Energy Bill
Debate between Lord Oxburgh and Lord Deben
Lord Oxburgh (CB)
My Lords, I, too, support these amendments. We have to recognise that the Bill has been a long time in gestation. What has changed since the Bill was originally conceived is that the bottom has dropped out of the coal price. It is very important to point out to the noble Earl, Lord Caithness, that in fact cheap coal does not mean cheap power: it means big profits for the owners of coal-fired power stations. As the noble Lord, Lord Teverson, pointed out, the electricity price is effectively tied to the gas price because of the operation of the mechanisms. As things are at present, it is effectively the low coal price that is driving the operation of coal-fired power stations and giving very substantial profits to those companies that have them. Indeed, roughly half that capacity is owned and operated by the big six.
I will not draw on your patience longer, but simply say that I understand the point made by the noble Lord, Lord Jenkin. There is effectively a chicken-and-egg situation here. Unless we give the market the certainty that these amendments would give, we shall not see the investment in gas that is needed to maintain the attainability of our longer-term targets.
Lord Deben
My Lords, the noble Lord, Lord Jenkin has rightly pointed to the crucial problem, which is: how do we deal with that period in which there is fear that the lights will not stay on? That is a proper fear to have and should be the first fear of any Government, because there is a responsibility to keep the lights on. There ought to be a second fear, too: namely, that we keep the lights on in such a way that the next generation has an even worse position, because we have polluted the atmosphere further and made the fact of dangerous climate change even greater. We naturally have to look at this very carefully.
However, on this occasion it seems that those who are most concerned with keeping the lights on, and I certainly put myself in that category, and those who are also concerned with climate change, and I put myself in that category, too, are in fact pushing at the same door. If we do not have a mechanism whereby it is sensible to invest in gas, that bit of the transition will not take place. That would seem to most of us to make it more difficult to provide affordably for the energy that we need.
The noble Lord, Lord Oxburgh, as so often, put his finger on one of the other problems. When we talk about these things, let us not confuse the cost of production with the price at which it is sold. Those of us who, like me, have represented constituencies, know how many people are close to the edge when it comes to warming their homes. The whole question of affordability is utterly crucial. However, the idea that if we burnt coal we would get cheap power is not so. We need to have a mixture—a portfolio of means of generation—in which gas will play its part.
We have heard a lot recently about the opportunities that shale gas will give us. I find both extremes unacceptable—from those who think it means the end of the world at one end to those at the other who feel that it will be a game-changing matter. They are both wrong, but there is a place for gas. If that gas were produced at home, that would contribute considerably, not to a lowering in cost because it would have little to do with that, but to greater energy sovereignty, which is worth while.
The question is how we move from a situation which we hardly imagined, because the bottom had not fallen out of the coal market, in which we have to provide for the transition from coal to gas to one in which we do provide for that transition. The difficulty is that I suspect both those who tabled the amendments and the Government are on the same side—both groups want to achieve this. The real question is that there is a kind of fear of letting go of nurse’s hand—that is, the coal—in case we do not get the gas. I would like to turn it around the other way: if we do not do this, I am not at all sure that we will get the gas. That is crucial. I hope very much that the Government will enable us to have a situation in which we provide for that transition.
I have been trying very hard during these debates to remain entirely independent because all I have spoken are the words that the Committee on Climate Change, which I chair, has put forward. The committee has made it clear that it feels that this kind of transition needs to be facilitated in this way. I do not want to make this a great division because I do not think it is one; it is a question of how we do this safely in the new circumstances to which the noble Lord, Lord Oxburgh, referred.
I very much hope that my noble friend will be able to give us confidence in the Government’s answering of this question if she is unable to accept the amendments that are put before her. If we do not do one or other, we will find ourselves unable to guarantee reasonable prices or the continuance of the lights being on because we have not made the transference that is essential in any case and which I thought everyone supported.
Energy Bill
Debate between Lord Oxburgh and Lord Deben
Lord Deben
My Lords, I am very clear in my desire to have maximum competition. I have been fascinated to hear the various versions of history of privatisation, the like that we have now been given. It is rather like listening to the history of the Battle of the Boyne in the north of Ireland. You would not expect to find that people were talking about the same event. Happily, we have not come to blows about it but perhaps I may suggest that there were few industries as incompetent, useless and pathetic as the British electricity industry before it was privatised. This industry hid the cost of nuclear power in a way which was possible only because it was totally and utterly opaque.
