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Energy: White Paper

My Lords, I hope that the Minister will feel encouraged that I found his remarks a very able review of the paper that we are discussing. They helped to clarify my thinking about the status of the paper. He may be slightly less pleased that my conclusion is that it is more appropriate as a Green Paper than as a White Paper. In any event, its status has been eroded by pre-announcements of aspects of policy in another place—by eminent gentlemen down there—and by the legislative programme that is already announced, such as the Climate Change Bill, the changes in the Planning Bill, and so on. The paper is a very good review of the situation that we face on the energy front. If I have a conclusion, it is that the Government’s strategy is not to have a strategy; it is to work by a series of ad hoc decisions in the light of an evolving situation. I am bound to say that that has a great deal of merit, but a White Paper it is not. One of the things that I regret in the changes that the Government have brought about in the past couple of weeks—for which the Minister has no responsibility, of course—is that they have failed to resolve the dilemma that we all face in dealing with energy matters and global warming. They are still the responsibility of two separate government departments. Energy is with DBERR—the trouble is that if I use the acronym, I am inclined to use the word ““defer””, which is perhaps rather less than fortunate—and Defra. Can the Minister indicate whether the Government intend to resolve that dichotomy, where one department is, as you might say, responsible for making a mess and another department is responsible for clearing it up? The technical question is: what mechanism do the Government have in place to deal with matters should there be a disagreement between the two departments? I intend to speak largely about global warming; in one or two aspects, I may cover points that have already been made. One thing that especially worries me from the perspective of global warming is the immense reliance that is being placed on energy efficiency and economy as a means of reducing carbon dioxide emissions. In July 2005, the Science and Technology Committee published a paper on energy efficiency which contained a very interesting graph revealing the performance of the economy over the previous 30 years. The graph shows gross domestic product rising, which is very welcome. It also shows energy units per unit of GDP falling. The business of energy efficiency is not something thought up recently as a consequence of global warming; increased energy efficiency has been happening for a very long time. However, the really interesting line in the graph showed energy consumption rising slowly over that whole period. The one thing that we cannot afford to do is to stop the development of the economy. We must keep the economy growing for everybody’s sake. In that, we need to ensure that the action we take in the developed world does not prejudice the opportunities for development in the third world. Food miles—distasteful to some—and tourism, which increase aviation, of course represent for us an increase in our carbon footprint, but they are economic drivers in the third world. We must be careful not to take action which might inhibit or stop their possibilities for development. The Minister mentioned the problem of the growth of energy consumption in the future. I have a graph from the Institute of Economic Affairs, and if I translate the acronym correctly, the present energy demand globally is roughly 12 billion tonnes per annum of oil equivalent. That is predicted to rise to 17 billion tonnes per annum by 2030. This paper is published in the light of all the global warming information. That energy demand will have to be met. While energy economy is going to be important, we should not be relying on it to make a major contribution, partly because of the international aspects and partly because of the sheer reality of a growing economy where things are always changing. Energy demand is likely to increase in this country in any event to some degree. I was fortunate to get into discussions with people from General Motors a month ago on this subject. Transport is another prominent source of carbon dioxide. Their expectation for the future is that at best the improvements in vehicle efficiency will roughly match the increase in vehicle volume, so there is no easy economy to be achieved there. We need to take these factors seriously into account because the Government’s policy of reducing carbon dioxide emissions by 60 per cent from the 1990 figure by 2050 is going to be difficult to achieve. My own party has gone for 80 per cent. However, it is a valid objective because in the end we should be aiming for a society that does not emit carbon dioxide at all. There are a number of other difficulties. It is quite clear that the Government’s policy is to rely very much, particularly for big business and heavy industry, on cap-and-trade systems for reducing carbon emissions. There are a number of problems related to this but the main one has been the abysmal failure of both the European Commission and Europe’s national Governments to arrive at a sufficiently robust system of caps. Emissions trading is easy if there are too many certificates. The result is that a tonne of carbon, even in phase 2 of the system, is presently estimated to cost only £17 to £18. There is a difficulty there because for most people the cost of getting rid of a tonne of carbon dioxide emissions is much higher than that. Another problem that the Government have failed to address is the fact that the renewables obligations certificates referred to by the noble Lord, Lord O’Neill, are charged on the nuclear industry, which does not emit carbon dioxide. As long as we have that situation, we will effectively have not a tax on carbon dioxide emissions but a tax on energy. That is not what we should have, so we clearly need some change there. We are going to have a policy that we hope will speed up the construction of major infrastructure, but as yet we have no policy on what is to be built. I accept that the Government should not try to pick a winning technology—Governments have an abysmal record in that—but they should make one policy in principle: from now on, if at all possible, they should construct nothing that emits carbon dioxide as a result of fossil fuel consumption. However, I understand that that is not technically possible. The run-down in generating capacity is likely to occur more rapidly than we are able to build new plant, and certainly before we might be able to bring forward new green energy sources. That has two consequences. The first is that if we are to put in generating capacity which we hope will be only short-term to emit the fewest possible tonnes of carbon dioxide per unit of energy produced, that, as has already been pointed out, would mean gas. The other problem which we have anyway with the electricity-generating industry is that it is being given responsibility for driving the efficient use of energy by its customers with no obligation to become an efficient energy user itself. Because of the price of a tonne of carbon, it does not look as though the market at the moment is likely to be effective. In answer to a Question of mine in 2005, the Government in effect said that for every kilowatt hour of electricity supplied to the customer in this country, more than a kilowatt hour of energy is released to the atmosphere in the form of waste heat. Heat is a saleable commodity and that waste is not acceptable now or in the future. There has to be a use for it. There may be planning implications but something seriously needs to be done. There are three uses for it, three Hs, and they are heat, hydrogen and horticulture—heat for district heating which would predicate smaller power stations built on the urban periphery; hydrogen because we are going to need it in the long term to resolve transport problems related to going green; and horticulture because, if all else fails, you can surround a power station with acres of glass and produce tropical crops on waste heat. Another important point touched on by the Minister is the question of biofuels. They can make a significant contribution. I am a farmer and I welcome what is happening. The price of wheat, which I grow, has virtually doubled in the last nine months. The price of a tortilla in Mexico has also doubled causing political problems there. This is largely the result not particularly of bad weather and short commodity production, but of the conversion of grains into bioethanol, and that will continue. There is another problem. We are now burning off natural carbon sinks in addition to the geological carbon sinks that we use as fossil fuel. That has also been touched on this afternoon, and it is not particularly acceptable. The final problem with this is that there is not enough land to enable us to fuel our transport industry from crops. It simply will not be possible to do that; we would need another planet. It is one of the few things on which I agree with WWF. There is plenty of energy. It will—indeed, it must—come from other sources. We will need the land that we have to feed our population.