Electricity Market Reform

Debate between Lord Dixon-Smith and Lord Marland

Tuesday 12th July 2011 Lords Chamber

[Lord Marland]

I do not think my noble friend can take that from our Statement. The reality is that onshore wind does divide communities—my noble friend puts his finger on it—and it therefore becomes an issue for local communities to decide through the local planning process whether they want it. A large number of local communities in Scotland are embracing onshore wind whereas a number of communities in this country—I am sure my noble friend Lord Reay’s community is one of them—do not want to embrace it. The reality is that the Government have a target. Two-thirds of that target for onshore wind is either met or is in the process of being met so there is a very limited amount of headroom. Our real push is to get offshore wind up to the target we wish to achieve.

[Lord Dixon-Smith]

My Lords, I hesitate to intervene but there is one thing I need to say and one question I need to ask. We should stop worrying too much about cost. I have said this before but I have seen farm tractor diesel prices rise by well over 4,000 per cent since I started in business. That has been vexing occasionally. It is always difficult to put up with rising costs but we live in a different world. This is an evolution in costs over a similar period. If we can keep the costs down below that sort of increase we shall have done very well indeed. That is a harsh reality which my noble friend Lord Lawson may find uncomfortable. However, when he was Chancellor of the Exchequer, he may have had something to do with what has happened.

The Minister is essentially setting out a programme through until 2030. The difficulty is that the major infrastructure investment he requires will consist in many instances of projects which will still be running in 2050, by which time we shall have to have a carbon-free, or virtually carbon-free, energy industry. There will still be one or two essential uses. What is the Minister going to do if he finds that the 10 per cent of the carbon which still has to be emitted in a coal-fired power station is incompatible with the 2050 target when he is committing a 40-year investment? That is what it will be if he gets someone to build a CCS power station today.

Energy Bill [HL]

Debate between Lord Dixon-Smith and Lord Marland

Wednesday 2nd March 2011 Lords Chamber

[Lord Dixon-Smith]

My Lords, I hesitate to intervene, and if the Minister had risen quickly enough to keep the noble Lord, Lord Whitty, in his seat, I probably would not have intervened at all.

Although repetition is a good thing, we must bear in mind that the stated purposes have already been written into legislation and are already so ingrained in all our thinking habits that, frankly, to put them at the beginning of this Bill adds nothing. One problem with the amendment is that it requires “commensurate contributions” from two very diverse and very different things that will depend on a great deal of voluntary action by large numbers of people or groups, societies, local authorities, housing associations and so on. To me, the word “commensurate” makes this, worthy though it is, in effect meaningless because there are too many outside factors that mean that commensurate action will probably be only accidental because it depends on so many people, either tenants, landlords or the other categories of people whom I have already mentioned, volunteering to take part. It also depends on a lot of other factors, the primary one being the absolute certainty that the energy savings they will achieve, and the value of them, will be greater than the costs that they have to bear. Such arguments were expressed in Committee because of the uncertainty about what might happen with interest rates in the future.

The second point is that, even if we put this into place, the far more potent effect in reducing emissions from domestic households will be the work that will have to be done on the supply side of the energy industry to decarbonise the electricity supply. It is far more important to pay attention to that sort of aspect, where the effect can be far greater on a residential level, than this aspect, which will have a beneficial effect—there is no denying that—but not a huge effect because the amount of energy and the cost saved will be nowhere near the cost of making the domestic sector CO₂-emissions free. In my view, the effect of the 2050 target implies that by 2050 the whole domestic sector has to be carbon-emission free. We need to focus much more on that effect and take this as it is now. It will be a benefit, of course, but it will be only a small benefit. I do not think that we should complicate the matter, and still less should we try to take actions that depend on the actions of others—that are commensurate—because we simply cannot control the situation with that degree of accuracy.

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Lord Marland)]

My Lords, I thank all noble Lords who have spoken and want to tell everyone that I am on my best behaviour because my boss is watching, so I will not say anything too controversial or concede too much.

It is a great opportunity for me to thank all noble Lords for the time and effort that they put into Committee to identify issues and work together to make this a much more valuable Bill. That is the expertise of the House. We can contribute, and we have done magnificently. We have given the Bill a thorough road test with great cross-party agreement, and I pay my personal thanks to those on the Opposition Benches for all the work that they have done—through very difficult physical circumstances in the noble Baroness’s case. I am delighted to see her able to get to her feet. She can always have assistance from our side, particularly when going into the right Lobby.

