Energy Bill [HL]

Lord Jenkin of Roding Excerpts

Tuesday 8th February 2011 Grand Committee

[Lord Marland]

Giving it a ROC is an incentive to use it. This means that it is in a totally different category from nuclear and therefore fits into the same category as onshore and offshore wind, which also benefit from the same revenue contributions and financial support. I hope that clarifies the point.

[Lord Jenkin of Roding]

Following on from that question, will the Minister confirm that, if there turns out to be a need for a subsidy for geothermal energy in the way discussed, and the subsidy is in the same form as that for onshore and offshore wind, the cost would fall, as with those two generating systems, on the consumer?

Lord Marland: I cannot confirm the costs on the consumer at this early stage of the procedure. However, I can confirm that there are two ROCs already in place available for deep geothermal. Therefore, there is a system in place for rewarding the person who produces it.

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[Lord Oxburgh]

To answer a couple of points raised by the right reverend Prelate, I should say that 25 years is a perfectly reasonable time, but it might well be 35 years for the life of a field of this kind.

[Lord Jenkin of Roding]

We could not all hear that.

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[Lord Oxburgh]

In the interests of reducing internecine strife, I think the prospects of serious incompatibility here are quite small. There is not really as much scope for moving wind farm locations as it might appear—wind is pretty variable—but, given the kind of technology of which I spoke in relation to the previous amendment, one can now exploit gas fields or oil fields at an angle from some distance without too much difficulty. It is important to give some confidence, as far as it is needed for investors in this area, but I do not think this is going to be a big problem.

[Lord Jenkin of Roding]

My Lords, the noble Lord, Lord Oxburgh, is absolutely right. The more I have looked into this, the more I see that it is a very complex problem. It has been under discussion with the two industries and my noble friend’s department for some years. From time to time, pressure has been brought on one or the other to try to find a solution. I am sure that the noble Lord, Lord Oxburgh, is right but the prospects of a serious overlap are pretty small.

It seems to me that often the problem is bringing the product ashore. The problems with offshore oil and gas are well known but I know that some wind farms have found difficulty in finding ways of getting their supplies ashore. It has been suggested to me—I think this has been discussed with my noble friend’s department—that there might be some form of compulsory purchase onshore to ensure that the product of a wind farm can be brought ashore at the most appropriate place, even if at present the landowners are reluctant to give permission. However, it does not seem to me that this complex matter has been dealt with by a single amendment in a Bill of this sort.

I entirely take the point made by the noble Lord, Lord O'Neill of Clackmannan, that oil and gas will be very important—particularly gas—for many years ahead. It is not so long ago that there was a major discovery off the coast of Scotland—the Buzzard gas field—and that could still happen. These things are far from certain and gas has to be exploited where it is. Yes, as the noble Lord, Lord Oxburgh, implies, there is a limited capacity for drilling horizontally, if necessary, or at an angle to develop a field but my impression is that the two industries have tried over a long period to reach an accommodation about how this might be handled. I think we would be a little unwise to start legislating in the way the noble Lord, Lord Whitty, suggests and simply say that there can be a retrospective revocation or variation of a lease that has been given in respect of which a great deal of capital investment may have taken place.

On the whole, I do not support the amendment in the name of the noble Lord, Lord Whitty, but I think that the discussions should continue. If it appears to my noble friend’s department that some legislative provision needs to be made, perhaps the Government could look at that for the next energy Bill, whenever it appears. My impression is that we may not see it this Session.

[Lord Judd]

In the cause of cohesion on this side of the Committee, might I say that it has been very intoxicating to have the thesis and the antithesis and, like others, in all humility I would like to put myself on the side of the synthesis? It seems to me that it would be tragic if we got into a vicious either/or battle. The issue is how to bring these things together constructively. I make the observation—no doubt I could be described as an unreconstructed politician of former days—that it seems to bring home to me the hazards of a market-dominated approach in these crucial strategic issues and that we really need very effective strategic planning into which the private sector can then feed its contribution. This debate brings home the need for a strategic approach, not just targets but how they are to be delivered because that is the crucial issue all the time. It is not just to spell out the aspirations; it is actually to have the mechanisms there to ensure they happen.

I take the urgency and importance of the vigorous argument of my noble friend Lord O’Neill seriously, and if I have one anxiety it is on that point. Employment, security, economy, the real immediate needs—those are all crucial and it would be naive to overlook them. However, I am fearful because we seem to keep getting caught up in the immediacy of the management situation, but the Bill should unashamedly take a visionary approach to the long-term future. I am sure that my noble friend Lord O’Neill would be the first to agree that he is talking about what we all know to be finite resources. That is crucial at this juncture. Sooner or later, this country will have to face the issue. It is not an ephemeral kind of idea; it is absolute fundamental practicality that the economy of this has to keep going at some future point without the availability—it is taken for granted—of the finite resources. If we always get into the crude argument, the long-term thinking will always be pushed to the side. We will always hear about all the difficulties and doubts.

Objective considerations about the reality of what is proposed are important, but many of these things are challenges to be overcome and to be got right; they are not excuses for delaying and pushing to one side. I for one put firmly on record that whether or not the idea is acceptable as an amendment, my noble friend Lord Whitty is to be warmly congratulated on again having brought it home to the Committee, in his characteristically firm way, that either we are serious about alternatives or we are not. If we are, we have to start putting some consistent muscle and priority behind those alternatives and stop saying that they are an also-ran to be fitted in when there are no other objections to be raised.