I remember having discussions with the head of the Central Electricity Generating Board and it was quite impossible ever to get any information of any kind that anyone would need if they were to make any assessment. I sat in a Cabinet meeting when the noble Lord, Lord Wakeham, had to come in and explain that we could not privatise the nuclear power industry because the finances had been so incompetently run that there was no way whatever that it could be presented in a manner which anyone properly could buy. Do not tell us this story about the electricity industry. On top of that, we have had a pretty miserable time since privatisation. It would be better to do what one should do in the north of Ireland; that is, to say that there are very considerable histories on both sides and that we had better just face that, and not try to fight old battles again.
The issue is that we do not have as good a degree of competition as we would like. We do not forward that by lauding either the failed system of state ownership or the not-very-efficient system which we happen to have now, so would it help to take the amendment of the noble Lord, Lord Berkeley? When reading this amendment last night, I started by thinking it sounded rather good—or perhaps it was this morning; it is out of my memory now. Then I thought, “This is exactly the kind of prescription that does not work”. We need to make sure that every time we make a decision, we do so in a way that ensures the maximum likelihood of competition.
One of the helpful comments made reminded the Government of the end of the ROC scheme in 2017. That is an area where we could look very carefully at ensuring that the move into the new structures encourages competition, and enables the companies that have made real advances in the present structure to transfer to a new structure. Maybe we will have to alter the new structure to make that more likely. If I may say so to my noble friend the Minister, my problem is that I am not sure whether the Government are entirely with it, or moving fast enough and with enough sensitivity, to do their best here.
The noble Lord who has been promoting a concept of bringing expert advice into DECC has graphically illustrated the concerns we all have about constantly changing Ministers and, above all, constantly changing civil servants. One of my worries is that unless we get some better stability in the structure, we will not recognise early enough—or long enough ahead—the changes we have to make to protect what competition we have and to encourage more. Having said that, I must say to the noble Lord, Lord Berkeley, that I am not at all sure that the kind of shake-up he proposes here would be a satisfactory means of delivering it. Indeed, it certainly would be a satisfactory means of delivering total incomprehension and utter difficulty at a point when it is most necessary that we keep the lights on.
Therefore I hope that the Minister will not accept this, and in a robust way—meaning that she will tell us that she will act in a way that is a bit more than merely taking on board the need for competition. I hope, rather, that she will find a whole range of areas where the Government can promote that competition.
Lord Oxburgh
My Lords, I will make two quick points. First, I point out that many Governments would salivate at the thought of having six roughly equipotent competitors or participants in a regulated industry in competition with each other. For my information, I am not clear how you decide when you have enough competition, because six participants is quite a lot. It is popular to bash the big six, probably because they do not handle their consumers very well and they have all been associated with unpopular price rises. However, I would like to hear this aspect explored a little more.
My second point is quite separate, which is to draw attention to the second subsection of the amendment of the noble Lord, Lord Berkeley. Regardless of whether the amendment is accepted by the Government, it is very important that the Government take note of that second subsection. It covers a lot of small businesses—I declare an interest as a director of 2OC, which does this—that use renewable energy on a particular site and deliver it to a particular business or a very small range of customers locally. They generally combine generation and transmission to one or a limited number of customers. The Government should make sure that that is protected in the Bill, whatever the final outcome.
Energy Bill
Debate between Lord Oxburgh and Lord Deben
Lord Oxburgh
My Lords, I declare an interest as honorary president of the Carbon Capture & Storage Association. This is an extremely important amendment if CCS is to go forward. It has not been easy to attract investment to this area; the investment required is heavy. This amendment simply minimises the risk for those who are introducing a new technology. As noble Lords will be aware, the Government’s decarbonisation plan is probably unachievable without CCS, so it is important that this kind of reassurance is given to the industry. I strongly support the amendment.
Lord Deben
The Committee on Climate Change has made it clear that CCS is an essential part of the matters that we have to address if we are to meet our statutory responsibilities. I doubt if anyone on any side of the House would not agree with that, and I thought it generous of the noble Baroness, Lady Worthington, to say what she said about the past history of CCS.
That has been a pretty universal thing; we have not got it right. It is very difficult to get right, and I would not blame the Government for the difficulties. However, we have to solve those difficulties, and this amendment is a most useful way of making it that much more certain for the industry. If we want to use the resources that may be at our disposal—fracked gas, for example—we have to have CCS to meet our 2050 demands.
In a sense, that is less important to the British picture than to the world picture. The biggest contribution that we could make to the world picture is in the development of CCS because that would break through in a series of countries—the mechanism by which we can have the energy we need as well as protecting ourselves against dangerous climate change.
