Oil and Gas: UK Continental Shelf

Lord Lawson of Blaby Excerpts

Tuesday 9th February 2016 Lords Chamber

[Lord Bourne of Aberystwyth]

My Lords, the noble Lord will be aware that the Government have given high priority to ensuring that the recommendations of the Wood report are taken through into law. That is now happening through the Energy Bill, as the noble Lord is aware, so I think that indicates our clear commitment. He is absolutely right; this is a global problem but we are doing what we can domestically to ensure that the UK industry has all the support necessary.

[Lord Lawson of Blaby (Con)]

My Lords, as I well recall from my time as Energy Secretary, the North Sea oil and gas has had a glorious past. However, is it not clear that its future can be only a shadow of what it has been, and that the future of our indigenous oil and gas industry must lie in the exploitation of our shale resources, which are quite substantial? Will my noble friend undertake to go ahead with that as fast as he possibly can?

[Lord Bourne of Aberystwyth]

My Lords, I am very much aware that my noble friend has a very distinguished record as a former Energy Secretary. However, I do not think it is true to say that the oil industry is entering a period where its significance is diminished. It is perhaps not what it was, but it is still of enormous importance. The two oil fields to which I referred will be able, when at maximum production, to supply energy to 2 million homes. However, he is absolutely right about the importance of shale and the Government are determined to go ahead with exploration for it.

Paris Climate Change Conference

Lord Lawson of Blaby Excerpts

Tuesday 15th December 2015 Lords Chamber

[Lord Bourne of Aberystwyth]

My Lords, the noble Baroness is quite right about the importance of the small islands in the Pacific and elsewhere, such as the Seychelles and the Maldives. It was brought home graphically to me when I met representatives from Tuvalu in the House of Lords during the summer. They said that two degrees was not going to be enough to save them from total obliteration. Although there is a measure of self-interest, it is to the credit of the world that there was a sense of international responsibility for these issues when they came up in Paris.

On the investment issues which the noble Baroness rightly raised, £122 billion is spent annually in the UK on the low carbon economy. It is of extreme and growing significance and we are well aware of it. I repeat that this global agreement has been much welcomed. It gives certainty and sense of direction worldwide, not just in the UK. We have significant investments in the UK which have taken heart from the Government’s decision. An example is Siemens in relation to offshore wind. The point is well made that economic leaders need certainty. I would not disagree with that and it will, obviously, inform our policy.

[Lord Lawson of Blaby (Con)]

My Lords, the problem is that the Statement that my noble friend read out bears only the most tenuous relationship to what is actually happening in the real world. Is he not aware, for example, that back in the real world India has just announced plans to double its coal production by 2020? Is he not aware that in the real world, more than 2,500 coal-fired power stations are under construction, particularly in India and China but elsewhere around the world? Whether he wants to see decarbonisation or not, does he agree that, bearing in mind the effect on fuel prices, which affect fuel poverty and the competitiveness of British industry—one thinks of the recent closures in the steel industry in this country—it makes no sense whatever for us to decarbonise faster than the rest of the world?

[Lord Bourne of Aberystwyth]

My Lords, I am very well aware of the massive deployment of coal. That is one reason why the world needed to come together to see how it will address that issue. It is also true to say that in both India and China there is massive deployment of renewables. I think that the deployment of solar is about to overtake coal in India, so I recognise the issue. That is why we need to address it. I hope the noble Lord agrees that we do need to address it; I was not sure whether that was the inference of his question. I understand the particular problems with steel, for example, that he mentioned, but this issue is not related simply to energy but also to overproduction. I also recognise that every country has to protect its own patch and its own interests. As I said, there is an element of self-interest in different countries coming to this agreement in different ways, but there is a real sense of international responsibility and a real sense that if we had not acted in the way we did in Paris, we would face very serious problems in the future. There are still challenges but this was a very important milestone, and a very important milestone for the United Kingdom in the role it played.

