Electricity Generation
Debate between Lord Oxburgh and Baroness Verma
Lord Oxburgh (CB)
My Lords, the Minister will know that this country is now the largest external supplier of electricity to Germany through the interconnectors. At times of high pressure on electricity supplies in Europe, how and by whom is it decided in which direction the electricity flows down the interconnectors? Is that simply a matter of market forces and, if the prices are higher in Germany, do the lights go out in the UK?
Baroness Verma
My Lords, let me reassure the noble Lord that the lights are not going out.
Infrastructure Bill [HL]
Debate between Lord Oxburgh and Baroness Verma(9 years, 7 months ago)
Grand CommitteeRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord Oxburgh (CB)
My Lords, briefly, I support the thinking behind the amendment. I have two points. There has been significant discussion of the gas price and the coal price. One should bear in mind that both of these could go up and down fairly dramatically. It is quite likely that the shale gas price in the US will rise, simply because the majority of the shale gas in the US resource is not economically exploitable at the present price of between $3 and $4. This is not of great importance, except to emphasise that coal and gas can change. It is important that we see the long-term perspective here and that we do not legislate now on the basis of how these prices look today.
I am not sure that the wording that we have here is right, but the Government need to come back to the House and let us know how they are actually going to meet their obligations under the Climate Change Act in the light of the elevation of the carbon price and the other considerations to which noble Lords have drawn attention.
Baroness Verma
My Lords, I am grateful to the noble Baroness for tabling these amendments. I know that many of us heard the well rehearsed arguments during the passage of the Energy Bill. I agree with the noble Lord, Lord Whitty; I do not think it was four years, although it probably felt like four years. Whatever, we all got a lot of grey hairs from it—I remember that.
The measures in the Bill and our electricity market reforms have demonstrated that they are already working and starting to deliver new investment in electricity infrastructure: a clear demonstration of industry confidence. In April, we announced the allocation of the first contracts for difference to eight renewables projects. These projects included offshore wind, coal-to-biomass conversions and a dedicated biomass plant with combined heat and power. By 2020, these projects alone will be able to provide up to £12 billion of private sector investment, supporting 8,500 jobs, and could add a further 4.5 gigawatts of low-carbon generation capacity to Britain’s energy mix. This builds further on the major growth in the UK’s renewable electricity sector that we have seen, with capacity more than doubling since 2010 and with renewables now providing around 15% of our electricity. I wanted to point that out before I came back to the noble Baroness’s amendment.
We recognise that the intent behind the Energy Bill amendment was to achieve outcomes broadly consistent with those to which the Government are firmly committed. The potential uncertainties of applying the EPS in the way proposed by the amendment, on balance, pose risks that the Government should be unprepared to take.
The noble Baroness has already helpfully explained that existing coal-fired power stations will need to invest in fitting equipment in order to meet the requirements of the EU industrial emissions directive. That directive succeeds the large combustion plants directive and sets much more stringent limits on emissions of oxides of sulphur and nitrogen from 1 January 2016. However, I recognise that there have been a number of developments since last year as we have set about implementing our electricity market reforms.
I do not share the noble Baroness’s analysis of the current position or her prediction of the future. I am therefore not convinced that in the case of this amendment there is a need to revisit the conclusion reached by both Houses on this point less than a year ago. I do not think that I want to go back and rehearse the arguments made during the debate on the Energy Bill that led to the rejection of the amendment previously. They highlighted the risk that it could lead to a scenario where coal plants closed earlier than might otherwise be necessary to most cost-effectively achieve the decarbonisation of the electricity system. Were this to happen, the need for more generation capacity to be built earlier than we currently project could result in an increased cost to consumers. The noble Baroness may be prepared to risk imposing such unnecessary cost but I am not. The argument in recent months has been how consumers feel about the cost of energy.
