Energy Bill [HL]

Lord Howell of Guildford Excerpts

Tuesday 12th April 2016 Lords Chamber

[Baroness Worthington]

I note that, but I would just say that we are not Canada and we are very fortunate to have the North Sea as a reserve to use, which I believe would make it more cost efficient if we could do it in a timely fashion—obviously, not wanting to gold-plate anything, but making the best of the resource that we have in this nation. As I said, we need some reassurances from the Government. I am part of the group that the noble Lord, Lord Oxburgh, has now set up, which is looking at the whole issue afresh. We do not want to push carbon capture and storage for its own sake, but only in so far as it gives us options to decarbonise at least cost. I hope that the Minister will be able to say some words of reassurance about that process and the seriousness with which the Government will take the recommendations of that group.

[Lord Howell of Guildford (Con)]

My Lords, I agree that carbon capture is one of the keys to the future of energy and climate policy, because, if it can be done commercially and successfully, it will allow us to continue burning fossil fuels but in ways where the carbon is extracted. This is the case for continuing with fossil fuels, and perhaps slightly undermines the case of those who want to abolish fossil fuels altogether, because the whole point is that you can carry on if you have the technology.

Through your Lordships, I ask the noble Baroness who just spoke from the Liberal Democrat Benches whether they have thought about alternative and cheaper carbon removal technologies. There is carbon capture utilisation, which is developing in all sorts of new areas. It is beginning to look as though it can undermine the vast costs of piping carbon away into the North Sea. As we heard from the Minister, that would set back the problems in the North Sea, which are enormous and one hesitates to add any burdens to them, however important one may think the technology. So if there are cheaper ways of going forward, surely we should be going those ways.

That makes sense of what I understand from my noble friend to be the Government’s strategy, which is that the experimental efforts with carbon capture and storage in its full glory, with piping, transmission, finding places in the North Sea and overcoming all the vast technical and cost problems, can be replaced by something rather more imaginative. We may be moving in the right direction. My question is whether the Liberal Democrats have thought about those alternatives before pressing something which will obviously hurt the oil and gas industry in the North Sea at a time when it is already hurt very considerably.

[Baroness Featherstone]

I am happy to answer the noble Lord’s question. The Liberal Democrats keep an open mind on all technologies which can advance our climate change agenda. However, in Peterhead, for example, projects were well advanced and should have been continued.

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[Baroness Worthington]

My Lords, Amendment 9E is in my name. Our previous debate on this took place in October, before the historic climate agreement in Paris, which, for the first time, saw virtually all countries agreeing to take action together to avert the growing risk of global climate change. The significant breakthrough that made Paris a success was that countries are now individually responsible for coming forward with nationally determined targets and measures, while being guided by an overarching collective goal.

That process places the responsibility on countries to do what they can, with a view to ratcheting up ambition over time. The UK already has its own nationally determined commitments and we have been at the forefront of international leadership on climate change domestically and internationally for well over a decade. Again, I pay tribute to Secretary of State Amber Rudd, who deserves great credit for the role she and her team played in making Paris the success that it was.

Now, as we enter the final stages of this Energy Bill, which we have been considering since last July, the question we face is: how will we as the United Kingdom want to continue in that climate leadership role by demonstrating our commitment to domestic action, leading by example and forging a path that others can follow? We can and must do this, I believe, by reviewing and reforming an important aspect of our ground-breaking Climate Change Act; that is, how we measure progress.

As things stand, how we do this is complicated and unclear, made ever more complex by a decision introduced in secondary legislation and taken after the Bill was agreed that we should use European emissions allowances as the basis for accounting for our emissions in the power and industrial sectors. This is how things work currently but it cannot continue in this way for much longer. We must start counting our actual domestic emissions, guided by a common international goal set at the European and global level.

