Energy Bill [HL]

Lord Reay Excerpts

Wednesday 22nd December 2010 Lords Chamber

[Lord Reay]

My Lords, the main purpose of the Bill is to introduce the Government’s so-called Green Deal, which they believe will,

“revolutionise the energy efficiency of British properties”.

We shall see. Why should it work? After all, we have had—and for the time being, at least, still have—CERT, CESP and Warm Front, yet we still seem to need the Green Deal. It is highly complex, requiring enormous new administrative effort, with advisers and installers to be accredited on a nationwide basis; Green Deal providers to be licensed by the Office of Fair Trading under the Consumer Credit Act and regulated by Ofgem; and the electricity suppliers also to be involved. There are four different categories of participant to be supervised, although some big energy companies may aspire to combine several of those functions, which could bring its own problems, as the noble Lord, Lord Teverson, said earlier.

One problem that has been found with schemes such as this in the past is that installers charge more for work done under the scheme than they do for the same work done outside it. That of course deters take-up. Consumers will therefore have to be satisfied that they are getting value for money and not paying excessive interest rates on their loans. But even if the take-up was satisfactory in the eyes of the Government, the effect on CO₂ emission reduction might be negligible, although ostensibly that is the scheme's purpose, for to the extent that consumers choose to live in warmer homes, rather than use less energy, CO₂ emissions are not saved. At moments the Government seem to acknowledge that this might happen, although without acknowledging the implications. Page 15 of DECC's admirably clear 20-page executive summary of the proposals in the Green Deal states that the energy company obligation will,

“help the most vulnerable low income households, who tend to under-heat their homes, to heat their properties adequately and more affordably”.

That is a positive result in terms of human happiness but does not have much effect on carbon emissions.

The impulse behind the Bill is, presumably, the prospect of higher fuel prices, but here the greatest threat comes from government policies. Oil prices are indeed very likely at some point to spike upwards but oil plays only a small part overall in domestic heating, most home boilers being gas-fired. The outlook for gas prices and gas availability is very different. As my noble friend Lord Lawson of Blaby has explained, new technological breakthroughs made by the oil and gas industry in the United States, which, incidentally, were quite unforeseen, and not, unlike carbon capture and storage, counted by Governments as chickens before they hatched, have opened a new vista of plentiful gas on what has been described as a planetary scale. Even Lancashire might be going to make an important contribution to United Kingdom supplies. Nor is the prospect a very distant one. As my noble friend said, the United States is already in the process of overtaking Russia as the world's largest producer of natural gas. But, as I say, the greatest threat to energy prices, of course, comes from government policies.

The Government's obsession with renewable energy, and their determination to deliver vast subsidies to wind power in particular, promises us ever-rising fuel bills, on some calculations to double their current level, far into the future, pushing ever-more households into fuel poverty, and sending ever-more of our industry overseas. What can be the point of hoping to save on gas imports, as the Government state they aim to do on page 7 of the Green Deal summary, if the result of our choosing to have more expensive energy is that we have to import more goods instead?

Last week, I spotted a small crack in the liberal consensus. A discrete editorial on Friday in the Financial Times gave its opinion that the target of getting 30 per cent of our electricity from renewables was unnecessary as well as expensive and should be dropped; nuclear and renewables should be allowed to compete on level terms with no additional subsidy in the form of either ROCs or the feed-in tariff for renewables; and that the goal of policy should be European Union treaty change. I entirely agree with that view so far as it goes.

I appreciated very much the speech of the noble Lord, Lord McFall, with his call for realism in the energy debate and his references to the arresting speech made by Mr Rupert Soames recently in the Scottish Parliament. What I do not agree with is the proposal being circulated that the Bill should be amended to include local carbon budgets. We have only just managed to lose the regional renewable energy targets along with the regional development agencies, and a welcome riddance that was. Local carbon budgets would just result in—would be designed to result in—the further disfigurement of the countryside with gigantic wind turbines and their attendant pylons, to the further impoverishment of the consumer and of the country.

We have seen several Governments recently cutting back drastically on their renewable energy subsidies. That is the route that I would like us to follow, relieving pressure on households and industry, and giving economic growth a chance. For goodness’ sake, let us start to do that before it is too late.