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Energy Bill

Before those somewhat churlish closing remarks, I was going to say what a great pleasure it was to follow the hon. Member for Copeland (Mr. Reed), who speaks with great knowledge of the nuclear industry. As many other Members have pointed out, it is not wholly coincidental that we are debating the Second Reading of the Bill on the first day of the Copenhagen summit on climate change, which has been described by some as the most important conference in human history. Although there may be some hyperbole in that description—I seem to recall that Yalta was quite important—the question of climate change is certainly the dominant one for our generation. Notwithstanding the local difficulties at the university of East Anglia's climatic research unit, it is clear to most sensible commentators that the world's climate is indeed changing. Whether climate change is caused by human activity is still a matter for debate. A few years ago I was fortunate enough to pay a visit to the Argonne national laboratory in Chicago. My visit and the presentation that I received there left me in no doubt whatever that since mass industrialisation, the world's climate has warmed and is continuing to warm significantly. I, for one, am entirely satisfied that human activity is contributing significantly to global warming, and it is clear that for the sake of future generations, we must take what action we can to attempt to slow that process and to adapt to it. As other hon. Members have pointed out, however, the Government have been somewhat slow to respond to this phenomenon. Given that some 47 per cent. of carbon emissions are produced in energy generation, the Government's energy policy was for many years timid, with a refusal, for example, to accept and recognise the urgent need to replace our ageing fleet of nuclear power stations. Very late in the day they have recognised that nuclear generation should be an important part of the energy mix of this country, and that it will be necessary to build new nuclear reactors. The Government's slowness in recognising that fact means that there will be a hiatus of many years between the closure of our last remaining nuclear stations and the commissioning of the new ones. During that time the country will be prone to serious power cuts, and when the lights go off, the British people will remember who is responsible for that. Nevertheless, there are signs in the Bill that the Government have belatedly recognised that security of supply should be central to our energy policy. To that extent, I welcome the amendments in clauses 16 and 17, which provide that the principal objective of both the Secretary of State and Ofgem is to protect the interests of consumers in relation to gas and electricity—interests which include the reduction of emissions of greenhouse gases, and security of supply. Indeed, security of supply must be a prime objective. With the depletion of North sea oil and gas and the decline in our nuclear generating capability, it is all the more important to ensure that our supply of gas and electricity is as secure as it may be. This will undoubtedly mean employing various fuels for the generation of electricity, including nuclear, gas, conventional fossil fuels and renewables. We in Wales have a significant interest in all matters relating to energy, which is perhaps unsurprising, given that we are sitting on large coal reserves, are in a particularly windy part of the country, and have coastlines that lend themselves to the production of tidal power, to say nothing of the fact that we are on the coast of the Severn estuary. We also have one of the last remaining operational nuclear power stations, at Wylfa, and I was pleased to see that only last month the Secretary of State indicated that Wylfa was a preferred location for one of the new fleet of nuclear power stations. We also have Trawsfyndd, which is in the process of decommissioning, and which I have visited. It provides an example of an impressive exercise in the handling of a retired nuclear power station. I was told by the work force there that one of the things they would like most of all in that area is another nuclear power station, because nuclear power stations provide high-value jobs in areas where frequently there is no other work at all. We also have the Dinorwig and Ffestiniog pump storage schemes. I am sure many hon. Members have visited those schemes. They are remarkable feats of engineering, able to fire up from complete shutdown in 12 seconds, giving an enormous and reliable boost to the energy supply in the grid. Some three years ago, the Welsh Affairs Committee conducted an important inquiry into energy in Wales, and produced a follow-up report a couple of years later. Those reports were important contributions to the debate on energy production in this country, and I commend both of them to hon. Members. Some of the themes touched on by the Committee in its inquiry have to some extent been addressed by the Government and feature in the Bill. In particular, I welcome the proposals to take forward the development of carbon capture and storage technology, set out in Part 1. Coal is an important resource for future generation in the UK. However, it is clear that if we accept, as I believe we must, that emissions from conventional power stations are contributing significantly to global warming, the problem of those emissions must be addressed. The Select Committee on Science and Technology has indicated that in the long term, some 85 per cent. of carbon dioxide emissions could be stored safely through the development of carbon capture and storage technology, so it is highly desirable to do as much as we can to develop that. We are fortunate in this country in that we already have significant expertise in exploiting the North sea's resources, which themselves could be turned to the development of CCS technology. Exhausted wells in the North sea could also prove to be ideal locations for the storage of captured carbon. The Government therefore need to press on with the development of CCS technology, and I welcome the Bill to the extent that, in its own faltering way, it provides the launch pad for that development. However, I have concerns about how CCS will be funded. My constituency—indeed, much of Wales—is largely rural, and I know from conversations with constituents that fuel poverty is a significant concern. Indeed, it has been