Energy Generation

Alan Whitehead Excerpts

Wednesday 17th April 2013 Westminster Hall

[Barry Gardiner]

The hon. Gentleman makes a very interesting and worthwhile point, which I perfectly understand. I am sure that if I go into consumption emissions versus production emissions, you will call me to order from the Chair, Mr Gray, but we must not pat ourselves on the back for seeing our own production emissions drop if we are still driving the very consumption model that generates the emissions elsewhere around the globe.

The Committee on Climate Change estimates that in the absence of a 2030 target, offshore wind might cost as much as £140 per megawatt-hour. With such a target, the cost, under the committee’s scenario, drops to £100. The difference between the two costs is about the presence of a competitive supply chain in the UK. We do not have one, but what we do have is at risk.

Let us remember that the Government’s proposals are not that we should set a target in 2016, but that we may not set one until at least that date. Those are two very different propositions.

[Dr Alan Whitehead (Southampton, Test) (Lab)]

Would my hon. Friend also care to include the provision that not only can the Government not set a target before 2016, but that there is no level at which the target might be set after 2016?

[Barry Gardiner]

My hon. Friend is, as ever, thoroughly astute on these matters. He was a tremendous champion of the decarbonisation target when the Bill was in Committee, and he speaks with great knowledge on the subject. He is absolutely right. Only last night at a dinner, I heard the Secretary of State talking as if this was a great leap forward, that this would be the only Government who had legislated for a decarbonisation target. At that point I almost spluttered into my chicken, because we have not legislated for a decarbonisation target. [Interruption.] And it was beef anyway, says my hon. Friend the Member for Southampton, Test (Dr Whitehead). What we have done is make provision so that, at the appropriate moment, it would not be impossible to legislate.

Let me return to the key point that I wish to address, because I know that other Members want to enter the debate. Although it is good to have a debate and a real exchange of views through interventions, I fear that I must press on if other Members are to be able to speak. Siemens told us that if we wait till 2016 to set a decarbonisation target for 2030, it and many of its competitors are likely to delay or cancel planned investments in the UK.

In March, six of the largest supply chain investors wrote to the Chancellor, the Secretary of State for Business, Innovation and Skills and the Secretary of State for Energy and Climate Change to register their strong support for the decarbonisation amendment tabled by the hon. Member for South Suffolk (Mr Yeo) and me, which to date is supported by 41 Members from—I am pleased to say—all parties in the House. They wrote:

“Projects can take 4-6 years from investment decision to construction and operation. We are already close to the point where lack of a post-2020 market driver will seriously undermine project pipelines. Supply chain investment decisions depend on reasonable assurance for manufacturers that a production facility to be constructed during this decade, costing hundreds of millions of pounds, will have an adequate market for its products well into the 2020s.

Postponing the 2030 target decision until 2016 creates entirely avoidable political risk. This will slow growth in the low carbon sector, handicap the UK supply chain, reduce UK R&D and produce fewer new jobs. This is not in keeping with the Government’s aspirations for the UK to be the global leader in low carbon technologies such as offshore wind and marine.”

The amendment would require a 2030 decarbonisation target for the energy sector to be set by the Secretary of State, on the advice of the Committee on Climate Change, by next spring, which would ensure that the Energy Bill sent a coherent signal to investors. By securing investment in a competitive UK supply chain, the amendment would not only reduce the cost of decarbonising our energy infrastructure, but ensure that the investments that we are committed to make produced a significant growth multiplier and contributed to the essential rebalancing of the British economy.

Recent peer-reviewed studies from the London School of Economics and Berkeley have concluded that the fiscal multiplier for productive infrastructure investment in current economic conditions is likely to be about 2.5 in the UK. The amendment would ensure that the £7.6 billion produced secure investable propositions, creating significant numbers of construction jobs and long-term high-value jobs in communities around the UK, where both are scarce.

--- Later in debate ---

[Dr Alan Whitehead (Southampton, Test) (Lab)]

I, too, will try to be as brief as possible, because I know that other Members wish to contribute to this debate.

The hon. Member for North Warwickshire (Dan Byles) stated that we had some of the world’s toughest targets on climate change, but it is precisely because we have those targets that a target now for decarbonisation of the energy sector up to 2030 is vital. Essentially, that is the case that the Committee on Climate Change made on decarbonising the power sector, falling from 450 grams or so per kWh today to about 50 grams per kWh by 2030. That is because the power sector produces a large percentage of emissions, so we cannot decouple the question of decarbonisation of the power sector from overall targets. The suggestion by the Committee on Climate Change that, in order to stay in line with the overall targets that this country has set itself, the target should be about 50 grams per kWh by 2030 should be the basis for what we set as a target in the Energy Bill.

The Government tabled amendments to the Energy Bill after it was considered in Committee, stating that they “may” set a target. However, they cannot do it before 2016, and if they do so the Minister “may” set a target of—a level we know not what. In terms of building confidence for industry and knowing that we have to reach the position that I have suggested regarding the relationship of energy to overall climate change targets, that change in the Bill will be of very little comfort indeed to those people who know what they have to do as far as investment in the low-carbon economy is concerned.

I would go further than that. Between now and 2016 —we cannot set a target before then in the amendments—a number of events will occur, and I wish to ask hon. Members if they can spot the difference between two phrases. The paragraph in the energy White Paper dealing with what will happen in respect of emissions when the Government revise their view of EU emissions trajectories in 2014 says:

“The Government will review progress towards the EU emissions goal in early 2014. If at that point our domestic commitments place us on a different emissions trajectory than the EU ETS trajectory agreed by the EU, we will, as appropriate and consistent with the legal requirements of the Climate Change Act, revise up our budget to align it with the actual EU trajectory.”

That sounds good. The gas strategy, which came out shortly afterwards, states:

“We will review our progress in early 2014 and if, at that point, our domestic commitments place us on a different trajectory from the one agreed by our partners in the EU under the ETS, we will revise ... our budget as appropriate to align it with the actual EU trajectory.”

That is the problem of waiting until 2016. If, by that point, we have revised up our trajectory to deal with a gas strategy that suggests that, in at least one direction, we have more than 37 GW of new gas plant running at full tilt, rather than DECC’s previous suggestion of some 19 GW of gas—we need gas, but not that much, running at a much lower trajectory—we will irrevocably bust our climate change targets by that act alone. That is why it is important that there is a target in the Bill that locks us into a proper direction on the decarbonisation of energy and, at the same time, gives confidence in respect of future investment for those who wish to invest in that low-carbon economy.

I hope that I have done the Minister a favour by mentioning that he appears to have agreed, on behalf of his Department, to a different strategy from the one to which he is committed, and to which he thinks he is committed. I hope that, in the run-up to the end of the Energy Bill, he looks at the quote from the gas strategy—it is on page 22—and sees whether, among other things, he might agree with the amendment tabled by my hon. Friend the Member for Brent North (Barry Gardiner), which may be considered during the latter stages of the Bill, and excise that paragraph from the gas strategy, to make things really tidy for the future as far as our targets are concerned.

[Several hon. Members]

rose—