Energy Bill

Lord Empey Excerpts

Tuesday 18th June 2013 Lords Chamber

[Lord Empey]

My Lords, some time ago I had the opportunity to be Energy Minister in Northern Ireland for three years. Although it was only one part of my enterprise portfolio, it took up an amazing amount of time. Many noble Lords here today have served as Ministers and will be familiar with receiving a first-day brief from the Civil Service. In my case, I was advised that because energy was largely privatised, there would be little call on my time, merely a few regulatory functions to perform. How wrong that turned out to be.

Energy supply is a vital economic as well as a national security consideration, and this has become an even greater governmental responsibility in recent years. We read stories that the UK nearly ran out of gas during a recent cold spell that coincided with a breakdown in some part of the distribution and storage system. Whatever the truth, the point remains that ensuring a secure and affordable energy supply is one of the key requirements of good government.

The Government insist that this Bill is about establishing a framework for delivering secure, affordable and low-carbon energy. This is a sentiment that I am sure we all share. However, there needs to be a close examination of some of the aims and targets that we as a nation are being asked to sign up to. I know from our experience in Ulster that those same sentiments were shared in the 1980s and 1990s when the then Government signed us up to availability contracts, which have stifled competitiveness and kept energy prices unnecessarily high in Northern Ireland for nearly two decades.

Let us stand back for a moment from the complicated clauses in the Bill and look at what we should be doing and why. As a nation, the UK already suffers from a lack of economic competitiveness. We have to charge out to our customers the cost of our growing debt burden as well as our expensive welfare system. Despite the rhetoric of the Government and all parties, the export-led recovery has not yet happened. This is because we no longer produce enough manufactures and services at prices that international customers are prepared to pay. In this regard, therefore, what does this Bill do to our international competitiveness? Does it help us or hinder us? What does it do to reduce the overall amount of carbons pumped into the world’s atmosphere?

My contention is that the Bill leads to a reduction in the one and merely to redistribution of the other. I shall explain. Our competitiveness and the reduction of carbon dioxide in the atmosphere are inextricably linked. I believe that unilaterally adding cost to our energy supply for the genuine and admirable purposes of reducing carbon emissions here in the UK merely transfers the carbon emissions to China and other parts of Asia and the world. By making our already high cost base higher, it could be said that we will produce more of our energy from clean sources. That may be right. But the net effect is that, unless it is done simultaneously and universally by the major manufacturing nations, we reduce the amount of manufactures we produce and transfer that production to other places. While strides are being made in China to control emissions, there will be increased emissions, because China will be making the goods that we are no longer competitively making and in addition it will take a lot of energy to get those products to our shores from the other side of the world.

Climate change can be addressed only internationally and the EU and UK cannot allow themselves to get too far ahead of other nations. Otherwise, they will merely make themselves uncompetitive for no valid purpose. I believe that the climate is changing and that man is contributing to that change. We are certainly making a contribution, but its scale is hard to judge. Nevertheless, I do not accept the idea that it is purely manmade. Climate change is natural, but I believe that we are accelerating it. We can make a difference, and we already have. For instance, we took lead out of petrol, which has reduced dramatically the amount of lead in the atmosphere throughout the world. So we can make a difference, but let us keep it in proportion.

On the generation of renewable energy as well as nuclear, we are talking about adding a charge to consumers’ energy bills to subsidise the cost of renewables and nuclear-generated electricity. This is not a new idea, but we have to enable generators to produce electricity at a price that will allow them to borrow the money to provide the service. There is nothing wrong with that in principle, but the cut-in and cut-out points on the subsidy are critical. There is a lot of widely inaccurate speculation about what can be achieved by all this. The truth is that no alternative sources of energy come anywhere near the point where they could provide the UK with a constant and reliable source of energy. Wind is currently the major alternative, whether onshore or offshore. There is no doubt that it has a part to play, as do other forms of renewables, but let us not exaggerate its potential. In this country, energy demand rises during cold spells, which often coincide with high pressure in the atmosphere. High pressure usually means little or no wind. The classic example of this was in the winter of 2010-11 when we had five weeks of freezing weather and little wind. Without the traditional source of generation, we would effectively have been out of business.

I agree with the noble Viscount, Lord Ridley, who is no longer in his place. I cannot understand the difficulty in people grasping the fact that, even if we increase the amount of renewable energy from wind and other sources, we will still have to maintain every single megawatt of traditionally produced electricity, plus an amount to allow for breakdowns. We know that wind does not survive high pressure and that the other sources of renewables are vastly underdeveloped. Wind generation will reduce the amount of energy that is produced by traditional sources when it is functioning, but, when it is not functioning, you need to have the back-up. Therefore, the amount of generating capacity from traditional sources, whether fossil or nuclear, is not going to be amended significantly in the foreseeable future for that reason.

People are not going to tolerate the electricity supply going off. I often joke with colleagues that if the electricity went off during cup final people would be prepared to burn Chippendale furniture in the power stations to keep their lights on. The more wind that you have, the less efficient become the traditional sources of fossil fuel and nuclear supply, because that reserve, whether it is spinning or not spinning, will become less competitive. So the irony is that we will vastly increase the amount of electricity capacity in this country from renewables and non-renewables, but we still have to have the back-up. There could be five weeks of bad weather coming down the road and, if you have a series of breakdowns, you have to have power stations spinning, and they are spinning as we debate this Bill today. I do not see that people grasp that fact.

Energy from wind is great. In my own city, Harland and Wolff does not build ships any more—it builds windmills, and that is great. But the fact is that you have to have them backed up. Unfortunately, in a relatively small geographic area such as the British Isles, you have these weather patterns. Yes, we can do a certain amount with interconnection. I pioneered the gas and electric interconnectors with the Irish Republic, and we have an interconnector with Scotland. I am all for that, but the electricity interconnector has two 250 megawatt cables, and one of them is bust. So nothing is totally reliable; you have to have redundancy built in whatever the source, and you cannot have enough of it. That is the experience we all have.

In economies like India, the lights go on and off, and all the major universities and hospitals have huge amounts of generator back-up. In this country we pride ourselves on having a constant supply, which makes a huge difference to certain industries and activities that simply have to have constant, reliable supplies of electricity at affordable prices. I fully support the concept of reducing our carbon footprint as best we can—but we all know that it is vehicles that produce most carbon emissions, and not Mrs Bloggs at number 33. So this deals with only part of it.

We have indigenous potential in this country. Shale gas has been mentioned. At home in Northern Ireland we have vast resources of lignite from Lough Neagh right up through County Antrim. An Australian mining company came to me a few years ago to say, “We could open-cast mine it, because it is high-quality and low sulphur. We could build a big trench up the centre of County Antrim from Lough Neagh up to Ballymoney. We would put in an 800 megawatt power station and fill the hole in as we go along”. You can imagine the amount of interest that that had from the local community, who saw their towns, farms and everything disappearing into this great hole. Campaigns were launched, and I have to say that I took a far-sighted and courageous decision as Energy Minister to do nothing. I took the view that it should mature in the ground and that it was there if we needed it. But the truth is that we have resources and we may have to deploy them. Mr Putin and others have been mentioned, and there is no doubt in my mind that this is a national security issue, apart from anything else. We cannot allow ourselves to be at somebody’s mercy.

Research and development has not been mentioned very much. The European Union has significant resources in this area, and we have to do far more R&D into the technologies. All that we are doing at the moment is to use sticking plaster and adding bits on here and there. We are not putting enough money into the R&D of energy supply. I hope that as we go into Committee and on to Report we can drill down into some of these issues and perhaps improve the Bill as it passes through the House.