Energy Bill

Lord Lawson of Blaby Excerpts

Tuesday 18th June 2013 Lords Chamber

[Lord Lawson of Blaby]

My Lords, like other noble Lords who have spoken, I begin by declaring an interest. It is a non-remunerated and non-pecuniary interest, unlike some noble Lords’ interests. It is the chairmanship of the Global Warming Policy Foundation. While I am about interests, perhaps I should declare two past interests, which I think are slightly more relevant to this debate: one which was remunerated, not particularly well, Secretary of State for Energy, and the other, president for a very long time—indeed I am the immediate past president—of the British Institute of Energy Economics. I have been tilling this soil for quite a long time. I am glad to say that next to me here is my successor as president, my noble friend Lord Howell, who was my predecessor as Secretary of State for Energy. Unfortunately, his other commitments prevent him from speaking in this Second Reading debate but I hope he will bring his great wisdom on this issue to bear in further stages of this Bill.

I do not blame my noble friend the Minister in the slightest for the fact that this is the worst Energy Bill in living memory and, indeed, probably the worst Bill of any kind that the present Government have brought forward. That may to some extent explain why it is so enthusiastically welcomed by the party opposite. It has, as the Minister made clear, one purpose and one purpose only: to reach the very demanding—that is an understatement—and radical decarbonisation targets in the Climate Change Act, which, as she rightly said, is something on which no other country has embarked. She seemed to think that was a good thing. In my opinion, it is just because no other country is so stupid.

The policy too has a particular characteristic. It has been characterised by our leading energy economist, Professor Dieter Helm of Oxford, as the Gosplan approach—his word, not mine. The noble Baroness, Lady Worthington, had a similar critique of this Bill. It is a curious, arbitrary form of nationalisation with much greater discretion for Ministers and officials than any of the old-fashioned nationalisations. The noble Baroness developed a powerful critique. It was probably the only aspect of her speech with which I agreed, but nevertheless she made a very important point. The other claims for the Bill are, of course, poppycock.

As my noble friend Lord Teverson pointed out, this is not a new Bill. It was first published in draft in 2010, and in gestation it inevitably goes back beyond that. Since then, absolutely everything of importance in the energy field has changed. Incidentally, we need to distinguish between the climate change issue and the energy issue. For example, Professor Helm, to whom I referred and whom I have known for many years, is, on the climate change issue, at the alarmist end of the spectrum, yet he has produced the most devastating critique of the Bill because he is, among other things, unlike some noble Lords who have spoken, a highly competent economist.

Anyhow, since the Bill first came forward, everything of significance on the energy scene has changed. On climate change, too, it is now agreed even by the Met Office that there has been no further recorded global warming for the past 16 years or so. That has led to a great debate among scientists as to whether, as seems likely, they exaggerated in the past what is known in the jargon as the climate sensitivity of carbon. There is an emerging consensus among scientists that the climate sensitivity of carbon is probably less than they thought. That means, importantly, that any dangers from warming, if they occur, are postponed well into the next century. It means that there is no urgency to go ahead in this way, not only because the uncertainties are in the distant future but because we have no idea what technologies will develop over the next 100 years. All we know is that there will be technological development, because there always has been and always will be.

Again, the Kyoto agreement has collapsed with no successor. The whole of the Bill was predicated on the idea of a global agreement, but we now know that there is no global agreement and that there will not be a global agreement on mandatory carbon emission controls. In the European Union, which is the closest to us in going in this direction—although it has no Climate Change Act as it is not so stupid—the renewables industry is in meltdown. Over the past five years, the share price of the renewables companies has fallen by at least 80%. The countries concerned are busy withdrawing their subsidies and one renewable company after another is going bankrupt.

