Energy Generation

Lord Barker of Battle Excerpts

Wednesday 17th April 2013 Westminster Hall

[Andrew George]

The UK is setting the standard for the rest of the world, and the rest of the world will move in that direction in due course. It is important that there is cross-party agreement that we want to be the greenest Government ever, which is I think part of the coalition agreement that my hon. Friend signed up to. We also want to ensure that the decarbonisation targets that we set will put the UK economy at the forefront of green jobs and investment.

[The Minister of State, Department of Energy and Climate Change (Gregory Barker)]

Just for the record, being the greenest Government ever is not part of the coalition agreement, but the personal pledge of the Prime Minister.

[Andrew George]

I am grateful to the Minister for that clarification. It is true; I looked through the coalition agreement and could not find a reference to the slogan. Nevertheless, it is a commitment of the Prime Minister on behalf of the Government that everyone who supports the Government is aware of and supports.

I am sorry that my hon. Friend the Member for Camborne and Redruth (George Eustice) is not here. He strongly supports the west Cornwall wave hub, which makes landfall in Hayle, a former part of my constituency. I hope that Ministers will come to look at the project and give it the additional support that it needs in terms of wave energy and floating offshore wind energy.

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[Barry Gardiner]

I am not a gambling man, but I understand the position of seeking to look at climate change policy as a balance of risks, and the hon. Lady is absolutely right to make that point. In truth, whatever the UK does will not make a global difference to whether we reach 2°, as I am sure she would acknowledge. The aspiration required of the UK and the global leadership that it possesses, which the hon. Member for St Ives mentioned, mean that we have to drive this if we are to play our part in achieving the global reduction. I understand the percentage figures she gave, but it is perhaps illegitimate to conclude that if we hit the 2030 target we will have only a 36% chance of achieving the 2° target. The UK cannot achieve that on its own; it demands a similar effort across the globe.

Part of the problem is that, in considering electricity market reform, the Government have been like a phlebotomist looking at the body politic. They have been obsessed with the energy flow around the system, as a phlebotomist is obsessed with the blood flow around the body, but they have failed to consider the health of the whole organism. That makes for a very poor doctor; we would not want a GP who was simply a phlebotomist.

The Government’s approach has not taken enough cognisance of how the energy sector fits in with powering our economy as a whole. A good example is the ramping down of funds available for carbon capture and storage. Coal and CCS will be vital for us. There will be significant jobs, and if we invest in and develop CCS, it will become a major part of our exports in skills and technology around the world, from which we can benefit. It is part of our wider economy, and the same is true of the renewables industry the more we invest in it and adopt the position, as the hon. Gentleman said, of being the global leader.

I am afraid that we have already lost that position, because other countries have invested far more, including what we are prepared to do in CCS. Unless we invest, we will not develop the export capacity that we need to drive our economy as a whole. We cannot simply be what Gary Smith of the GMB often refers to as the Meccano men of Europe, who simply fit together a product made elsewhere. We must have supply chains in the UK, create the jobs and invest in companies here.

[Gregory Barker]

I am sorry to intervene, but I will be pressed for time when I am winding up. The hon. Gentleman has forgotten that the Chancellor announced in the Budget the two preferred bidders for the detailed planning and design stage of our CCS competition, including the CCS project in Peterhead that was canned under the Labour Government—two projects, real progress.

[Barry Gardiner]

I do not dispute what the Minister says about the two projects that are on line, but I do not think that he will dispute what I have said about the reduction in funds available for CCS.

If we build a competitive supply chain fast enough, we can expect significant investment in the UK almost immediately, which will mean that British companies are well placed to export to a renewable energy market that the International Energy Agency predicts will be worth at least $6.4 trillion by 2035. If we do not lay the foundations for a competitive supply chain, we will see the cost of decarbonisation rise, along with our trade deficit, as we hand over the growth benefits from public investment to countries that have already taken steps to remove the policy risk from low-carbon infrastructure investment. Businesses are calling for demand security beyond 2020, which the Energy Bill could provide at no cost.

