Environment: Low-carbon Technologies

Lord Haskel Excerpts

Wednesday 14th July 2010 Lords Chamber

Asked By

[Lord Haskel]

To ask Her Majesty’s Government what steps they are taking to encourage low-carbon technologies in the market place.

[Lord Haskel]

My Lords, I thank my noble friends, including the noble Lord, Lord Smith, who will be speaking in this debate. I also thank the Minister, who, unfortunately, is the only speaker from the government side. Perhaps I may also say how much I—like everyone else, I am sure—am looking forward to the maiden speech of my noble friend Lord Prescott. He has been a real champion for a low-carbon environment, and over many years he has really delivered on that.

The coalition, however, has so far only made promises. Its agreement promises to,

“implement a full programme of measures”—

of measures—

“to fulfil our joint ambitions for a low carbon and eco-friendly economy”.

Those are fine words, and yes, many measures are needed to run a low-carbon economy. The purpose of this debate is to find out whether the Government are really going to do it. But even if they do, they will not be successful unless they have the political will and the determination to see it through.

What are these measures? The first is money. You need public money to stimulate private investment, because science and technology is too risky for the private sector alone. It is a kind of market failure. The Enterprise Minister recognised that when commenting on the new enterprise capital fund and the growth capital fund announced in the recent Budget. The Government plan to create a green investment bank during the next Parliament. The Conservative Party Green Investment Bank Commission reported at the end of last month that the green investment bank must be established now because of the lack of funding for small low-carbon projects and the hope that a green investment bank would encourage more investment in the green economy from the private sector. It made the important point that these institutions need the clear goal of reducing carbon, not of creating shareholder value. It is not there to crowd out the private banks.

Another reason why that Conservative commission is anxious for the green bank to start is that money is global. If the state procrastinates or keeps changing its mind, the money will go elsewhere, probably into something far less risky than technology. Last week’s NESTA report makes exactly this point. I hope the Minister will listen to his own supporters who are concerned that, without these financial measures, much of our investment in science, technology and innovation will be wasted.

What about people? People are a key part of these measures. The Royal Society’s report The Scientific Century contains a section called “Scientific People” and it says it all. It deals with the shortage of secondary school science and mathematics teachers, because without good teachers there is little hope of inspiring children to stick with science and engineering; with the need for inspiration and encouragement for students to stick with STEM subjects; and with the shortage of skilled people in the supply chain. Diversity in the science and engineering workforce remains a real challenge, and we now have to compete with the United States and elsewhere to attract the best talent. It may be a statement of the obvious, but the point I am trying to make is that unless we teach, train, attract and encourage enough good people, the project will not succeed.

So what about the science and technology itself, which is perhaps the key measure? We are inundated with reports, all of which argue the intellectual case for maintaining a strong science base to enable Britain to engage in research, development and innovation. The environmental industry has produced its own manifesto on how we can contribute to economic growth through technology. In many ways, it agrees with the recent Hartwell paper—which the Minister says he has read—which states that decarbonisation goes hand in hand with improving our quality of life.

According to Mr Willetts, the Science Minister, government procurement can also help promote a low-carbon economy. Last Friday he said on the radio that he would like to encourage government procurement from innovative, small technology companies. It is obvious that the coalition has not yet got the hang of joined-up government, because the small business research initiative operated by the Technology Strategy Board has done, and is doing, precisely that. During the past couple of years, some 400 companies have had contracts from 14 government departments. I hope that the Minister will tell his honourable friend about it.

What about jobs? The way that the market seems to work is that the moment something we invent here needs scaling up, it is outsourced to Asia or eastern Europe. So most of the jobs created by new products will not be located here; they will be located there. The Government have said that we need to create 2 million new jobs in the private sector in the next five years. I am not suggesting protectionism, because protectionism never works anyway; but I am suggesting that “making it here” is another aspect of the low-carbon market which needs the Government's attention. I know that my noble friend Lord Sugar has something to say about that.

A lot of low-carbon technology deals with energy. Renewable energy and nuclear energy are seen as having a key part to play. The problem is that there is no single best solution. The Committee on Climate Change points out that, at the same time as strengthening our ability to generate low-carbon electricity, we have to reform the energy market, achieve a floor price for carbon, and improve the energy efficiency of buildings, agriculture and transport. All this requires the Government's attention; all this is part of the “measures”.

So where do we find the political will, the commitment and the determination to do all this? I hope the Minister will agree with me that the first task of the Government is to get the balance right. Because of the financial crisis, the level may have to be reduced, but it is no use being selective. You have to do it all.

Secondly, the Government can show political will by setting high standards. The market wants standards to create a level playing field; business wants high standards to encourage innovation; and the British people want high standards to make Britain a better place to live. I know that the Government are reluctant to regulate but, as the Committee on Climate Change says in its report, regulation is needed to achieve the reduction in greenhouse gases which the law demands. It is needed because exhortation and social responsibility have not worked. Another way of showing political will is to tax carbon emissions instead of taxing work and innovation. Before the election, the Liberal Democrats were very vocal on this, but, since then, they have been uncharacteristically quiet. Is the Government’s vision limited to cutting the deficit, or is there a greater ambition—an ambition to create a low-carbon economy by tackling all the measures that I have raised? Or is this too much for a Government who believe in smaller government? We need to know, because there is an awful lot riding on it.

The Minister has indicated previously that many of these issues will have to wait until the spending review in October. That is not good enough, because markets do not wait for Ministers. If they sense delay and procrastination, they just move on regardless. So here is an end-of-term suggestion for the Minister that he could be getting on with. He should cancel the use of all ministerial cars in central London and instead use the mayor’s free public bicycle scheme, which starts soon. It will save money. It will reduce carbon. The technology is proven. Most Ministers have the necessary skills. It demonstrates the Government’s commitment to a greener economy. It is leadership by example. I look forward to seeing the Minister with his trousers tucked into his socks.