Viscount Hanworth
Main Page: Viscount Hanworth (Labour - Excepted Hereditary)
Lord Oxburgh
My Lords, I shall speak also to Amendments 3, 4, 6, 9 and 14. I begin by declaring my interests as listed in the register, but with a small renewable energy company and a small energy efficiency company. It would also be appropriate to start by thanking the Minister and her team for the way in which they have made themselves available to brief any Member of the Committee who has approached them on the complexities of the Bill. It certainly is a complex Bill and, indeed, that is part of the problem. The complexity of the Bill arises from the multiplicity of its objectives, which are to achieve decarbonisation, to achieve energy security and to do both of those at the lowest possible cost.
Some of us had the opportunity yesterday, courtesy of the noble Viscount, Lord Ridley, to attend a briefing given by an investment manager on his view of the costs and complexity of the Bill. Although I think that not everyone agreed with everything that the briefer said, the talk was extremely informative in the sense that it emphasised the enormous capital that will have to be raised if the aspirations of the Government, as seen through the climate change committee, are to be achieved over the next 40 or so years. It also emphasised the relative unattractiveness of the UK utilities market compared with those in competitor countries and therefore the difficulty in persuading investors to put money into these proposals.
Of course, one of the problems is that the proposed way forward cannot be regarded as the cheapest way forward. In fact, it is relatively expensive by comparison with ways forward that do not decarbonise and which pay much less attention to security of supply. Given that investments in generation are long-term investments, for 30, 40 or even 50 years, investors have to be absolutely clear that the Government are of firm intent.
It was around 50 years ago that the late Lord Franks, in describing the inability of Oxford University to reform itself internally, introduced the expression “infirmity of purpose”, which occurred frequently throughout his reports. Fundamentally, the concerns of the investment community are that there may be a degree of infirmity of purpose between this Government and their successor Governments. Given the overall difficulty of investing in UK utilities, for the reasons that I have just outlined, the least we can do is to do everything possible to indicate that not only the present Government but, as far as possible, across parties, that subsequent Governments will support this approach.
That is the reason for putting forward this group of amendments. Because of the drafting of the Bill, they may appear a little complicated, but there are really only a couple of words that are important: the substitution of “must” for “may” in terms of the obligations of Ministers to declare a target range; and the insertion of the dates 2030 and 2014.
The obvious cause for inserting 2030 is that, although in one sense it is arbitrary, it is an extremely important date in the Government’s decarbonisation plans: if the 2050 target is to be achieved, there has to be really very substantial decarbonisation of electricity generation by 2030 because the second phase of achieving the 2050 target is pervasive electrification of the rest of the energy economy. Unless you have decarbonised your electricity generation before that, the second phase makes no sense. This is part of the reason for 2030 but it is also a matter of emphasising the Government’s firmity of purpose.
The reason for inserting 2014 relates, at least in part, to a second objective, which comes from Brussels and has to do with the proportion of renewables that we need to have in our generation by 2020. To digress for a moment, last week I spent several days reverting to my roots at an energy professionals’ conference in Edinburgh. Although shale gas was a very important topic of conversation there—probably the most important—a secondary topic of conversation was the failure of Governments to understand how long things take, to understand the timescales of change. One constructor said to me, “It’s fine. We can build a power station in three years, or put up wind turbines very quickly, provided we have all the components ready”. He said that the Government seemed not to understand the importance of the supply chain. An important development that may appear quick to implement may be delayed for several years if key components such as bearings are not available in the necessary timescale. The message was that if the 2020 target is to be achieved, it is extremely important that that should be made clear now, as soon as possible, so that those who will be involved in achieving it can start placing orders and can take their place in the queue for components to get the thing going. Two years’ delay would be extremely important. My second point is that if one leaves this to the last few years of the decade, there simply will not be enough civil engineering capacity to build the requisite generating capacity, whatever its character, in time.
Clearly there are broader questions of industrial competitiveness, which certainly have bothered me a lot. However, I will not touch on them now because amendments that we will debate later will provide a better opportunity to discuss them. So in conclusion, the only important point is that we cannot take investment in our energy sector for granted. It will be difficult, and we have to do everything we can to strengthen investor confidence. The amendments in this group do nothing other than strengthen that confidence, and there is no significant downside, given that the information that will be necessary for the Government to meet these commitments will be available to them by December this year. I beg to move.
Viscount Hanworth
My Lords, I strongly support the amendments tabled by the noble Lord, Lord Oxburgh. Amendments 2 and 6 are of prime importance. The Bill prevents the Secretary of State setting a carbon intensity target for the electricity industry before 2016, which is when the UK’s fifth carbon budget is due to be set. It states that the Secretary of State may set a target but does not compel him to do so. If he were to set a target, the earliest date from which the target range would be effective would be 2030. The amendments tabled by the noble Lord, Lord Oxburgh, would compel the Secretary of State to set a target by 1 April 2014. Here, we are revisiting territory that has already been fought over on Report in the House of Commons. An amendment with the same intentions and similar wording to the one we are considering was proposed by a cross-party alliance consisting of a Conservative ex-Minister, Tim Yeo, and the Labour MP Barry Gardiner. The outcome, after a long debate, was that the amendment was disagreed by 290 votes to 267. However, for the coalition it was a whipped vote, and it is clear that numerous Liberal Democrats, and quite a few Conservatives, defied the whip by voting in favour of the amendment. We may surmise, therefore, that a majority was in favour of the amendment, but that the expression of their opinions was limited by the imposition of the whip. One might wonder why the leaders of the Liberal Democrats agreed to the imposition of the whip. We must assume that it was a matter of political expediency, and that a quid pro quo was on offer.