estimated that more than 740,000 rural households in the UK live in fuel poverty, and that amounts to about 8 per cent. of rural households. Further, some 42 per cent. of rural households are not connected to the gas mains, as compared with only 8 per cent. of households in urban areas. As a consequence, many rural households rely upon liquid petroleum gas or fuel oil to heat their homes, and the Commission for Rural Communities has estimated that heating a three-bedroom house in the countryside costs some £1,300 per annum using LPG and £1,044 using domestic fuel oil, as against only £568 using mains gas. Clause 4 provides that CCS demonstration projects will be funded by a levy on electricity suppliers. As other hon. Members have said, that levy will undoubtedly be passed on to consumers in the form of higher electricity prices, and although the levy will affect all consumers, it will have a disproportionate affect on rural households, which already pay considerably more than urban households to heat their homes. Clause 4(4) provides that the Secretary of State may make regulations exempting certain types of electricity suppliers from the levy, so I ask the Secretary of State to consider the disproportionate impact that electricity price increases will have on rural consumers, particularly because they will not benefit from the schemes in part 2 for reducing fuel poverty, because those do not apply to either LPG or fuel oil. Returning to clause 17, I should say that the new statutory focus on greenhouse gas emissions will, or should, clearly lead to the development of new sources of renewable energy. At the moment, the principal form of renewable energy in Wales, as indeed in most of the rest of the country, is wind power. There is no doubt that wind should form part of an energy mix, but it is illusory to suggest that it can ever constitute a reliable form of base load generation. Its efficiency—at some 27 per cent. as opposed to nuclear power's 95 per cent.—is worrying low, and the reasons why are obvious: wind by its nature is intermittent, and when the wind does not blow the turbines do not turn. Wind can at best, therefore, constitute only an ancillary source of generation. However, in Wales and many other parts of the country, wind appears to be the only form of renewable generation that is being pursued, and the inherent hazardousness of that is self-evident. During the five coldest days last winter, very few turbines turned, and those days were just the period when we needed as much electricity as possible. The reason why they did not turn is quite simple: a large anticyclone was sitting over the British Isles, and as every schoolboy knows, anticyclones in winter tend to produce cold conditions without wind. Nevertheless, wind farms continue to be built, and that is a significant phenomenon in Wales, where the Welsh Assembly Government's infamous technical advice note 8 provides a planning presumption in favour of wind farm development in the so-called strategic search areas, which tend to be located, interestingly enough, on Forestry Commission land, the rental income of which passes to the Welsh Assembly Government. Consequently, large areas of Welsh upland are being progressively colonised by wind turbines. Indeed, the Hiraethog area of my constituency contains numerous small wind farms that have been consented to under town and country planning legislation. RWE npower renewables, however, now has plans to build in the Clocaenog forest a wind farm with an output of more than 50 MW, for which an application will soon be made to the Department of Energy and Climate Change under the provisions of the Electricity Act 1989. If that is consented to, the cumulative impact of development on the Hiraethog area will be to turn a beautiful rural landscape into an industrialised one—for a source of generation that is only 27 per cent. efficient. Part of the problem is the way in which renewables obligation certificates are structured, a point that the hon. Member for Brighton, Kemptown (Dr. Turner) touched on briefly. ROCs are a very blunt instrument that reward the developers of wind farms at precisely the same rate as the developers of other renewable technologies—with one certificate per megawatt-hour. The Department has proposals for banding ROCs to encourage the development of other forms of renewable technology. However, wind farms would still have the benefit of one ROC per megawatt-hour under the Government's new proposals. That is particularly worrying, because other potential forms of renewable technology, if exploited, could prove significantly more efficient than wind. In that respect, I agree entirely with the hon. Gentleman. He mentioned tidal power, which offers the most obvious advantages. The tide, after all, ebbs and flows with absolute predictability twice a day, every day, and Wales has many locations where tidal stream technology and tidal lagoon technology could be developed commercially. Swansea bay and Kinmel bay, which is off the coast of my constituency, offer particularly exciting potential for the development of tidal lagoons. Indeed, evidence taken by the Select Committee on Welsh Affairs indicated that the Kinmel bay site had a potential generating capacity of 432 MW, which is by any standards a significant power station. However, ROCs have hitherto not differentiated between the various forms of renewable technology, so developers have tended to opt for the low-hanging fruit of wind turbines, with all their inherent unreliability, as opposed to tide. The Department's proposed re-banding will not settle that. Wind turbines are relatively cheap and easy to construct, so developers will continue to opt for them, but the Government should reconsider their proposal for the banding of renewables obligation certificates as a matter of some urgency, so as positively to encourage the development of new technologies. As other Members have said, this Bill is a step in the right direction, but it is a somewhat timid and faltering one. The Government need to be bolder and to act more quickly and decisively. Twelve years has elapsed, and only now are we really getting to grips with a problem that will affect our children very significantly indeed. We need to develop the nuclear power stations and to facilitate development of the reliable renewable technologies that the country needs. I believe that this will be done, but that the Government who achieve it will be a Conservative one.