I think there is almost unanimous consensus on the need substantially to decarbonise electricity generation by 2030. There is similar consensus that there will be little or no role left for unabated coal generation in future. However, we continue to believe that applying the EPS as proposed by the amendment is unnecessary and potentially a risky intervention to the market. It is our other EMR policies that will work to deliver the outcomes that we all wish to see but without risking our security of supply and ensuring that we are able to give consumers energy at as low a cost as possible.
The noble Lord, Lord Whitty, asked why we allow existing coal stations to participate in the capacity market. We do it so that the market ensures security of electricity supply at the least cost to the consumer. It is important to reiterate that all existing coal plants still need to meet their environmental commitments and will be subject to the carbon price floor. I assure the Committee that it is also about the fact that we have seen 7 gigawatts of new gas plant come forward seeking capacity agreement, which indicates that the capacity market is bringing on new investment.
I am not convinced that we need to revisit this argument. I know that the noble Baroness is absolutely committed to raising this issue again but I hope that I am able to convince her that the steps we are taking in the broader argument are ensuring that we are able to deliver at a cost value to the consumer and that security of supply remains, and that we remain committed to bringing on as much low-carbon energy as possible through the reforms that we have made in the Energy Act. I hope that on that basis she is able to withdraw the amendment.
Energy Bill
Debate between Lord Oxburgh and Baroness Verma(10 years, 5 months ago)
Lords ChamberRead Full debate Read Hansard Text
Baroness Verma
My Lords, I shall continue by trying to conclude quickly. The Bill has undergone thorough scrutiny and the Government have listened very carefully to all the concerns raised during its passage through this House. I am grateful to my noble friend Lord Teverson for his warm words. We have responded to a great many of the issues raised by colleagues from all sides of the House on, for example, domestic tariffs and access to markets, and we have introduced new topics—for example, carbon monoxide and smoke alarms.
We must acknowledge that the other place has accepted 112 amendments and, moreover, has welcomed them. It has recognised the expertise that this House has brought to the scrutiny of the Bill and the real improvements to it that this House has made. However, the other place has decided with a considerable majority that it does not agree with this amendment. The elected Chamber saw an unprecedented majority for the Bill as it completed its passage through the other place. Today, we can decide that the Bill proceeds to the statute book—a Bill that is essential for protecting consumers and for ensuring security of supply and decarbonisation of our economy. Nothing will send a firmer signal to investors than that this House will do nothing that prevents the Bill receiving Royal Assent.
Lord Oxburgh
My Lords, so much for my attempts to find an uncontroversial middle way of bringing all sides together. The temperature of this debate has been a little higher than I would have expected and, indeed, than I would have hoped. I agree with a great deal that the Minister has said on both security of supply and the Bill’s importance for investors. However, the fact is that the amendment increases, rather than reduces, both those things. If Members with a keen sense of smell have detected a faint aroma in the Chamber, it is the aroma of red herrings.
The Minister spoke of concerns about certainty for investors if my amendment is agreed, and the noble Lord, Lord Forsyth, said the same thing. He is quite right: we do not really know what is going to happen in 10 years’ time, but the Bill contains a measure that allows the Government to disregard these constraints if severe circumstances mean that it is necessary to do so. Therefore, that question of security of supply does not really exist.
As far as looking at certainty for investors is concerned, in the near term the necessity is for investment in gas-fired power stations. Everyone agrees with that. This amendment would improve, not reduce, certainty for investors in the time that we can look forward to. I do not know anyone who does not think that we need new gas-fired power stations, and the amendment would help investment in that regard.
The noble Lord, Lord Jenkin, rightly said that we have to get on with it. I am going to press this matter to a vote. I do not think that it need delay the passage of the Bill for more than a few days. As far as investors are concerned, getting the right Bill before Christmas, which the Government can certainly do if they are so minded, will be the main thing. The fact that that happens a day or two later is neither here nor there, and there will be a much more certain basis for investing in new gas.
Energy Bill
Debate between Lord Oxburgh and Baroness Verma
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma) (Con)
My Lords, these amendments have attracted significant debate across the House today and I am extremely grateful for the insights of all noble Lords who have spoken. However, the Government do not agree that the Bill should be amended as proposed and I shall set out the reasons for this.
