Electricity Market Reform

David Mowat Excerpts

Thursday 3rd November 2011 Westminster Hall

[David Mowat (Warrington South) (Con)]

I have already spoken this afternoon, so I will be brief to let the hon. Member for Southampton, Test (Dr Whitehead) contribute to the debate. I liked the Rubik’s cube analogy that we have just heard; I will not add to that although I want to raise a couple of points that have not yet been discussed. We have spoken a little about fuel poverty, but we have not specifically mentioned energy-intensive industries. I know that proposals on that are to be published and I await them with interest. It is a major problem. I was recently told that INEOS in Runcorn uses about as much electricity as Liverpool. That is a continuum; it is not a discrete industry, and to a greater or lesser extent, all industry uses electricity. At a time when we are rebalancing our economy, it is worth noting that a unit of GDP obtained from manufacturing will always require more energy than one obtained from services.

I have two specific points. First, paragraph 37 on page 15 of the report states:

“It is important that the Electricity Market Reform package is geared to deliver our renewables targets as well as our decarbonisation objectives.”

The Government agreed with that conclusion and although I looked carefully at the logic behind it to try to find evidence for it, I could not. Cutting 80% of our carbon emissions by 2050 is a difficult challenge, and I am concerned that we are introducing subsidiary targets that will make it harder. Of course renewables are part of the solution, and nothing in my remarks should imply otherwise, but if we elevate renewables over and above other methods of reducing carbon, including nuclear power and a little bit of gas, we could be driven to make wrong decisions. I think that to an extent we are doing just that.

We have just heard an exchange about the cost of solar power, which is still high. A finding by the Parliamentary Office of Science and Technology and Cambridge university suggested that, over its lifecycle, solar power uses three times as much carbon as nuclear power, including the manufacturing cost of PV cells. I support the objectives of decarbonisation, but I wonder whether some of the renewables objectives could be a distraction.

My second comment on the report links to the previous point about fuel poverty. We have a problem with cost, which we are ducking. The danger of doing that is that it could become a cumulative issue, meaning that we will never address head-on the question of why the costs involved may be a price worth paying. We have heard in previous debates about the numbers of people who are dying in our country from fuel-related issues such as hypothermia—I think I heard the figure of 2,500 a year. Page 61 of the report implies that the EMR reforms, which I broadly support as a sensible way of achieving our objective, will have a maximum impact on energy prices over three decades of 7%—that is the highest number on the chart. That figure is based on a set of assumptions that I could not find and that I am not sure have been published. Unless we take seriously the extra costs associated with some of our actions in terms of interfering with the market, we will lose popular support for some of the things we are rightly trying to do.