The Committee on Climate Change is the body trusted by the industry to set the right target. The Minister will know only too well the letter written by the newly appointed chair of the CCC to the Secretary of State on 25 February. He described how the Government’s plans entail a

“high degree of uncertainty about sector development beyond 2020. This will adversely impact on supply chain investment decisions and project development, undermining implementation of the Bill and raising costs for consumers.”

He went further, however, and referred to

“the need to resolve uncertainties about the direction of travel for power system development”,

specifically the “dash for gas” and the danger that it presents to low-carbon generation. I trust that the Minister will reconsider the proposals on the decarbonisation target in the Department and that we may yet see some progress.

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[The Minister of State, Department of Energy and Climate Change (Gregory Barker)]

Having returned from St Paul’s, I may be feeling a little dewy-eyed and unduly romantic, but I think this was a really good debate on both sides of the Chamber. I do not agree with all the speeches and interventions, but the quality of the arguments deployed by both sides has been very high and I have listened carefully to the points made by the hon. Members for Brent North (Barry Gardiner), for Angus (Mr Weir), for Strangford (Jim Shannon), for Llanelli (Nia Griffith) and for Southampton, Test (Dr Whitehead) and by my hon. Friend the Member for Redcar (Ian Swales). I have also listened carefully to the powerful and pithy interventions by my hon. Friends the Members for North Warwickshire (Dan Byles), for Warrington South (David Mowat) and for Rochester and Strood (Mark Reckless).

Most of all, I congratulate my hon. Friend the Member for St Ives (Andrew George) on securing this debate and on opening with a tour d’horizon on the energy sector with a clear focus on decarbonisation. He is right in so many respects on the Government’s ambition and direction. In less than three years, we have put in place many of the key building blocks of a greener, cleaner energy economy of which both coalition partners can be rightly proud.

Year-on-year, offshore wind capacity was up 60% and solar PV capacity was up 500% in 2011-12. [Interruption.] The hon. Member for Brighton, Pavilion (Caroline Lucas) is chortling, but in the past six months we have added more than half a gigawatt of solar. That totally flies in the face of the Opposition’s doom-mongering and scaremongering. The Government have a record of deployment and real action of which we can be proud, but we are absolutely clear that we will always consider the interests of the consumer. We will always consider who is actually paying. We do not believe in going green at any price; we believe that there is a fair balance between value for money and achieving our vital climate goals.

[Caroline Lucas]

Will the Minister give way?

[Gregory Barker]

I am afraid that I will not give way, because I have very little time to cover all the points.

It is interesting that I do not think that I have heard anyone in this debate refer to consumers, to consumer bills or to the ability of the British taxpayer to shoulder the subsidies that are necessary to pay for this agenda. As hon. Members know, I am a great champion of greening our economy. I am one of the few Members present who played a part in the passage of the Climate Change Act 2008, which is one of the proudest moments of my parliamentary life to date. I am absolutely committed to that, but we have to reconcile the difficult challenge of cost and delivery.

The Prime Minister has been emphatic. I am glad that my hon. Friend the Member for St Ives mentioned that we are the greenest Government ever. That was the Prime Minister’s pledge when he visited the Department of Energy and Climate Change on day four of the Government, and he reiterated the pledge only a matter of weeks ago to the Royal Society:

“we are in a global race and the countries that succeed in that race, the economies…that will prosper are those that are the greenest and the most energy-efficient… it is the countries that prioritise green energy that will secure the biggest share of jobs and growth.”

There is no fundamental difference between the two sides of the House in our direction, destination or determination to meet the goals that are embedded in the Climate Change Act. In fact, there is not so much between us on the decarbonisation target, either. We have tabled an amendment to the Energy Bill that will allow us to set a decarbonisation target alongside the fifth carbon budget, and I will go on to address that in detail.

