Net Zero (Economic Affairs Committee Report)

Baroness Noakes Excerpts

Monday 16th October 2023 Lords Chamber

[Baroness Noakes (Con)]

My Lords, I declare my registered interests as an investor in a number of energy companies. I too am a member of the Economic Affairs Committee, and I pay tribute to the chairmanship of my noble friend Lord Bridges of Headley. It is a shame that he is not able to be here to lead this debate, but I thank the noble Baroness, Lady Kramer, for introducing the report so ably.

It has taken 15 months for there to be a debate on this report and, after all that, we are allowed only five minutes. Our Select Committees should be an integral part of how Parliament holds the Government to account, but they are being sidelined. I hope that the Government will do better in future to allow Select Committee reports the time they deserve in your Lordships’ House.

A lot has happened in the energy space in the last year since we reported. I particularly welcome the Government’s recent announcements, which have brought a welcome sense of pragmatism to the delivery of net zero. As we heard, the report focused on how much investment was needed in order to deliver net zero by 2050 and where that investment would come from. The Government’s response has not shed much more light on this. But the even bigger questions, which the report did not set out to look at, are: who pays, when they have to pay it and how much they have to pay. These are the biggest challenges facing the delivery of net zero.

The Government have never been clear with the public about how much the cost of achieving net zero will affect them. Indeed, my noble friend Lord Hammond has recently said that successive Governments have been “systematically dishonest” about it. The public have little understanding about how green levies are already inflating their energy bills or about what they will pay for in future, including the impact of delivering a nuclear programme. We need a proper grown-up debate with the public about what costs they are prepared to accept.

The advocates of net zero often assert that, in the long run, the costs are likely to be outweighed by the benefits. Long-range forecasts, such as those from the Committee on Climate Change, are only as good as the underlying assumptions on which they are based, and it is not surprising that many of those assumptions are highly contestable. They were also made at a time when interest rates were near zero, and today’s “higher for longer” environment does not improve the calculations.

The renewables sector lives on subsidies and, as we heard, it imposes costs by way of extra investment in grid infrastructure and in back-up storage or generation capacity for when the sun does not shine and the wind does not blow. Consumers pay for all of that. As my noble friend Lord Frost pointed out, renewable energy itself seems to be getting more expensive rather than less, as the latest auction round showed. Who really knows what renewables will end up costing consumers, not in a hypothetical 2050 but in three, five or 10 years’ time? A 25-year forecast has no meaning to those who pay bills in the short and medium term. Today’s energy consumers should be centre stage in the conversations about the cost of delivering net zero.

The country as a whole remains supportive of the Government’s net-zero ambitions, but polling shows that support weakens when the impact on bills is factored in. As energy bill payers discover what net zero is costing them, and as those costs increase, so support for the policies will likely decrease. At the end of the day, net zero will be delivered in this country only if the British people are prepared to pay for it, either in their bills or in higher taxes. The Secretary of State for Energy Security and Net Zero described net zero as a form of religion. Religious belief is all very well, but it does not pay the bills.

It was never sensible to sign a blank cheque to deliver net zero in a country that accounts for less than 1% of global emissions, and we certainly ought not to sign a blank cheque for some notion of global leadership. This House must never forget that the British people will decide what happens, whatever the politicians and the metropolitan elite think.