Energy Prices
Debate between Chris Huhne and Malcolm Wicks(12 years, 11 months ago)
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Chris Huhne
My hon. Friend is absolutely right. The story of energy policy under the previous Government is one of stopping and starting, and of failing for many years to face up to the need to deal with the problem of renewing our energy infrastructure. But we are not dithering or delaying any longer: we in this Government are biting the bullet. We are determined to proceed with what is necessary to ensure that we have clean, green and secure energy for our nation.
Our proposals to reform the electricity market will deliver the best deal for Britain and for consumers, ensuring secure, low-carbon electricity supplies, and providing green jobs.
Malcolm Wicks (Croydon North) (Lab)
This is not the point that I was going to make, but I recall the Labour Government making the difficult decision on nuclear so convincingly that even the Liberal Democrats are now in support.
On the long-term issue, however, what is missing from this debate is the global dimension, although the Secretary of State has touched on it. Given that world energy demand is going to increase by 30-odd% in the coming years, with consequences for pricing, has the Department made any forecast of the implications for British energy prices and costs over the next 10 or 15 years?
Chris Huhne
I very happily exempt the right hon. Gentleman from my strictures about the previous Government’s policy, because when he was in the post of Energy Minister he certainly took some tough decisions, but sadly the record over the 13 years is not one of which Labour Members can be proud.
On energy prices, the right hon. Gentleman is absolutely right, and we have of course produced a forecast in the annual energy statement. Like all forecasts, it gets more uncertain the further out it goes, but it does point to a rise over time in oil and gas prices worldwide because of increased demand from, in particular, the far east. One of the current environment’s most striking features, about which there ought to be much greater public awareness and debate, is the sharp recovery in oil, gas and other commodity prices, despite continued relatively slow growth in Europe, the United States and Japan. This is the first time that that has happened in the post-war period. That shows the influence that the rapid growth and catch-up in the far east will have on world commodity prices.
Annual Energy Statement
Debate between Chris Huhne and Malcolm Wicks
Chris Huhne
I am grateful to the right hon. Gentleman for his question. If he is in any way unsatisfied with the explanations that we have given in the documents—explanations which are considerably more detailed than those provided by any previous Government—he should ask for a briefing, and we will ensure that he receives any additional answers that he may require.
The key point, however, is that a substantial part of what we need to do to tackle climate change involves measures included in our green deal legislation which pay for themselves and do not involve a cost, while those that do involve a cost—namely the raising of prices to enable us to move to a low-carbon economy when it comes to electricity generation—are offset by the reduction in energy volumes precisely because of our energy-saving measures.
I commend the document to the right hon. Gentleman. I am sure he will find is persuasive.
Malcolm Wicks (Croydon North) (Lab)
If the last Labour Government did nothing about energy policy, I cannot think why I was so busy all the time.
To raise the tone of this discussion, I welcome what the Secretary of State said about long-term contracts, and I would like to hear more. On carbon capture and storage, the Secretary of State knows that despite all the excitement about feed-in tariffs, renewables and nuclear, the world, including the United Kingdom, will mainly be using fossil fuels for the next few decades. What is happening in respect of CCS? There have been some disappointments in recent months. When does the Secretary of State think the first CCS plant in the UK will be operating and helping to clean up our planet?
Chris Huhne
I certainly did not want to imply that the right hon. Gentleman, who has considerable expertise in this area, was in any way slacking when he was an Energy Minister—although I think he might have had better support from his colleagues on certain occasions.
CCS is a key technology. The right hon. Gentleman is absolutely right to say that we are going to continue to be reliant on gas and other fossil fuels. If we move to unabated gas rather than coal, that in itself will save about half the carbon emissions. For the longer term however, CCS is essential if we are going to be able to use gas, especially if we find, as I hope we will, that we have considerable exploitable reserves of shale gas under Lancashire and elsewhere.
