Cost of Energy

Debate between Edward Morello and Joy Morrissey

Tuesday 11th February 2025 Westminster Hall

[Edward Morello]

I am struggling with the argument of renewable energy not being cost-effective. For the cost of the amount of generation that Hinkley C would deliver, we could deliver twice as much renewable energy generation. The strike price for offshore wind is far below any other source of electricity. So I am at a loss—across every single form of renewable energy, the generation price is below that of fossil fuels.

The hon. Lady talks about the previous Government being at the forefront of renewable energy generation, when they signed off new drilling licences for North sea oil. I feel I am living in cloud cuckoo land. There is no connection between what she is saying and the reality of market forces. Ask any wholesale energy price provider what their strike price is for renewables, and they will say that it is lower than for fossil fuels.

[Joy Morrissey]

I thank the hon. Member for his intervention. I ask that I be allowed to make progress in my speech, during which I will address many of the excellent points he raised. Let me go back to my earlier point about density and some renewables being more affordable than others. For example, acres of agricultural land need to be covered with solar panels to produce a fraction of the power that could be generated by gas power plants or small nuclear reactors.

The time has come to have a much more sensible and serious conversation about the true cost of renewable-based systems, not just repeating again and again that renewables are the cheapest form of energy. That is why the previous Secretary of State, my right hon. Friend the Member for East Surrey (Claire Coutinho), asked the Department to produce a full-system cost of renewable-based systems. If we are intent on decarbonising the entire grid by 2030, as the Government want, we must have a detailed assessment of what it will cost, and what it will do to our constituents’ energy bills and our already high industrial energy prices. Since taking office, however, the current Secretary of State has scrapped that work. He is rushing headlong into renewable-based systems, without any idea of what it will cost the country and the economy.

There is also the issue of trust—trust for consumers and for those in industry. Throughout the general election campaign, the Prime Minister, the Chancellor, the Secretary of State and around 50 Labour MPs promised across the country to cut energy bills by £300. As soon as they got into Government, they refused to commit to that promise. Even worse, they decided to take the same amount from millions of pensioners in poverty. It is difficult to think of a bigger betrayal committed by an incoming Government.

Six months on, Labour voted against an amendment to make the Government accountable for that promise through Great British Energy—their energy company that is not going to generate a single watt of energy. The new chair of that company says that it is not even within its remit to cut bills by £300. Labour cannot spend weeks and months repeating such an explicit, clear and simple promise only to row back on it the second it gets into Government. Perhaps the Minister would like to tell constituents in Beaconsfield and across the country when they can expect to see £300 off their energy bills, and how much their bills will increase to in the meantime.

It is not just households that are worried about the cost of energy, but industry too. The same energy-intensive industries that wrote to the Government to raise concerns about their plans to hike the carbon price to the highest rate in the world also share the despair at the UK having among the highest industrial electricity prices in the world. In fact, the Department’s data shows that we now have the highest industrial energy prices in the world, well above the International Energy Agency and EU average.

More than anything, our heavy and manufacturing industries need cheap energy. They need stable and reliable energy, which does not rely on the whims of the weather. As with the shutting down of the UK oil and gas industry, seeing British industry move overseas will not change demand. It just means that domestic production—with all the tax revenue, British jobs and the investment that it brings—will be replaced by higher-carbon imports from abroad. Ministers say that decarbonisation cannot mean de-industrialisation, but if our industries, which are the hardest to decarbonise, cannot cope with the high cost of energy and therefore move abroad, that will be a disaster for our economy, devastating for our workers and their families, and will do nothing to reduce global emissions.

Ministers say that they want us to be global leaders. They want us to convince other countries to decarbonise, which is a noble goal. Climate change is a global issue, and there is no sense in our going it alone to cut our emissions when we produce fewer than 1% of global emissions. That is exactly why the Government need to change tack and stop our industrial energy prices rising any further. Countries around the world, which care deeply about holding on to their industrial and manufacturing base, are looking to the UK and other western nations to see what happens next. If they look at us and see industries being gutted by a misguided energy policy and see our people suffering from higher and higher energy bills, they will not want to follow us down the path to decarbonisation. We will be a warning, not an example, to the rest of the world.

Our ceramics, automotive, cement, steel, minerals, glass, aluminium and chemical industries need, above all else, cheap energy. I urge the Minister to talk to those businesses that are struggling with high energy costs and ask them what a carbon price of £147 per tonne of CO2 would do to their businesses. The Minister might not like the answer, but the Government need to face the consequences of their policies.

The Government should be asking what arrangements will give us the cheapest, most reliable energy and how we get there. Instead, they are determined to decarbonise the grid by 2030 at any cost to meet a political target, even if that sends people’s bills through the roof, offshores our emissions to polluting countries and leaves us at the mercy of Chinese imports. When facing the electorate at the next election, they will not be able to say that they were not warned.