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Energy: White Paper

My Lords, as is customary, I start by congratulating the noble Lord, Lord Jones of Birmingham, on his maiden speech. He has made it on an important subject: energy policy and the recent White Paper. This is the third White Paper in four years, and I am bound to say that the previous two rated, in my book, as perhaps only beta minors. This one is much better; it is more comprehensive and begins to give us a well argued way forward. But, as many noble Lords have said in the debate, we need to see some action now, and therefore we all welcome what the noble Lord said this morning without any prompting, shall we say. I say this in the main from the rather narrow fronts of, first, electricity supply and, secondly, climate change. In previous debates I have talked about carbon emissions in transport, particularly aviation. They are important and quite topical subjects, but today I will confine myself solely to electricity supply. I do so for several reasons. First, as the Minister said, it is our biggest single CO2 emissions source, at about one-third. Secondly, it is probably the easiest one to deal with. Thirdly, as the White Paper acknowledges, it so happens that the next dozen years will present a unique opportunity to do something significant and make a major contribution to CO2 reductions, and to do so in a manner which is or could be near economic. The caveat of ““near economic”” is of great importance. We can do things which are pretty expensive—offshore wind power is the obvious example—but there are limits in terms of security of supply and of cost. The opportunity is derived from the fact that, between now and 2020, about a third of our generating system needs to be renewed. All this is well argued and set out in chapter 5 of the White Paper. I am not going to speak at length about renewables but will make three brief points. First, they are in my view a red herring, a sop to the ““hair shirts and sandals”” people. They would be lucky to achieve 20 per cent, which is just as well as they are expensive, which is my second point. A new renewable obligation of 20 per cent is just about affordable in terms of subsidy, but the figures are beginning to get pretty big and it is increasingly worrying. Thirdly, the environmental damage to our countryside is factored in only when the planning aspect is brought into play. In that connection, the thought of a Severn barrage horrifies me. The damage it will do to wildlife and the estuarine countryside—that is, the birdlife—is difficult to contemplate. Whether a tidal flow scheme, as compared with a barrage, is a possibility may be worth examining. Nor do I wish to say anything about nuclear. The Government are still treading gingerly in this area. I can understand why, and I hope that under the new leadership we can move forward. A new consultation document—here I agree very much with the noble Lord, Lord Jenkin of Roding—has much to commend it. There is no question, either on basic economic grounds or on CO2 grounds, that the new generation of nuclear power stations is pretty good. Surely by now we can put to bed the decommissioning issues. We have had countless reports on this, including some from House of Lords Select Committees. Surely we can move on now, following the consultation. I encourage the Government to grasp this nettle. In the interests of diversity of supply—not too many eggs in one basket, that is—I would like to see around 25 or 30 per cent of our supply from nuclear. I come finally to fossil fuels—about 50 to 60 per cent of future supply. Gas and coal are highly economic, excluding the carbon footprint. There are big question marks, of course, over gas supplies from Russia, but we can thank President Putin for alerting us to that danger. The other big question is surely the economics and the technical question of carbon capture and sequestration—CCS. How well are we—not just Great Britain—progressing with this technology? What is the timescale? When do decisions have to be made? What do the electricity supply companies think? In my notes I wrote, ““Where have we got to on the important and imaginative scheme of BP at Peterhead?””. I got the answer from the speech of the noble Baroness, Lady Wilcox. BP has had to abandon it because the Government were incapable of coming to a decision. I am appalled by that. Now that we have a businessman in charge, perhaps these sort of disasters will be prevented. I understand that decisions are required from Government, but where have we got to? I go on about this because grinding away at the technology of CCS, carbon capture and storage, seems to be the key to the future of the electricity supply industry. I suspect that CCS, combined with other technical improvements in electricity generation, is not that far off from being economic. Does the Minister agree? What price does his department put on carbon that would equate with the extra cost of CCS? In addition, if he agrees with this line of thought, do we have enough regulatory powers to push the electricity companies in this direction? The White Paper suggests, in rather general terms, that Ofgem has these powers. Can the Minister confirm that Ofgem has the power to ensure that the generating companies make timely and appropriate investments with low carbon footprints? I am referring here to box 5.1.1 of the White Paper. I conclude with a few observations on the EU Emissions Trading Scheme, which has been referred to by a number of noble Lords. I am sure that the Government are right to seek agreement to strengthen and reinforce the ETS to provide firms with greater long-term carbon market certainty. In particular, we surely need a much higher carbon price—other noble Lords mentioned this—and a much more stable price, if CCS is to become an economic reality. Moreover, ETS is surely the way forward to international carbon trading, with all the benefits of classical economic efficiency. It is a large and hugely complex subject, but the objectives are clear. I leave it at that. Finally, if there is one conclusion that comes through from this debate, it is that we have had enough talk about White Papers. We now need decisions and actions.