Energy Bill

Lord Berkeley Excerpts

Monday 28th October 2013 Lords Chamber

[Lord Cameron of Dillington (CB)]

My Lords, I hesitate to speak to the amendment because I am not against it and I sympathise with the intentions of the noble Lords who are proposing it, particularly if it affected the price of construction timber and made housing more expensive, which would not be good. However, I advocate a bit of caution. I have recently come across a company which is trying to build four medium-sized biomass-powered electricity generating stations using brash, tops, coppice, sawmill offcuts and other non-value timber. They are putting them at different ends of the United Kingdom so they have good local sources for the timber. Each power station will be producing between 12 and 25 megawatts and will cost about £60 million. The material is sustainably sourced and will encourage the use of thinnings. For those noble Lords who do not know, thinnings are quite often not taken out because it costs more to do so than to leave them. If you could take more thinnings out it would create more high-value timber for construction or other uses.

I sympathise with the amendment but if it were applied across the board, with a generalised percentage, it would cripple a highly sustainable, beneficial biomass-generating business before it got off the ground. Before an amendment of this nature is enacted, it either needs to be reworded or we need a statement from DECC guaranteeing a flexible interpretation.

[Lord Berkeley (Lab)]

I support the amendment in principle, but I am concerned. The noble Lord, Lord Cameron, has made some interesting points. I have been told that the biomass market, as we see it today, probably has a life of about 10 years. Investment is going into ports at both ends for the wood, as well as in shipping lines and transport from the ports. I declare an interest as chair of the Rail Freight Group. A lot of investment is going into new wagons or converting coal wagons to keep this stuff dry, because if it gets wet it is not very nice. The message in the industry is that they have got 10 years and then the nuclear power station at Hinkley point, and perhaps others, will be on stream, after which there is no guarantee of what will happen.

If that is the case and if, in the interim, the furniture industry of which the noble Lord, Lord Jenkin, spoke, is decimated, that will not be very good. We will have had 10 years of biomass but no furniture industry after that. I do not know whether that is the case. There are clearly many millions of tonnes of biomass in other parts of the world, but there are problems certifying where it comes from. Also, I am told that if it comes in pellets you cannot convert it to woodchips and vice versa. I would hate to see an industry like that decimated just for 10 years of using local biomass which then proves to be uneconomic and where the plant closes down.

[Viscount Ridley (Con)]

My Lords, I wish to speak briefly in support of the amendment. I think I am right in saying that the Secretary of State has expressed a view similar to that of the amendment. Speaking to the BBC on 18 July, he said:

“Making electricity from biomass based on imported wood is not a long-term answer to our energy needs—I am quite clear about that.”

We are in a bit of a bind here, because the Department of Energy and Climate Change has said it expects about 90% of the biomass that will be burned in power stations to be imported. However, the wood panel industry is clear in saying that even if 10% of what is going to be burnt is produced domestically, it will have a devastating effect and could displace a lot of the wood panel industry, which it estimates would increase carbon emissions by about 6 million tonnes, because if you are burning something today instead of incorporating it into a piece of furniture, you are turning it into CO₂ much sooner. Making furniture also produces carbon emissions, but considerably less—about one-quarter or one-fifth of the amount.

Perhaps I may also take this opportunity to ask the Minister for clarification on my Written Question earlier this year about carbon dioxide emissions from burning biomass. It is clear that in the short term, biomass is about the highest carbon dioxide-emitting fuel there is. If you recapture that over a period of 35 or 40 years for softwood, and rather longer for hardwood, one can in the long run perhaps make the case that biomass is carbon neutral. However, all the calculations that I have seen show that because of the need to drive off water, and due to its chemical composition—there is a difference between cellulose which has hydrated hydrogen in it as opposed to coal which does not—the use of biomass will increase our carbon emissions over several decades. I thought that that was the period we are most worried about, so I am a little puzzled about the current dash for wood, as I call it.

--- Later in debate ---

[Lord Teverson (LD)]

My Lords, I will speak briefly on Amendments 50 and 51. My heart is with them completely, and I congratulate the right reverend Prelate on his award. I am sometimes involved in green awards and energy efficiency—an area that has often been left out of these debates—and it is great to have someone who has been a recipient of one of those.

The difficulty with these two amendments is that they target a specific reduction in electricity. Coming back to the decarbonisation debate that we had earlier on today, better decarbonisation can, of course, actually be achieved by having an increase in electricity. One of the big challenges of decarbonisation is moving the transport sector from fossil fuels either into biofuels or, particularly, into electricity, using electric vehicles. We also eventually want to move home heating from gas into electric—non-carbon-generated electricity. It therefore makes it very difficult in these areas to have targets on terawatt-hours or proportions or whatever; you have to take it back to exactly what the right revered Prelate said, which is energy efficiency. I am a great advocate of the green deal, and it certainly has its issues at the moment and I hope it succeeds, though perhaps it needs a number of changes to do that. At the end of the day, however, the real thing we have to do is just to go out there and, perhaps rather brutally—whether it is street by street or village by village—ensure that we upgrade domestic and industrial premises so that they are energy efficient. Going down the route of specific electricity-target reductions could actually work against decarbonisation and the way in which we are trying to reduce carbon emissions in this country. I am absolutely with the intent, but I think the method in this case has great difficulty.