My hon. Friend the Member for St Ives mentioned marine energy in his opening speech. I am extremely proud of the huge leaps forward we have made on that exciting technology over the past three years with the establishment of the UK’s first marine energy parks—first in the south-west and now in Scotland. I am extremely proud of that investment. Our commitment in the last review, despite all the pressure on public finance and energy bills, was to increase substantially the renewable obligations certificates that we are giving marine, to give it the investment punch that it needs.

My hon. Friend kindly invited me to visit Cornwall and see FaBTest. I will be there next week. I must admit that it was already in the pipeline, but he can take back the good news this weekend and tell every Cornishman good and true that the Energy Minister is coming.

[Mr Weir]

What about Cornishwomen?

[Gregory Barker]

Quite right. I stand corrected. Although I am blowing my own trumpet, the hon. Member for Rutherglen and Hamilton West (Tom Greatrex) chided my Department for its turnover in Energy Ministers. Coming from the Labour party, that is a bit bleeding rich. Under the previous Administration, there was a revolving door on the Department. I think I am now the longest-serving Energy Minister since the previous Conservative Administration—

[Tom Greatrex]

Will the Minister give way?

[Gregory Barker]

No, I will not, I am afraid. I greatly welcome the closer alignment with the Department for Business, Innovation and Skills. I cheered the last Government when they created a separate Department of Energy and Climate Change. It is a good thing, but it must also be a good thing, as he pointed out, to have much closer alignment between BIS and DECC. The appointment of my right hon. Friend the Member for Sevenoaks (Michael Fallon) to the important job of Energy Minister, much as it will stretch him, sends a clear signal about the central importance of the low-carbon economy to British growth and our long-term growth prospects, as the Prime Minister said and every Member who has spoken in the debate has pointed out. The CBI supports the agenda, and there is wider support for the low-carbon economy that goes way beyond certain renewable energy technologies. It offers export and other business opportunities requiring little or no subsidy, and it has a great deal of its own momentum.

We will return to the decarbonisation target when the Bill returns to the Commons on Report after the Queen’s Speech. I know that some hon. Members have argued that we should go further and set a target now, to provide greater certainty to investors. I understand that argument—I listened carefully to the contributions made in the evidence session before the Bill Committee—and I see the strong merit of the argument for a decarbonisation target. That is why we are introducing measures in the Bill to create such a target. However, we must also resist the temptation to think that life is about targets. Surely, we learned our lesson under the last Government. Simply setting targets does not deliver results. If this Government are about anything, we are about deployment, results and driving real change in real time, and our record demonstrates that we are capable of doing that.

As we set out in the carbon plan in December 2011, it is likely that, as well as decarbonising electricity generation, meeting our 2050 target will require the electrification of a significant amount of heat and transport in the UK. In turn, that will not only affect overall demand for electricity but require us to take into account when that electricity is needed. For instance, when will people want to charge electric vehicles? Heat demand changes seasonally and over the course of a single day. All those things must be taken together when we consider the best way to decarbonise electricity as part of a least-cost route to meeting our obligations under the Climate Change Act 2008.

The second reason why I believe we should wait to set a target range is that we do not need to do so now. As I have said, we have provided clear signals to investors via a range of different initiatives, legally binding targets and the action that we are taking through the electricity market reforms in the Energy Bill. They have prompted the director of the CBI to say that the Bill sends

“a strong signal to investors that the Government is serious about providing firms with the certainty they need to invest in affordable secure low-carbon energy.”

That is what we are doing.

This must be seen in the context of the Government’s wider plans. The green investment bank is now investing billions of pounds in our green economy and catalysing billions more. I appreciate that hon. Members have focused on one element, but the wider package is extremely ambitious and encouraging.

[Mr James Gray (in the Chair)]

I am most grateful to the Minister for winding up precisely at 6.15. Can people from the last debate leave the Chamber quickly and quietly?