Lord Teverson
Main Page: Lord Teverson (Liberal Democrat - Life peer)
Lord Teverson
Lord Teverson (LD)
My Lords, in moving Amendment 71, I will speak to my Amendments 73 and 74 as well. I understand that people who know better than I have described my Amendments 71 and 73 as clunky and I immediately put up my hand. I am trying to do the very simple thing of turning something that the Government described as a grandfathering clause into something that really is a grandfathering clause. It came as some surprise to us in Committee, when we perhaps read the Bill with greater care than we had done previously, that in terms of emissions performance standards, the Bill effectively fixes an EPS right up until the beginning of 2045. I refer not just to plants that already exist but to those that will be built well into the future. The emissions performance standard in this section of the Bill applies to plants built right up to 2044.
I seek to improve this position. I hope that I am offering greater investor certainty in terms of grandfather rights to those who might invest in new gas plant or plant in other power sectors covered by the EPS. Certain vehicles, for example, are approved when they are manufactured and first go on the road and keep the relevant grandfather rights until the end of their working life. That is what I propose in this amendment. As I say, it would provide investor certainty in terms of grandfather rights but, just as importantly, it would ensure that a regular review takes place.
Section 5 of the 2010 Act refers to three-yearly reviews, but those are non-statutory. I have been reminded that Clause 58, on page 56 of this Bill, contains a statutory mechanism to look at these things every five years. I suggest that this should be done every three years and that there should not be a need to change primary legislation—that is the difference—in order to change the EPS. It seems to me a very strong lock if the EPS is defined specifically in the Bill. I understand that the existing provision in the Bill seeks to provide investor certainty but I seek to give greater investor certainty by saying that once a plant is consented it keeps that EPS right the way through, at least until it has to be reconsented. I hope that the Government will think that that is an improvement.
Amendment 74 deals with a very important area. Coal plants are effectively excluded from the EPS under this legislation. However, unabated coal plants are one of the main sources of our nation’s overall emissions of CO2. This is a major challenge in terms of our climate change targets and our desire to bring down carbon emissions in the United Kingdom. The amendment seeks to do a number of very positive things. It would help fulfil the Government’s intentions around carbon emissions and their energy policy. The Government have rightly made provision in the Bill that if certain major modifications are made to fossil fuel generating stations they have to be reconsented and the EPS becomes applicable, thereby making it impossible to run an unabated coal station. I seek to extend that provision to all major changes, including those plants attempting to reinvest to comply with the industrial emissions directive—the successor to the large combustion plant directive. We seek to do this because the Government’s trajectory for their carbon plan has always assumed that fossil fuel unabated coal stations will come out of UK generating capacity in an ordered manner after 2016. All that this amendment intends is to make sure that that actually happens.
Why is there a question mark now? It is because coal, primarily because of shale gas in the United States, has now become incredibly cheap. One of the outcomes has been that last year coal accounted for around 40% of total electricity generation and overtook gas which is now only about 28% of electricity generation—hence the UK’s carbon emissions went up last year quite significantly. The amendment would ensure that, although investment to prevent the output of mainly nitrous pollutants and thereby comply with the IED might now become economic and allow coal stations to carry on with this exemption from the EPS for many decades to come, the Government will actually keep to their trajectory in terms of taking carbon out of the system.
Let me first stress, perhaps paradoxically, what the amendment would not do. It would not take out coal immediately. As I said, it complies with the carbon plan which the Government have already published. Coal can continue to operate beyond 2016 under derogations and, in fact, can operate for some 17,500 hours, limited, right up to 2023. The importance of that is that coal-fired power stations can still operate during peak times and therefore make sure that we do not have blackouts. So the amendment does not get in the way of security of supply.
The other thing the amendment would not do is put up electricity prices. As we well know, electricity prices are primarily driven by the wholesale gas price and although coal prices have come down quite significantly, unfortunately, as we know, wholesale gas prices have not and so electricity prices have not either. It sometimes makes me ask what the generating companies have done with the extra margin from the coal production, but we will leave that argument for another day.
The amendment would ensure that there is no longer a baseload coal generation into and beyond the next decade. That is crucial for climate change and the Government’s wish to bring down carbon emissions. It would also meet those Government predictions. There are two other things that the amendment will make sure of: one is that there is a continued incentive for carbon capture and storage. Clearly and quite obviously, if unabated coal can continue exempt from the emissions performance standards, then CCS will go absolutely nowhere.