[Lord Berkeley]

My Lords, the noble Lord, Lord Teverson, has some very good points there. If, as I do quite often, you go around properties in different parts of the continent, you find that the energy usage and consumption and insulation are generally a lot better than many of our buildings here. I have a feeling, having talked to a few people in the building trade, that it is because the standards to which we build our properties actually require less insulation and draught-proofing than those of many other countries. It may be because we think that the temperature is always the same here, so it does not really matter.

Another problem that we have to sort out soon is the greater use of air conditioning in buildings, because in some countries—I do not think it is the case here—the current use of energy for air conditioning is a great deal more than that for heating. It is possible to design buildings which need much less air conditioning. Noble Lords will have seen them in the architectural press at some time. I do not know why we do not encourage more of this in this country; it has been an issue for years.

However, I am still not convinced that the energy suppliers have any incentive to sell less electricity or gas. It is a bit like the water companies: they love having leakages and no meters, because they sell more water and seem to think that is a good idea in places or times where there is a shortage. We are stuck with some perverse incentives. I agree that these are probably not the right amendments to achieve what we want, but it is something that we need to do to get the incentives, insulation and building regulations right, and look at the air conditioning and the design of our buildings so that they are fit for purpose in the time of global warming, as we debated earlier.

[Baroness Verma]

My Lords, I welcome the continuing interest shown in electricity-demand reduction. My noble friend Lord Roper’s Amendment 48 raises an issue that came up a number of times at both Second Reading and Committee—namely, that multiple pilots are necessary in order to test a variety of approaches. One of the pilot’s key aims is to test the Government’s preferred approach of delivering electricity demand reduction through the capacity market. That said, from a legal viewpoint the amendment is unnecessary as the Secretary of State is already able to design and run a pilot, or pilots, to test different approaches if this is necessary.

Before I move on, I, too, add my congratulations to the right reverend Prelate the Bishop of London on the great energy reductions he has achieved, which just shows that behaviour change towards energy usage can make a huge amount of difference. I commend what the right reverend Prelate has done. He also mentioned the very important Green Deal and smart meters. These measures will help to revolutionise the way we approach energy usage. It is about being able to ensure that consumers understand the usage of energy, which is why I listened very keenly to what the right reverend Prelate said. Where the Green Deal is concerned, 80,000 assessments have been carried out. Under ECO, many tens of thousands of homes have already benefited from the Green Deal. Like my noble friend Lord Teverson, I think the Green Deal is an excellent vehicle for being able to bring greater efficiency towards homes.

My noble friend Lord Roper and the noble Lord, Lord Grantchester, spoke about there being more than one pilot. We would rather start with what we consider the preferred option but we do not rule out there being multiple approaches simultaneously. If we have too many, it will be difficult to evaluate. We want to be sensible and see a range, if that is what is needed, but we have a preferred approach. It would be better for us as a Government to see that preferred approach dealt with first. There is nothing in the Bill to stop us having more than one approach.

I reiterate that Clause 37 is simply a spending power, required to authorise the spending of Government money. I appreciate the concern to ensure sufficient funds are available for piloting. We considered raising funds for the pilot using the capacity market powers but rejected this approach because it would delay the start of the pilot, which we announced is expected to start next summer.

Amendments 50 and 51, from the noble Lord, Lord Grantchester, and the right reverend Prelate the Bishop of London, would require the Secretary of State to publish a strategy to reduce a stated amount of electricity demand by 2020 and 2030. While I welcome the principle behind these proposals, the Government have already published a number of documents, including on how we will meet our existing energy efficiency commitments. That is through the energy efficiency strategy which will be updated later this year, the DECC energy and emissions projections, and the Government’s response to the EDR consultation. These documents already provide a comprehensive view of Government strategy. As the pilot is designed to improve our understanding of the cost-effectiveness of EDR in relation to that of a variety of supply-side and demand-side measures, we do not consider it appropriate to set a specific EDR target.

The noble Lord, Lord Grantchester, asked about the difference in the estimates that the department has given out. The estimate of the untapped potential was revised from 92 terawatt hours to around 32 terawatt hours by 2030 because there is considerable uncertainty as to the exact level of potential for electricity demand reduction. We believe that this figure represents a much more sensible picture of what can be achieved. That analysis has also been subject to external peer review.

In conclusion, we have listened to concerns about reporting the results of the pilot and have introduced an amendment on this. Our existing legal powers already allow us to test other approaches if it becomes necessary. We believe the minimum £20 million allocated to the pilot is sufficient to support a range of projects in different sectors in these difficult times. We already have an energy efficiency strategy, which will be updated shortly. I hope that my noble friend Lord Roper, the noble Lord, Lord Grantchester, and the right reverend Prelate the Bishop of London will agree to withdraw their amendments. I beg to move the amendment that stands in my name.