Global Energy Sector

Lord Lilley Excerpts

Wednesday 15th June 2022 Lords Chamber

[Lord Lilley (Con)]

My Lords, noble Lords may recall the debate we had in February 2020 on Absolute Zero, the report produced by the Cambridge University engineering department and other universities in this country. It had almost the universal approval of this House. The central thesis of that report was that we cannot rely on

“new or breakthrough technologies … they won’t be operating at scale within thirty years.”

We have to rely on existing technologies and reducing demand. But the IEA road map assumes that what it calls “technologies under development” but not yet in the market will provide almost half the emissions savings by 2050. The main innovation opportunities it identifies to produce these savings are what it calls

“advanced batteries, hydrogen electrolysers, and direct air capture and storage.”

I simply ask noble Lords participating in this debate or reading it in Hansard whether that is remotely credible. Clearly, the practical people in the Cambridge University engineering department do not believe it is. I am prepared to believe that the occasional pig might fly, but the IEA report assumes a whole farmyard of pigs will take to the air. That seems a little unlikely.

It is worth looking at how rapidly—or not—new technologies have been deployed in our pursuit of reducing carbon emissions over the last couple of decades. After 20 years of effort, low-carbon technologies provide just 21% of this country’s total primary energy. That is little more than double the 9.4% that they provided in 2000, almost all of which was from old-fashioned bioenergy. It is that which has produced most of the savings in the subsequent 20 years; it provides 8.8% of our energy now.

The somewhat newer but scarcely novel technologies that have contributed to our progress over that period are wind and solar. Wind has been around since the Middle Ages and solar has been around for quite a long time. Although they have developed over the last 20 years, together they provide just 4.7% of our primary energy in this country. That has taken 20 years to come about.

The IEA also makes heroic assumptions about deploying existing technologies. For example, it says that, from 2025, throughout the world, including this country, no new gas boilers should be installed. I ask participants in the debate whether they believe that should be the case. Should we ban the introduction of new gas boilers from 2025? Presumably they are to be replaced by either heat pumps or direct electricity. We know the problems with heat pumps. They are available and I wanted to install one in my flat, but I was advised by my architect and builder that, unless I was insane, I should not do so. If they are not yet available or cheap, and the costs of insulation and changing radiators are not viable, we will have to do it by direct electricity. Electricity costs four times as much as gas to provide the same amount of therms. Is that what supporters of this report want to see? If not, where are they going to conjure up heat for our households from, once they are no longer allowed to replace their gas boilers?

The IEA also says there should be no new oil or gas fields developed from now. The approach that we and most countries have adopted, in trying to move towards net zero, has been the sensible one of reducing demand, not supply: phasing out demand for fossil fuels by providing alternatives, not forbidding the supply of fossil fuels. That is the sensible thing to do. If, in spelling out how we are going to reduce demand, oil companies none the less go ahead and develop fields that subsequently prove surplus to requirements, they will be left with stranded assets. That is their fault; I am not going to shed any tears for them. If, on the contrary, we stop them developing enough oil and gas to meet our schedule of reduced demand, there will be a shortage. We are seeing it now as a result of the war in Ukraine. Oil has gone up by 60% to 70% and gas has gone up by 130% of what it was before Covid. That is hard and tough for consumers, but it makes wonderful profits for suppliers. Is that what those who advocate this approach of cutting back on supply, rather than on demand, want?

The noble Baroness, Lady Sheehan, asked us to spell out our credentials. I spell out mine. I studied science at Cambridge. Of course, I do not deny the science of global warming; it is about as robust as any science I know, although it is not as alarming as some would have us believe. There is double the amount of CO₂ in the atmosphere; the direct effect is to raise the temperature of the world by 1% and then knock-on effects will significantly increase that. I accept that.

Likewise, the noble Baroness asked whether we had any vested interests. I twice worked for an oil company and, long before that, studied energy and was an energy analyst in the City. I used to upset the oil companies by advocating that we, in this country, stopped giving them free assets in the North Sea. I published something called North Sea Giveaway that prompted the Government of the day—this was before I was in Parliament—to introduce auctions to siphon off some of the profits the oil companies were making. That may be why none of them has ever asked me to go on its board.

The noble Baroness, Lady Sheehan, asserted that there is no benefit from developing new fields, or supplies of oil and gas, in the North Sea or, by extension, shale gas on land. There is; there is a direct reduction in the amount of emissions you would have for a given consumption of gas and oil. Instead of having to liquefy the gas in Qatar, ship it across the ocean and regasify it here, with the creation of emissions at those three stages, you would provide it locally, with reduced emissions. If people are sincere about wanting to reduce emissions, rather than simply wanting to punish oil companies and stop them going about their business, they would welcome domestic production for those reasons.

I hope that the House looks at this report with a critical eye and finds either that my analysis of it is incorrect and that it is full of realistic proposals, rather than flying pigs—if so, I hope someone will tell me what they are—or that it looks at a better solution to reach net zero by 2050 than what is laid out in this report.