Energy Trilemma

Roger Gale Excerpts

Thursday 23rd March 2023 Commons Chamber

[Ian Blackford]

I have talked about the Skilling report and the ability to get to 80 GW. There is the opportunity with tidal to provide the baseload. I argue on that basis that we probably do not need the investment in nuclear to get to where we need to get. One thing I referenced was that I did not believe there is any fantasy in the numbers we have from Skilling. They are eminently achievable on the roadmap that we talk about.

Let us look at some of the choices and where the money has to come from, and put that in the context of the debate we are having over the trilemma and the choices that many people are having to make because of the cost of energy. We know that a number of producers have made eye-watering profits as a consequence of high energy prices over the past year. This Government have rightly introduced a windfall tax. If we had wanted, we could have hypothecated some of that to make sure we were speeding up investment in renewables. We could have provided the £50 million that I am asking for on an annual basis so that we could fulfil that potential in tidal.

One aspect of the events of the past 12 months has been the enormous increase in share buy-backs from energy producers. In essence, what are share buy-backs? They are in effect a return of capital to shareholders. We have taxed the profits of the generators to some extent, but we have not taxed the return of cash to shareholders—windfall gains. On a one-off basis, we could have taxed share buy-backs in the same way that we tax dividends, and provided the ability to generate the investment that we need in our energy transition. That would have been the sensible thing to do.

Let me come back to the European Union, because there is already an €800 billion NextGenerationEU post-coronavirus pandemic recovery scheme. EU member states must reserve 37% of their spending for that green transition. About €100 billion of the EU’s 2021 to 2027 cohesion fund, which is dedicated to regional development, goes to green spending. Horizon Europe, the EU science and innovation programme, allocates €40 billion to green deal research and innovation, and industry partnerships. The investment I am asking for and that I believe we need in tidal has to be seen in the context of the scale of that investment.

On a subject that many of us discuss, carbon capture and storage, the EU has commenced its third round before the UK has come close to completing its second. We are all aware of the promises that have been made about carbon capture and storage in the north-east of Scotland. There are Members in this Chamber who are as passionate as I am about making sure it happens, and let us remember why. If we are serious about getting to our net zero targets—whether 2045 in Scotland or 2050 in this place—then carbon capture and storage has to happen.

We have failed to back carbon capture and storage, and the harsh reality is that the renewable energy budget has been cut by a third and there has been the cut to the ringfenced budget for tidal stream. We need to make sure that we create competitive advantages out of the bounty that we know is there. Let us come back again to the green industrial strategy, because if we are able to develop our green energy sources to the extent that I believe we can, we need to make sure there is a competitive advantage for our industries and the industries of the future.

We also need to make sure that our communities benefit from the investment that is taking place. To take my own home island of Skye, an enormous increase in investment is coming down the line over the next few years in wind generation. We will be producing many times the amount of energy that the island of Skye can absorb by itself, yet there is an additional cost to access the network from producing in such remote and rural areas. There is a double whammy: because of the nature of the regional distribution market, we pay the highest prices to get the electricity back again. It simply is not good enough, and the communities making legitimate sacrifices in producing that energy have to be compensated effectively.

While we are talking about onshore, offshore and tidal, we should not forget the opportunities we have with pumped hydro storage. I delighted that, this week, SSE has announced a £100 million investment in the biggest pumped hydro storage scheme in the United Kingdom for 40 years. The Coire Glas scheme will power over 3 million homes, more than doubling the United Kingdom’s electricity storage capacity. Again, it is demonstration of what can be done in providing the baseload that is so necessary.

We need to pose the question why—in what is, for Scotland and arguably for the UK, an energy-rich country—people are facing the kind of costs that they have done over the last year. The average household bill in Shetland, if I may refer to that, in October 2022 was £5,578, more than double the UK average of £2,500, according to evidence submitted to the House of Commons Scottish Affairs Committee by Shetland Islands Council. The latest available figures show that a third—33%—of households in remote and rural areas in Scotland are in extreme fuel poverty. That statistic has not been updated since 2019 due to covid, and therefore does not reflect the current cost of living crisis. There will have been a massive increase in the percentage of our households that are not just in fuel poverty, but in extreme fuel poverty.

The only place where the UK Government seem to be increasing investment is in nuclear energy, which is far more expensive than the renewable alternatives. The Institute for Public Policy Research said:

“If the Government are serious about reaping the benefits of the transition and levelling up, it should learn from Joe Biden, scale up public investment, and bring forward a serious strategy to build an economy that is prosperous, fair and green.”

The CBI said:

“The UK is falling behind rapidly—to the Americans and the Europeans, who are outspending and outsmarting us.”

The world faces an energy trilemma, but the UK faces a simple binary choice: will it continue to be left behind, or will we collectively work in humanity’s self-interest to tackle climate change and embrace the opportunity for green growth?

[Mr Deputy Speaker (Sir Roger Gale)]

I call David Duguid.

--- Later in debate ---

[Several hon. Members rose—]

[Mr Deputy Speaker (Sir Roger Gale)]

I shall need to start the winding-up speeches at about 4.30 pm. Three Members are still waiting to speak. So far the speeches have been running at about 13 minutes, but I am afraid I must ask Members to confine themselves to about seven minutes if everyone is to get in.