I hope my noble friend the Minister will understand that for us this is a central area, and if the Government are not able to agree to this perhaps they will come forward with some alternative mechanism to make sure that the ends put forward here will be met. I am sure that she will want to know that this issue has been widely tweeted, because it is seen as so important by so many different people across the field. It is very important that we give a proper response to the noble Baroness’s request.
Lord Deben
My Lords, first, I thank the Minister for his response to the previous debate, which was measured and extremely encouraging. My problem with the issue that the noble Baroness has raised is simply that were the late date to produce a very considerable amount of gas-fired generation set at so late a date, we are seriously suggesting that in six years we are going to meet an 80% reduction in our emissions; that is what we are statutorily required to do. I say to my noble friend that I have not yet seen any evidence that this helps the other. This, after all, is a statement by the Government. It is not a statutory requirement. We have a statutory requirement. I hope that my noble friend takes this opportunity to explain to the Committee how this particular date can possibly sit side by side with all the other commitments of the Government.
That is the issue. It is a very simple, quietly put, but absolute issue. If you look at all the other things that the Government intend to do, and insist that they are doing, they do not, could not and will not stand alongside this date of 2044. That is six years before we have to achieve a statutory requirement.
It is hugely valuable to have the opportunity of raising this question with the Minister. I recognise that he will not agree with the amendment; I know perfectly well that that is not what is on his lists. His problem is that the Government have so far been unable to explain the disconnect between these two. I would not like to follow the noble Baroness in her attempts to describe how this came about. The fact is that it ain’t gonna stand up. The great thing about the Bill is that we are trying to ensure that we have a real future basis for action in order to meet our statutory requirements and the increasing threat of climate change. Therefore, we ought to highlight to the Government that this is not a matter of passing interest—a day or two out, a year or two different. This is a fundamental flaw in the present circumstances. The Minister will regret his position, because the discussions should not be taking place here. This discussion should have happened when it was announced. Many of us remember that no discussion could have taken place because of the way in which the announcement was made.
Any policy which was consistent with a grandfathering situation leading to 2044 could not be consistent with the statutory requirements for the reduction in emissions. Any policy consistent with the statutory requirements for 2050’s reduction of 80% could not be consistent with this statement about gas grandfathering. Because I have a great desire that the coalition Government shall succeed in their claim to be the greenest Government ever—a desire which I have independently and as chairman of the climate change committee because I want any Government to reach that goal—I say to the Minister that we shall have to listen very carefully to what he says. So far no Minister who has attempted to answer this question has been able to make these two things consistent. As long as they are not consistent, Ministers cannot blame industry outside. They have to ask themselves whether there is a consistent policy or whether the policy is in fact right at its centre.
Lord Oxburgh
My Lords, I support this amendment and the points made by the noble Lord, Lord Deben. It would be very interesting if the Minister could tell the Committee what he regards the implications of sticking to 2044 as a date would be, because it has totally excruciating consequences for the generation pattern in other parts of the system if our legal obligations are to be met.
Energy Bill
Debate between Lord Oxburgh and Lord Deben
Lord Deben
My Lords, we ought to help the Minister on this. I suspect that I know what advice she has been given, and it is important to warn her about it. I will express that warning very carefully.
In the 19th century there was a scandal when people bought wallpaper that had a colouring based on arsenic. Large numbers of people died. The Government consistently refused to outlaw arsenic in the manufacture of that wallpaper. In the end, it was the fact that people ceased to buy the wallpaper that stopped the damage. The Government did not change the law until 1974. Therefore, there is a history of Governments not doing what they ought to do at the time they ought to do it. I was fascinated to read some of the evidence that the Government gave about why they were not doing it. Noble Lords will not be surprised that the argument was, first, that there is no need for regulation in this area; secondly, that it will be expensive; thirdly, that there is no call for it; fourthly, that people ought to be able to make these decisions themselves; and, fifthly, that the science is not quite proven. Have we not heard those arguments before, and will we not hear them again?
I suggest to my noble friend that this is a genuinely serious issue that could be solved. Lives can be saved at a cost that is significantly lower than it used to be, because government is enabling people to go into these premises for all sorts of other reasons. If the Minister has been advised that it is inappropriate to have legislation in this area—of course, I do not know whether she has been—I would pick up on the comments of the noble Lord, Lord Hunt. Anyone who has a gas fire installed is always forced to install further ventilation, even if it is utterly unnecessary. We already have legislation of a very detailed kind. If you wanted to put a gas fire in this Room, even though it may be very draughty, you would have to put a ventilating spot at the top there because that is what the law says.