The provisions in Part 1 set out a logical, measured approach that enables the Government to set the UK’s first sector-specific carbon intensity target in law. Once set, the provisions place a legal duty on the Secretary of State to ensure that the target is achieved. This brings with it important responsibilities. It is not something that should be rushed into. A target would have significant implications for the power sector, consumers and the wider economy. It is therefore vital to understand fully, based on evidence, whether a target represents the best approach to meeting our economy-wide carbon budgets cost-effectively and, if so, what level it should be set at.
The right time to consider this is in 2016, not 2014 as proposed by Amendment 1, as 2016 is when, in line with the requirements of the Climate Change Act, we will be undertaking extensive analysis to set the level of the fifth carbon budget in law, incorporating advice from the Committee on Climate Change. At that point we can consider a decarbonisation target within the broader context of the trajectory of our whole economy towards our 2050 target.
Moreover, in 2016 we will have a better understanding of how low-carbon forms of electricity have developed, the commercial deliverability of carbon capture and storage, the uptake of electric vehicles, and how the market is responding to the reforms included in this Bill. We will also have a clearer idea of a future climate change package both at the global and the EU level. These are important considerations when looking at the UK’s targets for 2030. By contrast, the noble Lord’s proposed approach would mean rushing to set a target in less than six months. As it stands, there are significant uncertainties now as to the energy mix that will best meet our objectives of secure, sustainable and affordable energy. This would make setting a robust target challenging.
In terms of investor certainty, according to the British Chambers of Commerce, the Energy Bill as it stands will,
“provide sufficient incentives to attract investment in low carbon forms of energy”.
This is supported by the point made at Second Reading by my noble friend Lord Browne of Madingley. In his experience as a businessman and an investor:
“The incentive structures contained in the Bill are far more important than targets or aspirations, because they are the mechanism for action”.—[Official Report, 18/6/13; col. 192.]
This is not forgetting that since January 2010 there have been announcements that could see more than £29 billion of investment in renewable energy. This speaks for itself. Clearly, a decarbonisation target is not the only way to encourage investment.
On Amendment 2, I fully agree with noble Lords that there should be a role for the Committee on Climate Change. In line with its responsibilities under the Climate Change Act, it is due to provide advice on the level of the fifth carbon budget. This covers the 2030 period. This analysis is perfectly sufficient to advise on a decarbonisation target range and it is therefore unnecessary to include further provisions in the Bill.
Amendment 2A, tabled by the noble Lord, Lord O’Neill, proposes setting annual carbon intensity limits on electricity suppliers. I do not support this amendment for three key reasons. First, the government reforms in the Bill support market-based mechanisms to incentivise a cost-effective transition to low-carbon power. Introducing an annual carbon limit on suppliers would be contrary to this approach. Secondly, the proposal would introduce confusion around accountability. The Government’s provisions clearly place legal responsibility for meeting the target range on the Secretary of State. This position should be maintained since it is he or she who is responsible for setting UK energy policy and is ultimately accountable to Parliament. Lastly, this is a blunt instrument which could have unintended consequences. We are not convinced that the proposal would not undermine our security of supply objectives. We are also concerned that the amendment may lead to an increase in consumer bills if the costs of compliance are passed on from energy suppliers to consumers.
The Government are not willing to accept these amendments today. However, we considered the amendment tabled by the noble Baroness, Lady Worthington, in Grand Committee. This proposed that the Secretary of State explain the actions to be taken to stay on track to meet the target over time. The Government support the aim of transparent reporting and I therefore commit to the House that, where carbon intensity is reported to have increased year on year for three consecutive years, the Government will explain the reasons why, and, where appropriate, report additional actions to address it within the annual statement of grid carbon intensity.
In conclusion, I hope that noble Lords can see the drawbacks of rushing to set a target next year. We want a much more measured approach. We all want to see decarbonisation continue—and this Bill enables that—but we must all be mindful that any targets set now will impact on consumer bills. Without having the more detailed information that is needed across all sectors, and without looking at our position against our European partners and more widely globally, setting a target would put us in isolation and make us uncompetitive against our partners.
