Energy Bill

Debate between Lord O'Neill of Clackmannan and Lord Turnbull

Tuesday 2nd July 2013 Grand Committee

[Lord Turnbull]

My Lords, I beg to move Amendment 18, which is related to Amendment 19. I expect the noble Viscount, Lord Ridley, will speak to the other amendments in this group, which I also support. Climate change can be thought of at three levels. First, level 1: do you accept the orthodox view of the relationship between CO₂ and temperature? Secondly, level 2: do you accept what we are told about the impact of any given temperature increase on the planet? Thirdly, level 3: supposing you accept levels 1 and 2, do you believe that the right set of responses is being proposed in the right order? In other words you can buy in completely, as I think the noble Lord, Lord Jenkin, does, to levels 1 and 2 but remain largely a level 3 sceptic, which is where I started. Levels 1 and 2 are really about Second Reading things, which we probably have discussed enough, so we will concentrate on the responses in the Bill.

These amendments highlight two concerns about these policy responses. The first is the pronounced unilateralism of the UK’s approach, based on a statutory duty to reduce carbon intensity of economy, which is equivalent to reducing CO₂ per unit of GDP by more than 90% in just over 40 years. The second is the issue in the amendment in the name of the noble Viscount, Lord Ridley, as to whether some of technologies are all that they are claimed to be in terms of cost CO₂ per tonne abated.

Six years ago during the passage of the Climate Change Bill, I expressed some concerns about the Government’s approach. I said:

“First, the target set for 2050 appears to be largely unconditional and unilateral. The UK will commit itself to this target irrespective of the performance of other nations. The reality, however, is that our own contribution by 2050 is unlikely to be crucial, so we are”—

relying—

“on the exemplary effect: in other words, we cannot carry conviction in international debate if we do not carry our full share of the burden. There is genuine validity in this, but we should not be naïve and rely on it too heavily. If we fail to persuade other nations, we could be left in 40 years’ time having paid heavily to decarbonise … and still incurring the costs of rebuilding our sea defences and water resources. The Bill should therefore contain a duty to work actively internationally for more demanding targets”.—[Official Report, 27/11/07; col. 1156.]

To be fair, Her Majesty’s Government worked actively for an international agreement with demanding targets but the landscape has changed because their efforts were unsuccessful. The Kyoto accord has expired and has not been replaced. Negotiations continue but a global agreement is looking more and more forlorn. In my view, China and India will never agree to binding limits on their emissions while they have hundreds of millions of their citizens yet to be lifted put of poverty. Although China aims to reduce the carbon intensity of its output, its growth is so fast that its emissions will continue to rise for many years, as was made clear by its negotiator at Doha. Between them, India and China are planning some 800 new coal stations. Without these two countries, the US will never join, although it is doing very well at reducing its emissions on its own. Canada has opted out of this process and Russia, which signed up last time, will not join a second time.

Even among those which did sign up, the sound of backtracking is becoming a roar as economic realities begin to bite and the case for such rapid adjustment is questioned. Subsidies for renewables are being cut back sharply in Germany and Spain. Germany has held up new targets on vehicle emissions and the EU specifically declined the opportunity to shore up the failing ETS.

Fortunately, the penny has begun to drop in some parts of the coalition. In 2011, in his Autumn Statement, the Chancellor of the Exchequer said:

“We are not going to save the planet by shutting down our steel mills, aluminium smelters and paper manufacturers. All we will be doing is exporting valuable jobs”—

out of Britain, and that,

“we should not price British businesses out of the world economy. If we burden them with … social and environmental goals, however worthy in their own right, not only will we not achieve those goals, but the businesses will fail, jobs will be lost, and our country will be poorer”.—[Official Report, Commons, 29/11/11; col. 807.]

I could not put it better myself.

In his 2012 Budget the Chancellor said:

“I will always be alert to the costs that we are asking families and businesses to bear”.—[Official Report, Commons, 21/3/12; col. 798.]

One can detect some backtracking here in the UK, such as reining in overgenerous feed-in tariffs and the refusal to set a 2030 target, which we have just discussed—although the Liberal Democrat end of the pushmi-pullyu is still driving on regardless.

Perhaps the best example—after the noble Lord, Lord Jenkin—of the level 3 sceptic is Professor Dieter Helm. In an article last October headed “UK Energy Bill is Fiasco in the Making,” he wrote:

“The result is that the government instead is picking its chosen ‘winners’ amongst the low carbon technologies, in part driven by the EU Renewables Directive. This has resulted in some of the most expensive technologies being picked first, notably offshore wind and roof top solar. Not only does this result in far higher bills than are necessary to British customers, but it makes almost no difference to global warming”.

In March this year DECC produced a paper on the extra costs of energy and climate change policies, which I commend to you. The table on page 53 shows that a large user, who consumes some gas and some electricity, faces additional costs of 21% to 48% by 2030. If other countries do not follow similar policies with the same zeal, the results will be very damaging for the UK. The purpose of this amendment is to address the unilateralist problem explicitly so that we can put an end to this attention-seeking and self-harming behaviour. In the matters to be taken into account in Clause 2(2), I suggest that the vague,

“circumstances at European and international level”,

be replaced by a reference to the extent to which competitors really are reducing carbon emissions.

The next amendment would require the Secretary of State to report on what he has discovered on all these “take into account” items before moving on to lay a decarbonisation order. These issues will not go away and I look forward to the Minister responding to them and explaining how we can have information that would enable us to judge our true relative position.

[Lord O'Neill of Clackmannan]

For the convenience of the Committee, would the noble Lord tell us for how much longer we will go on this evening? I was under the impression that we would finish at 7.30 pm, but we also had a target number of clauses to reach. The target is still some distance away and we are now well past 7.30 pm. Could we have some indication of what is happening?