Crucially, the amendment would make sure that new gas investment can actually take place. It was interesting to read this morning in the Daily Telegraph, which has a great interest in energy, about a report that was, I think, released today by an organisation called EY. The article is headed:
“Gas and nuclear plants that could power all UK homes ‘on hold’”.
It goes on to say:
“Gas and nuclear power plant projects with sufficient capacity to supply electricity to every UK household are on hold … some 23GW of new gas plant has received planning permission but just 4pc is being built, with the rest suspended or on hold ‘with owners waiting to see if the economic and policy environment become more favourable’”.
One of the reasons it gives for that is the cheap coal influx from America which has made the situation worse.
As I often do, I endorse exactly what the Daily Telegraph says; this is a really important issue. We need new gas generation; the planning permissions are there and cheap coal is one of the reasons that investment is being held back. We need to move forward with it and the amendment is important because it helps fulfil the Government’s carbon plan and policy and makes sure that the investment that we need in new gas is actually able to move forward. I beg to move.
The Chairman of Committees (Lord Sewel)
I have to inform your Lordships that if Amendment 71 is agreed I cannot call Amendment 72, by reason of pre-emption.
Lord Teverson
My Lords, I thank the Minister for going through that so comprehensively. She is right that this is a very green Bill. My noble friend Lord Lawson was quite right to accuse it of being a decarbonisation Bill. That is exactly what it is.
I very much welcome my noble friend’s comments about Amendment 71 and my amendments around grandfathering clauses. I do not think that I got the phrasing absolutely right and I look forward to her looking at that.
On Amendment 74, I want to come back to something said by my noble friend Lord Caithness. He said that we need to be practical and down to earth and to get involved in the reality of energy. This amendment was precisely about that. We have to remember that, as this provision stands, it does not guarantee that coal capacity will be there; it is left entirely to the whims of investment committees of the big six as to whether they decide to invest. We give up control at that point—we do not know. The future is indeterminate. If we passed this amendment and it became part of the Bill, we would then know what would happen. To me, that is better than knowing what might or might not happen.
As the Minister said, we are looking for investor certainty here. The only way that new gas will be invested in as an intermediate technology is through that certainty. At the moment, that investment is not taking place, despite the clear ambitions that it should. However, I understand the position of the Minister that if it were not for this Bill we would not have an emissions performance standard. I advocated it several times to the party opposite pre-2010 and it was never accepted, so this is a major step forward. I beg leave to withdraw Amendment 71.
Lord Grantchester (Lab)
My Lords, this is the amendment that we discussed in Committee in July. On this side of the House, we have considerable sympathy and agreement with my noble friend’s amendment and the sentiments behind it. In Committee, the debate highlighted the achievements made by the previous Labour Government in initiating waste reduction plans; the progress made since the last election, with the setting up of the Courtauld agreement; and the developments made at EU level with the landfill directive, setting up targets to reduce the amount of biodegradable municipal waste entering landfill in 2020 to 35% of 1995 levels. The UK is on course to meet that target; there is an EU-wide review which should reveal that next year.
Over the past couple of years, the number of plants set up to produce energy from anaerobic digestion of waste has doubled to 110. The Minister spoke of encouraging this through feed-in tariffs and the renewable heat incentive, as well as the Green Investment Bank’s initiative, in her reply in July. My noble friend’s amendment is pushing at an open door; it is happening already, but as part of an industry and the EU-wide process rather than through adding it to the Bill.
In my response in July, I said that recycling organic waste for renewable energy generation is no substitute for eliminating the volume of food waste produced in the first place. Ten days ago, Tesco revealed that in the first six months of 2013 it generated 30,000 tonnes of food waste. Obviously, this figure revealed widespread differences between different foodstuffs. To reduce waste, it is important first to discover where that waste is taking place, so that action can be made more effective. Tesco added that, where possible, any food which could not be sold could also be donated to the charity sector, Foodshare and other food banks, or diverted to animal feed for livestock. This is also part of an effective answer.