We have to be sensible and see this as an opportunity to debate the subject but to set it in the appropriate context. We do not know which technologies will realistically be able to be deployed in the 2020s. As the EEF has warned,
“should current assumptions about the development of carbon capture technology, the level of investment in nuclear power, the cost of offshore wind or the future price of gas prove wrong the UK could end up committed to an unrealistic and extremely costly target”.
We need to keep these issues very much in mind. Ultimately, what we decide will be borne by the consumer. I hope that the noble Lord will withdraw his amendment.
Lord Oxburgh
My Lords, I thank all those who have participated in this very interesting discussion. I apologise for the fact that what I had intended to be a rather narrow, technical discussion has turned into a debate that has been much more like a Second Reading. Nevertheless, I think it has done a great deal to clear the air. I am extremely sensitive to the question of consumer prices and there is a real debate to be had about to what extent some of the measures that we have been talking about should go on to energy bills and to what extent they should be borne by general taxation. I am not taking a position on that but it is well worth discussing.
I think I found something with which I could agree in almost all the speeches that have been made, from whichever side of the House—even in the case of the noble Lord, Lord Lawson. There are things about this Bill that I do not like but we have to have a Bill and we have to have it urgently. However, I think his cover is blown: on the basis of his comments today, we can be pretty sure that he is moonlighting as a leader writer for the FT. I also agree with those noble Lords who have questioned the overly prescriptive nature of the EU targets. We could well do without them and I would like to see the Government do what they can to renegotiate or indeed disregard them. On the other hand, to believe that what I and my co-proposers have suggested today will have any additional impact on consumer bills beyond that to which we are already committed through existing agreements is a misunderstanding.
On the 2030 target, I have to say that, given the length of time this proposal has been around, the “rushing” argument is a little bit rich. We know precisely the views of the Committee on Climate Change. We have had them from several members of the committee today. We know what the committee expects and what its forward look demands for 2030. Waiting for the next carbon budget is a little bit of a procrastination and I do not think that it is a serious, substantial objection.
If one takes the position taken by the noble Lord, Lord Lawson, that one is unconvinced that human intervention is having a significant effect on long-term climate—
Energy Bill
Debate between Lord Oxburgh and Baroness Verma
Baroness Worthington
My Lords, I support Amendment 49 of the noble Lord, Lord Oxburgh. Throughout the evening and the passage of this Bill we have discussed the need for competition and for keeping downward pressure on price a great deal. It is clear, as the noble Lord, Lord Oxburgh, has pointed out, that the majority of the increases in consumer and business bills in recent years have been down to the increase in gas prices.
It is regrettable that we heard recently from British Gas that it had decided to withdraw a project to enhance and expand its gas storage capabilities. This is another sign that there is insufficient downward pressure on prices. It probably suits British Gas quite well to have prices rising, because that leads to higher profits. It is probably the wrong body to make any kind of economic assessment on whether it makes sense for them to invest in gas storage. There has to be some form of intervention from government to ensure that there is timely investment in gas capacity.
Gas prices fluctuate between the summer, when demand is low, and winter, when it is high. If we can smooth that out and provide a more stable price throughout the year, it makes sense to have a tool in the armoury, as the noble Lord, Lord Oxburgh, has said, to facilitate this. I am sure that the Minister will come back with some thoughts on this. It is quite a new element to introduce to the Bill at this late stage and perhaps an amendment of this kind is not the way to deliver it, but I strongly support the sentiment behind it. As the noble Lord, Lord Oxburgh, has pointed out, we are seeing our North Sea gas reserves diminish and we are moving into a more international situation in which we rely on gas from many different parts of the world. Much of it is being delivered by ship. Ships can change course in the middle of the ocean if they see fit, if offered a better price. Our reliance on gas needs to be underpinned and secured through greater capacity and gas storage.