As I have said, Longannet was a disappointment—I made a statement to the House on that—but other projects are coming forward. Peterhead is nearer the reservoirs than Longannet, so the pipeline costs are likely to be lower, and less investment will be needed to upgrade the plant in line with the large combustion plant directive. All the parties who were involved in the Longannet negotiation are confident that we can deliver a commercial-scale CCS plant for within that £1 billion budget, and we intend to do so.
Weightman Report (Fukushima)
Debate between Chris Huhne and Malcolm Wicks(13 years, 2 months ago)
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Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
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Chris Huhne
I certainly will not say that nuclear power is an option of last resort; the electricity market reform clearly anticipates that it can be part of the portfolio of low-carbon electricity generation, which could include renewables, nuclear or clean coal and gas. It is precisely because of the uncertainties that attach to all forms of electricity generation, and, indeed, the fact that all forms of electricity generation—whether onshore wind turbines, nuclear power or a new power station—seem to carry with them a little cloud of people who happen to dislike them, that we need a portfolio to deal with both the technological risks and the economic uncertainties.
The hon. Gentleman also asked about the issue of the cap, and I would merely caution him not to confuse two things: the third-party liability, which is dealt with under the Brussels and Paris conventions, and the total cost of dealing with the Fukushima disaster—the figure he cited is one of the more extreme estimates. We had a consultation that ended in the spring, and we are looking at issues to do with raising the limit on the third-party liability. Those discussions are ongoing, and we will make an announcement in due course.
Malcolm Wicks (Croydon North) (Lab)
I thank the Secretary of State for delivering what was a perfectly rational statement based on the report by Dr Weightman, but will he reflect on the fact that political leaderships in many parts of the world are now putting tackling climate change ever lower down the agendas that count, and does he agree that it is therefore very important that Britain goes ahead with the civil nuclear programme, not only for reasons of energy security, but to confirm that we are absolutely determined to hit our CO2 reduction targets—which were, of course, agreed by this Parliament?
Chris Huhne
The right hon. Gentleman is one of the most expert and experienced Members in this field and he is absolutely right and I entirely agree with the sentiments he has expressed. I am not sure whether I would go along with his view that people are resiling from action on carbon emissions, however. One of the striking aspects of public opinion as shown in the recent European Commission Eurobarometer results is that there has been hardly any change in this country or anywhere else in the proportion of people who are seriously concerned about climate change. Indeed, the last Eurobarometer survey was undertaken in June and more people in this country were concerned about this issue than about the economic situation, which I found surprising as that tends to take precedence over other things when we are in difficult times.
The other point the right hon. Gentleman should bear in mind is that the entire low-carbon shift—the transition to a low-carbon economy—offers enormous potential growth opportunities. That is the case in terms of not only nuclear, but also renewables, clean coal and gas, and energy saving. They are the four key pillars of the Government’s policy. We are already seeing substantial demand effects and job effects from the investment being made in those areas. For example, just in terms of the three supply-side elements of energy policy, Ofgem has estimated spending at £200 billion over 10 years, which is roughly double the normal amount of energy investment in a business cycle. That is an important reason why we are likely to have support for the recovery going forward.
Electricity Market Reform
Debate between Chris Huhne and Malcolm Wicks
Chris Huhne
I assure the hon. Gentleman that the Government are extremely seized of the urgency of getting the legislation through during the second Session and of issuing the contracts, so that they will be on course and we are able—I hope—to issue the first contracts in 2013.
Malcolm Wicks (Croydon North) (Lab)
I will put to one side a Liberal Democrat Secretary of State attacking the Labour Government for being slow to build nuclear reactors, which shows a capacity for humour that I admire. Do the Secretary of State and the Department now have contractual details from our gas supply companies, which used not to be the case? That would, first, enable him to assure himself about the security of supply, not least given that we often buy gas on the spot market or in the short term, and secondly, enable his Department to scrutinise those contracts to make sure that when companies increase gas prices they are doing so in ways that are fair to the customer.
