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Draft National Policy Statement for Fossil Fuel Electricity Generating Infrastructure (EN-2)

That is right. We have said that nuclear power must be developed to be commercially viable with no subsidy. Clearly there is an issue about the carbon market and the price of carbon. From 2013, the EU cap will be tightened, and the rules will be tightened. Auctioning is being introduced in phase 2, there will be much more auctioning in phase 3, and the system will become much more robust. I think that the price is around €13 at the moment, but I accept that this is an issue. The Government have always said that we will keep the price of carbon under review. As part of our work on the energy market assessment, which will be an initial analysis published at the time of the Budget, we will look at this matter to see what the options for interventions are. I do not have an easy answer to the noble Lord’s question, but we are very much aware of the issue. It would be much better if the carbon market operated effectively. That would be preferable to interventions, but, given that we are where we are, we have to look at some of the options that are available. I do not want noble Lords to think that these interventions are necessarily easy. We are working in quite difficult territory. I must move on a little. We have seen the Ofgem guesstimates. My department’s work on the low-carbon transition plan shows much smaller increases in the total cost of climate change policies. It estimates that the increase will be around 9 per cent for domestic bills by 2020, and up to 16 to 18 per cent for business bills. All these matters are, of course, subject to debate. I have listened with care to the comment made by the noble Lord, Lord Broers. He is right that the modelling in the national policy statement was undertaken by Redpoint/Trilemma, which used models to illustrate how much new investment we might need in any infrastructure over the next 15 years. We think that the data are objective, but I am very happy to discuss this with him further and to share data with him so that he can see how we came to the figures. We may disagree about the additional cost, but there is one. However, I come back to the point that I made earlier. At the end of the day, we think that it is best for us to go down the low-carbon route as quickly as possible, and the cost-effectiveness will become clear over time. I should also say that the more turbines we build, the more the cost will reduce. The whole renewable obligations system is based on the expectation that costs will come down, and I am sure that that will happen. I move on to the question raised by the noble Lord, Lord Dixon-Smith, and by the noble Baroness, Lady Young, about the energy mix. The noble Lord felt that there was too much focus on the period up to 2025 and that we needed to look at a longer timescale. I agree. Alongside the energy market assessment, we are working on what we call a "road map" to 2050, looking at what the energy mix should be by that year. That is consistent with the kind of investment decisions that energy companies will have to make, but it does not undermine what is contained in the national policy statements. Again, I hope that we will be able to publish something fairly soon, and your Lordships will no doubt wish to develop it. On the question of Kazakhstan, I was there last week, as well as in Turkmenistan and Azerbaijan, looking for oil and gas. It has been a policy of the Government to encourage gas and oil from the Caspian being brought to Europe. This country would probably get very little gas from the Caspian, but it would mean another source of energy for Europe in general, which would have a positive impact in terms of our own energy security. If ever there was a need for EU leadership in terms of ensuring that we get the southern corridor up and running rather than just talking about it, this is it. Energy security is one of the most important areas for the EU to be developing. I assure the noble Lord that we think it is worthwhile piping gas from Kazakhstan, and Europe should be a jolly sight more active in encouraging that to happen.