I hope that the Minister can say something about how the Government intend to bring more of this to ensure that we are not facing a situation where it is in everyone’s interest apart from the consumer to have gas prices rising continually, and that there is some way in which they can intervene to bring investment to this important aspect of energy security and affordability.
Baroness Verma
My Lords, I am grateful to the noble Lord, Lord Oxburgh, for his amendment, which returns to the matter of gas storage that he raised in Committee. My department published analysis and made a Statement in the other place on 4 September on precisely this issue and I am glad to discuss it today.
The amendment is intended to enable the Secretary of State to make arrangements to provide capacity payments in exchange for the supply of gas more securely, or at lower prices, than would otherwise be possible. I should make it clear from the outset that the capacity market is not intended to support the gas market. Rather, the capacity market is an integral part of our electricity market reform programme.
On the face of it, this amendment aims to facilitate a simple and attractive concept: cheaper and more secure gas for consumers. While the Government recognise that rising energy bills are a worry for many households and businesses, this amendment is not the solution. It is difficult to imagine that any supplier of gas would sign a contract to sell gas at a future date at a discount to the prevailing market price. The capacity payment is required to offset the risk to the supplier of being out of pocket and it would need to top up any shortfall to the point where there would be no net benefit to consumers.
Specifically, it has been argued that capacity payments may facilitate the construction of additional gas storage capacity, which offers the potential to buy cheaply in summer and store the gas until it can be sold when prices are higher in winter, as the noble Baroness, Lady Worthington, pointed out. This is a service that the market currently provides. Storage capacity is currently increasing, with two facilities having been completed in the past 18 months and two more facilities under construction. There are 10 more projects with major planning consents in place, which are awaiting the right commercial signals to invest. Where the market is not already providing this signal, supporting a storage project through subsidy, whether by a capacity payment or other means, would just transfer the risk currently faced by the market to the Government. In other words, it would be passed on to consumers and taxpayers.
DECC considered in detail the case for supporting gas storage. Analysis shows that, although there are interventions that could enhance our gas security, under most scenarios they would not do so cost-effectively. All options risk adding disproportionate costs to energy bills and risk distorting a well functioning GB gas market. We will not be taking these interventions forward and do not envisage needing the powers that these amendments propose.
As I explained earlier, we are introducing a capacity market to provide for capacity payments to ensure security of our electricity supplies. This is because the electricity market faces new challenges. These include the planned closure of a large proportion of our existing generating capacity and an increased amount of low-carbon generation. That means that there is an increased need for additional reliable capacity. The capacity market is specifically designed to address this.
These issues do not translate to the gas market. The security of gas supply outlook is robust. There is spare supply capacity: the available capacity of nearly 700 million cubic metres a day is far in excess of even the highest recorded daily demand of 465 million cubic metres. The gas system also has greater flexibility to rectify demand/supply imbalances within the balancing period and, for gas, unlike electricity, there are readily available means for storage which the market is currently expanding. The Government therefore do not consider this amendment to be necessary. I hope that the noble Lord, Lord Oxburgh, has found my explanation reassuring and on that basis will withdraw his amendment.
Lord Oxburgh
My Lords, I have to confess that I did not find the Minister’s reply at all reassuring. The fact that existing capacity meets the maximum plausible demand is not quite the point. The Minister might be aware—or perhaps would remember if she had been in her post a year or two back—that all we need is a major fire at one of our terminals or a catastrophe of some kind and we would be in very severe difficulties. In drafting this amendment, I deliberately did not specify the means—I did not specify gas storage. All I specified was the end. Whether someone is willing to provide gas at a fixed price for a fixed period and how they do it were deliberately not specified. For that reason, some of these arguments are a little wide of the mark.
I am not as convinced as the Minister that the existing gas market works at all well. It is in the interests of the major gas suppliers to hold supply back and then to dribble it in at times of high demand. That is when they make a lot of money. There is no one in the loop at present who protects the interests of the consumer. It is certainly not in the interests of the gas supply companies to do so. I am disappointed that the Government are not taking a more active position on this matter. However, if they are determined to turn their back on this, there is nothing more to be done today and I beg leave to withdraw the amendment.