I am not suggesting that we should be in any way as prescriptive as that. We should not say what kind of alarm there should be, except to say that it should be effective, and we should certainly be willing to allow alterations to the text of the amendment, because I am not expert enough to know whether it would do the job. I hope my noble friend will understand that this is one of those issues in which everybody involved has to say to themselves, “Am I prepared to allow people to die when I could stop it?”. That must be of great importance. We have to ask ourselves, individually, as Members of the House of Lords, officers of the department and Ministers, “Am I prepared not to act when action will save lives?”. That is not acting in some extreme way, or some awful health and safety nonsense. The very simple fact is that modern equipment needs this. It ought to be part of the deal. No deal should be done without it. In other circumstances, it is precisely like stopping people working in unsafe conditions in factories. We do that as a matter of course.
Lastly, it would be quite wrong not to use the opportunity of the Bill to do this on the basis that there might be another opportunity, another Bill or another place. We can use this Bill—the provision falls within the Long Title. There is no reason why we should not do it here; it is an appropriate place to put it. I very much hope that my noble friend will accept what is a really valuable contribution and play her part—and ours—in ensuring that next year a whole lot of people who would have been dead are alive.
Lord Oxburgh
My Lords, I, too, support this amendment. After the eloquent contributions we have heard, there is little more to be added. I simply say to the Minister that if, in spite of the eloquence of noble Lords, she does not feel able to legislate for this here, when will the Government do so? Will she give a firm undertaking that legislation will be introduced? For the very reasons that the noble Lord, Lord Deben, gave, people are dying and we must do something about it.
Energy Bill
Debate between Lord Oxburgh and Lord Deben
Lord Deben
My Lords, perhaps I might counsel the Minister to be very careful about accepting these amendments. They seem to confuse a range of different things. They also demand a degree of reporting that might get in the way of the action that I hope will be carried through. The reporting system we have at the moment was designed by Parliament. It stipulates that there should be reports from outside the ministry on the ministry’s and the Government’s performance. If there are areas where it is not done properly, I, as chairman of the climate change committee, would want to know that, in order to see whether we should produce reports in areas that we do not cover at the moment.
I am very concerned about the current desire to report so often as we go along that we do not actually do things. I see this throughout government. We have to be extremely careful. There are two kinds of issue here. The idea that we should have reporting more often than once a year, and that we should have real-time reporting, are issues of such concern that it would perhaps be better if we did not proceed down that route during consideration of the Bill, where there are many decisions to be made on specifics.
I am also unhappy about the proposed constant series of carbon intensity targets. That would be a totally different way of looking at the matter from the suggestion that we needed an interim target to give some kind of parameter and scale to what we are looking at. If we are going to start tying people down to very much closer targets, it will raise issues that go much further than the Bill, towards the way in which government and industry interrelate. I hope that on this occasion the Minister will feel that this is something that should be thought about more carefully before we take on board what is proposed.
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.
Energy Bill [HL]
Debate between Lord Oxburgh and Lord Deben
Lord Deben
My Lords, I hesitated to break into my old mentor’s speech, but I want to agree with him and to say to the noble Lord, Lord Lea of Crondall, that in his speech he proved why this is impossible. In this amendment, the Office for National Statistics is supposed to publish all this in an easily assimilable form. Your Lordships' House might suggest that after listening to the noble Lord, Lord Lea, it is quite difficult to feel that it would be easy to produce an easily assimilable form.
The second thing I would say to the noble Lord, Lord Lea, is very important. It is always true that the poorer you are, the more heavily any imposition weighs upon you. It is not new to say that a particular sum is heavier on somebody who has a small income than on somebody who has a large income. That is why it is very important in the way in which we deal with these matters to see that it falls as lightly as possible on those who are least able to bear it. To spend a great deal of time producing this material in a form that I fear will not be easily assimilable and will probably not be read by the very people for whom it is intended does not help this issue. This issue is that in everything the Government do, in everything the coalition do, they have to seek to do it in a way that is as equable as possible. I say to your Lordships that we are already placing huge responsibilities upon the system of government, and to add to those this very detailed, extremely expensive and, I have to say, probably not used collection of new statistics without any real indication that it is going to be of any practical value is unnecessary not only at this stage of the Bill but at any stage of the Bill.
Finally, the thing we should be concentrating upon is enabling individuals to influence their spending. That is what matters, not what the Office for National Statistics says. Individuals should be able to see how much energy they are using, how they can best prevent that energy being used, how they can opt-in to the Green Deal and how they can make their lives more comfortable and happier. That is what we should be concentrating on. We should be moving away from this determination constantly and centrally to mull over, reproduce, redo, represent and reargue all these cases and get down to the real issue. How does Mrs Jones do something about her own energy use? How does she make her home more energy efficient? How does she know when she is using that energy? How is she able to take advantage of lower tariffs by, for example, doing her washing at a time that is not a peak time? All those things demand the fast installation of smart meters. I hope they will not be prescriptive but will merely say what they are supposed to do rather than how they do it. I hear some rather unnerving information from the ministry that sounds as though it wants to be terribly detailed about it. I hope it is not going to be like that. That is what we should be emphasising: helping individuals to make choices that benefit them rather than providing a lot of statistics that I suggest will be read by nobody. If they will be read by nobody, they will do nobody any good.
