Energy Bill

Caroline Lucas Excerpts

Wednesday 19th December 2012 Commons Chamber

[Mr Davey]

I am grateful for the hon. Gentleman’s intervention. He has merely convinced me more that this will be a hot topic of debate. However, I can confirm to him and the House that one of the purposes of the Bill is to decarbonise our electricity supply. That is a critical purpose. We need to move from coal to gas, from fossil fuels to low carbon. We need a more diversified energy mix, with renewables, carbon capture and storage, and new nuclear all playing their part in enhancing the security of our electricity supplies. Low-carbon energy security will help to insulate consumers from fossil fuel price spikes and will help us to meet our climate obligations, including our emissions and renewables target.

The key challenge that prompted the Bill was the need to attract tens of billions of pounds of investment, including investment in low carbon, while keeping energy bills affordable. Given that global gas prices had almost doubled since 2007, which was already putting huge upward pressure on bills, the need to stimulate that essential energy investment as cheaply as possible became a central consideration. Whatever the many debates in which we will rightly engage today and during the Bill’s passage, let no one lose sight of the three core challenges that it was designed to meet: attracting more than £100 billion of investment, creating the world’s first ever market in low-carbon energy, and helping people and businesses around our country who were struggling in the face of rising world energy prices. I think that those aims are widely shared across the House.

[Caroline Lucas (Brighton, Pavilion) (Green)]

I agree with the Secretary of State about the importance of reducing fuel bills, but if that is important, why does the Bill enshrine a dash for gas? Organisations from the CBI to the International Energy Agency say that that will not reduce fuel bills, whereas much greater investment in renewables and efficiency certainly would.

[Mr Davey]

I reject the notion that our policy supports a dash for gas, and I absolutely reject the suggestion that the Bill is designed to do any such thing. On the contrary, it is designed to reform our electricity market. It favours not fossil fuels but low-carbon sources, and I should have thought that the hon. Lady and, indeed, all Members would support it for that reason.

You will understand, Mr Deputy Speaker, why I am genuinely disappointed that the Opposition decided to withhold their full support for the Bill in their reasoned amendment. They say that they want our economy to grow, they say that they support low-carbon energy, and they say that they want a better deal for consumers and business, but if they vote against the Bill, they will be opposing growth, opposing decarbonisation and opposing help for people who are struggling with high energy bills. Just a few years ago all the major parties worked together to deliver the Climate Change Act 2008. Why is a party led by the architect of that landmark Act refusing to support the practical reforms that will help to deliver its lofty objectives?

I predict that we will have many debates and exchanges about a decarbonisation target for the power sector—an issue that features prominently in the Opposition’s reasoned amendment—yet it should be noted that this Government will legislate so that the next Government can set a decarbonisation target alongside a fifth carbon budget, even though at the last election the manifesto of no party argued for such a power sector decarbonisation target. We will no doubt hear that industry would benefit from such a target, and I strongly sympathise with that argument, yet industry would be seriously damaged if we were not to take forward our wider reforms of the electricity market.

The right hon. Member for Don Valley (Caroline Flint) has the power to send a much stronger signal to energy investors in the UK even than setting a 2030 decarbonisation target. Almost every investment in energy is a long-term investment lasting far longer than any Parliament, and investors therefore worry about political risk. They worry about what happens if the governing party or coalition is replaced, and they therefore listen to what the Opposition say.

I presume that the right hon. Lady will press her amendment to a Division. If it is defeated, however, will she and her party colleagues support the Bill on Second Reading? I am happy to give way to her if she wants to answer that question—I am afraid she has not been tempted to respond. We shall, therefore, all await her speech with even greater anticipation, to discover whether she intends to vote against the Bill on Second Reading.

--- Later in debate ---

[Caroline Lucas (Brighton, Pavilion) (Green)]

I tabled a reasoned amendment to decline giving the Bill a Second Reading. I do not do that lightly, and I recognise that there are some small steps forward, including the £7.6 billion for low-carbon energy to 2020, but overall the Bill fails miserably when compared with the scale of the challenges we face. It fails, first, on energy bills and the scandal of 6 million households in fuel poverty; secondly, on the scale and pace of carbon reduction needed; thirdly, because it does not fully recognise the huge potential of energy efficiency and renewable energy, including community renewables, to meet energy needs and create thousands of jobs now and into the future; and finally, because it locks us into a centralised fossil fuel and nuclear energy system at exactly the time when we need more decentralised energy.

Lack of time means that I can focus on only a few aspects. I agree with everything that the right hon. Member for Oldham West and Royton (Mr Meacher) said about nuclear. Let me say a few words about energy efficiency and fuel poverty. It is extremely disappointing that the Bill overlooks the huge potential of energy efficiency and demand reduction, despite widespread consensus that they are the cheapest, quickest, most effective ways to protect householders and businesses against high energy bills and to cut emissions.

The Government’s record is dismal. Ministers have slashed overall funding for fuel-poor households by 26% and cut energy efficiency funding for fuel-poor households by almost a half. I very much hope the Government will table amendments on demand reduction when the last-minute consultation is complete, and that they are commensurate with their own analysis, which shows that demand for electricity could be cut by at least 40% by 2030. Unfortunately, current policies would achieve at most about a third of that potential. It is crucial that any such demand-side incentives do not compete with renewable energy, and I hope Ministers will today confirm that demand-side measures will not be funded by the levy control framework.

It is worth reiterating that whether we see proposals for an energy efficiency feed-in tariff or other mechanisms, they must be additional to wider measures, including high efficiency standards for buildings and the recycling of revenue from carbon taxes and the EU emissions trading system to invest in a nationwide housing retrofit to ensure that all our homes need far less energy in order to keep warm.

On renewables, I welcome the announcement last month that the Government will provide sufficient funds through the levy control framework to ensure that the UK meets its legally binding renewables target by 2020. I sincerely hope that that will help reverse the current situation in which the UK is falling miserably behind other EU countries. The UK languishes at third from the bottom of the league table, on just 3.3% in 2011, a quarter of the EU average.

I am worried also about the future of community energy, on which Ministers deliver platitudes and promises but no policy. As a result, the Bill prolongs the uncertainty faced by small electricity generators, including community-owned renewables. What we need is a radical change in ownership—a move towards many more independent generators, smaller companies located in the UK, and community and co-operatively owned energy generation. Many hon. Members will have in their constituencies projects similar to Brighton energy co-operative that offer a real alternative.

I hope we can work together to change the Bill so that it does not disadvantage such schemes, by supporting, for example, the creation of a purchaser of first option to provide a guaranteed market for community energy schemes and other smaller generation projects; an increase in the fixed feed-in tariff threshold to allow funding certainty for community projects; and a minimum annual target for new generation capacity from community renewables schemes.

I will not go into detail—the House can imagine why—on the many reasons why I am a supporter of putting a decarbonisation target in the Bill, but at the risk of sounding just like the Prime Minister did two years ago, I will quote him. He said:

“If we don’t decarbonise electricity, we’ve got no hope of meeting the targets that we’re all committed to.”

That means at the very least a 2030 target of 50g of CO₂ per kilowatt hour by 2030. If the scientific evidence shows that we should have more ambitious targets, however, for either power sector or economy-wide decarbonisation, it is crucial that the Bill provides a mechanism to ensure that that can happen in a timely manner.

[Mr Deputy Speaker (Mr Nigel Evans)]

To resume his seat no later than 6.40, I call Mr David Anderson.