Global Energy Sector

Lord Teverson Excerpts

Wednesday 15th June 2022 Lords Chamber

[Lord Teverson (LD)]

My Lords, I must unplug myself from the excellent forensic analysis by the noble Baroness, Lady Bennett.

One of the great things about the IEA report is that it shows a pathway and is optimistic, if you like, that the pathway is

“narrow but still achievable”—

it is possible. I have now been shown the pessimistic side of that: it is not possible, as we still have the problem and we do not have all the solutions to it. Having said that, our UK Climate Change Committee bases most of its analysis on proven technologies. However, as we all know, the UK is only a small part of this issue and the rest of the globe is something extra. I hope we can get some optimism back in this debate somehow, although I recognise a number of those arguments.

At the moment, it seems to me that we are a cross-roads on this debate, particularly because of decisions made in the Kremlin on Ukraine, as mentioned by my noble friend Lady Sheehan, and a resurgence of the dilemma about whether to get through the cost of living crisis and the cost of energy crisis by investing in fossil fuels again or accelerating the transition to renewables and other forms of decarbonisation in our economy. I am convinced, as my party would be, that it is clear that we need to take the fork in the road and follow the path that pushes for further decarbonisation of our planet, our energy systems and our economy. The other way to go is not necessarily right.

Three things in particular sprang out at me from the report. They have been mentioned by Members already so I will not spend a lot of time on them, but it was clear to me that, in the order in which the report listed remedies, energy efficiency was once again number one. I know the Minister completely agrees with that, but what amazed me was the statistic where the report estimated that some 30% of what we need to do for decarbonisation could be achieved through not just energy efficiency but demand-reduction measures that included energy efficiency.

In this country at the moment, with the cost of energy in particular at the core of the cost of living crisis, the figure quoted is that the Government are committing some £37 billion to sort out the issue of customer bills and so on—but that is dead money; it goes but it does not improve the situation. Where are we when it comes to using money to invest in energy efficiency and ways of producing demand reduction? I would be interested to know whether, given energy efficiency’s absence without leave in the Government’s energy security strategy, there will be measures in the Bill that is coming forward to make sure that we can move on from the green homes farce over the last two years and really take that issue on.

The other area that noble Lords have mentioned is ending investment in future fossil fuels. I might slightly disagree with my noble friend, in that when we have a crisis, as we do at the moment, I would expect existing assets to be sweated out. If President Biden manages to persuade Middle East countries to increase their production when we have a reduction in supply from Russia and its allies then, to me, that is a way forward. However, on the question of investing in fossil fuels in the long term, coming from an economist’s background, I know there will be supply where there is demand. However, it is important that we say no more about energy investment; it gives the wrong signals. There is a risk of stranded assets for the corporations that decide to do that, but there needs to be leadership on that.

I was amazed to hear that the Government recently approved, despite the Conservative local authority being against it, the exploration in Surrey. I would be interested to hear from the Minister why he feels that should have taken place.

The other strong message that has come out, and not just in the IEA report, is that there are economic benefits of decarbonisation, not just in terms of bringing down the costs of energy due to energy efficiency; in the whole area of jobs, growth and levelling up, the report estimates that would be an additional 0.4% of growth per annum. I expect that there is a strong standard deviation around that figure, but it shows that there is a way of moving forward that is economically positive but also brings the environmental benefits of clean air and a much better atmosphere altogether.

I have a question for the Minister. Suddenly COP 26 seemed to discover methane and the challenges around it. I thought that was a positive part of the Glasgow conference, in that there was an allowance to do that. The IEA report points out that if we stopped the leakage from gas that there is at the moment and put it back in the market, we could bring down the cost of gas substantially, so what are we doing in the North Sea, and indeed internationally, to reduce methane emissions?

An interesting part of the report said that we could get rid of 17% of regional air flights globally through surface transport if we invested properly in high-speed rail. Given the decades that it is taking to do that in this country, that is something that I feel is a bit late for us to do.

The report lays a good foundation globally. The Climate Change Committee has shown that we can achieve what we want to in the UK with existing technologies, but for me the key message is that we need to move forward on both energy efficiency and renewables. Indeed, the IEA chief executive, Dr Fatih Birol, said that energy efficiency and renewables are “the Romeo and Juliet” of energy transition. That is absolutely right. I will leave the subject at that, except to say: let us focus on those areas and make sure that we in the UK are able to deliver net zero by 2050.