Energy Bill
Debate between Lord Oxburgh and Baroness Verma
Baroness Verma
I am extremely grateful to my noble friend for allowing me to write to him and to the Committee, because inspiration is slightly slow in coming forward.
Lord Oxburgh
My Lords, I thank noble Lords who have spoken on this. I am certainly gratified to hear from the Minister how much effort and concern the department has put into the question of gas supply. However, we were more concerned about price security than about supply security. That is the important point to emphasise. The Minister said that she thought that additional powers were not necessary to achieve this, but I am not entirely clear from what she said whether that is the case.
In effect, we are proposing a mechanism by which the private sector can come to the Government and say, “Look, we can guarantee a certain amount of gas at a particular price over a particular period”. That would in fact be achieved by gas storage, but I do not think that the Government need to get involved in it; all that they need to do is make a deal with a company or group of companies to supply gas in particular quantities at particular times. That is why the capacity mechanism or the CFD mechanism would be extremely useful. I am not clear that the Minister has the power to use those mechanisms under the legislation as it is currently drafted, which is why I tabled this amendment.
A practical amendment could be extremely simple—probably much simpler than this one. If the Minister is concerned about the resource needed in DECC to draft an amendment properly, I have no doubt that industry would be willing to make legal help available to work under DECC officials to draft something acceptable. I am not entirely sure that the assurances that she gave me were quite relevant to this case but, that said, I beg leave to withdraw the amendment.
Energy Bill
Debate between Lord Oxburgh and Baroness Verma
Lord Oxburgh
My Lords, I simply add my support for this amendment and urge the Minister to give it careful consideration to meet its objectives, if not the words. Previous speakers have shot all the relevant foxes, so I will not pursue any of those, but simply comment that if we had been considering this Bill two years ago I would have urged the Government to use this as their main means of regulating emissions. We could have done away with acres of complexity in the rest of the Bill. However, that is, unfortunately, water under the bridge. I hope that the Minister will give this careful consideration.
Baroness Verma
My Lords, I am extremely grateful to the noble Lord, Lord O’Neill, and of course I look very carefully at all amendments and consider their impact. I am extremely grateful to my noble friend Lord Deben for rightly raising the important points about the information that is already available and the cost burden that it may impose further down the line on consumers. We must be very careful that we do not add to what is already a large pool of requirements put on suppliers and generators.
We are concerned about accountability. The Bill places sole responsibility on the Secretary of State to meet any target range. Once that is set, recognising that it is the Secretary of State who is responsible for setting energy policy in the UK, it is he who will be ultimately accountable to Parliament. My concern about the amendment is that it would be unfair for us to ask suppliers to manage their portfolios in order to meet national carbon intensity limits because, as has been said, it would be incredibly complicated to oversee and would confuse the responsibilities of the state in setting the target range with those of suppliers by specifying the annual level of carbon intensity that they must meet.
The question of the merit order, the order in which generation is dispatched, which is currently in response to price signals, is a commercial decision for industry and I would certainly have reservations about government interfering directly with it. There is, however, a role for government in seeking to achieve decarbonisation by supporting a market framework that will make it more attractive. I think that is what the noble Baroness alluded to by prioritising low-carbon electricity. That is exactly what we are doing through contracts for difference and the carbon price floor to improve the relative economics of low-carbon generation.
Those measures provide a much better means of addressing the gap raised by the noble Lord, Lord O’Neill, under his amendment. To quote my noble friend Lord Deben in the fifth report of his Committee on Climate Change:
“The gap between actual and achievable carbon intensity will be closed as coal plant is retired as the relative cost of coal increases under the rising carbon price floor and given tightening EU legislation on air quality”.
We are reaching that point but we do not need to add extra pressures to provide further information when there is more than adequate information around.
I will finish, and ask the noble Lord to withdraw his amendment, by saying that the Electricity and Gas (Energy Company Obligation) Order 2012 and its predecessors, the CERTs and CESPs, have always required energy companies to save carbon dioxide by promoting energy efficiency measures in households. There is enough going on in the system.