Electricity System Resilience (S&T Committee Report)

Lord Lawson of Blaby Excerpts

Tuesday 3rd November 2015 Lords Chamber

[Lord Broers (CB)]

My Lords, this was a rigorous inquiry, chaired with consummate skill by the noble Earl, Lord Selborne, and supported with detailed expertise by Professor Jim Watson and highly professional co-ordination by the committee staff, led by Chris Clarke. I join others in congratulating them all and declare my interest as a fellow the Royal Society and the Royal Academy of Engineering, and also the national academies of engineering of the United States, China and Australia, where I have also discussed energy.

I shall discuss only the committee’s recommendation that:

“The Government should ensure that incentives are in place so that all new generation is built in such a way as to maximise its flexibility, whilst ensuring that the costs to consumers are minimised”.

The emphasis is on flexibility, but it is really about costs. I will briefly discuss the recommendation that,

“the Government should also disseminate more comprehensive evidence on the potential costs of low carbon generation and improve communication with the public”.

There has, in fact, been significant progress over the past two years in telling people what is happening. Despite what the noble Lord, Lord O’Neill, has just said, we had been in a worse situation. We now have the full set of strike prices, including that for nuclear power, and it is becoming possible to evaluate the various scenarios open to the country. This is a welcome change from the time when it seemed that no one knew what was possible, or even what was happening. For example, I recall the Government in late 2009 insisting that we would have 8 gigawatts of offshore wind capacity in the North Sea by 2011, which was clearly impossible and revealed a total lack of understanding of the challenges of that technology.

I experienced the new openness in a letter from the noble Lord, Lord Bourne, in answer to a supplementary question I asked earlier this year, and I thank the Minister for his letter and apologise for being so late in doing so. I had asked whether the capacities that he had referred to for various renewables were the gross capacities or the power actually delivered to the grid. He pointed out in his letter that they were the latter, and that the load factors used for onshore wind and solar were 24% to 32% and 9% to 11% respectively—a welcome recognition of reality. Solar PV yields 1/10th of what it says on the label.

It is clear that DECC is getting to grips with the complex and difficult energy trilemma. Five years after we were being told we would have 8 gigawatts of offshore wind in the North Sea, we are at least approaching 4 gigwatts and data are being produced that help us to estimate the real costs of offshore wind, although it will be a long time before we can assess the maintenance costs of these huge machines in the hostile environment of the North Sea. There is also some action, rather than endless talking, on new nuclear, even if, regrettably, we are not going to build it ourselves but will put it in the hands of the French and the Chinese.

Overall, we now have enough data to assess quantitatively different combinations of power generation type. Some of these have been laid out in the Electricity Market Reform Delivery Plan. What becomes clear, however, is that renewable energy generation is extremely expensive. The strike price for offshore wind, for example, has been set at more than three times the cost of electricity today: at £155 per kilowatt hour compared with £50 per kilowatt hour for conventional fossil fuel, which is the reference price. It is also more than 50% higher than the £92 per kilowatt hour projected for nuclear in 2023.

So the high deployment of the offshore wind scenario, in which offshore wind provides about a third of the power, shown in the EMR delivery plan would require the taxpayer to provide a subsidy amounting to two-thirds of the present cost of electricity, which is twice the reference price for about a third of the power generated. In fact, if one relies on the data available today, the high deployment of the nuclear option would seem to provide the lowest cost for meeting our carbon targets, especially as nuclear can be used to back up the intermittent renewables as well as producing little carbon itself. However, this cost will be much higher than the cost of electricity today. The high deployment of the CCS option may emerge as attractive in the future, but there is too little evidence available at this time to evaluate it. The hope is that large cost reductions will be realised as the renewable methods are scaled up, but this is anything but certain.

It is also argued that energy bills are already coming down and that this trend can be continued, but the reductions we have seen recently have nothing to do with progress with low-carbon generation. They have resulted from other factors, and I shall mention some of them. First, there have been significant reductions in the cost of fossil fuels. DECC data show that, between the second quarter of 2013 and the second quarter of 2015, UK energy suppliers paid 20% less for natural gas, 23% less for coal and 40% less for oil—the noble Viscount has mentioned some of this already. Secondly, there is what DECC calls products policy. This is the adoption of Europe-wide standards and energy labels that have increased the efficiency of household appliances. It is a truly excellent initiative. There is also the 80% energy saving that results from the use of LEDs rather than incandescent bulbs, and the increasing use of improved insulation, even if we are not as good at that as the rest of Europe, and the ability better to monitor usage through the use of smart meters.