We have sought where possible to accommodate suggestions, but some cannot be achieved within the timeframe available on Report. However, we will endeavour to do so by Third Reading, and then further changes will be made in the other place. Of course, some amendments would not provide the functionality that is required, and even though we have listened very hard to them, unsurprisingly we will not accept them. I hope noble Lords will take that into account when they make their contributions. We have listened and we have all ridden together to make this a constructive document, and again I thank everyone for their support. I do not believe that it is necessary to set statutory powers, as referred to in Amendments 102 and 121, but I agree that there should be an aim for our energy efficiency policies. We will come back with proposals on that for consideration in the other place, which I hope will satisfy the noble Baroness. We cannot achieve that now, but we will be looking to achieve it as we go forward.

I am grateful for the contribution from the noble Lord, Lord Whitty. I was pleased to see that he had a playful smile when he referred to fuel poverty, which is fundamental to what we are trying to achieve. Fuel poverty has increased exponentially and we must put the brakes on that. Much of what we are trying to do with the Green Deal addresses that. My noble friend Lord Dixon-Smith rightly points, as he often does, to the issue of whether we should have continuing annual reports, and so on. Clearly the Government are committed to openness and transparency, and we have an annual report on progress towards our energy efficiency goals. We will consider the operation and performance of our energy efficiency policies, not least the Green Deal and the ECO, which will prominently feature in our reports published under the department’s annual energy statements. Such documents will provide all the information required on the activity of the department, including the Green Deal and ECOs. I hope that that reassurance will allow the noble Baroness to withdraw her amendment.

Energy Bill [HL]

Debate between Lord Dixon-Smith and Lord Marland

Monday 24th January 2011 Grand Committee

[Lord Dixon-Smith]

My Lords, my noble friend has a serious point. If the tenant seriously objects, it is completely wrong to hold the landlord responsible for that individual decision. It may be uncomfortable, but that is the reality. Otherwise, we have a form of compulsion that is wholly inappropriate.

[Lord Marland]

The point that I am making is that the landlord, if he has a tenant who will not agree, will continue the tenancy. When the tenancy changes, the landlord will have to change his plans. No one can force a tenant out, unless it is done legally—and, as the noble Baroness, Lady Noakes, says, tenants are strongly protected. But what would one do? One cannot force people into this Green Deal; one has to encourage them. The Green Deal is a market-led product. We are saying that once the tenancy ends, the new tenant will have to have the Green Deal. I am afraid that that is as far as we can legitimately go at this stage. No doubt during the review we will find out whether this has operated voluntarily or whether we need to find other ways to encourage people.

Energy Bill [HL]

Debate between Lord Dixon-Smith and Lord Marland

Wednesday 19th January 2011 Grand Committee

[Lord Marland]

The methodology for the golden rule will be standardised and it is fundamental that it is. That is a good cornerstone from which to start. I hope that that answers the noble Lord’s question.

[Lord Dixon-Smith]

My noble friend has not touched on the question of the cost of the finance.

[Lord Marland]

I would rather pick that up later on, when we come to Amendment 15. If the noble Lord does not mind, I would be happy to deal with it then. As for rolling up the costs of the assessor, we would not encourage that, but there may be a framework in which it could happen. We will need to look into that further.

Energy Bill [HL]

Debate between Lord Dixon-Smith and Lord Marland

Monday 17th January 2011 Grand Committee

[Lord Dixon-Smith]

My Lords, I feel tempted to rise for the fly that has been flicked over us, as you might say, even though I suspect that it is probably uncatchable. To explain my attitude to all this—particularly to the noble Baroness, Lady Smith of Basildon; she and I share a certain amount in our background—I should explain that I was once responsible for the total built estate in Essex. Part of that responsibility was structural maintenance, and the other part—even 30 years ago when I was doing it—was energy efficiency, not least of the problems being because we had many buildings erected under a very different regime in the 1950s that were extremely energy inefficient.

