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Energy: Renewables (EUC Report)

My Lords, this has been a very interesting afternoon for me. I was delighted to hear the opening remarks of my noble friend Lord Freeman, who rightly pointed out that the 15 per cent renewables target that we are looking at is the target after we achieve a 20 per cent reduction in our carbon emissions by 2020—that is, 20 per cent of our energy requirements not today but in 2020. The difference is fundamental, and my noble friend was absolutely right to draw attention to it. In this country, ultimately we are looking at an 80 per cent reduction in our carbon emissions. That is not yet written into law but it is a recommendation that will, as I understand it, be made to the Government by the Committee on Climate Change following its consideration of evidence that has accrued since the Government decided on the 60 per cent target three or four years ago when they were planning the Climate Change Bill. That is, of itself, fundamental because it probably means that by 2020 we will require a renewables target higher than 15 per cent if we are to get our emissions down to 20 per cent below where they were in 1992—or, in the case of Europe, probably today. However, getting our emissions down to that level will be very difficult. I also sympathise with my noble friend Lord Freeman, as anyone who writes a report looking at the future is immediately in difficulties because what you expect to happen in the future never does happen. I merely draw the House’s attention to page 37 of the report, which refers to the cost to the domestic consumer of generating 37 per cent of electricity from renewable sources. The report sets out assumptions based on oil prices at $70 a barrel and $150 a barrel, which they nearly were earlier this year, although today they are at $55 a barrel. That suggests that under the present regime the price for the consumer will be much higher than anything generated in this report. That leads me on to a different aspect of this issue. It seems to me that in the end it all comes down to economics and the climate in which everyone has to undertake these actions. I draw attention to something that appears on page 75 of today’s Times. It may not be too significant but it is, none the less, indicative. It is a report that the world’s biggest wind farm, which, curiously, was to be in Texas, has just been put on hold because the economic conditions have worsened so much in the past two or three months. Years ago, I was responsible for the whole built estate run by Essex County Council—that is, maintenance, energy use and everything else. Even in those days, we worked very hard on energy economy. Economic viability drove the programme, and projects went in and out of viability depending on the fluctuating interest rate. I say that to make the point that, ultimately, we really need to get this moving. I agree with the noble Lord, Lord Teverson, about the headmaster’s report, but the comment that I consider to be appropriate for the Government at the moment is, ““Could do better if they tried””. I am not wholly convinced that the Government are really trying to tackle this; at least they give no appearance of having an absolute conviction to get to grips with the problem. I use another illustration of the difficulties that we face. A friend of mine has a wind turbine which supplies most, if not all, his electricity and he supplies some to the grid. Until the electricity prices rose, he was on a 60-year payback period. That would not encourage people to go into this business. Finally, we need to consider another problem. I refer to the second report of the Science and Technology Committee, 2005-06, to this House on energy efficiency. At page 27 of the report we find a graph which illustrates yet another aspect of this problem of which little has so far been said today. That report illustrates the performance of our country's economy over the past 30 years. Interestingly, it shows that GDP grew by about 110 per cent over that time. For our own sakes and for the sake of everyone in our communities, we expect to keep our economy growing. It also shows the units of energy required to produce a unit of GDP falling from 100 to 50, so effectively it halved. Energy efficiency has been ongoing for a long time. It would have accelerated had the price of oil stayed where it was, but now I am not sure what will happen. We need to bear that in mind because the real problem revealed by that graph, and which we need to consider very seriously, is that over the same 30 years the effect of those two movements was to keep our energy use virtually flat—it grew about 5 per cent. If we are to rely on increasing energy efficiency to try to get our emissions down, in my view, it will not happen. If we become more efficient in our use of energy, it will be held up as the economy grows. We have a deep problem and the nature of change required in our energy supplies is greater than most of us are at present contemplating. As my noble friend Lord James was saying, this question of economy applies across the board: not only do we have these problems in the United Kingdom, but every other country across Europe has a similar, parallel problem and will want to invest in this area. The noble Lord, Lord Rowe-Beddoe, who I see has temporarily had to leave the Chamber, talked about the need for stability in the economic climate in order to encourage investors in the construction and installation of all the specialist equipment to deal with the installations and then the installations themselves. Given that this is now a trans-European problem, investors ought to be able to have considerable confidence, but the brutal truth is that, looking at the economy today, there is no confidence at all. No one in manufacturing industry, and no one in the construction industry, dares to plan more than about a week ahead. Until we get that foundation laid, we shall find it extremely difficult to achieve anything. There is an urgent need to give this field and the wider economy that stability. The Minister will undoubtedly argue that the Government are already doing what they can and that we shall hear more next week with the Pre-Budget Report and so on. I do not expect him to answer this this afternoon, but we all need to recognise that we will get nowhere without certainty in giving the people who are going to have to put their money into the construction that is necessary to bring this change about the confidence to begin doing so. I should refer to the Planning Bill. It has been much mentioned, and I played some part in it in this House in the past few weeks. It will help, but it is not a solution. For a start, it deals with national-scale infrastructure projects only. It will take care of power stations, but a lot of other things are required. That is the first thing, but let us also consider the timescales. The Bill will be passed by the end of this Session. The planning commission will probably be in place by next April. It will, perhaps, have settled its procedures by autumn 2009. At that point, applicants will know what they have to do in order to make a valid application. It will take them a year to produce a valid application; certainly, it will take a year for an application for a power station. That takes us to the end of 2010. It will then take another year for the commission to consider it. Therefore, we should not think that we have produced a tremendous acceleration. Of course, after that, matters will be much easier and there will begin to be some benefit, but we have a two or three-year hiatus before the Act will be operating. We have to face the fact that that is so. It will help with planning problems at national level on large-scale projects, but in due course, we may have to turn our attention—dare I say it?—to the rest of the planning system, which for many people in the construction industry is still a confusing obstacle to pass. This has been an interesting afternoon. It is a step forward. Whether one agrees or disagrees with everything that was said is neither here nor there. The more discussion we have on this issue, and the more the recognition is forced home that urgent action is required, the better. In that sense, I completely support everything that has been said this afternoon.