International Renewable Energy Agency (Legal Capacities) Order 2011

Debate between Lord Reay and Lord Liddle

Wednesday 7th September 2011 Grand Committee

[Lord Liddle]

My Lords, on behalf of the Opposition, I offer our support for this order, which is quite a significant positive step for mankind. It is a multilateral agreement in an area where multilateral agreement has been extremely difficult to achieve. Until relatively recently, the United States did not accept that climate change was a problem of any kind, yet it is signing up to this international agency to spread best practice in renewables. That is extremely welcome. We hope that Britain will try to play a leading role in IRENA.

It has a clear purpose, which is set out in paragraph 7.2 of the Explanatory Memorandum. Technology in this area is changing rapidly. There is a need for knowledge dissemination and not only competition but co-operation to make sure that technological advances spread at the most rapid rate throughout the year. There are well known market failures in applying renewable technologies, which means that there is a role for public intervention. As we know, the carbon price today does not reflect what it will be in the future as a result of the growing problem of climate change. Therefore, there is a problem about market incentives. In the developing world, where this type of organisation can play an important role, there are problems of governing capacity, project management capacity and access to finance. An organisation such as this, working in co-operation with bodies such as the World Bank and the world’s regional development agencies, can play an important role. Therefore, the UK should look at this positively as an opportunity for leadership.

I should like to probe the Minister on what kind of agenda Britain intends to pursue in this agency. If I may, I should like to indulge in a flight of fancy of my own about the kind of agenda that I would like to see explored. This is in line with the economic thinking of the Opposition. One of the risks that we face, and one of the reasons why it is important to have these multilateral institutions, is that climate change is falling down the political agenda as economic problems climb up it. That is a real problem; we saw it in the European Parliament vote on the 30 per cent target, and it is a worrying theme. This is precisely the moment, at a time when interest rates are very low and according to many experts a great depression is looming—we are facing a kind of Japanese decade in the West—when we ought to be thinking about the long-term investments that will pay off richly regarding renewable energy.

I should like to repeat an idea that I heard an eminent and far more distinguished person who is far more knowledgeable on these subjects, the noble Lord, Lord Rees, talking about at a conference on this subject. He thought that the kind of visionary project that we ought to be thinking about in Europe now is the use of solar renewables in the Sahara and wind renewables in the Aegean to power the industries of northern Europe, building grids from Africa, helping the Arab spring to have some kind of economic future and building networks to bring renewable energy to northern Europe. This is more important when countries such as Germany have announced that they are gong to abandon nuclear power.

Not only could this be a way of tackling the development problems of those countries that we so much want to help, particularly in north Africa, it could also help to revive the European economy in a major way at a time of crisis in the eurozone. However, it needs a mix of public and private finance. We must not be myopic about public deficits if we are going to be able to finance these types of very long-term projects, which could really pay off.

That is just an example, but there is huge potential for renewables, not just to solve the problems of climate change several decades hence but to help solve our economic problems in the coming decade. I would like to think that Her Majesty’s Government shared that view and would be using organisations such as this excellent IRENA to explore how such radical possibilities could be developed.

[Lord Reay]

My Lords, it is an agreeable irony that the headquarters of this fledgling international organisation that we are in the process of legitimising, and which is supposed to spearhead the dissemination of renewable energy technology throughout the developing world, as the Explanatory Memorandum tells us, is situated in the city of Abu Dhabi, one of the hydrocarbon capitals of the world. If the Government of that state seriously believed that renewable energy was likely to replace fossil fuels in whole or substantial part as a source of power throughout the world, one wonders if they would be quite so happy to be the host to such a threatening body.

However, nothing is quite as it first seems in the wonderful world of renewable energy. In fact, developing countries have not the slightest interest in adopting renewable energy policies. Their interest, quite rightly, is in economic growth. Under present technologies, that is best provided—because most cheaply provided—by fossil fuels, chiefly coal. That was the lesson of Copenhagen, and it is why China and India abruptly refused to sign up to any global agreement to cut carbon emissions. That, though, does not suit the western developed countries, which have all foolishly signed up to cripplingly expensive renewable energy policies to leave developing countries to go their own way. That is because it is a manifest absurdity for developed countries to set out to reduce global carbon emissions on their own. To give an example of how absurd that would be, China’s annual increase in carbon emissions in recent years has been roughly equivalent to the UK’s total emissions. Those countries that have adopted these ruinous renewable energy policies, therefore, have to lay claim to be leading the rest of the world. For this claim not to look absurd, developing countries—or some of them—must be made to look as if they were co-operating in the pursuit of these policies.

This, of course, can be done if the West puts enough money on the table. Hence the extraordinary commitment undertaken at Copenhagen to provide immediately $10 billion a year to developing countries for climate change purposes with the aim of increasing this eventually to $100 billion a year.

There is also the lamentable so-called clean development mechanism. This is a mechanism to pay developing countries for projects that are supposed to reduce emissions instead of cutting our own emissions. Needless to say, this has developed into a complete scam riddled with conflicts of interest and dubious validations. I would refer noble Lords interested in further details to a marvellous new book, Let them Eat Carbon, by Matthew Sinclair, director of the TaxPayers’ Alliance, which dissects brilliantly most of the ramifications of renewable energy policies. Readers will find in it most of the points I am making and many other revealing ones besides.

IRENA, I am afraid, is a part of this charade in which developing countries are lured into showing sufficient interest in renewable energy to enable the West to claim that it is leading the world. IRENA, of course, is only a small cog in the machine. Nevertheless, it has its costs. I note from the minutes of the first session of the IRENA assembly in April this year, that it attracted 950 participants, including one head of state—of Tonga I think—30 ministerial-level officials and 670 country delegates. The climate is probably quite agreeable in Abu Dhabi in early April. It would be interesting to know how many carbon emissions such a gathering was responsible for.

I gather from what the Foreign Office Minister said in another place on 14 July that the annual budget to keep this show on the road is $25 million a year. He also said that the United Kingdom contribution is £700,000 per annum. I wonder if the Minister can confirm that figure and say whether the department expects it to remain at that level in future years.

One day in this country we will have to wake up and shed a policy that is quite pointless in the absence of a global agreement and which we certainly cannot afford. In our straitened circumstances, and desperate as we are for economic growth, that day cannot come a moment too soon. When it does, it is us who will be following the lead of the developing countries and not the other way round.