Queen’s Speech

Lord Freeman Excerpts

Wednesday 16th May 2012 Lords Chamber

[Lord Freeman]

My Lords, I will concentrate my remarks concerning the gracious Speech on the proposals put forward on energy. Together with the noble Lords, Lord Whitty and Lord Rowe-Beddoe, I helped produce a report on renewable energy. The single point that I make with great emphasis, and address through my noble friend on the Front Bench to the Department of Energy, is that policy has been developed over the past two years in this Parliament, and now is the time to implement it. There should be no more changes, because the financing of our new energy policy in the coming years will require very significant sums of money as well as certainty for the private sector.

I very much welcome the proposals for the green investment bank and the reforms to the electricity market included in the gracious Speech. The past two years have been very productive for the development of policy in the Department of Energy on low-carbon energy, cutting emissions and facilitating investment; but now is the time to send a message to the private sector—I will come to this in a moment—that there will be no more changes or developments in policy. Time is running out. We need an embargo on further policy initiatives.

I very much welcome the feed-in tariff and the guaranteeing of the price for low-carbon technology—the investment costs of producing electricity. The initiatives taken by the department for building new capacity in both nuclear and renewable energy provide fair incentives.

I will say a word about wind power, and in particular offshore wind. I very much welcome the developments that have occurred over the past few years and the significant investment. Compared with the investment in offshore wind that the Germans and the French have achieved, we have a good record so far. The intermittence in the supply of electricity coming from offshore wind is a problem. I hope that the private sector can develop the technology to take excess power generated by prevailing winds that the Central Electricity Generating Board does not need and store and use that electricity, perhaps using new technologies such as electrolysis to convert and store hydrogen for use in transport, particularly delivery vehicles, buses and so on.

The costs entailed in the delivery of this new energy strategy are very substantial. Estimates for the next five years in this country alone exceed £100 billion. When one considers that policies in France and Germany have brought a fall in central government financing, one can understand that we face a very significant challenge in raising the money. Most of it must come from non-government sources. Obviously there will be subsidies for low-carbon technology that the Government will provide, but the bulk of the investment will have to come from the private sector. UK institutions such as pension funds will not be able to supply a large proportion of that money. Sovereign wealth funds will probably be a better source of finance. The green investment bank is likely to have only something like £3 billion, whereas £100 billion will be required over the next three to five years.

We can also export some of our technology—particularly to China, India and Brazil—for cash receipts. Whether the Government or the private sector facilitate that, it could be a source of funding. The EU Project Bond Initiative, aimed at raising money for energy projects and guaranteed by the European Union, holds some promise. I once again emphasise the importance of certainty for the private sector that no more policy initiatives will proceed. Policies completed: implementation now.