Energy Bill [Lords]

Dan Poulter Excerpts

Monday 18th January 2016 Commons Chamber

[Graham Stuart]

Indeed, Austria is my hon. Friend’s favourite bête noire. He points out that the contribution of many countries that like to talk about this topic but not deliver on it is pretty woeful, which goes back to my earlier point about the need for a joined-up approach to ensure that we genuinely deliver collectively the outcomes that we desire. Thanks in part to the efforts of my right hon. Friend the Secretary of State, EU ambitions were raised, but they did not go as far as the UK would have liked. In 2008, with cross-party support, we unilaterally decided on a pathway for this country, which was 80% reductions by 2050.

[Dr Daniel Poulter (Central Suffolk and North Ipswich) (Con)]

I agree with much of what my hon. Friend is saying, but does he also agree that where the UK leads, as was outlined by the former Leader of the Opposition, very often other countries in the EU follow? Currently, Sweden is considering implementing its own climate change Act based on UK legislation.

[Graham Stuart]

My hon. Friend is right, but it is important not to exaggerate that, because it will quite rightly be picked up by colleagues, who will point out that something as all-encompassing, as specific and as road-mapped as our Climate Change Act has probably never been passed in another country in the world, and it is coming up for eight years since that Act was passed into law.

It is worth saying a little on the context, as we are seeing turning points. It is not correct to say that we are solely, in this sadomasochistic way, inflicting pain on ourselves while others entirely deny themselves these pleasures. According to Bloomberg New Energy Finance, last year, despite the fall in oil and gas prices, there was record investment in clean power, with an increase to $329 billion. In other words, the regulatory and legal framework has been set up across the world, and the GLOBE organisation, of which I am chair and in which I declare an interest, has, I hope, played a part in helping to create those frameworks around the world.

Chinese renewables investment last year hit $111 billion, which was an increase of 17%, while the US investment in renewables went up 7.5% to $56 billion. However, to return to the point of my hon. Friend the Member for Warrington South (David Mowat), Europe saw the lowest level of investment in renewables last year since 2006. Therefore, while we may be delivering, Europe is not entirely doing what one might hope that it would.

On the subject of onshore wind, may I welcome the Government’s commitment to look at the whole system cost of renewables? My understanding is that onshore wind is currently our cheapest renewable, but there are issues around the back-up that is required. What we need to have is an objective assessment of the cost, so that we can make a proper judgment of the benefits of one form of clean energy versus another—for instance against biomass, which my hon. Friend the Member for Selby and Ainsty was so keen to champion. Until we have that clarity over the real costs, it is hard to create the framework and the incentives that we need to bring on the cleanest possible transformation at the lowest possible cost.

On the issue of zero emissions, I just wanted to follow on from what the right hon. Member for Doncaster North said. He is right. If we are to deliver 2° let alone 1.5°, we will need to move to what sounds like a slightly fantastical idea of zero emissions. If we can entirely decarbonise the power system and then use that power in other systems, we will start to move towards the ability to eradicate most of our carbon. We still need other ways to change our systems—and we have time to develop these—so that any storage we have offsets the emissions that are not avoidable. There will always be emissions in a developed and industrialised world, but what we can do is net that to zero. It is important to make that point in case any people at home think that we are dealing in science fiction rather than reality. Given the progress in technology that we have seen over recent years, it is credible to believe that we can move to zero emissions. If, given modern science, 1.5° will be achieved, such a rate will be necessary.

The Government are doing a reset. By June this year, they will legislate on the fifth carbon budget, which covers the distant years of 2028 to 2032. By the end of the year, they will produce a strategy to deliver that, which is welcome. What we need is something much more coherent than the renewables obligation system. We need something that uses auctions, which delivers, as the Secretary of State has said, a market driving out costs in which the Government are out of the way to the maximum extent that they can be. In the meantime, why are we investing in expensive energies such as offshore wind? It is because they would not be viably invested in otherwise. None the less, that investment is driving the costs down. I say to those who are more sceptical on this matter to look at how prices have come down in solar and in onshore wind and how they are coming down in offshore wind. Whatever the current eddies in investor confidence, going forward with these particular Ministers who are committed both to delivering our climate obligations and to doing so at the lowest cost and in the most coherent manner is exactly the right position for us be in. I am delighted to say that I will be supporting this Bill tonight.

--- Later in debate ---

[Dr Poulter]

My hon. Friend makes some important points. Does he agree that the challenges he has outlined in relation to the long-term viability of North sea oil and gas are further highlighted by the Iranian nuclear deal that has been signed, and the fact that that supply of oil will be coming on to the global market when prices are already depressed?

[David Mowat]

My hon. Friend is right. That development was probably already discounted in the market. Nevertheless, more oil will, of course, put the price down. Like the hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell), I worked in the oil industry for a period of my life. During that time a phrase that was often used was that the solution to low oil prices is low oil prices. At some point there will be a market reaction, but it is a long way off. My hon. Friend is right—the Iranian thing does not look helpful.

I have two points on this part of the Bill. The first is one that the SNP may agree with. The new authority is to be based, apparently, in Aberdeen and London. I do not understand why any of it has to be in London. I leave it at that. We have a need in this country to have everything in London. If anything needs to be only in Aberdeen, it is the new authority.

The second point is whether the new authority is going to have issues with US competition law. I do not fully understand that, but my experience is that there could not even be a meeting between US oil companies in the same room without lawyers involved, because of their incredible concern about US anti-trust laws. I wonder how the authority will deal with that, but no doubt somebody cleverer than I am has thought about that.

We have spoken about CCS. Clause 80 is an interesting amendment proposed by the Opposition in the House of Lords. That clause says, broadly, that we should no longer take credits from the EU emissions trading scheme as part of the process. If we step back and think about that, it is the Opposition saying that they do not want a European solution to cap and trade. I made this point earlier and I think I am right. It is true that the European ETS system is useless; that is a different problem. It is completely useless because the European Parliament would not increase the cost of carbon as we have, for example, but that is no reason to give up on a European solution. It seems odd that the two more pro-European parties in this House—I think it is fair to say that—want to go away from a European solution to sort out emissions.