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[Lord Jenkin of Roding]

I have words of comfort for the noble Baroness. I have on previous occasions said that I totally share her dismay at the complexity of the legislation, and I have arranged a meeting next week with the chairman and the chief parliamentary counsel of the Law Commission to discuss the whole process of consolidation, how the Law Commission approaches it, where the initiative lies and whether it considers that the Electricity Act and the Gas Act would be a case for consolidation. I am not just talking the talk; I am, I hope, walking the walk. I hope that Ministers and officials in the department will recognise that some of us are not going to let that matter rest.

I am very glad that the noble Baroness said that this is a probing amendment, because the issue is extremely simple. Section 48 of the 2008 Act gives the Government power to impose changes on a funded decommissioning programme after it has been done. It has, no doubt, been represented by the nuclear industry that it contains a considerable element of uncertainty about additional charges possibly being made after the original programme had been agreed or about changes being made to the timing of the payments. At the moment, the payments are intended to be spread over the life of a plant so that by the end of that time there will be a sufficient fund available to cover the decommissioning and waste treatment. It is absolutely right that that should not now fall on the taxpayer but is part of the cost of producing the electricity. Under that section, the Government have the power to impose a change. All this clause is doing, as I understand it, is requiring the Government to agree a change with the developer. It may well be possible for the Government to suggest there should be changes, but the developer has to agree. Given what we have been saying in earlier debates about the need to try to create certainty, I think this clause is entirely right. I am glad the noble Baroness decided to table merely a probing amendment because I think the clause should be allowed to stand in the interests of certainty for the nuclear industry.

[Lord O'Neill of Clackmannan]

My Lords, one thing that has struck me about this House is that although we often talk about scrutiny we rarely use the probing amendment, which is one of the regular tools of the discredited Standing Committee process in the House of Commons. It is often used there for time-wasting purposes as well. However, in today’s case it is useful when there is a certain degree—in fact, a large degree—of opacity in the wording of the Bill, for quite understandable reasons. You have to work your way through the network to try and get to the point.

On the substance of the issue, speaking as the chairman of the Nuclear Industry Association, we are quite relaxed about this. We think that there will always be something which we have not anticipated—God forbid that, in terms of nuclear power generation or waste management, it was of the order of any terribly serious or dreadful prospect. My real point is that we recognise that there can be unforeseen circumstances. The Government have, on occasion, to change step for whatever reason but should do so, as far as is reasonably possible, with the agreement and understanding of those who are going to be affected by that. At the moment, with the agreement which has been reached on waste management—in terms of both the funding of the Nuclear Decommissioning Authority and the costing programme for its long-term cost—the industry is, within reasonable bounds, happy on that issue. On that point, I hope that my noble friend is only probing and will withdraw.

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[Baroness Smith of Basildon]

I rise to speak—or not, as the case may be. One of the oddities of procedure in your Lordships’ House is that sometimes it seems that we have to say the exact opposite of what we want to say in order to have the opportunity to, in this case, congratulate the Minister. I have had to give notice of my intention to oppose the Question that the clause stand part of the Bill, which is the opposite of what I want to do. In fact, I congratulate the Minister: he will recall that, under Schedule 7 to the Public Bodies Bill, I have proposed an amendment to delete the Coal Authority from that Bill. It seemed to me that any change to the functions of the Coal Authority should be undertaken not by secondary legislation—by order—but by primary legislation. That is exactly what the Minister has done in Clause 100 of this Bill, so I merely congratulate him as it is the appropriate way to make such changes. I hope that he will either support my amendment to Schedule 7 to the Public Bodies Bill or take other action to ensure that the Coal Authority is no longer in it.

[Lord Jenkin of Roding]

I understand from the impact statement on this that some possible competition issues will need to be addressed as to whether the Coal Authority will have, in some way, a preferred position as against other contractors that may compete for the business. I hope that my noble friend can give me some assurance that that will be taken account of.

[Baroness Northover]

My Lords, I am delighted to have been assigned this clause stand part debate, because therefore I am by proxy receiving congratulations that are not deserved, which is a great pleasure. My noble friend has raised another issue on the substance of the clause, so I shall spell out what it seeks to do.

This simple clause extends the Coal Authority’s powers in England and Wales, which would enable the Coal Authority to use, and charge for, its existing expertise in remediating coal-related environmental and safety liabilities in non-coal related contexts. For example, it could assist other public bodies and private landowners in dealing with mine-water treatment and subsidence or surface hazard remediation outside the coal-mining sphere, but that would not take precedence over the authority’s existing statutory duties.

On whether we are talking here about non-flat playing fields again, I assure my noble friend Lord Jenkin that the clause enables the Coal Authority to work in the area without cutting across its statutory duties, but it does not give it precedence in the area. It does not even place an obligation on the Coal Authority to act in this way or on others to use it; it is just an enabling power. I hope that that reassures him. We will return to the Public Bodies Bill—maybe not, depending on what happens with the AV Bill—and no doubt we will get into further discussions on what it says. In the mean time, I hope that the noble Baroness will be happy not to oppose the Question that the clause stand part.