Energy Bill

Baroness Liddell of Coatdyke Excerpts

Tuesday 18th June 2013 Lords Chamber

[Baroness Liddell of Coatdyke]

My Lords, I, too, must draw attention to my entry in the register of Members’ interests as a director of the Offshore Renewable Energy Catapult. I should also take my lead from the noble Lord, Lord Lawson, who pointed out that he was a previous Secretary of State for Energy. I was a Minister for Energy but, being a woman, I was expected to multitask, so I was also Minister for competitiveness in Europe. Tempting though it is to follow and challenge some of the lines of the noble Lord, Lord Lawson, I notice that the noble Lord, Lord Stern, is in his place and is soon to speak. I think that he will probably do a much better job of it than I could conceivably do.

Yet like the noble Lord, Lord Lawson, I am not an unalloyed fan of this Bill. Professor Dieter Helm’s analysis of the Bill was actually very interesting. I see that the noble Lord, Lord Birt, is to speak later on. Perhaps he, too, could take up the issue of the bias against understanding contained in this Bill because it is of considerable complexity, and within that complexity there is the opportunity for a considerable mistake. However, the Bill is needed, although it may not be in the right shape. Also like the noble Lord, Lord Lawson, I am concerned about the lack of impact on fuel poverty, which I will come back to in my section on demand reduction. I am not going to say much about decarbonisation, but when you put those issues alongside the decommissioning of existing capacity, there is a crisis of security, as the noble Lord, Lord Oxburgh, pointedly set out.

It may have been the intention that this legislation would end uncertainty. The Minister referred to that in her opening remarks but, frankly, its long gestation period has added to the uncertainty, as well as the fact that we need more detail on the setting of the strike prices and the need for secondary legislation to support the Bill. We have a considerable difficulty here around uncertainty. If I may give just one example, Ernst & Young has recently done some research on the international investment market for renewable energy. Because of uncertainty in the British market, we have dropped to sixth place in terms of our attractiveness for that investment.

In the area of offshore wind, where Britain is actually a leader, we have lost our top position. If noble Lords want an idea of the scale of this, let me point out that last year, €4 billion of manufacturing capability was commissioned in Europe. Some 75% of the turbines for offshore wind were built in Britain. There is a huge opportunity for offshore wind and we have managed to fail to exploit it to the full because of the slow progress in proceeding with this Bill.

This Bill is an example of market manipulation. I do not have a problem with that; infant industries often need market manipulation. The noble Lord, Lord Roper, is right to ask for an explanation of where we are in negotiations with the European Commission on state aid. I would also be very interested to know if the Minister could enlighten us on where we are in relation to the impact on UK energy costs compared with our EU competitors. That is a critical balance, and not just in terms of how our economy operates. The noble Lord, Lord Oxburgh, referred to interconnectivity; the direction of flow with interconnectivity will be based on the relative prices on either side of the interconnector. Like the noble Lord, Lord Deben, I worry about sovereignty. This is one of the key issues of the past 10 years. If someone has the capability to switch off access to energy, they will have strategic control over what happens to the economy of this country.

Going back to the complexity issue, there are some aspects of EMR that have been tried elsewhere and some experience of capacity markets in the USA, but I am not aware of any country using the model of contracts for difference and capacity markets at the same time. I would be very interested to know how the Minister sees some of these issues working.

We also have a pressing need for diversity of energy-generating capacity. Many of us in this House are in our prime and we can remember the six-day war. We also remember what happens when we become overly dependent on one energy source as against another, and we must ensure that that does not happen again. There is a place for all sources of energy, including fossil fuels. This is a real challenge for the scientists and engineers who, for as long as I have been around, have been promising clean coal technology. Carbon capture and storage is the holy grail, but I have been waiting for far too long to see its commercialisation. The Minister skirted over nuclear in talking about the Office for Nuclear Regulation, but in a situation where EDF is in a monopoly position in negotiations with the Government, where are these discussions? What conclusions will we come to? The Committee on Climate Change has said that at least 16 gigawatts of future supply should come from nuclear, but it is difficult to see how that is going to come on stream in time to impact on the insecurity of supply that we have to deal with.

There are some of us who do not necessarily remember it but know that there was shale gas in this country before. I live very close to West Lothian, where there was quite an industry around shale gas in my father’s day. There have been recent announcements about the prospect of 37 gigawatts of gas generation being sanctioned, alongside the prospect of shale gas—with envious eyes across the Atlantic looking at how shale gas has impacted on US energy markets. Are we going to end up with a dash to gas being forced on us because we need security of supply? We need to get a move on with nuclear and with investment in renewable energies. We are seeking economic growth, so it is all the more critical that manufacturing capability which we can rely on in the future is developed. What is going to happen about strike price setting in practice? What will the setting of the strike price be, taking into account new nuclear? How will a competitive model eventually operate?

Let me turn now to the lines on capacity markets to deliver energy saving. Frankly, I think it is fanciful. I am with the right reverend Prelate when he asks why we are having only one pilot. Why are we not in a position to look at other ways of managing demand? One of the best ways of ensuring a robust energy market is to ensure energy efficiency. I ask the Minister to answer this in her summing up: if I were Mrs Liddell of Coatdyke in North Lanarkshire, living in a damp council house with inadequate insulation, possibly a post-war house with no upgrading since, how would that affect my fuel bill? It would not. And please do not tell me about the Green Deal; you need £150 even to get your foot in the door. That may buy a rather nice dinner in the Barry Room, but it is a king’s ransom for some of the people who are most intimately affected by this.

I turn my attention to an area that has caused considerable concern throughout the country: the mis-selling of tariffs for electricity. I am not suggesting that there needs to be some kind of retrospective legislation with regard to this, but I am asking that we get some clarity on the Prime Minister’s claim that people will be put on the lowest possible tariff. How is that going to work? We need that spelt out, and quickly. We need additional powers and resources for Ofgem, which at the moment is apparently looking at 27 cases of mis-selling, both formal and informal. Mis-selling is fraud against the most vulnerable in our society, and this Bill is not going to help that.

I look forward to our deliberations on the Bill. There are critical issues that need to be raised. We need an energy Bill but, sadly, I am not sure that this Bill as it stands is the finished article. I hope that by the time we get to the end of July, it might be.