Energy Bill

Debate between Tim Yeo and Barry Gardiner

Tuesday 4th June 2013 Commons Chamber

[Mr Yeo]

That is quite a challenge because we cannot predict exactly which will be the most cost-effective technologies. I very much hope, incidentally, that we will move swiftly away from a situation in which the Government set the strike prices for contracts for difference on a centrally determined basis, and that they will allow different technologies to bid in an auction process so that we can be sure that we are getting the best value for money. It may well be that some technologies that we do not yet know about will offer better value than offshore wind farms, for example, which look to me as if they are going to be at the costly end of the spectrum. Even today, it is possible to see solar and an array of wind farms—I visited them in my constituency last Friday—operating. The farmer who showed me these with great pride—he was lucky enough to make his investment before the rates were cut a year and a half ago—pointed out that his sheep enjoyed sheltering under these panels and that there was some evidence to demonstrate increased productivity from the sheep as well as the generation of renewable power.

I think I have probably said enough about the Treasury’s floor price for carbon for the House to realise that I am not a supporter of it. I stress that we need to recognise that it is raising prices, adding to consumer and business bills and making British business less competitive relative to the rest of the EU, and it manages to do so in a way that does not cut carbon emissions by a single kilogram.

Without amendment 11, the Bill, whose early passage through Parliament is desperately needed for economic and security reasons as much as for environmental ones, will be needlessly weakened. I commend the amendment to the House.

[Barry Gardiner (Brent North) (Lab)]

I am pleased to join the hon. Member for South Suffolk (Mr Yeo) in supporting amendment 11 and voting for it later today.

The Secretary of State is in a bind. His party believes in a 2030 decarbonisation target—it is Lib Dem party policy, after all. His party put the issue in its manifesto. Many of his MPs went further and actually signed a separate pledge in support of a decarbonisation target. Have they not learned the Lady Bracknell rule of politics: to break one pledge may be regarded as a misfortune; to break two looks like contempt for the electorate? The Secretary of State is, however, a decent fellow and he has told me from that Dispatch Box that he favours a 2030 decarbonisation target and would be happy to implement one were it not for the fact that he struck an agreement with the Chancellor. I understand that he refers to this agreement as “the grand bargain”. Hardly: it is more of a Faustian pact.

The Secretary of State was right to negotiate £7.6 billion under the levy control framework to support renewables up until 2020—but a bargain this was not. Old coal will be allowed to provide base load beyond 2023; gas will be incentivised to provide base load right the way up until 2045. All pretence of meeting our carbon budgets and emissions targets will be abandoned, and the jobs and growth that leadership in low-carbon industries would generate will be lost. The combined value to the UK economy of all this is worth many times more than the paltry £7.6 billion that the Secretary of State has negotiated up to 2020. A grand bargain? Not since Esau sold his birthright for a mess of pottage has a worse deal been struck.

Just 10 days ago, the UK’s independent Committee on Climate Change produced its report on the electricity market reform. The report compared and analysed the relative benefits of investing in a portfolio of low-carbon technologies through the 2020s rather than investing in gas-fired generation. The report finds that investment in low carbon would save consumers between £25 billion and £45 billion. If, however, one uses the higher-end estimates of gas and carbon prices, the Climate Change Committee’s estimate then rises to £100 billion.

UN Framework Convention on Climate Change

Debate between Tim Yeo and Barry Gardiner

Thursday 18th April 2013 Westminster Hall

[Mr Yeo]

I entirely agree with the right hon. Gentleman. I am pleased that the Foreign and Commonwealth Office is supporting GLOBE; it should continue to do so, because of the beneficial impact it has had. Interestingly, there is also some correlation between the location of the conference of the parties meetings and progress by individual countries. The progress made in Mexico and South Africa was encouraged by the fact that they hosted COP meetings, and the selection of venues for future COPs will have a bearing on further progress. When South Korea was in the frame to host the COP last year, I was disappointed that it was not chosen. South Korea is another high energy user with a rapidly growing economy, and it has shown a lot of interest in wanting to address the need for low-carbon technology.

We received evidence on emissions trading and the desirability of a global cap-and-trade system, and I think that the Government broadly share our view, but we are all aware of the enormous practical obstacles. Nevertheless, I hope that we face something of a critical moment in emissions trading, particularly after this week’s vote in the European Parliament. It is much to be regretted that the enormous impact of the recession on emissions in the EU—reducing them to well below the pathway that would have been realistically forecast five years ago—is not in any way recognised through tightening of the limits in phase 3. We have seen the effect of that on the carbon price. Alongside that, however, we can take encouragement from the commencement of emissions trading in California at the start of this year, where there seems to be real commitment from the state, and the governor in particular, to making it work, and from the emissions trading pilots under way in China, which we will focus on in the second of the afternoon’s debates.

It is the view of the Committee, and my very strong view, that what happened this week in the European Parliament underlines the damage that the UK Treasury’s unilateral imposition of a floor price for carbon could do to some sections of British industry. That should now be seen and acknowledged for what it is: a straightforward tax, introduced by the Treasury for revenue-raising purposes. It will do nothing to reduce carbon emissions; it might divert some emissions from this country to the rest of the EU, and it might put British business at a competitive disadvantage compared with the EU, just for the Treasury to collect another few billion pounds a year. If the Treasury says, “We’re going to have a tax,” that is fine, but do not dress it up as an environmental measure which, I am afraid, tends simply to discredit the concept of carbon pricing.