The point that I really want to make is this: in those days, energy efficiency was constantly measured and schemes for improving the energy efficiency of buildings flew in and out of our programme with monotonous regularity, because they were always dependent on showing an economic return. Interest rates in those days changed with monotonous regularity, and the consequence was that a scheme that might be eligible for consideration one month would go out six months or even three months later, because there was no longer an economic return. However else we look at the question of energy efficiency in housing, economic return will still be the driver on which individuals will make up their minds whether to participate in the scheme. Not least of the problems that the Government face in proposing a scheme of this nature, particularly at present when interest rates have been consistently low for a long period, is that it is almost impossible to judge what view people will take if interest rates go up to 5, 6 or 7 per cent. That would not be unforeseeable if the economy changes, particularly if inflation stays consistently high. That is one difficulty that the Government definitely have to face.

My problem with the amendments comes down to a slightly more difficult point. It is all very well for the Government to propose a scheme, but it depends on voluntary participation. People have to say that they wish to take part; there is no mechanism for compulsion, and rightly so. To ask the Government to predict what sort of savings in carbon emissions they expect as a result of the scheme is setting an impossible task. I do not see how it can be done. In any event, however significant the scheme may be in the context of the Climate Change Act and its 2050 target, it will play only a minor part. That target was specifically mentioned by the noble Baroness, Lady Smith, as a reason behind her amendment, but the critical issue in relation to it will be what happens to carbon dioxide.

If you remove carbon dioxide from electricity generation, you can turn a house totally into a zero-emissions house. The energy efficiency does not need to alter one iota if it is an all-electric house. At that point, you fall back on what I have already said—that the decision on whether to participate in an energy efficiency scheme is entirely and properly a responsibility of the householder. Therefore, I have a fundamental difference in approach.

I sometimes wonder when I see amendments like this how the proposers thought we would ever achieve the present state of development that we enjoy in this country, which is very sophisticated. The more sophisticated our society becomes, curiously, the more sophistication and complexity seems to be demanded in our legislation, which in fact makes legislation more difficult to implement. We have something here which depends on volunteers, and we already have a mechanism for annual reporting because the Government’s carbon performance has to be reported annually to the climate change committee. It seems to me therefore that the background to these amendments is superfluous. In order to keep legislation simple and understandable, I hope that the final decision will be that these amendments should not become part of the Bill.

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Lord Marland)]

My Lords, this is the first Bill that I have been involved with, so please be patient with me, if you would be so kind. It is good for this House that the Energy Bill is starting here, and I thank all noble Lords for their well thought out and helpful amendments. We may, of course, resist some of them, but they will be given respectful consideration and full discussion. I would also like to thank the opposition Benches for their constructive approach to this through the noble Baroness, Lady Smith of Basildon. I would particularly like to thank my officials, who have worked through the weekend and have had to respond to amendments tabled as recently as this morning. So they have put in a tremendous amount of hard work. I would also like to thank my unpaid friend Lady Northover, who joins me not as a rich person who can afford things—as the noble Lord, Lord O’Neill, thinks—but as someone who believes in public service.

Throughout our consideration of this Bill my door is always open, as is my limited mind, and should you wish at any time during this Committee to discuss any issues, I would be delighted to do so. So thank you in advance, all of you, for your support. I would also like to thank the noble Lords and the noble Baroness, Lady Smith of Basildon, for bringing forward these amendments which seek to provide clarity about the purposes of this part of the Bill, to ensure that those delivering the Green Deal have regard to those purposes, and to require annual reports on progress.

Amendment 1 seeks to put in statute the purposes of the Green Deal and to require relevant persons to have regard to these purposes in fulfilment of their functions. The Green Deal is indeed central to the carbon reduction target contained in the Climate Change Act and to the elimination of fuel poverty. I welcome the opportunity provided by this proposed amendment to provide clarity on the purposes of the policy.

There are, however, difficulties with this proposed clause as an operational clause, many of which my noble Friend Lord Dixon-Smith has alluded to. The Green Deal is about establishing a commercial framework in which businesses can take the lead in delivering a new type of finance package designed to address climate change and fuel poverty. However, most of the regulatory functions which will be performed by specific bodies under this Bill are for consumer protection. For example, those persons running accreditation schemes ought to be focused on setting and enforcing standards to protect customers, not having to have regard to a trade-off between high-level policy aims such as carbon reduction and operational issues such as enforcing standards. We should resist an overarching purpose because we do not want to open an opportunity to challenge inappropriate commercial practices on the basis that the end justifies the means if the overarching purpose is achieved.