Lord Turnbull
Main Page: Lord Turnbull (Crossbench - Life peer)
Lord Turnbull
My Lords, as noble Lords may be aware, I have strong reservations about the Bill but on this issue I side with the Government. The agenda to which we are working had its genesis 10 to 15 years ago when continued growth in the world seemed secure, real incomes were rising, global temperatures were tracking quite closely the rise of CO2, which is not the case today, when there was optimism about an international agreement, public money to fund the expansion of renewables was plentiful and peak oil was pretty much a received wisdom. None of that is true today. Indeed, the world is still in a state of flux. Therefore, a moratorium on specifying new commitments seems a sensible response.
The noble Lord, Lord Oxburgh, referred to infirmity of purpose. Some would say that there is such infirmity, partly for the reasons given by the noble Lord, Lord Stephen, partly because the world is uncertain, but, principally, because the Government have not yet made up their mind on how to resolve the trade-off between conflicting objectives. Until they do that, they cannot make this commitment sensibly.
We have impaled ourselves on a set of targets and timescales that are forcing us in desperation to undertake a number of responses that we could avoid if we had a more measured view of the sense of urgency. It is a truism that in commercial negotiations, the party with the deadline is the one in a weak position, yet we are engaged in probably the biggest commercial negotiation the Government have ever undertaken, with a variety of energy suppliers. We should not allow them to exploit this urgency, which is what is happening at the moment. For those reasons, the Government—not just out of political funk but for good reasons—are delaying the timing of these commitments.
Lord Howell of Guildford
My Lords, I apologise to colleagues and to the Minister for not being at Second Reading. I had inescapable commitments elsewhere. I declare my interests as president of the Energy Industries Council, in succession to my noble friend Lord Jenkin, whose superb speech we have just heard, president of the British Industry of Energy Economics, chairman of the Windsor Energy Group and as an adviser to Mitsubishi Electric. I apologise also for the fact that I appear to be sitting on the wrong side of the Committee. The truth is, I strongly oppose the amendment and believe that it is completely wrongheaded, but I am not over the moon about the Government’s policy, either—so perhaps I am sitting in roughly the right place.
The noble Lord, Lord Oxburgh, is a very wise man with whom I usually agree on everything. However, in this case I do not agree with him. He said that this is a very complex Bill. Of course, there is a mass of interventionist detail in it, a great deal of which will never work, but the basic aim is quite simple. It is to get investment in new plant as quickly as possible, and get plant of one sort or another up and working before we have serious interruptions, given that we are closing other plants at a great rate for all sorts of reasons, not least to do with EU directives. The noble Lord said clearly that if we put this additional target definitely in place by 2014, rather than perhaps in place later, we will overcome infirmity of purpose. I can only offer my experience. It may sound cynical, but I have been in and out of government over a long time, so perhaps it is the same thing. Targets do not do that.
In some of the ministries in which I served—I hope that this does not sound too awful—the saying was that targets were set to be missed. They are not an inspiration, and a lot of shrewd investors and financiers know perfectly well that if they put too much faith in targets, they will be wrong-footed. What they should watch of course is technology. I advise both the Committee and the Government to do as much as they can to put their faith in technology and to back every kind of technological advance, because technology rather than targets will deliver the objectives that most of us want, including decarbonisation, affordability, security of supply and so on.
When I see the suggestion that we should put another target into the pattern—an early one, at that—on top of the targets for 2050, and for 2020 for renewables, which we are stuck with the moment, I worry that I am seeing yet another example of a rather dreadful trend, which is to rush at decarbonisation much too fast. It is all question of pace and politics. While I am as anxious as the next man to see a greener, cleaner world, and while I accept the horrors of global warming, whether or not their cause is scientifically established, the rush and overambition of the Committee on Climate Change, of the recommendations and of the zealots will upset our targets and ensure that we do not get the decarbonisation that we need. It is going to distort decisions and undermine the green cause. It will lead us to absurd situations towards which we are rapidly heading now, where we are actually burning more coal and not less, the opposite of what we want, and where we are getting, as my noble friend Lord Jenkin has rightly said, eye-watering price increases and minimum prices fixed for years ahead to encourage renewables. So much for lower prices—there are not going to be lower prices. Households are now paying average prices twice as high as they were paying five years ago, and some forecasts—perhaps too gloomy—are saying they will be paying two or three times as much as that by the mid-2020s.
Lord Turnbull
“( ) the extent to which competitor nations are committed to and are implementing carbon reduction strategies;”
Lord Turnbull
My Lords, I beg to move Amendment 18, which is related to Amendment 19. I expect the noble Viscount, Lord Ridley, will speak to the other amendments in this group, which I also support. Climate change can be thought of at three levels. First, level 1: do you accept the orthodox view of the relationship between CO2 and temperature? Secondly, level 2: do you accept what we are told about the impact of any given temperature increase on the planet? Thirdly, level 3: supposing you accept levels 1 and 2, do you believe that the right set of responses is being proposed in the right order? In other words you can buy in completely, as I think the noble Lord, Lord Jenkin, does, to levels 1 and 2 but remain largely a level 3 sceptic, which is where I started. Levels 1 and 2 are really about Second Reading things, which we probably have discussed enough, so we will concentrate on the responses in the Bill.
