National Policy Statements

Dan Byles Excerpts

Wednesday 1st December 2010 Commons Chamber

[Charles Hendry]

I would give way to my hon. Friend the Member for Dover, but he was the one who made me depart from my extremely consensual speech into this area of great contention. I am keen that we should get on to the issues of planning policy that are at the heart of our debate.

[Dan Byles (North Warwickshire) (Con)]

To come back to the future of nuclear power in the UK and the comments made by my hon. Friend the Member for Dover (Charlie Elphicke) about keeping the lights on, Germany is now considering extending the lives of its reactors by up to 12 years. I am a great supporter of the idea that we need to replace our nuclear reactors with new nuclear reactors, but is there any scope in the Department’s plan to extend the lives of our current reactors to try to bridge that gap?

[Charles Hendry]

My hon. Friend raises an important issue. The situation in Germany is very different from the situation here. The plan in Germany had been to have an artificially early closure of the nuclear fleet, and Chancellor Merkel’s Government have allowed them to operate for their full lives. They have reversed a decision that would have brought about early closure. The approach that we have always taken in the United Kingdom is that plants should operate for their safe life. If there is an independent assessment that they can operate for longer than had been planned, that should be considered. The case here is based on safety and security issues and some recent life extensions have been given, which we welcome. At the end of the day the extensions are a bonus rather than a building block in energy policy, but my hon. Friend makes an important point.

I want to get back to some of the key areas of the debate. Our concern is that the existing market framework will not deliver the scale of investment needed in renewables, nuclear and carbon capture and storage, all of which have significant up-front costs. Our electricity market reform programme will examine the reforms necessary to restructure the electricity market to decarbonise the power sector by the 2030s while maintaining security of supply and affordable prices. We must move quickly to give investors certainty about our reforms because of the long lead-times in developing new generation capacity. Our reform of the planning system for major infrastructure, including for major energy infrastructure, also has an important role, as does the consultation on the revised draft energy national policy statements.

Reducing demand for electricity wherever possible is important in meeting our energy objectives. Our 2050 pathways analysis shows that total UK energy demand from all sources will need to fall significantly by 2050. As I have mentioned, the green deal will save energy in the home and non-domestic buildings. We will also roll out smart meters to help to reduce demand. However, those savings will be offset by increases in other areas, such as the increased use of electricity in industrial and domestic heating and in transport. Our 2050 pathways analysis suggests that demand for electricity may even double by 2050, as we plug into the grid to power our cars and heat our homes.

Decarbonising surface transport is essential to meet our target to reduce greenhouse gas emissions by 80% by 2050, as we are required to do by law. We expect electrification to play a major role in achieving that. While electric vehicles can be powered up overnight by fluctuating electricity generation, trains, for example, will need more base load generation. We have already announced £900 million of investment in the electrification of train lines from London to Didcot, Newbury and Oxford, and for lines serving Liverpool, Manchester, Preston and Blackpool. In the new year, we will consult on the next steps for building a national high-speed rail network, which will free up capacity to allow a shift of freight from road to rail and provide an attractive low-carbon option for travelling between our major cities.

Some 80% of journeys in the UK are currently made by car, and cars will continue to play an essential part in our national transport infrastructure. The Government announced in the spending review investment of more than £400 million in measures to promote the uptake of ultra-low-carbon vehicle technologies. That includes the plug-in car grant, which will be available from January 2011 and which will provide a grant of 25% of the vehicle price up to £5,000. We are also continuing the plugged-in places programme, which supports the development of electric vehicle recharging infrastructure in strategic locations. As part of the coalition agreement, we have also undertaken to mandate a national network of vehicle recharging facilities.

We want to see more decentralised and community energy systems, such as microgeneration, make a contribution to our targets on reducing carbon emissions and increasing energy security. However, we do not believe that decentralised and community energy systems are likely to lead to the significant replacement of large-scale energy infrastructure, which is why there is an urgent need for new major energy infrastructure.

--- Later in debate ---

[Huw Irranca-Davies]

I will not take another intervention because there are other people waiting to speak.

Meanwhile, part 3 of the overarching energy policy statement details new electricity projections. It outlines the need for 59 GW of new capacity by 2025, of which as much as 33 GW will be from renewables, thus leaving a significant potential gap, on top of the energy gap that we already acknowledge, if the Minister’s best laid plans do not come to fruition. This raises the question of how the Minister can avoid re-carbonising instead of de-carbonising the energy sector if an unabated dash for expensive imported gas rushes in to fill the looming energy gap. The dash for gas and the energy gap could be made far worse if any of the “what ifs” were to happen. The Minister has honestly and openly accepted that gas will form part of our journey to a de-carbonised future, but how will he ensure that we do not stumble into a new generation of unabated gas use by default?

