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Energy: White Paper

My Lords, following the exchange that has just taken place, I point out to the noble Lord, Lord Hunt, that the leader of the Liberal Democrats in this House has been a member of the Nuclear Energy All-Party Group for a good many years and, as with others, he has many friends. At this stage, I am not going to attempt another comprehensive assessment of the White Paper. I want to concentrate on a few points. My noble friend Lady Wilcox said rather firmly that the Government need to become much clearer on how they are going to achieve their objectives. We all welcome to the House the noble Lord, Lord Jones of Birmingham. I should like to add to the congratulations that have already been offered on what was, by any standards, an excellent maiden speech. I would add only one thing. The most encouraging statement that the noble Lord made during the course of his tour d’horizon was that decisions must be made this year. He nods vigorously. That is absolutely crucial and what we need. A few weeks ago at the Foundation for Science and Technology—I declare an interest as its president—we held a discussion on the energy White Paper. It was attended by a wide range of people from government public bodies, universities and industry. The Minister will be interested to know that we had a presentation from his senior civil servant, Mr. Willy Rickett, the director-general of the Energy Group—in what was then the DTI and is now, I think, the DBERR, which sounds like a sort of French aristocrat. There were also other energy experts. I will mention one or two of the points that arose during that discussion. Referring to the White Paper, one speaker asked whether the policy is market-oriented or government-oriented. He quoted the Financial Times aphorism, ““Is it Gosplan or Greenplan?”” The answer is that it is a bit of both. The Government stress that investment decisions—as has been said, over the next two decades billions of pounds will need to be invested in this country to keep the lights on—must be made by the market, by energy companies and by the financial markets from which the investment funds will flow. However, the Government can and do use a variety of fiscal and other instruments to steer markets in the directions which they want. An obvious example, mentioned several times today, is the renewable obligations certificates to subsidise renewable energy. Ministers often boast about the ROCs and the modest expansion in renewable energy that they imply. There is always the implication that this is financed by a government subsidy. It is not. The subsidy comes directly on to consumers’ bills. Ofgem has estimated that cost as £15 per year on every electricity bill. The other aspect of what I might call the Gosplan features is this huge list of other organisations, bodies, principles and policies which represent the Government’s view. If I may, I am just going to take a moment or two to recite what they are. We have had mention of the EU Emissions Trading Scheme and I will come back to that in a moment. We also have the carbon reduction commitment, the energy performance certificate, the carbon emissions reduction target, the carbon capture and storage initiative, the distributed generation package, the biomass strategy, the energy efficiency commitment, the renewable transport fuel obligation—my Lords, I am half way through the list—the low-carbon transport innovation strategy, the environmental transformation fund, the Energy Technologies Institute, the climate change levy, climate change agreements, the Coal Forum, national policy statements, Warm Front, the UK fuel poverty strategy, the Sector Skills Council, et cetera, et cetera. That is not an exhaustive list. On top of that, there is the new Planning Bill and the Climate Change Bill. If the noble Lord, Lord Jones of Birmingham, could do something to rationalise and bring coherence to this vast tangle of government-sponsored initiatives, he would make a huge contribution to an excellent energy policy. Many of the contributors to our debate at the FST laid stress on the overriding need for an effective and realistic mechanism for pricing carbon. That is essential if these investment markets are going to work properly. It is an issue which, the noble Lord, Lord Jones, may have been warned, I have raised on several occasions in this House and on which I have had lengthy correspondence with his colleague, the noble Lord, Lord Truscott, notably last February. The noble Lord, Lord Truscott, acknowledged that the EU ETS, the chosen mechanism for pricing carbon, was not working properly in phase 1. It was hoped that the review, then in progress, would bring about improvements. He promised that the White Paper would set out the Government’s view in more detail. Well, my Lords, it does. I draw attention—one has to hunt for it, but it is there—to Annex C, at the back of the White Paper. I am not going to quote it all as that would be inappropriate. However, four perfectly valid bullet points are set out on page 334. First, the EU ETS, "““should … set safe, predictable and affordable limits on emissions, which tighten over time””." That is quite right. Secondly, it should, "““be improved such that it is more efficient with fewer distortions””." Thirdl, it should, "““cover the right emitters””," which it most emphatically does not do at present. The carbon capture and storage is not yet in it. Fourthly, it should, "““form the hub of a global carbon market””." We are a long way from that. Where does that take us? How are the Government getting on with this? What is being done to make these thoroughly desirable objectives happen? In the debate on 8 February on the electricity industry, I asked the noble Lord, Lord Truscott, about the so-called carbon hedge proposal advanced by EDF Energy and others. Put briefly, it is a market mechanism for establishing a floor price for carbon. That would be a valuable start. In his letter to me written after the debate, on 19 February, the noble Lord, Lord Truscott, commented generally, but he did add the words, in italics, in the final paragraph, that, "““we committed in the Energy Review to ‘keep open the option of further