These amendments highlight two concerns about these policy responses. The first is the pronounced unilateralism of the UK’s approach, based on a statutory duty to reduce carbon intensity of economy, which is equivalent to reducing CO2 per unit of GDP by more than 90% in just over 40 years. The second is the issue in the amendment in the name of the noble Viscount, Lord Ridley, as to whether some of technologies are all that they are claimed to be in terms of cost CO2 per tonne abated.
Six years ago during the passage of the Climate Change Bill, I expressed some concerns about the Government’s approach. I said:
“First, the target set for 2050 appears to be largely unconditional and unilateral. The UK will commit itself to this target irrespective of the performance of other nations. The reality, however, is that our own contribution by 2050 is unlikely to be crucial, so we are”—
relying—
“on the exemplary effect: in other words, we cannot carry conviction in international debate if we do not carry our full share of the burden. There is genuine validity in this, but we should not be naïve and rely on it too heavily. If we fail to persuade other nations, we could be left in 40 years’ time having paid heavily to decarbonise … and still incurring the costs of rebuilding our sea defences and water resources. The Bill should therefore contain a duty to work actively internationally for more demanding targets”.—[Official Report, 27/11/07; col. 1156.]
To be fair, Her Majesty’s Government worked actively for an international agreement with demanding targets but the landscape has changed because their efforts were unsuccessful. The Kyoto accord has expired and has not been replaced. Negotiations continue but a global agreement is looking more and more forlorn. In my view, China and India will never agree to binding limits on their emissions while they have hundreds of millions of their citizens yet to be lifted put of poverty. Although China aims to reduce the carbon intensity of its output, its growth is so fast that its emissions will continue to rise for many years, as was made clear by its negotiator at Doha. Between them, India and China are planning some 800 new coal stations. Without these two countries, the US will never join, although it is doing very well at reducing its emissions on its own. Canada has opted out of this process and Russia, which signed up last time, will not join a second time.
Even among those which did sign up, the sound of backtracking is becoming a roar as economic realities begin to bite and the case for such rapid adjustment is questioned. Subsidies for renewables are being cut back sharply in Germany and Spain. Germany has held up new targets on vehicle emissions and the EU specifically declined the opportunity to shore up the failing ETS.
Fortunately, the penny has begun to drop in some parts of the coalition. In 2011, in his Autumn Statement, the Chancellor of the Exchequer said:
“We are not going to save the planet by shutting down our steel mills, aluminium smelters and paper manufacturers. All we will be doing is exporting valuable jobs”—
out of Britain, and that,
“we should not price British businesses out of the world economy. If we burden them with … social and environmental goals, however worthy in their own right, not only will we not achieve those goals, but the businesses will fail, jobs will be lost, and our country will be poorer”.—[Official Report, Commons, 29/11/11; col. 807.]
I could not put it better myself.
In his 2012 Budget the Chancellor said:
“I will always be alert to the costs that we are asking families and businesses to bear”.—[Official Report, Commons, 21/3/12; col. 798.]
One can detect some backtracking here in the UK, such as reining in overgenerous feed-in tariffs and the refusal to set a 2030 target, which we have just discussed—although the Liberal Democrat end of the pushmi-pullyu is still driving on regardless.
Perhaps the best example—after the noble Lord, Lord Jenkin—of the level 3 sceptic is Professor Dieter Helm. In an article last October headed “UK Energy Bill is Fiasco in the Making,” he wrote:
“The result is that the government instead is picking its chosen ‘winners’ amongst the low carbon technologies, in part driven by the EU Renewables Directive. This has resulted in some of the most expensive technologies being picked first, notably offshore wind and roof top solar. Not only does this result in far higher bills than are necessary to British customers, but it makes almost no difference to global warming”.
In March this year DECC produced a paper on the extra costs of energy and climate change policies, which I commend to you. The table on page 53 shows that a large user, who consumes some gas and some electricity, faces additional costs of 21% to 48% by 2030. If other countries do not follow similar policies with the same zeal, the results will be very damaging for the UK. The purpose of this amendment is to address the unilateralist problem explicitly so that we can put an end to this attention-seeking and self-harming behaviour. In the matters to be taken into account in Clause 2(2), I suggest that the vague,
“circumstances at European and international level”,
be replaced by a reference to the extent to which competitors really are reducing carbon emissions.
The next amendment would require the Secretary of State to report on what he has discovered on all these “take into account” items before moving on to lay a decarbonisation order. These issues will not go away and I look forward to the Minister responding to them and explaining how we can have information that would enable us to judge our true relative position.
Lord O'Neill of Clackmannan
For the convenience of the Committee, would the noble Lord tell us for how much longer we will go on this evening? I was under the impression that we would finish at 7.30 pm, but we also had a target number of clauses to reach. The target is still some distance away and we are now well past 7.30 pm. Could we have some indication of what is happening?
Lord Turnbull
I am grateful for the Minister’s answer on Amendment 19 as regards the assurance that an adequate commentary on all the items to be taken account of will be provided. I certainly will not press that amendment. As regards Amendment 18, it is interesting that some see the glass half full and some see the glass half empty. That is precisely what makes the case for better commentary on what is happening in other countries, about which there is a continued argument. I hope also that that can be provided in the information that will come with the Bill.
As regards the response of the noble Lord, Lord Grantchester, there is a Catch-22 situation here. If we are a world leader in climate change, the more we advance this claim, the more the danger that we are overdoing it. Hence, the greater the case for some check just to see that we are not going too far. The whole question of our relative position is one that will not go away. It will need to be dealt with but it can be dealt with later in the Bill or in the responses that the Government are making. I therefore beg leave to withdraw Amendment 18.