Chris Huhne
The right hon. Gentleman makes a very good point; he is expert in this area. The Energy Bill, which we hope will achieve Royal Assent in the autumn when we come back from the recess, contains provisions that ensure that we are able to be informed about these measures and ensure greater security of supply. He will have read in the press about long-term arrangements being contracted, for example, between Centrica and the state of Qatar. We have a number of these longer-term arrangements. Security of supply is important in physical terms, and we also think about it in price terms. The 30% increase in gas prices over the past year has been a significant shock to a number of consumers. One of the reasons we want to get to low carbon is to protect the economy and consumers against that sort of shock.
Fourth Carbon Budget
Debate between Chris Huhne and Malcolm Wicks
Chris Huhne
I am grateful to the right hon. Gentleman for his question. The energy-intensive work group that we have set up between my Department and the Department for Business, Innovation and Skills will come forward with a set of measures by the end of the year. That is a clear commitment. As he knows, there are a number of ways to help energy-intensive industries, including the free allocation of units under the EU emissions trading scheme and encouraging a move towards the use of biomass and biofuels, for example. We are looking at all those measures to ensure that we can balance the concerns of the energy-intensive industries as well as make substantial progress towards the low-carbon economy.
Malcolm Wicks (Croydon North) (Lab)
The climate change targets that the last Parliament legislated for were arguably the most ambitious thing that any Parliament in this country has ever legislated for. I certainly welcome the broad thrust of the coalition Government’s proposals today, even if the Secretary of State failed to understand that turning over turf during his term of office depended on four years of preparatory work, which I am happy to discuss with him.
Many of the goods that we consume in Britain used to be manufactured in Britain. They are now manufactured in places such as China, thereby producing carbon emissions, and then imported into this country. Those carbon emissions in China and elsewhere occur only because of demand from western societies such as ours. Given that we are talking about a global phenomenon, does the Secretary of State have any ideas for how Europe as a whole can use its influence to bring about appropriate carbon reduction policies in places such as China, India and elsewhere?
Chris Huhne
The right hon. Gentleman’s question is an interesting one, as I would expect, given his background as an Energy Minister and his expertise in this field. Wherever one goes in the world, people will say that everyone else is working much less hard on the low-carbon agenda than they are. That is the prevailing myth. I was recently speaking to my counterpart in Australia, who said that the entire debate there is about how only the Australians are dealing with climate change and no one else is. The reality is that enormous progress is being made on this agenda right across the board, including in India and China. The five-year plan that the Chinese have just established is enormously ambitious. Six of the largest renewables companies in the world are now Chinese. The Chinese are making an enormous commitment to offshore wind, as well as in more conventional sectors such as nuclear. They are now the dominant player in solar photovoltaics, having taken the lead from Germany, so I simply do not accept that this is a world where we are moving ahead of other people. We are moving ahead together, but it will be the people who move furthest and fastest who get the best prizes.
Energy Bill [Lords]
Debate between Chris Huhne and Malcolm Wicks
Chris Huhne
The hon. Lady anticipates a point that I will turn to very soon.
Landlords do not want to invest because tenants benefit; tenants do not want to invest because they will move on. By linking the green deal measures to the property, not the tenant, the Bill bridges that divide. With the green deal, everybody wins. Landlords will face no up-front costs; tenants will keep warm for less.
I welcome many of the positive responses that we have had from landlords to the prospect of the green deal. However, some individuals and organisations feel that we are not committed to securing improvements to the least energy-efficient properties in the private rented sector. Many tenants suffer appalling conditions without the power to agree improvements with their landlords. The debate has been lively, and we have listened. That is why I am pleased to announce that we will change the current provisions to make it clear that we will regulate. This is significant step and a marker of our intent. From 2016, any tenant or their representatives asking for their landlord’s consent to make reasonable energy efficiency improvements cannot be refused. From 2018, the rental of the very worst performing properties—those rated F and G—will be banned through a minimum energy efficiency standard. We will of course seek to work with landlords well in advance to support their take-up of the green deal. The precise form of these regulations will be subject to the usual scrutiny processes.
