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Energy Bill

My Lords, we have had an interesting and wide-ranging debate. I hope that noble Lords will forgive me if I deal with it in considerable detail. Because I am not troubled by what is going on in Moscow tonight—those of us who support Aston Villa are never troubled—I make no apology for perhaps going past the time for kick-off. Noble Lords might catch the second half if they are lucky. I assure the noble Lord, Lord Oxburgh, that I personally see this as an urgent matter, and Her Majesty’s Government do the same. I am surprised if the noble Lord, Lord Teverson, thinks that I am not bringing to it my usual degree of enthusiasm in these matters. Perhaps I could take noble Lords back to my time at the CBI when I was director-general. Having listened to the debate today, I give noble Lords on all sides of the House some fabulous qualifications in hindsight. At times, we at the CBI just never saw the initiative and support from either side of the political domain for this enormously important issue. I am new to this House, so I hope noble Lords will forgive me if I am not allowed to say this, but I have heard some things tonight from other Benches that have made me think, ““You do have a nerve””. The delay from both parties on this issue over decades is a reflection of the diverse and complex nature of the issues. The wider energy strategy that we now have to address is, in one way, the product of all that deliberation and consultation, as well as a shift in the political—with a small ““p””—feeling in the country about it. Indeed, the noble Lord, Lord Teverson, said that the Bill does not allow us to make sufficient progress on climate change early enough, but at last we have a Bill that is bringing forward important enabling legislation which will allow companies to make investments in such important carbon technologies as carbon capture and storage. It will push forward nuclear at last and allow, through the banding of the RO, a more rapid expansion of renewables. The Bill makes significant progress which has long been lacking across the political piece, as those in business have known and talked about for so long. The breadth of issues we have touched on today is also a reminder of the tensions inherent in how we respond to the challenges we are facing. We have to combine decisive urgent action to cut carbon emissions with cost-effectiveness while maintaining a competitive and growing economy. We have to ensure secure and reliable energy supplies though increasingly we know that we will rely on international markets. I am grateful to the noble Baroness, Lady Wilcox, who marched through the decline of domestic gas and oil reserves. That is a statement of the obvious. An alarmist walk through our history and where we are going will do nothing to instil confidence in people—businesses, overseas investors and the private sector—about investment in the future. It is so very important that as a nation we pull together to deliver a secure and low-carbon solution. My noble friend Lord Birt, among many others, referred to the concept of this as an international issue. My noble friend Lord Truscott talked about how important oil and water were going to be in the 21st century. I make speeches all over the world talking about how the currency of power has fundamentally changed in the 21st century. Power in the 20th century was determined primarily by who had the biggest guns, the biggest armies and where they went. Power in the 21st century will be about the currency of oil and gas. I would suggest that the currency in 20 or 30 years’ time, and in some very surprising places, will be water. Then, there is the currency of the development, exploitation and transfer of knowledge. This country can succeed in that knowledge, that technological advance in dealing with so many aspects of climate change and security of energy supply. It is arrogance of the very worst sort if the Americas, the Britains, the Frances, the Germanys and the Japans turn to the Indias, the Chinas, the Brazils and the Vietnams and say, ““We got rich by fouling this planet. You can’t””. They will not believe us, for a start. They will ignore us, for the second. But at the end of the day we cannot allow them to be doing that. We must come to them as partners with technological solutions so that they can get wealthier and rich. By the way, that is not rocket science. If they get richer, they will buy our goods and services. But at the same time, we must make sure that we can partner with them and provide them with those technological solutions. If we can reach some level of the moral high ground by making sure that we can go to those countries and say, ““We are doing out best. We are trying very hard here. We even apologise for what we have done over the past couple of hundred years””, then we as the European Union can, I hope, have a crack at persuading our friends 3,000 miles west of here that they also must get to that moral high ground if they are going to make a difference in using the currency—the power—of the 21st century, which will so much depend on how they deal with this. Five areas in the Bill are key to that. The first deals with creating a fit-for-purpose licensing regime to allow the private sector to bring forward offshore gas storage and unloading projects. The second deals with plugging the gap in the regulatory framework for carbon capture and storage, creating a licensing regime for the permanent storage of carbon dioxide under the seabed. The third is reform of the renewables obligation that will triple the renewable electricity promoted by the RO by 2015 compared to today. The fourth is putting in place measures to ensure the private sector covers the full costs of decommissioning and a full share of the waste management costs of any new nuclear power stations. The fifth is powers to underpin the roll-out of smart meters to medium-sized business in the first instance, but potentially to all energy consumers. I can assure the noble Lord, Lord Taylor of Holbeach, that the roll-out of smart meters will continue apace. We are going to get medium-sized businesses going by November 2008. We will then roll it out over the next five years, after more consultation, to smaller businesses and then into the private consumer. It will not happen if we do not get buy-in from all sections of our society and I suggest that that is one of the important aspects of being leaders. It is interesting that the noble Baroness, Lady Carnegy of Lour, mentioned leadership in France—the leadership that I presume shows up so evidently in how they deal with their farmers and students. But the noble Baroness is right; they show distinct leadership in nuclear power and we can learn much from the way that their parties came together to deliver solutions which will endure for decades to come. I now turn to specific points that have been raised. First, I will deal with one or two issues raised by the noble Baroness, Lady Wilcox. She says that the Bill fails to specify how the long-term liabilities arising in connection with carbon stores will be handled. The enabling provisions are in the Bill. For example, Clause 20(3) allows licences to include conditions on the closure of a store, and provisions about the obligations of the licensee after closure and about the termination of a licence. Clause 30 applies to the decommissioning arrangements that currently apply to offshore oil and gas facilities, to structures used specifically for carbon dioxide storage. We want to consult on the detailed liability arrangements that will apply. Whatever the detail, these will ensure that the operator will be legally and financially responsible during the period that the store is licensed. The operator will be obliged to seal the store to a specified standard and remove to structures used for storage. Public funds will be protected against risks of the operator failing to meet its obligations through financial guarantee arrangements and the licence will not come to an end until the long-term stability of the store has been demonstrated. The noble Baroness, Lady Wilcox, also asked whether the CCS regime should cover all of those liabilities. It does. Clause 31 relates to the termination of licences at the end of the life of the store. They allow the Secretary of State to make financial arrangements with the licensee in relation to the licensing authority taking on liability for the closed store. The noble Baroness also asked whether the Government will change safety standards for new nuclear power stations. In the United Kingdom we have strict, independent safety protection regimes for nuclear power and any new station will be subject to safety licensing conditions. They will have to comply with the conditions set by the regulators in connection with their licences and their authorisations. The noble Baroness also asked why the 2050 target is not an 80 per cent reduction in CO2 and only a 60 per cent reduction. The figure is set at 60 per cent because that was what the science recommended at the time. Rather than making up a new figure, we have asked the Committee on Climate Change to assess that figure again in the light of updated scientific information. The noble Lord, Lord Redesdale, mentioned that the Government should introduce a renewable heat obligation. The Government are focused on heat; the Prime Minister said last November that we will be doing more on the issue. That is why we have had a call for evidence on the subject, which considered a range of issues, including financial support mechanisms and obligation in that respect. The work is feeding into the renewable energy strategy consultation this summer. But heat is complex, as the noble Lord knows, and we need the time to make sure that we get the policy right before thinking about legislation necessary to deliver it. I was interested to listen to the noble Lord, Lord Redesdale, when he said that it was difficult for companies to factor in CO2. That is not what I hear when I go around the businesses of Britain or inward investors to the country. In a commissioned survey, 50 per cent of respondents said that it was already having a strong, or medium, impact on the decisions to develop innovative technology.