Energy Bill

Lord Prescott Excerpts

Tuesday 18th June 2013 Lords Chamber

[Lord Prescott]

My Lords, I feel most inadequate as I have no commercial interests to record either in the register or anywhere else, except perhaps one: I was the UK and European negotiator at Kyoto. Therefore, my interest is to continue to argue the case for climate change—the scientific argument and the connection between carbon and the increase in climate change. This very good debate has reflected the different interests and the division between those who believe in the climate change argument and those who say, “No, it is a nonsense and we should not take any notice of it”. That was probably very much reflected in the evidence and clash of views between the noble Lords, Lord Lawson and Lord Stern. I think that the noble Lord, Lord Stern, well won that argument, but I am in that school of thought. I am an admirer of the comprehensive work that the noble Lord, Lord Stern, has done and the major contribution he has made to the climate change argument.

The noble Lord, Lord Lawson, was referred to by the noble Lord, Lord Deben, not as a sceptic but as a denier. You could tell from his speech that there is no doubt that he is a denier. Perhaps I could add the noble Viscount, Lord Ridley, to that argument. The noble Viscount is indicating that he is not and I take his correction. However, basically, they believe in leaving it to the market. I did not hear an alternative from either of them. There is a great deal of rejection about the science, what we should be doing, how it should be cheaper and how much more efficient it should be. I must say to him that the coal industry and perhaps a number of the banks are not the most perfect examples of the operation of the perfect market. At the end of the day, the state comes in and has to find the money for them.

Leaving that aside, what we have in the powerful argument of the noble Lord, Lord Stern, is what he actually said and what we all know: that thousands of scientists have come to a view about the connection with climate change. One can say that they are all wrong, but the odd voice against them does not lead me to think, “Which side of the argument should I take?”. I am for the connection. I think the evidence of the weather is there, but that debate is ongoing. However, there is quite clearly a connection. If the connection between the level of greenhouse gases and carbon is accepted, and if we want to prevent an increase in global temperatures, then it has to be kept at that level. As the noble Lord, Lord Stern, has constantly pointed out, we are at a dangerous level. One can reject the argument; once that is done, it is easy to do anything. They can attack every proposal around because they want to leave it to the market to decide. Evidence shows us that the market cannot determine everything in these matters, and it often means that a regulated framework has to be found.

Much of this debate is about the balance of the regulated framework of the market and government. There are many examples. I remember when I was in Government and we convinced the industry of the need for a climate change levy. I remember Tony Blair, the Prime Minister, ringing me up when I was abroad and telling me that we were going to introduce a climate levy. I said, “Oh, you mean an energy tax”. “We don’t call it an energy tax”, he said. That may be so, but the important point was that industry administered that climate change. The levy that was imposed actually helped to make industries more efficient, and that was what was proved by it. I understand that there is a balance in the regulatory form between what governments might do and what the private sector might do and I am prepared to concede that there may well be something in the way that the market operates.

The criticisms have been genuine and informative, and I am sure that in Committee there will be good debates on serious issues. No one is actually speaking out against the Bill. Those who criticised parts of it were saying, “I support the Bill, but there are some things that I don’t like”. I will not go into all the details because they have been mentioned in an excellent manner. However, I suppose I find myself in the same boat. I agree with a lot of the criticism. It is not as good as it could be, but it is a Bill worth supporting and I want to say why that is so.

One of my criticisms is that there is no balance of energy policy; there is doubt in all the areas. We do not know what is going to happen with nuclear and we are in separate negotiations with a French state company as to whether we are prepared to give them sufficient money to provide us with nuclear energy in about 20 years’ time, even though the energy gap is coming in the next 10 years. For wind turbines we have Siemens, who want to put massive investment into my industry and my area, but it is always complaining about uncertainty, as indeed is the case with solar power.

I rather agree with the noble Lord, Lord Teverson, that there is a role for coal. It might mean that a lot of money has to go into carbon capture, but we should be prepared to recognise the role that coal plays. Some 40% of the energy in this country comes from coal. It might not come from our own coal fields, but it is certainly coming from somewhere. There is going to be a lot more about as the Asian countries begin to develop their demand for oil and coal because it is where 60% of their energy will come from, and that will lead to increased prices. This Bill is not going to prevent an increase in prices; that is one of the realities that we are going to have to live with.