We also remain committed to ensuring that all councils play a role in delivering the green deal. The recent memorandum of understanding between DECC and the Local Government Group recognises the enthusiasm that councils have for delivering the green deal.
Malcolm Wicks (Croydon North) (Lab)
I have a question about the private rented sector, and I ask it in a spirit of non-partisanship because I know that the Secretary of State likes that kind of thing. I welcome what he has said about putting some pressure on landlords but, given that the public sector will in effect be paying the rents of some of these energy-efficient dwellings, through housing benefit and housing allowances, has his Department had talks with the Department for Work and Pensions to see whether the withdrawal of housing benefit could become another weapon in his Department’s armoury?
Chris Huhne
We have discussed this with the DWP, and that would certainly be one route down which we could go. There would be dangers in doing so, however, not least because some of those on housing benefit find it hard to get into privately rented property. The simpler route that I have suggested will have a clear and predictable effect and will touch more than 680,000 homes in the private rented sector that are currently rated F and G. This is a substantial move.
Electricity Market Reform
Debate between Chris Huhne and Malcolm Wicks
Chris Huhne
We would aim to get the White Paper out in the spring and legislation landed in this place before the end of the Session, although realistically it would probably have to be a carry-over. I hope very much that we shall have legislation in place, and therefore the market system in place, in 2012.
Malcolm Wicks (Croydon North) (Lab)
I welcome the broad thrust of the statement. Does the Secretary of State agree that notwithstanding the beneficial effects of energy efficiency measures on prices, there are three reasons why prices are likely to rise in the medium term? The first is the new investment we require. The second is the climate change measures, which are vital, and the third is the dramatic global demand for energy over the next 30 years, which could go up by 30% or 40%. The only weakness in the statement that I can see is the social policy dimension. It is an irony that we have global warming, yet there are cold homes in Britain. Do we not require a step change in our thinking about social policies of different kinds to protect the most vulnerable during our winters?
Chris Huhne
I am grateful to the right hon. Gentleman for his question. He is one of the most informed people in the House on these matters, and he is absolutely right about the long-term drivers for energy markets. The social policy dimension is absolutely crucial for the Government, which is why the green deal puts such an important stress on dealing with the root cause of the problems of fuel poverty. Every winter we have debates in this place about the problems of fuel poverty, yet we have not made enough progress in really tackling the underlying issue, which is the energy inefficiency of the homes of so many people at the bottom of the income distribution. As I said in oral questions, the bills of those who are lucky enough to live in social housing with the decent homes standard could be only a sixth of the bills of owner occupiers or people in private rentals. We have to deal with that.
In the short term, we are committed, for example, to winter fuel payments, cold weather payments and to the continuation of the voluntary discount scheme for bills, and we shall underpin that with our own Warm Homes discount scheme from the next financial year. We are very aware of the issue and very concerned about it. We intend to make real progress in tackling the underlying causes, not merely providing sticking plasters for the symptoms.
Annual Energy Statement
Debate between Chris Huhne and Malcolm Wicks
Chris Huhne
Both the Department and the European Commission have looked closely at those competitiveness issues, and we feel confident that a range of measures, such as free allocation when it comes to the emissions trading scheme, can deal with those problems. We should remember that there are substantial transport costs, which provide some protection, and I believe that the industries concerned have a healthy future.
Malcolm Wicks (Croydon North) (Lab)
I welcome the idea of an annual energy statement and, indeed, much of this statement’s content, particularly what I think is a step forward—the assertion that new nuclear will play a part in meeting our energy needs. Given the coalition’s differences as was—or perhaps as still—who has ministerial responsibility for driving forward the civil nuclear programme? Given my experience of working with three Secretaries of State, and given the complexities of the matter, I know that one needs a Secretary of State who is determined to drive the programme forward.