Realising these gains is very good news, but they are likely to be overwhelmed by the vast increases in renewable generation cost, and taxpayers are going to have to bear the burden imposed upon them when the strike prices are higher than the reference price. It is essential that we continually monitor progress across the spectrum of low-carbon energy generation and adjust the mix to minimise cost, while, of course, meeting our carbon targets. At present the data suggest that this will mean maximising the use of nuclear power despite its higher cost, so I impress upon the Minister the need for the Government to press on with nuclear, and I include the small-scale modular reactors which the noble Earl, Lord Selborne, mentioned.

Before finishing, like others I emphasise the need to increase support for R&D in energy generation and, as stated in chapter 8 of the report, ensure that the objectives of the nuclear industrial strategy recommended by NIRAB are met. I shall also look forward and join the noble Lord, Lord Hennessy, in saying a few words about fusion power. There has been and remains a lot of scepticism about fusion, but there has been recent progress in plasma fusion on three fronts. First, at ITER—the international thermonuclear experimental reactor project in the south of France, where a doughnut-shaped reactor the size of the Arc de Triomphe is being built with the aim of producing half a megawatt of net output some time in the late 2020s—there have been delays and management problems, but in September an important milestone was achieved. A billion-dollar contract was placed to deliver the 200 kilometres of superconducting wires that will produce the magnetic field used to compress and confine the plasma and reach the temperature of 10 times that of the sun needed to produce fusion.

Secondly, here at Culham and at Princeton in the US two new tokamaks are being built to explore a new geometry for the fusion chamber. These are known as spherical tokamaks where the reactor chamber is not a torus, or doughnut, but is spherical, more like a cored apple with a single conductor down the middle. This geometry has been shown to be three times more effective in harnessing the magnetic field, and there are hopes that this may make reactors smaller than ITER feasible.

[Lord Lawson of Blaby (Con)]

My Lords, listening to the fascinating account of developments in fusion given by the noble Lord, Lord Broers, I am brought back to 34 years ago when I was Secretary of State for Energy. All my scientific advisers assured me that fusion would be economic within 25 years at most. Is it not dangerous to engage in wishful thinking?

[Lord Broers]

I thank the noble Lord, Lord Lawson, for that intervention. It is dangerous to be overly optimistic, and people have accused some of the people working on the new types of reactors of overoptimism, but the promise of fusion, as the noble Lord, Lord Hennessy, said earlier in this debate, is great. I am not suggesting that we replace huge quantities of investment elsewhere with work on fusion; I am just suggesting that we continue working on it because of its very great potential. It would be criminal not to continue to pursue it, particularly as we are making advances today. I am not suggesting at this stage that it is going to be tomorrow’s answer. It has always been tomorrow’s technology, but sometimes tomorrow’s technology comes home to roost, sometimes when we least expect it. I shall end on that optimistic note. If we could harness fusion power, we would have a lot of our problems resolved.

Renewable Energy

Lord Lawson of Blaby Excerpts

Wednesday 24th June 2015 Lords Chamber

[Lord Bourne of Aberystwyth]

My Lords, it is fair to say that there is a decline in the cost of renewable generation technologies. The steepest decline is in solar PV. On my noble friend’s point about the fact that the last leader of the Opposition, Ed Miliband, had a policy on energy that was not in the interests of the country, I am pleased to say that one of the first actions of the new Secretary of State for Energy and Climate Change was to write to the energy companies to say that we look forward to seeing a reduction in bills consequent on the fact that the last leader of the Opposition is not now Prime Minister.

[Lord Lawson of Blaby (Con)]

My Lords, by what date do the Government expect renewables to be cost-competitive so that hard-working families and businesses will no longer have to subsidise wealthy landlords and other green investors?

