Energy Bill

Baroness Parminter Excerpts

Tuesday 18th June 2013 Lords Chamber

[Baroness Parminter]

My Lords, like others, I welcome the Bill. It is critical that investment in the energy sector is procured and any policy inertia or uncertainty now will have a crippling effect on delivering that, securing the energy we need and meeting our legally binding carbon reduction targets. It is the only sustainable way to help keep energy affordable for hard-pressed consumers.

It is naïve to think that policy makers can control price volatility but action can mitigate its impacts, particularly those of volatile fuel supplies. Customer bills are likely to increase long term if we do not develop a clear policy framework to ensure adequate investment in low-carbon sources.

This is about bills and about jobs. The CBI recently reported that in trying economic times the UK’s green businesses have continued to grow in real terms, carving out a £122 billion share of a global market worth £3.3 trillion and employing close to 1 million people.

We have heard today from some climate sceptics—one particularly vocal noble Lord is no longer in his place—but they are in a minority in this House and around the globe. It is interesting that in the United States some of the strongest climate sceptics, including Karl Rove, support government initiatives for renewable projects, such as wind energy credits, given that wind power generates well paying, desirable jobs in rural areas. It is also seen as a cost-effective insurance against the growing number of climate change disasters. Insurers said that last year was the second most expensive in American history for disasters related to climate change, costing them $139 billion. However, private insurance paid only a quarter of those costs, leaving taxpayers to cover the rest. As the Economist highlighted last week, by comparison, funding renewable energy properly seems rather cheap. That was the point that my noble friend Lord Deben, who is not in his place, made earlier in stating that this Bill is UK plc’s insurance policy.

The majority of us accept that the Bill is right to introduce a capacity mechanism that seeks to ensure domestic security of energy supply. It is also clear around the House that there is a majority in favour of demand side response measures. Like others, I am pleased that that issue was addressed on Report in the other place through the introduction of an amendment for a pilot scheme for electricity demand management. However, given the limited opportunity to scrutinise these demand management proposals, I add my voice to the near unanimous number in this House who have called for a close scrutiny of the proposals in Committee. I support the call made by a number of my noble friends and noble Lords on the other side of the Chamber for more than one pilot scheme to be a critical part of the Bill.

There is one difference between myself and my noble friend Lord Deben, who is not in his place, in that I would not say that sovereignty is the only means of ensuring energy security. Yes, it is important, but it is not the only means. Measures better to exploit the benefits of co-operation with our European neighbours through interconnection are omitted from the Bill. Greater interconnection could help with the reduction of costs, particularly by making more efficient use of renewable energy. This view was strongly endorsed by the recent report of the House of Lords EU Sub-Committee on Agriculture, Fisheries, Environment and Energy on European energy policy.

Levels of interconnection between the UK and mainland Europe are much more limited than, for example, the 20-30% of interconnection between Belgium and the Netherlands. I applaud the Secretary of State for the recent memorandum of understanding with the Irish Government to trade renewable energy but there are outstanding barriers to better interconnection. Ofgem has highlighted the problem of congestion in the south of England which would require the existing onshore grid to be strengthened to accommodate major trade flows.

The full benefit of interconnection can be delivered only from greater deployment of high voltage direct current lines which allow electricity to be transported over long distances economically. The Bill does not say anything about the potential of interconnection, or how necessary grid strengthening can be financed or, as crucially, how public support can be gained for significantly higher pylons than are currently used. I hope that in Committee we seek clarification from the Government on their policy intentions on interconnection, on overcoming the barriers to building up the European electricity grid and on enabling Britain to benefit from increased security of supply.

There is much to be welcomed in the Bill but I am disappointed that it is a vehicle to provide public subsidy for the nuclear industry. Nuclear may be low carbon but that fact cannot hide the astronomical costs of building—and, indeed, decommissioning, as the right reverend Prelate the Bishop of Hereford ably pointed out—nuclear sites or the failure, after 60 years, to find solutions to storing high-level radioactive waste. All this on top of the fact that the British taxpayer is liable for any clean up of a major nuclear accident. Corporate liability for any nuclear accident is capped at around £1 billion—a derisory sum given that the estimated total clean-up costs for the Fukushima nuclear accident are likely to top £160 billion.

I wish the Bill well, but as we are not an energy island a strong European energy policy framework is critical. I commend the Secretary of State for his leadership in Europe and for arguing strongly for a binding emissions reductions target of 50% on 1990 levels by 2030 in the context of an ambitious global climate deal. Such leadership will be aided by the successful passage of this Bill and help move us towards the all-important global climate deal in Paris in 2015.