measures to reinforce the operation of the EU ETS in the UK should this be necessary to provide greater certainty to investors’””." EDF Energy briefed me this week to the effect that nothing whatever is being done about the carbon hedge proposals. Can the Minister now tell us what other options, what further measures as promised by the noble Lord, Lord Truscott, are being pursued to attempt to deal with the question of trying to get a clearer price for carbon. The future of nuclear policy was raised by a number of noble Lords. This had a very bad start from the risible 2003 White Paper. That was followed by what has been described in the courts as ““the deeply flawed consultation””, following the Greenpeace action. Therefore, Ministers had to start again. In May, they issued The Future of Nuclear Power, a consultation document with the closing date of 10 October. I am quick to give credit where credit is due. I think that is a very splendid consultation document. They have asked all the right questions and learnt the lessons of the court case. It is very well written, but the botched consultation of the previous year has cost us a year. The new consultation makes it very clear that no decisions have yet been made. This is a consultation paper. I have seen reports of meetings held by some of the noble Lord’s officials, including one excellent meeting held in the north-west by his senior man, Mark Higson. It is clear that Mr Higson and others have been bending over backwards to make it absolutely clear that no decisions have been taken: this is a consultation document. If he said ““we are consulting”” once, he said it 10 times. So I come to the point raised by my noble friend on the Front Bench. What are we to make of the question and response made at Question Time in the other place on 4 July? Sir Menzies Campbell asked: "““Will the Government now abandon their headlong rush towards a new generation of nuclear power stations?””." In a long answer that also covered other things, the Prime Minister said: "““That is why we have made the decision to continue with nuclear power””.—[Official Report, Commons, 4/7/07; col. 954.]" It is interesting to note that, absolutely right on cue, a letter has come from Greenpeace addressed to the Prime Minister. It states that this makes the consultation a nonsense, it will need to start all over again, and that although the Government would be prepared to consult widely, they will have to embark on yet a third round of consultation. We must have an answer from the Minister this afternoon to the question: what do the Government intend to do about that? If we are simply told, ““I am sorry. The Prime Minister got it wrong and he shouldn’t have said that””, we will understand. Although he had been in his job for more than the five days that he said, nevertheless it was clear that he had not been properly briefed on the issue. Many people would accept that, although I doubt whether Greenpeace will. The noble Lord may find that there will be another case and we need to be told this afternoon what the Government are going to do about it. Finally, I return to the issue I raised at Question Time on 28 June about the siting of new nuclear power stations. I should make it perfectly clear that I am not asking where these should be, and I accept entirely the thrust of the answer given by the noble Lord, Lord Truscott, in which he made it clear that the Jackson Consulting report was one of several policy documents being fed into the system. Rather, I want to ask about the process that the Government have in mind for deciding these issues. Both last year and this year the Government have made some important announcements about the siting process, and I have a few questions based on statements which have been made. The first appeared in the Energy Review Report of July last year at page 124. The Government promised that they would, "““monitor whether an appropriate market in nuclear sites is developing””." I am aware that Ofgem is worried that somehow it is going to be drawn into the process because there will be arguments about whether there is free and fair competition, and whether those who sit on the present sites, such as the Nuclear Decommissioning Authority and British Energy, will give proper access to them. If there is a conflict of interest, what role will the Government play in helping to resolve it? Then there is the question that arises in the nuclear power consultation document published in May this year, when the Government proposed that they would, "““invite nominations for possible sites for new nuclear power stations””," and on, "““restricting build to the vicinity of the existing sites””." Who will be invited to nominate the sites? Would the nominations be limited to the current owners or could another energy company, perhaps a speculative developer, nominate a preferred site? Which other bodies might be able to do that—the local authority or the regional development agency? Again, I think that the Minister could answer that without in any way anticipating where these sites will be. Thirdly, in the Energy Review Report last year the Government noted that: "““There might be other attractive sites, for example, sites with retiring fossil fuel generators””." Many of those are power stations that are going to have to close because of the EU Large Combustion Plant Directive. Will—or perhaps I should ask, could—retiring coal power station sites be nominated for new nuclear development under the Government’s siting consultation process? All these questions are based on statements that the Government have already made. I hope that I can get some answers. When the noble Lord comes to wind up the debate, he will recognise that I do not expect him to give me detailed answers to my questions, but I would very much welcome a general response and perhaps an undertaking to write to me in greater detail. The Government have embarked on what seems to me at last to be the right road towards what might become a viable energy policy. As I said at the beginning of my speech, it is very welcome that we can expect decisions before the end of this year. We shall want to hold Ministers firmly to account as the decisions which must be taken, are taken.