Energy Bill

John Leech Excerpts

Wednesday 19th December 2012 Commons Chamber

[Mr Davey]

I reject the notion that our policy supports a dash for gas, and I absolutely reject the suggestion that the Bill is designed to do any such thing. On the contrary, it is designed to reform our electricity market. It favours not fossil fuels but low-carbon sources, and I should have thought that the hon. Lady and, indeed, all Members would support it for that reason.

You will understand, Mr Deputy Speaker, why I am genuinely disappointed that the Opposition decided to withhold their full support for the Bill in their reasoned amendment. They say that they want our economy to grow, they say that they support low-carbon energy, and they say that they want a better deal for consumers and business, but if they vote against the Bill, they will be opposing growth, opposing decarbonisation and opposing help for people who are struggling with high energy bills. Just a few years ago all the major parties worked together to deliver the Climate Change Act 2008. Why is a party led by the architect of that landmark Act refusing to support the practical reforms that will help to deliver its lofty objectives?

I predict that we will have many debates and exchanges about a decarbonisation target for the power sector—an issue that features prominently in the Opposition’s reasoned amendment—yet it should be noted that this Government will legislate so that the next Government can set a decarbonisation target alongside a fifth carbon budget, even though at the last election the manifesto of no party argued for such a power sector decarbonisation target. We will no doubt hear that industry would benefit from such a target, and I strongly sympathise with that argument, yet industry would be seriously damaged if we were not to take forward our wider reforms of the electricity market.

The right hon. Member for Don Valley (Caroline Flint) has the power to send a much stronger signal to energy investors in the UK even than setting a 2030 decarbonisation target. Almost every investment in energy is a long-term investment lasting far longer than any Parliament, and investors therefore worry about political risk. They worry about what happens if the governing party or coalition is replaced, and they therefore listen to what the Opposition say.

I presume that the right hon. Lady will press her amendment to a Division. If it is defeated, however, will she and her party colleagues support the Bill on Second Reading? I am happy to give way to her if she wants to answer that question—I am afraid she has not been tempted to respond. We shall, therefore, all await her speech with even greater anticipation, to discover whether she intends to vote against the Bill on Second Reading.

[Mr John Leech (Manchester, Withington) (LD)]

My right hon. Friend’s support for such a target has been well documented, so I suppose the current position is one of the practical realities of coalition Government, but what will be the effect of setting a target in 2016 rather than 2012, and what impact will that have on our reaching the target in 2030?

[Mr Davey]

My hon. Friend makes an interesting point. National Grid will have the job of setting the first stage of the electricity market reform delivery plan, and I will give it guidelines, as agreed with the Chancellor, on how it should set that plan. We will make it clear that it must consider power sector decarbonisation even ahead of the target that will be set in 2016.

It is worth reminding the House that the renewables energy target for 2020 was set in 2008, some 12 years ahead of the target date. If we set a decarbonisation target for 2030 in 2016, that will be a full 14 years ahead of its target date. It is therefore clear that we are planning for the longer term and that we have logic on our side. It would have been great if the Opposition could say that they had argued for this before, but they did not. I am glad they are joining us now.

The Bill’s central objective is to achieve electricity market reform, with a new investment mechanism at its core: the feed-in tariff with contracts for difference. Contracts for difference will provide long-term electricity price stability, and therefore revenue certainty, to developers and investors in technologies such as carbon capture and storage, renewables and nuclear.