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Energy: White Paper

My Lords, I, too, congratulate my new noble friend. I hesitate to offer him advice as other noble Lords have done. I think that I will simply wish him well. Like him, I thought that the energy White Paper was really rather good. It faces up to the uncertainties about which he spoke: the uncertainties due to the need to tackle climate change; the uncertainty about energy security, about which my noble friend Lord O’Neill spoke; and the uncertain sources of our future fuel and the growing international competition to acquire it. As the Minister said, the pursuit of new sources of oil and gas is now central to the foreign policies of all the world’s major powers. In the face of these uncertainties, the Government are absolutely right to reduce our dependence on imported energy and to encourage the use of a diverse energy mix. It is ridiculous to characterise new nuclear power stations as a last resort as the leader of the Opposition did, only to be contradicted by his own colleagues, which shows, as my noble friend Lord O’Neill implied when he intervened, that there are some uncertainties opposite, too. The Government must encourage the efficient use of all sources of energy to encourage the saving of energy, to reduce our carbon footprint, and to encourage renewables and, of course, nuclear power. The only sensible course is to encourage this diversity and variety while becoming more economical. The White Paper provides a good framework for addressing the technical challenges and risks in energy. However, I am not sure whether it provides a political framework—a political context—in which all this will be done because, without this, not much will happen. The context is important because, in reality, we cannot go it alone. The Minister himself made this point. The framework within which the action will take place must be the single market. How could it be otherwise? Most agree that we have benefited enormously from our membership of the single market, and our commitment and involvement are so deep that surely much of our energy policy must be framed within its context. The White Paper agrees. On page 20, it says: "““An open European market is an essential part””," of an effective and transparent international energy market. It goes on to say that, "““the European Council agreed in March 2007 to a common European strategy for energy security and tackling climate change. This includes further steps to complete the internal market in gas and electricity””," and supports ““strong action”” by the Commission to enforce this internal market. It also says quite a lot about meeting targets in Europe. The carbon trading scheme in which the noble Baroness, Lady Wilcox, puts so much faith is based on the single market. However, efforts to liberalise the European electricity and gas markets have continued to be made for 10 years. The best way in which to ensure competition is to break up the large companies in France, Germany and Italy that dominate their markets. We are told that this can be done by unbundling, but some member states have strongly opposed these proposals for years. Certainly, people in Europe are free to choose their energy suppliers. In Britain, the percentage of households switching suppliers has been nearly 50 per cent. Elsewhere in the single market, however, the percentage of households switching their energy supplier is only in single figures or in the low teens, because the regulatory barriers in many member states as well as the problems of unbundling hinder the ability to switch suppliers. In some member states, price tariffs are regulated usually below market price, which makes it almost impossible for new suppliers to enter the market. This has gone on for years. There is a trend towards liberalisation, and there will be movement towards it. The movement will be slow, however, because the single market has become an accepted fact of business life. It may be grumbled about but it is rarely questioned, and its benefits and barriers are taken for granted. Now that its original ideals have become part of our way of life, economic development through the single market is becoming tentative, piecemeal and incremental. This is what happens when ideals become an accepted part of everyday life. If we are to achieve our energy security and energy sustainability in the context of the single market, we must decide between several alternatives. Should we give more power to the Commission? If the Commission already has enough power, can we find more and better ways in which it can use it? Is there a halfway house? Is functional separation the answer? This, after all, is how we liberalised the impact of BT in the telecoms market. Or is the answer to change the focus of the single market—a new vision that will inspire faster and more urgent growth? I believe that the way forward is through a new vision of what the single market is all about. We now take for granted the free movement of goods and services, people and capital. We accept that there are problems but, when reminded of that, we assume that things are moving in the right direction. With a new vision, progress, instead of tentative and piecemeal, will speed up and become more urgent. I am not alone in thinking this. In February, the Commission issued a communication called A Single Market for Citizens. Its vision is that the single market should be that of the consumer citizen. In January, the Treasury and the then DTI gave us their vision, which looks to business and industry to become more competitive, skilled and innovative in the face of globalisation, and that this more dynamic and competitive single market will promote jobs, growth and prosperity for the citizen. There seems to be a growing view that the vision for the single market should be inspired more by the citizen than by the market. And why not? Europe has an extraordinarily well educated population, and user-driven innovation is being recognised as good for politics and good for economics. It could certainly play a useful role in energy networks. Indeed, our own NESTA is funding research into this. The White Paper strongly makes the point that we will achieve greater security of supply and sustainability if we operate within the framework of the single market than if we go it alone. I agree. Yet energy is now probably the most important and divisive issue facing the European Union. Perhaps a new way of looking at the single market will help to resolve this paradox. Does the Minister agree? Is he happy to continue as we are in the hope that eventually we will liberalise the single market and so achieve our objectives in this excellent White Paper, or does he think that we should speed the whole thing up by featuring the interests and concerns of the European citizen consumer? The success of the White Paper within a reasonable time depends on this.