Lord Oxburgh
My Lords, I, too, have some sympathy with the interest of the noble Lord, Lord Lea of Crondall, in proposing this amendment. However, I, too, do not feel that this is the way forward. This is a very big matter and requires very careful consideration. At this point, I think I have an opportunity to offend all political parties in the House by saying that within the energy industry there is bewilderment that pretty much all the political parties believe that energy poverty should be treated separately from every other sort of poverty at the expense of distorting our energy market and our energy costing. In the view of many outside, it would be much more sensible to let energy prices do what they must. It is inevitable that we go into a more expensive energy world and handle the whole poverty problem together.
Energy Bill [HL]
Debate between Lord Oxburgh and Lord Deben
Lord Deben
My Lords, first, I declare an interest because, in the course of advising people on corporate responsibility, that can hardly be done without talking to quite a number of businesses that at some stage may be involved in this process—and not only the businesses, but the people. That enables one to ask the Minister to be extremely careful about a long list of appropriately ticked-off equipment. This is an area of fast-moving innovation. I have to tell the Minister that, in the work which I do professionally, one of the most difficult things is to keep up in this particular area, so rapid is the development. One of the problems that any of us who work in this kind of area face is the way that government legislation can hold up the market, stop development, and make it more difficult for new things to come forth.
I understand that we have to have a balance, and to stop people installing the wrong thing, the bad thing, the thing that does not do what it says. However, I beg her to look extremely carefully at the mechanism, so that it encourages innovation and makes it possible for new products to come onto the market rapidly, some of which will be cheaper and better able to meet the needs of the Green Deal. We need to have a system which does not inhibit the very necessary innovation which in part will be driven by the Green Deal. We do not want to have a situation in which the Green Deal is driving that innovation, and then find that people cannot meet the requirements because it takes six months to get it on the list, or because there is some technical reason why you cannot get it on the list. There are so many examples today of things which would do very well if we had not passed some regulation, when nobody knew how to do this, so that the new product cannot actually be recommended.
There is a second thing that I hope the Minister will think of, though this is not the appropriate place for her to put it. I am always worried when we talk about products without talking about people. You can have the best products in the world, but a cack-handed involvement in them will result in a worse position than the one you started off with. I discovered this from my professional work, in this case, when we did some work with plumbers. The fact is that there are no regulations ensuring that plumbers can be competent. You could have a product under this legislation which would be perfectly well ticked off, but a plumber doing the work could make it absolutely impossible to operate it as the rules and the certification would suggest.
This is an appropriate moment to say to the Minister that I hope very much that, in considering the products and making sure that they are suitable, we remember that products need installation. The installers must in fact be capable of installing them properly, or all the regulations on products in the world will not deliver the goods. I hope that the Minister will ensure that, when her civil servants are looking at this, they will see these two things together. They have to be part and parcel of the same mechanism, and that mechanism must not in any way inhibit the innovation which I very much hope will be the result of this legislation.
Lord Oxburgh
My Lords, I, too, strongly support this amendment. Innovation is moving extremely fast here. A couple of weeks ago, I had the privilege of being a judge in the final of the Shell springboard competition, which, as many noble Lords will be aware, aims to encourage and support small companies which are bringing what I might loosely describe as green technologies to the market. One of the two winners of this competition produced a technology which will have profound implications for the Green Deal—namely, a domestic voltage regulator. That is not a person; it is a very small piece of machinery. Without becoming too technical, I should explain that the appliances in our houses work on 220 volts. For technical reasons of the grid, typically it supplies us with something like 240 volts and 250 volts. That excess voltage, at best, does not do any harm to our domestic appliances, and at worst it damages them, because they receive too high a voltage, and it is indeed wasted. A domestic voltage regulator regulates down to 220 volts, and the consequence is that one proportionately reduces one’s electricity use. This is now a well-tried technology, and has the scope of reducing domestic use of electricity across the country as a whole by around 10 per cent, which is a massive saving. This is the kind of technology that we need to make sure is taken up rapidly. It has now been thoroughly tested, is already available, and has been in use for a number of years at the large-scale commercial level.