[Lord Bourne of Aberystwyth]

My Lords, it is not merely a question of cost. If it were the case that renewables were the cheapest form of electricity, we would not face the same challenge on climate change that we do. As I indicated, it is true that the cost of renewables is coming down. Meanwhile, it is the policy of the Government to focus on energy that is affordable, secure and clean.

Electricity Supply: Decarbonisation

Lord Lawson of Blaby Excerpts

Monday 15th June 2015 Lords Chamber

[Lord Bourne of Aberystwyth]

My Lords, I thank the noble Lord for that welcome; I am sure it will be the start of a beautiful friendship, to revisit “Casablanca”. We anticipate that by 2025, unabated coal will account for only 1% of total generation. In relation to Hinkley B, which he also mentioned, the answer is 2023.

[Lord Lawson of Blaby (Con)]

My Lords, I echo the welcome from the noble Lord, Lord Whitty, from this side of the House. In his reply the Minister referred to the Climate Change Act, which unilaterally imposes limits on carbon emissions for the United Kingdom. I am well aware that the Government wish to secure a legally binding global agreement on emission limitations at the United Nations Paris conference at the end of this year but, should that not prove possible, will he undertake to look seriously at abandoning or at least suspending our commitments? Unilateral masochism can make no sense whatever.

Parliamentary Voting System and Constituencies Bill

Lord Lawson of Blaby Excerpts

Wednesday 16th February 2011 Lords Chamber

[Lord Lawson of Blaby]

My Lords, on this occasion I am unable to support my noble and noble and learned friends and I find myself, after an intermission of something like 35 years, when we were in another place, in alliance with the noble Lord, Lord Rooker. I agree entirely with everything that he had to say, which means that I shall not need to detain this House long. I realise that the House has been debating this Bill for a very long time—far too long—so I shall do my best to be brief.

I do not agree with the noble and learned Lord who has just spoken, for a number of reasons. We are perfectly entitled to ask the House of Commons to think again and look at this further. After all, it had a threshold amendment at an earlier stage in its proceedings and the majority against the threshold shrank from well over 500 to 70, so things are moving in the right direction. It may be that with a little more momentum there the right result will be obtained.

There is another point which I have to tell the noble and learned Lord, Lord Lloyd. He seemed to say that this is not a matter for this House. We are talking, certainly on the AV issue, about what my right honourable friend the Deputy Prime Minister has said is a potential constitutional change of the first importance. If this House does not have a role as the watchdog of the constitution, it has no role at all. I cannot possibly accept the argument made by the noble and learned Lord, Lord Lloyd.

I was also disappointed if not, if I may say so, slightly shocked by the poverty of the argument presented by my noble and learned friend the Minister, which boiled down to two issues. First, if I understood him aright, it seemed to me that he was concerned that the consequence of the amendment moved by the noble Lord, Lord Rooker, might be, “If you don’t know, stay at home”. I think that was what he said. He seemed to think that was terrible but if you do not know, what should you do? You cannot go and vote, “don’t know”; there is not an option on the referendum ballot, as far as I am aware. We have not exactly been told that but if there is a “don’t know” option, it is a different matter. Perhaps my noble and learned friend can tell us but I do not think there is. So, is it: “If you don’t know, toss a coin”? I listened attentively to my noble and learned friend’s speech because I was hoping to find something in it but I could not.

Secondly, the only other argument that my noble and learned friend used was that the very idea of a threshold was improper and an insult to democracy. In pretty much every other country in the world, notably the United States, when there is a major constitutional change there are special provisions. You cannot just get anything through on a majority of one, however low the turnout and whatever the conditions. Special provisions are always put in for major constitutional changes to set a higher hurdle, as there should be when the constitution is being fundamentally changed. Is the Minister saying that the United States is somehow not a proper democracy—that its arrangements are somehow improper and insulting? I will not enumerate all the other countries; my noble friend Lord Lamont did so in an excellent intervention in Committee, citing all the examples.

I make two final points. First, the Government implicitly accept that there needs to be a high turnout. That is why they decided to hold the referendum on the same day as the local elections. We know that it was not to save a few million pounds; it is because they believe that it will ensure a higher turnout. They are right and that is proper. This amendment helps the Government. It is in the same spirit as what the Government are doing by trying to ensure that there is a high turnout.