While the Minister will be resistant to the amendment, it gives me the opportunity to ask her to commit the Government to certain helpful activities. Would she promise to report back to the House at regular intervals—I suggest twice annually—on actions that the Government are taking with the aim of reducing organic landfill waste, as well as undertaking to report back to Parliament immediately after the 2014 EU review is published, offering an updated strategy for reducing landfill of organic waste?
Lord Teverson
My Lords, I shall speak slightly out of order here, for which I apologise. I tabled a similar amendment in Committee, and I am very pleased that the noble Lord, Lord Judd, has brought this matter forward again.
This is not my noble friend the Minister’s area, or her department’s; it is very much a Defra area. Although I suspect that this Bill is not the best place to do this, I very much hope that Defra will take this area increasingly seriously and that the Government will find a way in which to move the agenda forward.
Baroness Verma
My Lords, I am grateful to the noble Lord, Lord Judd, for prompting further debate on the setting of targets for the landfilling of waste. Amendment 76 is designed to require the Secretary of State to set out a plan and timeframe, as soon as is practicable, for reducing and eventually eliminating the landfilling of organic waste. It would make it available for renewable energy generation and other appropriate uses, consistent with the waste hierarchy as defined in the Waste (England and Wales) Regulations 2011.
The Government support the minimisation of organic waste going into landfill and are sympathetic to the aims of this amendment. When we debated this matter in Committee, I outlined the considerable progress made in minimising organic waste entering landfill by the reduction of food waste and the increase in the number of anaerobic digesters generating energy from food waste. We very much agree with the points that the noble Lord made during that debate about the value of avoiding emissions of greenhouse gases from landfill. Preventing food waste is the most effective approach in carbon-saving terms: compared to landfilling, each tonne of food waste prevented means 4.2 tonnes of CO2-equivalent emissions are avoided.
We have worked very successfully with industry to reduce supply chain food and packaging waste by nearly 10% over the past three years, while the Waste and Resources Action Programme’s “Love Food Hate Waste” campaign helps consumers to make informed choices on reducing food waste. Household food waste is down by 13% since 2006, and we expect a 20% reduction to be achieved during the three phases of the Courtauld commitment that all the major supermarkets have signed up to. These results show that the voluntary approach can deliver real reductions in waste while allowing businesses to be more efficient and competitive. We want to build on this work with businesses rather than impose targets or restrictions. When food waste cannot be avoided, anaerobic digestion is currently the best option that we have, because it produces renewable energy and a valuable fertiliser. Over the years, we have provided a range of support through WRAP for anaerobic digestion, including £11 million in grant funding.
The substantial increase in the number of anaerobic digesters generating energy from waste continues. We now have more than 100 megawatts of capacity for waste and, together with the long-standing use of anaerobic digestion in the sewage treatment sector, this gives us capacity to generate 1.5 terawatt hours annually. In the Government’s anaerobic digestion strategy to tackle barriers to anaerobic digestion, we estimated that there was a potential to generate 3 terawatt hours to 5 terawatt hours of electricity by 2020. With another 300 megawatts of capacity consented or being built, the industry is well on its way to delivering that potential.
Most of the actions in our anaerobic digestion strategy are now complete. The Government published a second progress report in August and it is now for industry to use the outputs to ensure that the barriers they identified are removed. I hope the noble Lord will be reassured that we can continue to reduce organic waste entering landfill by encouraging food waste prevention and supporting a growing anaerobic digestion industry without introducing further targets to those set out in the EU landfill directive. I also add that current evidence suggests that further statutory targets would have an impact on businesses and local authorities in compliance and monitoring, risking additional cost burdens on business. It is likely that these additional cost burdens faced by industry and local authorities would be passed on to the consumer, which means that consumers could risk facing higher costs if additional statutory landfill bans were introduced.
The noble Lord, Lord Grantchester, asked about reporting on a reduction of landfill. Landfill tax is the main form of reducing organic waste from landfill. Defra is encouraging food waste prevention and encouraging the use of anaerobic digestion; the Environment Agency monitors emissions under the industrial emissions directive. Under the permitting regulations, the Environment Agency also monitors the air quality.
We are mindful of the concerns expressed by the noble Lord, Lord Judd, around this sector, but I hope that I have been able to satisfy the noble Lord that the actions that we are taking and our encouragement of industries such as anaerobic digestive generators to make use of waste will help him to decide to withdraw his amendment.