[Barry Gardiner (Brent North) (Lab)]

I pay tribute to the hon. Gentleman for the way he has steered the Committee in producing the two reports and for his remarks so far. Does he agree that what has happened with the carbon price and the announcement in the Finance Bill about raising the carbon floor price will act as a direct subsidy to nuclear production companies in this country, such as EDF, in a way that will distort the market? Like him, I support nuclear, but we must recognise that the market will be distorted by giving nuclear a substantial subsidy at the very time when the Government are attempting the difficult process of negotiating a strike price with EDF over the future of energy costs in this country.

[Mr Yeo]

I certainly do not dissent from the hon. Gentleman’s analysis of the effects. We are at a sensitive stage in the nuclear negotiations and this may be another unhelpful dimension. I would like to see a rational approach. There is an important role for nuclear, alongside a lot of other low-carbon technologies, but we need to get it at the best value for money for electricity consumers and the competitive position of British business.

Energy Supply

Debate between Tim Yeo and Barry Gardiner

Thursday 6th September 2012 Westminster Hall

[Mr Yeo]

I, too, am grateful for that entirely unsolicited intervention from my colleague.

I also point out that I have been a strong and consistent advocate of greater investment in renewable energy for almost two decades—ever since I first took an interest in climate change when I was rather unexpectedly given ministerial responsibility for it in 1993. I believe that Britain needs investment in many forms of low-carbon technology, which of course includes nuclear power, and the suggestion that my views on the subject could possibly have been influenced by interests that I did not acquire until 2006 is simply absurd.

I warmly welcome the new Minister to his post. He comes in at a very challenging time in his Department’s history. We, as a Committee, look forward to working closely with him. We worked very closely with his predecessor, my hon. Friend the Member for Wealden (Charles Hendry). I would like to take this opportunity to pay public tribute to him as an exceptionally conscientious, straightforward, knowledgeable and trustworthy Minister. He will be much missed—certainly by me, and I think by the whole Committee—and his knowledge of the issues, at a time when rather complex legislation is going through the House, is something that I hope my hon. Friend the new Minister will also soon acquire. I wish him well in his task.

I also thank my colleagues on the Committee for their work in producing not just the report that we are debating, but an extraordinary number of reports over the past 12 months. I also pay tribute to our very hard-working staff.

It is almost a year since the publication of the report that we are debating, and the concerns that we expressed then are almost exactly the same as those that we would express now. Britain is, of course, very dependent on imported fossil fuels for its energy, and anxieties about the level of generating capacity remain. The concerns about the fact that much of our existing capacity, in the form of the old coal and nuclear plants, will retire very soon, and about the need for that to be replaced, are as acute today—if not more acute—as they were last year. Absolutely enormous investment is needed in new capacity, storage facilities and so on. In the past year, there has still been progress, albeit insufficient, on energy efficiency, and on carbon capture and storage.

Britain remains a big net importer of energy—the figure was 29% last year. We are very lucky to have Norway on our doorstep, which is a friendly and reliable supplier of gas, but it is still desirable that we try to minimise our dependence on imports. In my view, that supports the argument for exploiting our shale gas reserves, for which we look to the Department of Energy and Climate Change for early approval, as has been recommended by the Committee. We will soon return to that subject, and I hope that we get the go-ahead soon.

Norway is a friendly supplier of gas, but even that fact cannot insulate us from future gas price spikes. Those who advocate relying mainly on gas to generate our electricity must recognise not only that, without the so far unproven economic availability of carbon capture and storage, gas cannot possibly get us to the 50 grams per kWh emissions target set by the Committee on Climate Change for 2030, but that there is also a real danger, as the Asian economies continue to grow, that global demand for gas will drive prices up, meaning that Britain’s economy will become less competitive if gas is our principal source of electricity generation.

[Barry Gardiner]

I am sure that the hon. Gentleman recalls the “World Energy Outlook” report and our interview with its head, Fatih Birol that drew particular attention to the fact that as Russian gas from western Siberia is gradually going offstream, the eastern Siberian gas fields will then come onstream. The likelihood is that there will be a decrease in the gas from Russia that comes into Europe and that, as the countries of Asia—China and India—see a rise in their need for gas, the eastern Siberian stream will increasingly be pulled down there. The position of Russia will therefore put Europe in a very different situation vis-à-vis gas.

[Mr Yeo]

The hon. Gentleman—in terms of the Committee’s work, he is probably my hon. Friend—is absolutely right about that point. The situation will get much more serious from Europe’s point of view in relation to its reliance on imports from Russia. I commend the work of the International Energy Agency, and especially of Fatih Birol, who has a particularly mature and perceptive view of long-term energy trends. The IEA’s work gives us a lot of warnings.

Despite all that, in what I hope will be a diversified mix of energy sources—gas, nuclear, low-carbon and renewables—gas will remain important in the next 15 years. We cannot do without it, so I hope that the Government’s gas strategy will include a further expansion of gas storage capacity, which is currently only a fraction of that routinely maintained by Germany, Italy, France and the United States.

Our report also recommended that the Government should set up an independent central agency to manage Britain’s strategic oil stocks, so we look forward to progress on that. We distinguished, although not everyone does, between independence and security. Independence of energy supplies is not attainable for Britain in the foreseeable future but, in any event, security is more important. Security means much more than just reliable sources and supplies of energy, although that is a pre-requisite, as it makes storage and interconnection important factors, too. It means having adequate generating capacity and a mix of generation that delivers value for money to consumers and protects consumers in the event of a much higher carbon price, which may well emerge—indeed, it is likely—in the 2020s and 2030s.

I note en passant, and with approval, the continued spread of emissions trading as a policy instrument. It has been adopted in a growing number of countries, although that trend that was not apparent three years ago. We now see it in countries in Asia, in Australia and in parts of America, and pilots are taking place inside China, as we reported recently. That points to the use of emissions trading and the possibility of a rising carbon price in 15 or 20 years.