Energy Bill

Lord Dixon-Smith Excerpts

Tuesday 18th June 2013 Lords Chamber

[Lord Dixon-Smith]

My Lords, it is many years since the late Lord Flowers, who knew a great deal about the nuclear industry, said to me that mankind had only one source of energy, and that was nuclear. However, mankind had a choice, which was to have his nuclear power station here or 98 million miles away. Lord Flowers knew which he preferred. I often wonder, when I get up in the morning, how many years’ worth of geologically stored solar energy mankind burns off every day to enable us to live the lives that we do. Carbon dioxide was locked in in such a way that it ultimately enabled the evolution of mankind. We need to think about that.

In the Bill before us this evening, we are discussing how to provide what I would call the procedural infrastructure to enable us to renew and refresh the electricity and energy generating industry after 15 years of what can be described only as gross neglect. However, that time was not totally wasted because it gave us the Climate Change Act, which establishes a CO₂ target for 2050. We have to be extremely careful about what we do because everything we do must be consistent with that target. That target is 80% of our 1990 emissions. It is the amount of emissions that this country was producing in the 1850s, when the population was 22 million. Today we have three times the population and it is five times the energy consumption that keeps modern society going. It is quite an interesting comparison.

Energy investments by their nature are long-term, and 2050 is less than half my lifetime away now. We heard lifetimes discussed in political terms a little while ago, but I prefer the calendar. What we do, therefore, must be consistent with that target. We need to think through what that target means. I have not seen that done, so I will suggest some conclusions. We need to determine what industries we have at present that give carbon emissions, or carbon-equivalent emissions, that are so essential that they will have to continue beyond that date.

My list of industries is as follows. First, there is metal smelting; I cannot envisage how we will survive without that. Next, there is cement manufacture; again, I cannot envisage how we will survive without it. Next, there is agriculture, particularly with regard to livestock. I declare an interest as a farmer, but I have no livestock other than two children and seven grandchildren. Agriculture, of course, is a surprisingly large creator of carbon-equivalent emissions. Next, there is aviation. There is a great problem of energy density, and I rule out biofuels because we cannot today feed our existing population on this planet properly, and by 2050 there will be 2 billion more of us to deal with. Therefore, I do not think biofuels will be a viable alternative. I include shipping for a similar reason. Energy density is very important to those in that industry because ships carry cargo, so the less space that is taken up by fuel tanks the better.

Once you have gone through that list, you are a very long way towards the 20% target that we have set. If that is the case, everything else we do must become zero. All land-based transport, all our buildings and all our industries must have zero emissions. That is fundamentally important. Encouragingly, there is already a basket of technologies that could make that possible, but we do not know what technologies will win the economic race, as opposed to the calendar race.

That brings me back to the Bill for a moment. The contracts for difference established by the Bill, it seems to me, are designed to guarantee a return to investors for investing in new nuclear power stations in particular. In addition, there are safeguards in the contracts for difference to provide some protection for consumers—as far as I am concerned, consumers and taxpayers are one and the same—as regards long-term price increases. I do not envy those who are responsible for negotiating those contracts. An apparently high price today could appear to be a very reasonable price in the longer term.

I should explain that my view is coloured by my lifetime in farming. I shall use the example of farm tractor red diesel because its duty is heavily taken away. I began by paying one shilling and three and three-eighths pence for a gallon of farm tractor red diesel. That price was equivalent to about 1.3p. At present, the price is between 77p and 78p per litre. Those with quick minds will realise that we are talking about a price increase of several thousand per cent for energy, and we have been worrying about whether it might go up by 10% or 20%. Frankly, I find that quite difficult. In fact, we do not pay society a sufficient compliment for adaptability. I am not saying that we should be complacent because we should do everything to keep prices down. Returning to the contracts, a price that looks unreasonably high today might, in 20 years’ time, be an extremely good deal for the consumer. Therefore, it adds to the burden of responsibility on those responsible for negotiations.

The other thing that has happened, which could not have been imagined during the passage of the Climate Change Bill, was the advent of shale gas, and shale oil in the United States. We know now that we have large quantities in this country. They have not yet been totally confirmed and defined but they are there. We know that they exist in large parts of mainland Europe and under the eastern Mediterranean. We know also that there are considerable quantities in China. One way or another, if we can overcome the problems of providing that, it may be a very useful interim energy source.

Shale is much cleaner than coal. More importantly, using combined-cycle gas generators, it would be possible to use carbon capture and storage and to make it virtually emission-free. In addition, because you could produce clean smaller-scale power stations, you could site them near communities so that the waste heat could be used and they would become combined heat and power stations. That would be a revolution in power generation. At present, most of our power stations release nearly the same amount of energy to the atmosphere in the form of waste heat as they supply to the customer in the form of electricity. We really need to find a way around that problem.

All that may be daydreaming but the point is that we do not need more interim targets for carbon emissions because that final target already rules everything we do. It is not simply that that determines it; I am sure that there are still unknown technologies, which we will have to learn about and adapt to. Some of them may be more helpful than anything we yet know.