Secondly and finally, I say to those of my noble friends who are uncertain as to whether the amendment goes against the coalition agreement: the constitutional status of the coalition agreement is somewhat obscure. Nevertheless, one should always play safe. I have studied the coalition agreement very carefully and spoken to some of my right honourable friends in the other place. It is clear that the amendment of the noble Lord, Lord Rooker, in no way contravenes the coalition agreement. Therefore, I hope that this House will have the backbone to tell the other place that this is something of major constitutional importance; and that this House, as the watchdog of the constitution, would like the other place to look at this again.

[Baroness Butler-Sloss]

My Lords, I want to ask the Minister a very basic question, to which not only I but possibly other Peers do not know the answer: are we allowed to vote in the AV referendum?

Parliamentary Voting System and Constituencies Bill

Lord Lawson of Blaby Excerpts

Monday 31st January 2011 Lords Chamber

[Lord Bach]

My Lords, the Deputy Prime Minister has frequently tried to place the Bill in the proud lineage of great reforms that led to the introduction of universal suffrage in Britain. I quote from his “new politics” speech, delivered in May last year:

“I’m talking about the most significant programme of empowerment by a British government since the great reforms of the 19th Century. The biggest shake up of our democracy since 1832”.

In the same speech, recalling the “anger and disappointment” felt by thousands of people who were turned away from the polling stations on general election night, he declared:

“You must be confident that, come polling day, your voice will be heard … Under this government’s plans, you will”

However, we know, as the Committee has heard before, that as a result of gaps in our electoral register, many millions of people are going to be denied a voice—indeed, any acknowledgement of their existence—in the two central proposals contained in the Bill.

The Government are fond of saying that this Bill is underpinned by the principle of equality, but you cannot get equality on the electoral playing field on the basis of a grossly unfair or unequal register. This is particularly so in respect of the proposed boundary changes, which are to be drawn on the basis of the December 2010 register, from which it is agreed that upwards of 3.5 million eligible voters are missing.

Putting that problem on one side, I think that the problem of underregistration also has a significant bearing on the referendum on the alternative vote, which is the subject of Part 1 of the Bill. As we are well aware, the Government intend that the referendum will be held on 5 May next, which, in our view, would be an unsuitable date. Even if the referendum goes ahead on that day, the referendum will at least be contested on a marginally more up-to-date electoral roll than that to be used for the boundary changes, if for no other reason than that there is still time to put missing people on the register. If the referendum was not going to be held so soon, this would allow even more time.

Happily, the Bill provides for that eventuality. Following the Committee’s acceptance of the amendment moved by my noble friend Lord Rooker, the Bill will not actually require a referendum to take place until October of this year. We believe that that extended deadline provides an important opportunity for the registration problem to be properly addressed and sufficient leeway for the acceptance of Amendment 102.

Amendment 102 is concerned with the commencement of Part 1 of the Bill. If accepted, the amendment would require the Electoral Commission to certify,

“that every local authority has taken all reasonable steps to ensure that the electoral register is as complete and accurate as possible”,

before the AV referendum is held. The amendment would not require a certain percentage of eligible voters or resident adults to be registered. In previous debates, that was felt to be an unreasonable target. Indeed, there was some disagreement about what the right percentage target would be. The amendment would simply impose on the Electoral Commission a requirement to judge whether local authorities are doing all that they reasonably should to ensure that as many people as possible are registered to vote.

[Lord Lawson of Blaby]

I have noted what the noble Lord has said. Does he consider that there may be some people—perhaps a lot of people—who do not register simply because they are not interested in voting at all? That may be deplorable, but that may be the case. Therefore, many of those who are not on the register may not be so due to any failure on the part of the responsible authorities in getting them on the register.

[Lord Bach]

Of course the noble Lord is right. There are some people who decide, as a matter of choice, not to vote in any election of any kind or may, in the past, have had some reason for not putting their names on the register. However, my amendment seeks to ensure only that local authorities have taken all reasonable steps to ensure that the electoral register is as complete and accurate as possible.