Government Levies on Energy Bills
Debate between Tim Yeo and Michael Fallon
Mr Yeo
It depends on our priority. Mine would be to get the largest amount of low-carbon electricity generated at the least possible subsidy cost to consumers. Given the figures that are currently projected, I am simply saying that the mix looks unlikely to achieve that objective. I entirely understand the hon. Gentleman’s point that if we are to support any technology, a degree of predictability is important for encouraging investment—I am not advocating a lot of chopping and changing—but at the same time, we are in the early stages and getting better value for money might be such a high priority, given the burden that energy costs now represent to consumers, that we should consider whether the projected mix is right.
On the subject of uncertainty, although the levy control framework helpfully gives a considerable degree of predictability for the rest of this decade, seven years is not all that long given that the investment cycle in the energy industry is very long. Will my right hon. Friend say when we might get at least an indication of the likely levy control frameworks beyond 2020?
That is particularly important in the light of the issue that the hon. Member for Brighton, Pavilion (Caroline Lucas) has just raised about nuclear. There is clearly at least a perception that nuclear will take a great chunk of levy control framework money in the 2020s. If we do not know the total, some people thinking of bringing on new investments later in this decade may be put off because they fear that not enough money will be available.
The Minister of State, Department of Energy and Climate Change (Michael Fallon)
I am not sure whether I heard my hon. Friend correctly. Is he really asking me to advise the House on public expenditure totals beyond 2020—two elections hence?
Mr Yeo
I am not sure whether the total comes under public expenditure. The money is not coming from taxpayers; it might merely affect electricity prices. In the context of the fact that the Committee on Climate Change now sets carbon budgets a minimum of a decade in advance and that we now have a fourth carbon budget that covers the period up to 2028—even the third carbon budget goes beyond the period for which we know the levy control framework total—I am simply asking for some indication of the Government’s thinking. Will the total be maintained in real terms at £7.6 billion index-linked, given that a very big demand on levy control framework money will be made in the early to mid-2020s if the nuclear power station goes ahead?
Mr Yeo
I think of the hon. Gentleman as an hon. Friend, because we agree on so many important issues. He has made his point quite effectively, without the need for me to comment on it. I remain a supporter of investment in new nuclear power stations, notwithstanding the concerns about the arithmetic eloquently introduced into the debate by the hon. Member for Brighton, Pavilion. I simply make the point that without any knowledge of the levy control framework total in the 2020s, there is certainly a perceived and probably an actual risk that nuclear might crowd out some other technologies.
May I tempt the Minister to tell us what he thinks is the prospect for the floor price for carbon?
Mr Yeo
I thought that the Minister was a bit like Oscar Wilde, who could resist everything except temptation, but perhaps he will resist it on this matter. I understand why the floor price policy was introduced, but it does not cut greenhouse gas emissions by a single kilogram, and it raises the costs of British business. If the Treasury’s priority is to help Britain to become more competitive, it is slightly bizarre for it to insist on that policy. There are of course now widespread rumours that we will soon hear that the floor price for carbon will be frozen, instead of going ever upwards. If that is the case, the sooner that it is made clear, the better.
Oral Answers to Questions
Debate between Tim Yeo and Michael Fallon
Mr Tim Yeo (South Suffolk) (Con)
8. What assessment he has made of Ofgem’s electricity capacity assessment report 2013.
The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)
The Government welcome Ofgem’s electricity capacity assessment as an authoritative investigation into security of supply over the next five winters. We will be working closely with Ofgem and National Grid to take decisive steps to ensure that security of supply is maintained in the short, medium and long term.
Mr Yeo
It is the excitement of your Speakership, Mr Speaker.
Does my right hon. Friend agree that the quickest, cheapest and most environmentally friendly way to ensure that the lights stay on at a time when capacity margins are a bit tight is through demand-side measures? Will he explore how Smart technology could be used more effectively to extend time-of-use pricing, which would cut some of the peaks in demand and thereby reduce the need for some of the expensive new capacity that is being considered?
Michael Fallon
Of course demand-side measures have a role to play, but Ofgem will also be looking at better balancing the system as a whole, using some of the measures it has been using for more than 20 years. We will also be looking at whether some of the previously mothballed plant, or mothballed units at some plant, can be brought back into operation if needed.
Energy Bill
Debate between Tim Yeo and Michael Fallon
Mr Yeo
One thing about which I am pretty certain is that the world’s concern about climate change will be more intense in 2030 than it is today. The probability is that through a combination of emissions trading systems and carbon taxes there will be a high carbon price in 2030, and I believe that the most competitive economies in 2030 will be those that have reduced their dependence on fossil fuel consumption.
Michael Fallon
I can certainly agree with my hon. Friend that the concern might well be more intense, but whether we will be so certain, I am not so sure. Indeed, I have read a report of a speech delivered by my hon. Friend during the recess, in which—I was somewhat puzzled to see this—he said about climate change that
“the causes are not absolutely clear. There could be natural causes, natural phases that are taking place.”
Mr Yeo
Let me make the record absolutely clear. I said that during the 4 billion year history of the planet there have been much greater changes in climate than anything that is likely to result from a 50% increase in greenhouse gas concentrations, but that those changes took place before there were human beings, which are one of the most recently arrived species. If we are to support life for 7 billion going on 9 billion human beings in the style to which we have rapidly become accustomed and to which many still aspire, the one absolute precondition is climate stability.
Michael Fallon
I am sure that those who support my hon. Friend will be grateful for that explanation. The quotation I have seems pretty clear to me, but it is for him to explain it. If he is not so sure any more, why should the rest of us be so sure?
I would say to my hon. Friends that they should let the Opposition, as they always will, be opportunistic. Let the Opposition please the lobbyists by suddenly supporting a target that they never endorsed in 13 years in power. I ask those of us here who share the responsibility of government to be a little more careful not to risk higher bills now for our hard-pressed industries and constituents, not to force out generating plants before we have the new investment that the Bill will deliver and, above all, not to drive up costs for those industries struggling to compete against lower energy costs abroad.
Let us have economic and industrial policy that is coherent, and energy policy by design, not decarbonisation by dogma or by default, which can only drive our industries offshore. There is a better way forward, and it is in the Bill. Let us be the first Government ever to enable a legally binding target to be set at the right time: when we set the fifth carbon budget in 2016. We can then better assess the real prospects and costs of carbon capture and storage; properly measure what is happening to the whole economy; and better judge the transition to a greener future against the costs that our consumers and businesses must bear. I urge all my hon. Friends not to rely on blind faith, but on the practical steps that we are taking in the Bill to decarbonise our economy while ensuring security of supply at least cost to our constituents.