Our original amendment, agreed to in this House, sought to make this change in primary legislation, but since I have no desire to upset the timetable for setting the fifth carbon budget, which, as the Minister pointed out, we expect to be set before 30 June, and the process is now well under way, I have not retabled the amendment that was agreed in October. Instead, we have proposed what we believe is a constructive way forward and have listened carefully to the comments made by the Minister in the other place, which were constructive and talked about the timing being the main issue of opposition from the Government.

But there still is a fundamental question at stake here: do we wish to meet our carbon budgets in a way that we determine—for example, through policies and measures that we deem appropriate for our circumstances—or are we happy to have half our budgets set for us on the basis of ever-more complex rules agreed in Brussels? At the moment, as our decision to implement a carbon price support policy shows, we are taking our own path. We add an extra £18 to every tonne emitted in the UK and we are pursuing our own policies to decarbonise. Ahead of Paris, the Secretary of State made a historic commitment to phase out coal for power generation in the UK by 2025. She was rightly praised for this commitment because it sends an important signal to investors at home and to other countries struggling to reduce emissions from coal, including Germany and Holland.

Given that this is our chosen option—that we are pursuing leadership and taking our own path—it seems illogical that our carbon budgets should not reflect our own circumstances. Working on the basis of our own accounting would enable us to make sensible decisions about which sectors to move forward on more quickly and which to give more time to; for example, we could provide more of a budget to sectors that are hard to decarbonise, such as heavy goods vehicle transportation or farming, while moving faster on the power sector, where we are currently overdelivering, as the Minister said. There are 36 million tonnes of overdelivery coming from the power sector. We should be able to use that and redistribute it to other sectors, but as things stand that is not possible.

There are very good reasons why our original amendment made sense, but as I listened to the considered words of the Minister in the other place, I concluded she was right not to accept that amendment at this time, as we are only weeks away from publishing the fifth carbon budget. We hope and assume that this number will follow the advice of the CCC and we expect that to help restore some confidence in the industry. But once that is in place, we should then determine how we will meet that ambition and part of that determination should be: what counts towards compliance with that budget? The amendment in my name, in lieu of our original amendment, sets out a process by which the Government can decide how we measure our progress and how we plan to meet our targets, including a deadline of the end of 2017 by which the matter should be resolved in secondary legislation. With the budget and the rules in place, we will then be in a position to develop a long-term plan to comply with those targets and lead by example.

Unfortunately, short-term thinking is endemic in our political system. More attention is paid to fleeting headlines and passing trends on Twitter than to the important details of often complex policy areas, such as energy, which are so necessary to drive investor confidence in growing our economy. Climate change is a long-term crisis that is slowly unfolding on our watch. Record losses in sea ice, massive coral bleaching in the Great Barrier Reef, unexplained spikes in methane emissions—these are the warnings that are going off around us. We owe it to ourselves and to all future generations to do all within our ability to act and to cause others to act to mitigate this crisis.

What we in this Chamber can do, what opposition parties can do and what the Government can do is try to pass good laws that provide sensible, long-term frameworks to drive down emissions in least-cost ways. The Climate Change Act was agreed on that basis and it works, but it is now in need of review. I urge the Minister to consider this amendment carefully and if he feels it is within his power to accept it, I hope he will do so, so that we can embark on a process of proper reflection and review over a reasonable timescale, and then we can make the changes that are needed to repatriate the way we meet our most necessary climate obligations.

[Lord Howell of Guildford]

My Lords, I have only one question about this amendment, and it is aimed at both sides of your Lordships’ House. As my noble friend rightly said, this is an extremely complex matter. I sometimes feel that the noble Baroness, Lady Worthington, is the only living person who fully understands the complexities of it all. It seems to me that if one looks behind the thoughts and motivations, the bottom line is whether additional pressures are put on consumers, on the nation, on industry and on activities of every kind to complete the carbon budgets, what weight we give to absolute, precise completion of the established carbon budgets—or indeed the next one we decide—and what contribution that will make worldwide to combating global warming.