Chris Huhne
I have great respect for the right hon. Gentleman’s expertise in this area. We work very much as a team in the Department, and my hon. Friend the Member for Wealden (Charles Hendry), the energy Minister, and I have been working very closely with nuclear suppliers and attempting to meet some of their concerns about the regulatory framework. It was precisely because we had two different views, from the Conservative side and the Liberal Democrat side, that we dealt with the issue right at the beginning, with a coalition agreement that makes very clear what is going to happen.
On the point that the right hon. Member for Doncaster North made about whether we should commit to a particular target, I simply say that I do not believe that it is the job of government to micro-manage how we put in place a framework for, and facilitate, low-carbon energy. However, there is no doubt that the coalition agreement sets out that there is a place for new nuclear, and I believe that there will be investment in new nuclear to meet our energy needs in the future.
Oral Answers to Questions
Debate between Chris Huhne and Malcolm Wicks
Chris Huhne
I have enormous respect for engineers. There are an awful lot of them in my constituency, which is a very manufacturing constituency. Therefore, I think and hope that the country will go on providing greater status to engineers than has often been the case in the past. I am afraid that the question of whether the Government should appoint a chief engineer is above my pay grade, but perhaps my hon. Friend would like to raise it at Prime Minister’s questions.
Malcolm Wicks (Croydon North) (Lab)
The UK’s energy import dependency will increase over the next 10 or 20 years, at a time when global demand for energy could increase by 40% over 10 or so years. Given that, what plans are there to reorganise the machinery of government, so that DECC, the Foreign Office, the Ministry of Defence and other agencies can get a better assessment and grip of the geopolitical risks that the UK faces?
Chris Huhne
I am very grateful for that highly intelligent question which, given his interest in this area, is what I would expect from the right hon. Gentleman. The National Security Council is explicitly charged with the co-ordination of energy security. That will go across Government: it will not be confined to my Department, but will include the Foreign Office and other interested Departments.
The right hon. Gentleman is absolutely right, in that the figures show that, on the worst possible projections, our energy import dependence may well rise from 27% to over half in the space of just 10 years. This is a really key issue, which we need to address.
Energy and Environment, Food and Rural Affairs
Debate between Chris Huhne and Malcolm Wicks(14 years, 6 months ago)
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Chris Huhne
The hon. Gentleman will know that Governments always have a clear position on treaties, because they intend to uphold any treaties that they have signed.
The transformation to a low-carbon economy is critical in meeting our climate change objectives and our energy security objectives. We will use a wide range of levers to cut carbon emissions and decarbonise our economy. Achieving the rapid progress that we need to make up for years of inaction and indecisiveness—in that regard, I am looking at some Labour Members—will be a significant challenge, but it also presents a massive opportunity for Britain. The global market in low-carbon and environmental goods and services was estimated at £3.2 trillion in 2008-09, and is projected to rise to more than £4 trillion by 2015. By taking action to secure energy supplies and cut emissions we can enable British businesses to seize the benefits of that transition, creating new businesses and thousands of jobs across the country.
Malcolm Wicks (Croydon North) (Lab)
I congratulate the Secretary of State on his appointment. I am not sure who he was looking at just then, because Labour Members were very decisive about the need for new nuclear power. When you examine the transition to a low-carbon economy, are you factoring new nuclear power in or out? Similarly, do you factor nuclear power in when it comes to—
Malcolm Wicks
Indeed. Is the Secretary of State factoring in new nuclear power when it comes to carbon emissions? Does he recognise that in order to drive forward new nuclear power he must play a decisive, hands-on role?
Chris Huhne
If the right hon. Gentleman were to read the coalition Government agreement, he would recognise that a clear framework is in place for new nuclear power. I am pleased that some of those most interested in investing in new nuclear, such as EDF, have welcomed the clarity with which the new Government have set out their position. If he is concerned about that, he needs to update himself on some of the potential investors.
The steps that we need to take—