Energy Bill [Lords]
Debate between Tim Yeo and Brian Binley
Mr Yeo
The test of smart meters will be how user-friendly they are at giving people information that is relevant to their decisions in a manner that they can easily understand. That includes older people who might not have as much facility for modern information technology communications.
On security, I welcome the duty placed on Ofgem to report on the adequacy of future capacity. Demand for electricity will rise substantially not just because of economic growth but because several of the measures designed to reduce greenhouse gas emissions involve the greater use of electricity—for example, for transport and heat. We shall need a lot more generating capacity and the lead times for new capacity are such that decisions taken in this Parliament are absolutely crucial. A further dash for gas might be the quickest and cheapest way to expand capacity, but it would mean becoming even more dependent on gas imports, threatening a different aspect of security of supply. Even in a world in which gas can be imported from a large number of countries and in which we have the possibility of perhaps abundant supplies of shale gas from Poland and the United States, I do not think that anyone would be comfortable with our relying more on imports.
Furthermore, unabated gas emissions are so much higher than the target for emissions that the Committee on Climate Change quite rightly set for 2030 of 50 grams per kWh that a dash for gas could lead to expensive stranded assets in the 2020s unless we achieve carbon capture and storage, which is by no means a certainty. Yesterday, in its excellent review of renewables the committee reminded us, as it helpfully and regularly does, that nearly all new generating capacity must now be low-carbon. After all, electric cars and electrically heated houses are not going to cut greenhouse gas emissions if the extra electricity is generated by coal. The committee’s review is welcome as a common-sense judgment on renewables. It reaches the unavoidable conclusion that even with an enormous increase in offshore wind and solar power there remains an absolutely essential role for nuclear. We therefore need from the Government today, and regularly in future, an assurance that as soon as any safety issues raised by Professor Weightman have been addressed, every possible assistance will be given to ensure that new nuclear capacity comes on stream as soon as possible.
In the context of how more low-carbon electricity can be produced, a more explicit acknowledgment is needed of the risks of blithely assuming that carbon capture and storage will work viably at scale. With the abundant availability of coal in many countries, lots of coal is going to be burned in the next few decades. It is beyond doubt that the single technological breakthrough that the world most urgently needs is carbon capture and storage. There is huge potential for it, but I have not been encouraged by the fact that when the UK Government offered £1 billion in a competition, there was only one bidder at the end of the process. I therefore urge that more attention be given to issues such as waste-to-energy, which could provide a renewable source as some unrecyclable waste will be always be produced by a growing economy.
Mr Yeo
I am running out of time, I am afraid, and I think I get only two goes at giving way. I am sorry.
It is clear that whatever the precise mix of our portfolio of electricity generation, the cost of secure, low-carbon electricity will be higher in future—possibly much higher—although the Government have rightly pointed out that reliance on fossil fuels might turn out to be even more costly by 2030. Last week, in an evidence session held by my Select Committee on Energy and Climate Change, I asked Ministers what the Treasury’s assumptions about oil prices would mean if they were translated to gas prices, and they were a bit reluctant to explain what they thought gas prices might reach. Clearly, fuel poverty is going to be a key challenge in the next few years and the solution is not to divert investment into cheaper but higher-carbon power stations, but to ensure that household incomes are sufficient to meet unavoidable increases in fuel bills.
Equally important is the need for more low-carbon capacity. Tinkering with UK or European Union targets for the exact proportion of energy to be achieved from renewable sources by this date or that date is of little relevance. The only real question is how Britain, in an increasingly energy-hungry world in which China and the other BRIC countries—Brazil, Russia, India—will be consuming huge amounts of energy, can attract the funds needed to finance massive new capacity in all kinds of low-carbon electricity. The Intergovernmental Panel on Climate Change has reported today that £15 trillion will be needed in the next two decades to develop renewable energy. To attract our share, we must make sure that returns on investment in electricity generation in Britain are high enough and reliable enough. I urge Ministers to recognise that every policy change runs the risk of raising the cost of capital because each switch increases uncertainty in the minds of investors. Individual decisions such as the revision of feed-in tariffs for large-scale solar projects are understandable and perhaps unavoidable, but their impact on investors is harmful and will prove to be expensive in the long term. It is vital that the electricity market reform package promotes stability in the framework of incentives that are designed to promote low-carbon electricity. I urge Ministers to recognise in all policy statements the danger that investment in new capacity in this country is not an entitlement. We live in a genuinely global economy. Investors can easily migrate to places where returns are more secure, where planning delays are shorter and where policy is predictable.
There is a lot more in the Bill, not least the green investment bank. The bank’s contribution to funding some of the investment needed could be considerable if the Treasury allows it. In view of the imminent decision about the fourth carbon budget, I want to close by making a strong plea to the Government to accept the Committee on Climate Change’s recommendations. The Government’s credentials as the greenest Government ever will be enormously strengthened if the carbon budget put forward by the committee last December for the 2023-27 period is accepted. A budget for a period more than a decade away might seem a remote concept, but carbon budgets are much less susceptible to last-minute tinkering than financial ones. Carbon emissions in the middle of the 2020s will be affected by decisions about new electricity generation capacity taken during this Parliament.
Our accepting the committee’s fourth budget will show that Britain wants to lead the way to a low-carbon world. I understand the anxieties about our competitive position, but I believe that those risks are relatively small and are confined to the short and medium term. If the world really means to decarbonise by 2050, and I believe that it does, the countries that lead the way will not only be doing the right thing environmentally, but will reap a huge financial reward.
Let us look east at what China is doing in making huge strides towards a more sustainable, low carbon transport infrastructure and energy system. In the international climate change negotiations in the 2020s it might be China that takes the hawkish stance on greenhouse gas emissions and the measures needed to reduce them, and it will do so from a position of greater strength than many countries in the west. It would be tragic if Britain, one of the first places where the science of climate change was properly understood, were not in the vanguard of the world’s response. I urge the Prime Minister to overrule the reported resistance of the Secretary of State for Business, Innovation and Skills on this point, and I commend the Bill to the House.