EU: Energy Governance (EUC Report)

Lord Teverson Excerpts

Monday 13th June 2016 Lords Chamber

[Lord Teverson (LD)]

My Lords, I congratulate my noble friend Lady Scott on her work on this committee. I have not been a member of it but I have heard many stories of its effectiveness under her chairmanship. My family comes from Suffolk, but I must admit I have never been to Needham Market. The great and the good there should offer my noble friend the freedom of the town in full recognition of her work over the last three years—something that would be very difficult for me to do equally well. Not having been a member of the committee during this inquiry, I will just make a few comments on the report itself, concerning governance.

Something most of us would agree on is that the twin areas of energy and, in particular, climate policy are absolutely the right things for the 28 sovereign member states of the European Union to start acting far better together on to ensure that we have energy security, in the context of the energy trilemma, and meet our climate goals, which we share with the European Union. In the plans for an energy union, we have not just the three points of the energy trilemma, but two additional points. One is making the single energy market work properly, which we all want in terms of efficiency, security and consumer power.

Another important area is research and innovation. As the noble Viscount, Lord Ullswater, has just said, we are not going to do what we need to do on energy and the climate with existing technologies alone: we need to move forward, work with new technologies and make sure that they are inventive and innovative, so that we can meet targets in the best way at the lowest cost. With its eighth framework programme, Horizon 2020, the European Union is one of the research powerhouses globally. Energy is one of the areas where member states and science communities work best together.

I welcome the national energy and climate plan concept, which I will talk more about later, but we must remember that the energy union debate is not just about electricity. All too often, we talk just about electricity generation, but that represents only about one-third of energy consumption and use. We also have heating, in which gas plays a major role both in this country and across Europe, and transport. Although that is not covered directly by this energy union, it is something we must not forget.

Lastly, as the chairman has said, investor confidence is key right across Europe. I was interested to read in the report that €200 billion needs to be invested over the next decade. Given that we have said many times in this House that the UK itself requires €100 billion, we have a large part to play in making sure that that happens.

On national plans, I completely agree with the noble Viscount, Lord Ullswater, about getting the right balance in energy policy between European intervention and management and national choice, which is absolutely critical in this area. We should have national plans and climate plans as recommended, but we need to make sure implementation is at national level. National choice should be there but must be compatible with overall European objectives and with those plans, as they work together. If Germany wants, as it did, to rid itself of nuclear power after Fukushima, it should have the ability to do so. It caused some chaos in various ways and did not help its decarbonisation targets, but that is its prerogative. What the UK does is up to us.

I find it difficult when we have an EU target and we do not translate it into a national target. I question whether it is worth having an EU renewables target of 27% if we do not have national targets to achieve that. That is a contradiction, and setting something up to fail.

The regional plans are a good way forward, but we should not think that they will change everything. Interconnected worlds and interconnected regions can also add instability. I think back to financial systems and the crisis of 2008, when everyone was having the same difficulties at the same time. If we all have the same problems with systems requiring energy, those regional interconnections can cause instability. I congratulate the Government on the work they are doing on interconnections, but we need to make sure they are stable. The report says that the Commission should be the body that manages the area of regional co-operation, which is absolutely right. The last thing Europe needs at the moment is another institution. That is a strong recommendation, which should be adopted.

I have some questions for the Minister on the capacity market and the UK. How successful has progress on demand-side management been so far? Where interconnection is continuing, how successful has that intervention been so far? Lastly, we should not forget the cold economy. I chaired a commission by the University of Birmingham that looked at keeping people not warm but cool, which already accounts for some 12% to 14% of energy consumption. We need increasingly to take that into consideration in a European energy strategy.

We should never forget that the answer to the trilemma—security, low cost to consumers and carbon reduction—is energy efficiency. It was a great disappointment that energy efficiency was the one 2020 target that was not legally binding. Energy efficiency across Europe needs to be the fundamental cornerstone of European energy policy.