My question is simply to ask why the noble Lord, Lord Grantchester, has tabled this amendment, when in the Climate Change Act, with which the noble Baroness, Lady Worthington, had so much to do, there is a specific provision—Section 10(2)(h)—which warns and advises the Government and Ministers to have account of,

“circumstances at European and international level”.

The intention behind that was quite clear: to establish that if we got very badly out of line with neighbouring countries on our carbon budgets and on the provisions required to keep to them, the matter would be looked at again and, if necessary, changes would be made. My only question is: why are we not doing that now? Electricity costs between German and British steel have got out of alignment. Everyone knows that. We all know that theirs are 40% less and that we are paying £80 per megawatt-hour for steel-making in Britain, of which some £34 may be in additional green charges and levies. I accept that some of those are absolutely necessary, but some obviously take us out of line with our European neighbours, with the devastating results which we have all seen in the last few weeks. These things can be brushed aside, but everyone knows that this is one of the very powerful reasons why we are in some difficulties over the steel industry. I do not think that that can be denied.

[Baroness Worthington]

On that point about the steel industry, one point I was trying to convey is that if we take control of our own carbon budgets then we would decide how to allocate emissions to the steel sector, for example, rather than it being dictated by the EU ETS credits. We could then make our budgets and be more flexible to allow for those sectors that need to retain emissions for longer and push down further on the power sector, which is overdelivering by a substantial margin. We could use that to move that allocation around and protect those industries that we choose to protect for slightly longer.

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[Lord Howell of Guildford]

The question is: why are we not using the flexibility in the Climate Change Act to amend it, to ease some of the obvious and immediate pressures that are making the problems of the steel industry—but not only the steel industry—so very difficult because we are too far out of line? Anxious as we are to create a good example, which I fully accept, we are too far out of line with our direct competitors. People are being hurt and jobs are being lost. Why are we not amending our own Climate Change Act now, as we are allowed to do, to meet the new conditions? Is this to be part of the strategy, which we clearly need and which we talked about earlier today, to recover our own commercial and viable steel industries? My simple question to the noble Lord, Lord Grantchester—it is a bit to my noble friend Lord Bourne and the Government, too—is: why are we not following the precepts and guidance of the Climate Change Act itself and meeting the obvious needs of industry at this moment in some towns and areas, where many people are being thrown out of work?

[Lord Teverson (LD)]

My Lords, I rise to speak to the amendment in the name of the noble Baroness, Lady Worthington. Perhaps I can reassure the noble Lord, Lord Howell, as she has, that this amendment does not specifically help the steel industry or, necessarily, the size of the budget from the Climate Change Act. I guess that an amendment back on Report would have been needed to do that. This amendment would make sure that we repatriate entirely the powers to create our own carbon budget. So in fact it is a step towards what the noble Lord, Lord Howell, would want. Ironically, when we debated the Climate Change Bill I raised this matter specifically a number of times, but unfortunately the Labour Government of the time did not want to hear about it. I do not think that they necessarily understood it themselves. However, we now need to make a change. This should not be a party- political issue at all. It is about making a budget something that we could set ourselves and measure against our national performance. That is what we are trying to do.

In a way, I regret that we are not debating the original amendment, perhaps understandably amended to exclude the fifth carbon budget, for the reasons that have been explained. When we are tackling climate change and trying to get everybody to help, it is really important to make measuring our carbon emissions transparent, straightforward and easy, so that they mean what most people would understand them to mean: that the carbon emissions we create within the boundaries of the United Kingdom from products, services and industry are what our carbon budget measures. At the moment, that is not the case: it is only so for about half of it. The rest of it just reflects the European Emissions Trading Scheme settlement.

I fully support this amendment and hope that the Government will accept it as a way forward. There is no party angle to it whatever. All it would do is ensure that our UK emissions count against our UK carbon budget under the Climate Change Act. It would make government policy on climate change simple, straight- forward and manageable.