As a former Minister, I recognise the problem of dealing with highly complex issues and scenario planning. I therefore ask the Minister to share with the House his scenario planning and risk analysis for the energy market, before we come to debate the national policy statements in detail on the Floor of the House in January. If there is to be real democratic accountability, the House needs to see the complete assumptions on which the Minister is making his case for the NPSs and for the energy market underpinning them. We assume that these have been done. If nuclear, CCS, decentralised energy or a whole host of other variables were delayed or undeliverable, what is plan B, plan C or plan D, and would any of them allow us still to reach our aims on energy security and low carbon energy?

In that regard, what is the Minister’s response to the recommendation of the Committee on Climate Change, in response to the proposals for national policy statements on energy, that the Government act on the Committee’s proposal that the widely accepted concept of fully de-carbonising the electricity sector by 2030 should be made explicit in Government policy and NPSs? It has been widely accepted anyway, and it would drive the achievement of the 2050 targets on greenhouse gases. The Committee asserts that making explicit that commitment would drive forward decision making on new generating capacity and give certainty to investors regarding the Government’s overarching energy policy.

[Dan Byles]

The shadow Minister has highlighted the concern that many of the Government’s plans are predicated on CCS working and on investment in nuclear coming through, and he has asked what plan B is. Can we look forward to hearing from those on his own Front Bench what their plan B would be if they were in government?

[Huw Irranca-Davies]

I can give the hon. Gentleman a guarantee that we are committed to assisting the Government to deliver this, but to ignore the potential scenarios of not making good in any one of these areas would be to bury our head in the sand. There are real concerns that there could be delays in one of these areas, and if that were to happen, we, as a constructive Opposition would have to work jointly with the Government to fathom a way in which we could still deliver de-carbonised energy, hit our carbon reduction targets and deliver energy security and affordable energy. I have not even touched on the issues of the green deal and the green investment bank that were raised by other Members earlier. That is why we need to see the Government’s working assumptions, the detail behind the Minister’s development of these NPSs and, as soon as possible, the proposals for electricity market reform.

I am pleased that the Minister is talking a lot about the intentions behind the NPSs, but we are really up against time. I know that he will once again stand up and say that that is all the fault of the previous Administration, but actually it was the previous Administration who put in the foundations for what the coalition Government are now rightly taking forward. We will look to the Government to make good, and we will be constructive in helping them, but the House and the Energy and Climate Change Committee need to be able to wrestle with the facts as well as with the broad thrust of the statements. I have spoken longer than I intended to, and I look forward to hearing the comments of other Members.

--- Later in debate ---

[Dan Byles (North Warwickshire) (Con)]

I shall keep my remarks brief, as I am conscious of time.

It is extremely important that we get energy policy right. It is right that the Department has reconsulted on it, rather than rushing ahead, as it might have done. If we get energy policy wrong, we will live with the consequences for decades to come. There is a huge infrastructure challenge. As has been mentioned, we need to replace about one third of our entire energy generating capacity in the next 10 years.

All our nuclear power stations bar one will be off line by 2023, and we need to rebuild substantially, if not completely, our energy transmission infrastructure if we are to move towards a smart grid, which we will need to enable the 21st century energy infrastructure that we are trying to put in place to work. This huge infrastructure challenge translates into a huge investment challenge. Some £200 billion of investment is required in the coming years. To put that into context, I point out that it is approximately one third of the entire investment in energy infrastructure that the whole of Europe will require. EDF is looking at spending some £20 billion on what we hope will be the first of a new generation of nuclear power stations. That £20 billion represents the largest single investment by a French company outside France, I think ever, but certainly since the second world war. We need another nine just like that if we are to hit our £200 billion.

At the risk of over-emphasising this issue, let me say that we absolutely have to get the investment climate right. We need to put in place a stable regulatory and investment climate that will give investors the confidence to invest staggering sums of money for 30 or 40-year timelines and beyond. The investment challenge here is probably the biggest single part of the issue that we are discussing today. I therefore strongly welcome the broad degree of cross-party consensus that we have on our emerging energy policy. Investors must have the confidence that we will not lurch from one energy policy in this country to another with potential changes of Government, but work together and put something in place that will give the confidence for 10, 20, 30, 40 years or more.

That is all I want to say. It is a plea as much to those on the Opposition Front Bench as to those on the Government Front Bench. We must ensure that we put together an investment and regulatory regime that will not change, that will be stable and give the confidence that is necessary if we are to have the investment that we need.