. You can set up a CFD strike price and offer these contracts, but if no one wants to bother getting them they can simply carry on with business as usual. If they had this obligation, it would create a great incentive to find those CFDs, apply for them and come forward. The alternative is simply to keep offering higher and higher strike prices until the carrot becomes so attractive that they have to come forward. So it is a good insurance policy for the Bill, providing a way for the Government to link those targets that they propose to set in 2016 with an actual mechanism for delivery. Let us be honest: a target set by the Government to deliver carbon intensity of any value will be delivered only if you find a way for the commercial operators in the market to deliver it. This is one way, and it has potential supplementary benefits in giving independents confidence that their products will have a market.

I hope that we can look at this issue. As my noble friend has mentioned, this is a probing amendment and lots of the details have to be worked out, but it would be encouraging to hear some positive signals from the Government that we might be able to continue the discussion.

Civil Aviation Bill

Debate between Lord Deben and Baroness Worthington

Wednesday 7th November 2012 Lords Chamber

[Earl Attlee]

My Lords, I thank the noble Baroness for expressing once again the reasoning behind her amendment. I also recognise the contribution from my noble friend Lord Deben. However, I fear that I cannot accept the amendment. I urge noble Lords to consider the positive work that this Government have already set in train to address the underlying general environmental concerns. Indeed, earlier this afternoon, on an environmental supplementary duty in respect of the CAA’s airport economic regulation functions, I referred to some examples of the action taken by this Government to ensure that the sector makes a significant and cost-effective contribution to mitigate the adverse environmental effects of civil aviation in the UK. I also urge your Lordships to consider the merits of the amendments we have already agreed to address the specific concern of the impact of the airport economic regulatory regime on the environment.

Let me now address this amendment, which seeks to provide the CAA with a general environmental duty. The previous Government consulted on giving the CAA a general environmental objective, alongside proposed safety and consumer objectives, in December 2009. The responses were mixed, with airport operators in favour but airlines opposed. The majority of airline respondents felt that it was for the Government to set the direction of environmental policy but for the CAA to regulate, and that giving the CAA an environmental objective would blur the boundary between policy and regulation and could create additional costs on the industry. They felt that it was not appropriate for the CAA to have to make environmental judgments on noise or emission levels at airports but instead that it was more appropriate for it to regulate the impacts in line with government environmental policy. We talked earlier about the difficult policy issue of Heathrow Airport, the background to which is of course an environmental issue regarding what the environment can tolerate. However, these issues are a matter for central Government.

Since the consultation, the CAA has included an objective in its Strategic Plan: 2011 to 2016:

“To improve environmental performance through more efficient use of airspace and make an efficient contribution to reducing the aviation industry's environmental impacts”.

I will come back to that in a little more detail in a moment. Additionally, the information, guidance and advice duties and powers in the Bill are now stronger than those that were consulted on. The CAA has a duty to secure publication of appropriate environmental information. Environmental impacts have been defined very broadly in Clause 84 to include noise, vibration, emissions and visual disturbance from aircraft as well as the “effects from services” and facilities “provided at civil airports”.

The knock-on consequences for human health are also covered by the information provisions in Clause 84. This is a very important issue for some communities and one where additional information could provide a valuable contribution to an informed debate. Noble Lords should be in no doubt that there are real benefits to be gained through the collection of good quality environmental information that can be presented in a consistent way to help passengers and freight owners judge the environmental impact of their travel choices. In addition, the CAA will be able to publish guidance and advice with a view to the sector limiting or controlling the adverse environmental effects of civil aviation in the UK. I suspect that the environmental effect that most concerns the noble Baroness is that of CO₂ emissions.

The CAA is also already undertaking and supporting a number of actions to deliver positive environmental outcomes. Two examples of that include, first, the CAA’s work on implementing the Single European Sky initiative to enhance the design, management and regulation of airspace across the EU by moving from airspace divided by national airspace boundaries to functional airspace blocks. It is estimated that since 2008, the UK-Ireland functional airspace block has provided approximately £35 million of savings, including around 150,000 tonnes of CO₂. Under the EU’s Single European Sky legislation, the environment is considered to be as important as safety and efficiency and there are EU-wide performance targets on the environment. The CAA has reflected this additional emphasis on the environment in its regulatory approach to the provision of air traffic management services.

Secondly, the CAA is also continuing to develop and take forward the future airspace strategy to modernise the UK airspace system. Again, I have organised a presentation for your Lordships to understand the work that is going on. This includes a clear driver to implement air traffic management improvements that reduce emissions from aircraft and contribute to minimising aviation’s environmental impact. These include enabling more direct routes and optimal vertical profiles, continuous climb and descent procedures and reduced reliance on stack holding, which all reduce greenhouse gas emissions. Both these developments will be positive for CO₂ emissions; indeed, that is one of the drivers for them. I hope that the House will agree that we have struck a good balance on the environment, since we have already agreed some useful amendments today, and that the CAA will be better placed than ever before to take environmental matters very seriously, as we would expect it to do. I hope that in due course the noble Baroness will withdraw her amendment.

[Baroness Worthington]

My Lords, I thank the Minister for his comments but I am disappointed. It is fine to list all the wonderful things that the CAA, the aviation industry and the Government are doing but the fact of the matter is that environmental issues are absolutely crucial. We must always remember that everything else, such as the economy, is a subset of the environment. If we wanted a reminder of that, we need look no further back than two weeks ago when Hurricane Sandy blew into New York and its stock exchange closed for two days because some things are even more important than our economy.

It is very regrettable if the wisdom of putting a duty into this Bill about the environment cannot be seen. Clearly, this is a sector with a large environmental impact. The measures that the Minister has listed arise because of the significance of its impact. I cannot see why this sector should have a regulator that does not have an environmental duty when all other sectors appear to have one. I do not think that the Minister provided a clear rationale for why this should be the case and aviation should be singled out. If anything, his list of the measures being undertaken makes me consider that there ought to be a broad environmental duty to give the CAA cover for undertaking all these activities. How can it be that we have introduced all these environmental aspects but not given the broad framework from which they may hang? I am afraid that I am not persuaded.

[Lord Deben]

Does the noble Baroness agree that the fact that the airlines are unhappy about this should not necessarily be the closing remark and that, in most cases, those who are to be regulated would prefer not to be so? We have to be a little careful about taking that as a final sum.

[Baroness Worthington]

Absolutely. I was going to comment on that very fact, because the Minister began by commenting that responses were mixed. Of course they were mixed. It actually pleases me that the airport operators were in favour. We are really just listening to turkeys when we want to talk about Christmas, which is never a good way to start thinking about making comprehensive and sensible legislation and regulations. As I hope your Lordships can tell, we are very disappointed on this side. This is not a partisan issue; there has been cross-party support on this question all the way through the process. The House will not be satisfied by the arguments put forward, I think, and we will come back to this. However, at this stage, with regret, I beg leave to withdraw the amendment.