Energy Bill
Debate between Lord May of Oxford and Viscount Ridley
Lord May of Oxford (CB)
My Lords, I am a member of the Committee on Climate Change and was a member of the committee of both Houses that helped draft the legislation. I want to inject a fact or two into the discussion. The first thing the Committee on Climate Change did was to ask, “How much carbon, looking to 2050, do we think the world can have put into the atmosphere without exceeding a dangerous level of climate change?”. On that basis, we then divided that total by an estimate of the population of Britain in 2050. I would be the first to admit that that second figure is a little uncertain but that was the basis of the ambition that we set and of the overall target that was given for our goal for the end of 2050. We then put the committee together and asked, “Feasibly, how do we think we can get there?”. It was decided—I think sensibly—that the first thing to do was to decarbonise power. Once you do that, you can begin to do other, more difficult things. When looking at decadal timescales, you can look at the possibility of having surface transport primarily done by electricity and that will be okay if we decarbonise the power supply.
We then set intermediate goals. One of them was to come as close as we can by 2030 to decarbonising the energy source through renewables and other things. It was seen that the trajectory to that from 2010, which was when we were talking, was still going to involve coal and gas—gas more efficiently than coal. One thing that the noble Lord, Lord Lawson, and I agree on is that, given that we have to make that trajectory to 2030 and we will still have to use carbon-producing products to generate the energy, shale gas might be the best intermediate way to get there.
To get there, we also need industry to see that we are committed to getting there, to get it in turn preparing and talking of massive investment, but on the premise that there will be support and continuing commitment to those goals. This is primary legislation and the goals that have been accepted by the Government are legally binding, and I am in the habit of asking, on the Committee on Climate Change and elsewhere, “What does legally binding mean?”. I have not yet had a satisfactory answer. In so far as that phrase means something to some people, we have a legally binding interim target of decarbonising electricity by 2030.
That is why at the draft stage of the Bill the Committee on Climate Change recommended that it include not a vague statement of aspiration but the explicit wording essentially equivalent to that of the amendment moved by the noble Lord, Lord Oxburgh. In some sense, you could say we are legally committed to it but it would make common sense to vote for that amendment, as it is consistent with the history and where the facts lie. There are no two ways about it.
Viscount Ridley (Con)
My Lords, I declare my interests in various forms of energy as listed in the register. I cannot declare the probably seven-figure annual sum that I do not receive because I do not allow wind turbines on my land in a very windy part of Northumberland. I say that not to elicit the House’s sympathy, obviously, but to emphasise the point that the Government would be right to resist this amendment because it would hit the poorer even harder and reward the rich even more, by encouraging enormously expensive renewable energy, particularly the wind industry, particularly offshore wind. Effectively, this amendment would lock in now the wrong technologies, the ones that we know are inefficient in producing decarbonisation and which are immensely expensive.
We have heard a lot already today about the interests and needs of producers of energy. As I said in Committee, it is much more important that we think about the needs and interests of consumers of energy. We do not build power stations for the people who build them or the people who plan them; we build them for the people who use the electricity that comes from them, and thereby provide jobs with that electricity.
We know three things now that we did not know at the start of the summer when the Bill first arrived in this House. The first is that the public are right royally fed up with rising energy bills and are not going to take kindly to further increases, which is what we are talking about. Secondly, wind in particular—as with a lot of renewables—needs even bigger subsidies than we have been led to expect. We were told that the strike price for offshore wind would come down from around £150 per megawatt-hour to about £100. That target has now been abandoned; it is coming down to £135. That is an extremely expensive product—about three times the price of wholesale electricity at the moment. The third thing we have learnt—and I am going to come on to this at the end of my speech—is that climate change is happening more slowly than expected.
If all three of those points are taken together, it would be completely mad to lock in a target now for 2030. It would also be potentially callous because it would encourage an increase in the price of electricity.
Lord May of Oxford
My Lords, what the noble Viscount, Lord Ridley, has just said was factually incorrect. Climate change temperature has fluctuations. The noble Viscount does not understand the statistics properly; it is basically the same problem he had with his thesis. It fluctuates; it goes up; it flattens a bit. But the statement made by the noble Viscount, as if it were a flat generality, was inaccurate.
Viscount Ridley
My Lords, I shall repeat the statement. Later in my remarks I shall come back and justify it. Climate change is happening more slowly than expected. Far from locking in highly expensive energy, as we are doing, we should be reconsidering the huge cost that we are afflicting the most vulnerable with to comfort the most comfortable. Offshore wind costs about four times as much as gas: £270 per megawatt-hour is the total cost, including connections and system costs, for offshore wind compared with about £66 for gas. We are asking hard-working families to pay over the odds for their electricity in order to provide subsidies to generate power and in order to provide subsidies not to generate power. Last year, £30 million was paid to wind companies not to produce power at a time when it was not needed. Furthermore, we are asking them to pay over the odds to pay for the short-term operating reserve, which is the balancing mechanism by which we make up for the fact that wind is unpredictable. That consists largely of fleets of diesel generators, which are being increased in number by the national grid towards 8 gigawatts, combined with open-cycle gas turbines—both of which are higher carbon than combined-cycle and extremely expensive.
Moreover, we are asking hard-working families to pay over the odds to upgrade the grid and the network costs involved in that, specifically for wind. We are asking them to pay for a carbon floor price, the specific purpose of which is to make fossil fuels look less cheap compared with renewables. Finally, we are asking them to pay over the odds to compensate energy-intensive industries for these costs that we are putting on to them. All of these things end up on people’s bills at the end of the day and they are not paid through general taxation, where the richest could pay more of them: they are paid through people’s electricity bills. Green levies have risen by about tenfold in 10 years, but we ain’t seen nothing yet. By 2020, about £13 billion, if you include system costs and VAT, will be spent every year, compared with about £2.9 billion today, on the support for renewable energy, particularly wind. The biggest part of that will be going to offshore wind. People’s bills will go up as a result of green subsidies by 33% by 2020 and 41% by 2030, according to figures from the Department of Energy and Climate Change.