The final thing, to which allusion has already been made and which is probably the most important, is the shale gas revolution. The development of fracking, as many noble Lords know, means that it is now possible economically to win gas from shale on a massive scale. Indeed, the United States, which was first in the field, is already doing it for oil as well. It is getting oil from shale. That has transformed the picture economically. The price of gas has collapsed in the United States, the price of coal has collapsed in accordance and even the oil price is looking a bit shaky. That also has an important geopolitical consequence as shale is in abundance throughout the world. In this country, we have large deposits in the north-west, in Lancashire—in the Blackpool region—and in other places. That means that we no longer need to have any fear of being beholden either to an unstable Middle East or to an unreliable Mr Putin. There is an abundance of fossil fuels throughout the world. Everything has changed. We have an abundant supply and a prospect of lower prices. As other speakers have said, on the old forecasts it was thought that prices of fossil fuels were likely to increase. Even the International Energy Agency now thinks—although obviously it is all very uncertain—that they are just as likely to fall as they are to rise in the future. Yet despite these revolutionary changes, the Government’s policy and the Bill itself are completely unchanged from when they first came forward. They are ploughing on as if nothing had happened, despite the fact that the whole energy scene has totally changed.

This is not just a stupid energy policy; it is also an extraordinary foreign policy. I see a distinguished former Permanent Secretary at the Foreign Office in his place, the noble Lord, Lord Kerr. He used to be my Principal Private Secretary, so he is obviously a good man. I remind noble Lords that in the other place the Energy and Climate Change Committee produced a report on low carbon growth links with China. It concluded, and I am not making this up:

“China … should be at the heart of HMG’s climate change mitigation strategy”.

There was, of course, a response from the Government as there always is to Select Committee reports. This was jointly from DECC, the Department of Energy and Climate Change, and the Foreign and Commonwealth Office. They said:

“We therefore welcome the Committee’s report, which rightly concludes that the UK has an important role in encouraging the trend to low carbon in China”.

They went on, correctly:

“As the UK is responsible for less than 2% of global emissions, we need all other major economies to reduce their emissions as well”.

They then added, and I quote:

“By demonstrating political leadership … the UK can have a powerful influence on the speed of transition to low carbon economic models in other countries”.

What on earth have they been smoking? Their view, it seems, is that the Chinese cannot make up their minds whether they really want to decimate their industry on the altar of higher energy prices and impoverish their still quite poor people even further and that they are only looking for a lead from the Foreign Office in Britain before deciding to do just that. What sort of world do they think we are living in? It is complete lunacy. China and India, despite what noble Lords may have heard earlier in this debate, have not the slightest intention of following us down this crazy path.

We must also look at the oil industry. Your Lordships may not like the major oil companies, but they are not stupid. If they really thought for a moment that we were going to move into a decarbonised word, would they be spending untold billions on exploring for new oil and gas—and even more for developing them? What about the financial markets? What happens when one of the oil companies makes a great discovery? Do the shares go down because, after all, fossil fuels are completely obsolete and they are pursuing a damaging strategy? No, the shares go up when they have a great oil or gas find.

This is an Alice in Wonderland world in which the Government live and in which this debate is taking place. Nor is this policy a harmless lunacy. UK energy costs and prices are inevitably bound to rise as a result of this Bill, which will become an Act, I am sure. The purpose of this legislation is to push up energy prices, because that is the only way that renewables, and even nuclear, can be made economic. British electricity prices are already, as a result of government policies in this area, among the highest in the world. According to the energy experts who have studied the Bill they are set to double by 2030. As we move from low-cost carbon to high-cost renewables, we will be damaging the economy and damaging industry and it will be the poorest families that suffer the most. I am astonished that we did not hear a word from the spokesman for the party opposite on the plight on the poor who are suffering from fuel poverty, and who will suffer even more as a result of this legislation.

This is a bad, bad Bill. There is not a single energy expert of repute, whatever his views on climate change, who believes that the policy enshrined in this Bill is sustainable. However, that is no consolation because the damage that will be done before the inevitable U-turn takes place will be incalculable.