Energy Bill
Debate between Lord Howell of Guildford and Baroness Worthington
Baroness Worthington
Does the noble Lord agree that it is quite clear the reason for those price increases is the high price of gas?
Lord Howell of Guildford
No, I would not agree at all. I look at my bill, and I do not know whether the noble Baroness has looked at hers recently, and find that 20% stuck on the bill as a result of green policies and green taxes. It may be that gas contract prices have been rising, but spot prices, and indeed some contracts around the world, have been falling. The noble Baroness knows well that in the United States, for very special reasons which may become global reasons, the price of gas is about a quarter of what it is here. So I do not agree with that proposition, and would certainly disagree with it even more in the future.
Baroness Worthington
Will the noble Lord therefore explain why gas bills have been rising when they do not carry any of the costs of the renewables obligations, as on electricity? There is very clear evidence in the public domain that up to two-thirds of the increase in prices is because of the underlying price of gas.
Lord Howell of Guildford
Obviously the bulk of a market price is the price at which gas is purchased: either contract or spot. However, if the noble Baroness is asking me to agree with the proposition that gas prices are now, or will be be, the driving force in raising prices, and that we should ignore the additional pace at which extra costs are placed on the consumer, I am afraid I cannot. The consumer is paying more. Energy prices in this country—I do not want to wander off the amendment too far—are very high, almost as high as in Germany. This is not good for our industry, and the pace at which people can be asked—it is a question of pace, not principle—to bear additional costs, particularly poor families, has to be handled with great care and calibration by policy makers.
That is why this idea of targets represents a danger, encouraging more over-ambition and more speedy decisions which distort incentives. Furthermore, technology is changing all the time, and all kinds of developments can take place which wrongfoot those who have established targets for years ahead. I know about that because in the 1970s and 1980s I was the Energy Secretary, and we launched a huge programme looking 50 years ahead for replacing our nuclear fleet, which, if we had done it, would have saved a lot of problems today. Although we announced that we were going to have nine new pressurised water reactors by 1990, we only actually built one. Today, those reactors would have been built and would be working excellently, producing low-carbon electricity. Alas, that did not happen.
So if the aim of this amendment is to bring greater firmity of purpose, and to reduce infirmity of purpose, it is not going to succeed. The aim of the Bill is to get more investment and to get the investors putting their money into new machinery, whether it is renewable, nuclear or gas turbines. That investment is not coming forward. It is not happening, and if people say it is about to happen, I have to ask—and this is where I am going to sound disloyal to the Government—why are Ministers rushing around talking about de-mothballing existing plant to fill likely gaps in our power supply in the next few years? Why is the National Grid talking about interruptible contracts? These are very frightening things. These are not going to increase certainty; they are vastly decreasing certainty. The oil companies and energy companies that come to me are not at all impressed by this Bill. They do not believe that it will create the investment certainty they need and they wonder when the politicians are going to show more finesse and care, and when the proponents of green energy, of which I am certainly one, are going to show more sense of pace in pushing forward these issues.
If we continue at the present rate, if we continue to install targets that apparently commit Governments—but of course time passes and they change—and if we continue to believe in targets driving investment and pricing decisions, we will create precisely the kind of political backlash that we now have. We will see poorer performance on CO2 than other countries that avoid all these sorts of targets, such as the United States, which has a brilliant performance on CO2. We are going to see less security, less affordability and more damage to our country, its competitiveness and, above all, the poorest families in the land. These targets are not only undesirable but dangerous and I very strongly oppose them.