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Energy: Renewables (Economic Affairs Committee Report)

My Lords, although I think this is an extremely valuable report, I am probably the first to say that I am quite disappointed with its contents. If you read it in one respect, it seems to be saying that it is an either/or situation; you either have renewables or you have nuclear. I do not feel that that is the situation at all. The report talks about having a broad base and a mix, but a large number of the conclusions talk about the need for nuclear. Indeed, I was interested that the previous speaker talked about paragraph 258, which states: "““We are also concerned that determination to meet the target may lead to an over-emphasis on promoting short-term options””." I was not certain what the report was trying to indicate by that, because it does not specify what the short-term options are. If it just means wind, I wish it would have just said that and said that nuclear is a good thing, because that is how I read that section. The report goes through many of the issues in some depth, and there is great value in it. However, I was quite surprised, given that it is a report by the Economic Affairs Committee, that it suggests that if we go towards our renewables target it will add an extra £80 to every bill in the country by 2020. That is a fantastically accurate prediction, considering that there has been a massive swing in domestic and other energy bills over the past three years, which has gone far beyond £80 one way or the other. I agree that there will be a cost supplement for promoting a renewables strategy. However, I was rather disappointed that the report did not talk about the problems that we are facing with energy security. By 2020, we might be looking at as much as 80 per cent of our gas being imported from abroad. That will have a massive implication for the fluctuation in prices. We only have to go back over the past two or three years to work out what happened when the interconnectors were not supplying gas from the continent in the way that they should have and the spot price of gas was going up and down massively. Therefore, rather than increase bills, there will be a cost, but this might reduce how markets can go up and down, especially if we are so reliant on gas, as it looks like we will be. Much was made in previous speeches of the fact that prices are changing and the report needs to be rewritten in the light of the recession or the depression. I am not sure whether we are in a recession or depression; it seems to change on a regular basis. This will change the economics of the issues of renewable energy. I went to a seminar on wind turbines, where there was great concern that large numbers of projects would have to be cancelled because the cost of the steel for the wind turbines had shot up so much—because there was such demand for steel—that the turbines were becoming unaffordable. Now, there has been a massive decrease in the cost of steel. Although there has been a lack of credit, which is quite badly affecting the wind turbine industry and the prospects of many wind turbine farms, there is an issue about variations in cost, which could make wind cheaper rather than more expensive. One of the problems that the recession has brought has been a collapse in the carbon price as companies do not use up their carbon allowance. To raise finance, many of them are selling off the excess credits. The noble Lord, Lord Lawson, has shown that he is a climate sceptic. I am an ETS sceptic of the highest order. I do not believe that the European Emissions Trading Scheme will lead to a regulation of the carbon markets. The recent collapse in the carbon price shows the fragility of that system. I very much hope that, although the Government are putting a great deal of faith in this, it will be a wake-up call to the problems that are affecting carbon. I go back to the nuclear argument. I do not think that anyone in this House who has listened to me speak on this subject many times before would be surprised that I am sceptical about the arguments being made about nuclear. Obviously, many environmentalists are moving towards the building of nuclear power stations as a low-carbon option. However, my real concern is that it is not a silver bullet that will suddenly solve our needs, because of the timescale. During a Question yesterday, the Minister talked about the first nuclear power station coming on in 2018 and then nuclear power stations coming online in the 2020s and probably into the 2030s. To build up the level of generation that we need from these power stations, we are talking decades, because we start from such a low basis. The noble Lord, Lord Jenkin, will probably mention that even if we had the skills base in this country to manage such a massive expansion of the nuclear fleet, we do not have the companies any more. I am also sceptical about the prices given for each of the different renewables, which includes some figures on nuclear. I have seen a large number of these figures over the past few years, and they have changed quite considerably year on year. However, some of the figures around nuclear that are given in the report are rather optimistic, considering that we still have not come up with a suitable geological storage area. We have not even decided on the site, and we have certainly not decided when the building is going to happen, which could be 20 years from now. To generate figures concerning how much that will cost would affect those figures quite considerably. Many noble Lords have talked about wind farms. I always find it amazing that there has been such a shift over the years. A few years ago, nuclear was seen as very dangerous indeed. Now, it seems that nuclear is about as safe as you can get, and you could have your lunch off a nuclear reactor. However, if you happen to be walking across a moor and see a wind turbine, your head will suddenly explode through the affront to your sensibilities about wind turbines. I know that a lot of people do not like wind turbines. However, the surveys that have been done of people who live near wind turbines show that the majority of the population actually like them. I personally enjoy seeing them. I was passing over the border at Tow Law, where there is a wind farm. There was great opposition saying that it was going to spoil the countryside. However, I noticed that they have built a car park so that people can park and watch the wind turbines. It has almost become a tourist attraction in its own right. Different people have different views. It has become incredibly difficult to build wind turbines. The noble Lord, Lord Broers, mentioned the problem of how long it will take to get nuclear power stations through the planning process. Similarly, wind farm costs have been directly affected by the problems with the planning process. Every single wind turbine that is talked about always attracts attention. I speak from personal experience. I tried to put up a small, 6.8 kilowatt, 30-foot wind turbine tower that you would not be able to see from more than 200 metres away, and I received a letter of complaint from someone in Leeds. I found that quite incredible. This was someone who had no idea what I was doing, but because I wanted to put up a wind turbine in a national park, they objected. That is the problem that wind turbines have. We should realise that it is much cheaper to locate wind turbines onshore. We are looking offshore because of planning constraints, but there is much greater reliability offshore. This is an area that I am particularly concerned about. It is mentioned in the report as energy storage. We should be looking at large-scale energy storage so that the power from wind turbines can be stored and used in a much more effective way. To find out that only £1.2 million is being invested in energy storage, a technology that we will need in the future if we are to expand into renewables, is a massive disappointment. Another disappointment in the report was the omission of biomethane and biogas as a form of renewable gas which is going to be a major source of renewables in the future. Germany has 3,500 anaerobic digestion plants. I declare an interest in that I have just become the chairman of the Anaerobic Digestion and Biogas Association. Our stated aim is to try and build 1,000 plants over the next 10 years. The report states that there will be a massive cost in renewables. Nobody should underestimate the cost but we should not underestimate either the cost that is going to have to be pumped into the energy sector. We have underinvested in plants over the last few years. There is going to be a massive investment in all areas of generation and a massive investment needed in the transmission network, which has not been looked at in this report. It was only mentioned once in the White Paper and was left out of the two White Papers before that. We should not forget that we are now signed up to reducing by 2050 the amount of carbon dioxide we are emitting into the atmosphere by 80 per cent. The cost is going to be massive, as is the behavioural change needed, so we cannot look at the economics as being business as usual. This report highlights that to achieve that we are going to have to make massive changes.