Energy Bill
Debate between Lord Oxburgh and Baroness Verma
Baroness Verma
Of course, the point is that we have to make sure that this happens against the backdrop of what else is going on in the economy. We cannot set targets solely on one part of the economy. That is why we have been very clear that the investment in climate that we have made to 2020 through the levy control framework has already given certainty. We are putting £7.6 billion into low-carbon renewable energies to introduce that certainty to investors. We have already said that National Grid will be given an indicative range of decarbonisation scenarios for the power sector for 2030 consistent with the least-cost approach to the UK’s 2050 carbon budget. The fourth carbon budget will run up to 2027 and requires the UK to halve total emissions in the whole economy. We have set out in the carbon plan the likely implications for the electricity sector.
Lord Oxburgh
My Lords, I thank all those who have taken the time to give us a very interesting and rewarding debate this afternoon. I cannot possibly reply to all the comments that have been made and will refrain from discussing climate change, even though I would like to do so with certain noble Lords—perhaps we will do that in private.
Quite a number of noble Lords have made Second Reading points this afternoon rather than points which relate to this particular amendment. Be that as it may, it is worth commenting on shale gas, which has come up several times. It is worth pointing out that shale gas is about the most expensive gas to exploit that we know about on the face of the earth. You have to use a whole range of technologies which are mostly at the top of, or almost beyond, the range of conventional gas exploitation. The noble Lord, Lord Lawson, is absolutely right when he says—or implies—that gas is the least transportable of the fossil fuels. If you get your shale gas from abroad, you pay a premium of something close to $2 or $3. The real advantage of shale gas is to those who have it themselves and can put it straight into their national grid. If, in due course, we can do that, that will certainly be a help to the national economy. However, I do not see anything in this Bill that actually inhibits the future use of shale gas.
Lord Oxburgh
My Lords, I will not take up much time. The noble Lord, Lord Deben, may be right that this level of reporting may be a little excessive at this stage. However, it is important that the Government should recognise, if they take seriously the 2050 decarbonisation target, that it is almost certainly unachievable without CCS. That is a crucial technology if the target is to be achieved.
Baroness Verma
My Lords, on Amendment 12, Clause 1(8) gives the Government the power to repeal the reporting requirements in Section 5 of the Energy Act 2010 only if and when the power to set a target range is exercised. If the power is exercised, Section 5 in its entirety could be repealed. Section 5(1)(b) of the 2010 Act requires the Secretary of State to report on the development and use of carbon capture and storage technology. If it was decided to repeal Section 5, we would expect any progress on carbon capture and storage to be included in the annual statement on the decarbonisation of the electricity sector as a whole. This would occur under the requirements of Clause 3.
The power to repeal Section 5 of the 2010 Act has intentionally been framed as a power. It reflects the need to leave open any decision in this respect, as we will be better placed to take the view at the time of making a decarbonisation order because of the greater level of information that will be available. For example, we could expect good progress to be made between now and the making the first decarbonisation order, which will further develop our understanding of carbon capture and storage, and of its future prospects for deployment. If in due course there are reasons to believe that retaining the duty in Section 5(1)(b) of the 2010 Act is appropriate, of course those reasons will be borne in mind when we consider whether to exercise the power to repeal Section 5.
Amendment 25 proposes that the reporting of grid carbon intensity should commence following enactment. The Government’s view is that it is logical for the annual reporting of grid carbon intensity to be triggered by the setting of a decarbonisation target range. Until such point as this is set in a decarbonisation order, the three-yearly reporting requirement under Section 5 of the Energy Act 2010 will remain, meaning that the Government will continue to report on grid intensity, even ahead of a decarbonisation target range being set.
The noble Lord touched on consumers getting real-time information on energy usage. He will, of course, be aware that the Government are working on the smart meter mass rollout, which will be completed by 2020. Consumers will have an opportunity to have real-time information on their energy consumption, helping them to control energy use, save money and reduce emissions.