Biomass has also been criticised. It is all right not to believe in it and to attack every kind of industry for every kind of reason, but the reality is that if you do not accept the argument about carbon, then you can forget about the increase in carbon and just talk about price, production and security. But if you do believe in carbon, you have got to adjust the whole system, not only in this country but globally. That is what Kyoto is all about: to find an agreement to reduce the amount of greenhouse gases so that we can reduce carbon. There are challenges coming with climate change and the horrific circumstances that people are telling us about will come if we fail to achieve that.

The uncertainty produces real problems. In my area of Humberside we have 27% of the UK’s oil refinery capacity, 20% of its natural gas, 38% of its imported coal and 17% of UK electricity generation. All of those are an important part of the industrial base. Of course, the Siemens investment, which is now considering coming into this area, is plagued with uncertainty. Are we still going to have an energy policy? Are we going into wind turbines? I think the nimbys have more influence—and this Government gives them more—to actually turn against wind turbines. Whatever the arguments, whether or not they blow all the time, if you are prepared to accept that carbon is one of the limitations in the balance of your policy, you will end up with a different policy and leave it to the market. I know from historical experience that leaving it to the market will not provide a global solution to global problems. Why is that? Because when I was at Kyoto 1 there were only 46 nations; now there are 190 nations.

It is the politicians who have forced through some agreements, so let us not knock the politicians’ role in these matters, but getting a global solution to a clearly global problem requires a framework of consensus that is not easy to achieve. We have to recognise that developing countries which are looking to develop their riches, as we did in our industrial past, will have a high carbon growth. They depend on coal and oil and will go through our process of high carbon production. We poisoned the world and moved on, and now we want to continue doing it but feel that they have not got a place in it. If that race goes on, it will threaten any kind of global solution.

The Siemens investment, which will bring billions of pounds into our area, is an important factor that should be taken into account. I doubt that this Bill will achieve the kinds of things it seeks to achieve. Perhaps it will change in Committee. I am not sure that it will secure our energy or that it will reduce prices—I hope that it will—but in Committee we can discuss the process and find out more about the details, something that everyone has been calling for, so that we can understand it.

On the same argument, I can remember people saying that targets are not important. I believe that they are important, but we should not depend on targets because what we need is certainty. The noble Lord, Lord Browne, and others have said that we should have more certainty than targets. However, I still believe that we need the targets we set at Kyoto. By the way, many countries have achieved them. In the United Kingdom, not only did we achieve twice the levels set for us at Kyoto, but a million more jobs, growth in the economy and a reduction in gases. The argument that somehow Kyoto was a threat to employment and growth is not borne out by the facts in Europe, which is an important part of it. That was Kyoto 1 and we have to find an agreement on Kyoto 2, make no mistake about it, by 2016. The Americans do not like it. There is no difference between Obama and Bush on this matter, although Obama puts it in different words. They are still not co-operating on getting an agreement. The international negotiations are a challenge for us, but they are important.

Britain became the leader in most of these matters. It became the leader at Kyoto in 1997 and we set up the climate change levy in 2001. In 2006 we introduced the Climate Change and Sustainable Energy Act, and the Climate Change Act in 2008. In 2006, EU emissions trading was established, which was copied from us—it was not as good, but that is life—and the current Government have continued with their Green Investment Bank and this Energy Bill. Britain leads in trying to find a proper regulatory framework.

I have been happy to be involved—I notice the noble Lord, Lord Deben, is in his place—with a group called GLOBE International. I have been working with it for 12 months. The group has been working with parliamentarians in many countries. I am amazed that 33 countries have followed the lead, in different forms, that Britain has given. They can see that a statutory framework is essential if you are to get a global solution. It is coming from the back benches, not the Governments, because Governments are caught up with their civil servants. As our leader said before, there may be too much agreement and not enough common sense about it.

There is a way. We are leading the way towards the global solution which is needed for a global problem. We cannot look the other way and we cannot bury our heads in the sand. I am proud that Britain is leading and that this Government are following the same framework. The criticisms I have of this Bill are similar to the ones I have of other legislation, but at least Britain continues to lead the way on the most essential and difficult problem of how to deal with climate change. We need a regulatory framework. Britain is leading the way on that and I am glad that this Bill continues the process.