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Energy Bill

My Lords, I, too, welcome the Bill. It is a modest Bill. I guess that I differ from a number of others who have spoken only in the greater degree of my disappointment over what it does not do. Before I get on to carbon capture and storage, which I shall be talking about largely, I would like to ask the Minister—arising from his introductory remarks—how it is established that there is value for money for the sums that the supply companies are obliged to spend on alleviating fuel poverty. It is easy for them to spend the money, but is the money being spent sensibly? Do the Government know? Turning to carbon capture and storage, I must rather fully declare an interest. I am honorary president of the Carbon Capture and Storage Association, a position which I took up when the association was formed several years ago. It is a totally subscription-based organisation and not one—as alleged in today’s Times—that could bring in billions in money. The reason I became involved in this association was that carbon capture and storage seemed to me to be a vital bridging technology for as long as we continue to burn fossil fuels, during a transition period to a low-carbon energy economy. That remains my view. It is something that we have to have. I take it that when one is talking about government policy on carbon capture and storage, one can now discuss the document which the Secretary of State launched last week, Clean Coal, An Industrial Strategy for the Development of Carbon Capture and Storage across the UK. I am afraid that I find this a particularly disappointing document. It is not that good things have not been done, but that there is a real lack, as far as I can see, of both a sense of urgency and a sense of commitment. Speaking of urgency, I refer to paragraph 1.9 in this document, which states that as part of the Government’s plans for a long-term transition to clean coal: ""A rolling review process, which is planned to report by 2018, will consider the appropriate regulatory and financial framework to further drive the move to clean coal"—" It says 2018, my Lords. There is no reference in the document to how one will put in place the infrastructure for carbon capture and storage. It is universally recognised within the industry that this is likely to be the bottleneck. The demonstrators are largely—not exclusively but largely—concerned with the demonstration of capture technology. The whole infrastructure for transferring CO2 from where it is generated, in power stations round the country, really has to be subject to planning now, simply because it will involve pipelines which will involve permitting. We know that even with the best will in the world, that is a very long process. Unless we start it now, we have no chance of implementing carbon capture and storage in a timely way. I need not remind the Department of Energy and Climate Change of the urgency of getting emissions under control. What about commitment? Page 16 of the document states: ""It is generally agreed that, if proven, CCS will be needed to make a substantial contribution … to global abatement of CO2"." If proven? I should be grateful if the Minister could produce one chemical engineer who thinks that there is any technical difficulty in achieving carbon capture and storage. There is uncertainty over the cost. However, the same document includes a very sensible and realistic table of the costs of carbon capture and storage. I think that it represents the upper costs perfectly reasonably, and they will probably be less. In a number of places we find carbon capture recommended if it is "affordable". What is affordable? If it is not affordable, what is plan B? Does the Minister intend that we repeal the Climate Change Act or that the country should stop burning gas and coal for the next 30 to 40 years? That is a pretty tough choice either way. At the moment this is unresolved in the document which the Government have produced. I think that it is the demonstrable lack of commitment that dogs UK industry. The Government cannot expect UK industry to take carbon capture and storage seriously and commit to it before the Government do the same. I turn briefly to other matters. Whichever hue of Government we have after the election, a serious review of energy will be urgent. The main reason is that, globally, the fossil fuel situation in the past 18 months has changed profoundly, due to a recognition that shale gas is a viable economic proposition. I confess that for quite a long time I was sceptical about shale gas, but now I think that it has been sufficiently demonstrated in the United States that there can be little doubt. It is relatively poorly understood or explored but clearly it will be important. The US is now cancelling orders for imported liquefied natural gas from the Middle East. We see that Canada is now preparing to export liquefied natural gas to China. The natural gas price has become decoupled from the oil price to which it has been tied for so long. Indeed, we see relatively lower gas prices, much more security of gas supply and the UK is in a relatively good position. We were on the end of the pipelines coming from eastern Europe, but this county is pretty well served with LNG terminals. A lot of European LNG will come in and it will be exported by our pipelines to Europe. This time we are on the right end of the pipeline. Clearly that has profound implications for energy policy. Another point is that the Government should be aware that there is widespread concern in the energy generating community that the Government have not fully grasped the operational and business implications of wind energy targets, which, if implemented, will take wind generation to more than half of the maximum winter demand. It is not that that cannot be done, but it is not necessarily a very sensible way of proceeding. I declare an interest as the chairman of a wind energy company. However, I think that this is probably excessive. An incoming Government must pay much more attention to diversifying the renewables portfolio, as a number of noble Lords have pointed out. Biogas and biomass are becoming more important. Marine tidal stream has just completed a successful demonstration in Northern Ireland. The important thing about these renewables is that they are out of phase with wind. You can get away with a much larger fraction of renewables in your energy portfolio if you have a spread across the field. The Bill is fine as far as it goes, and I hope that it passes smoothly. I am sorry that we are unlikely to have the opportunity to debate it in much more depth. It disappoints me on its commitment to CCS. A new Government will have to tackle that if they wish to move ahead at the industrial level. Undoubtedly we will need a new energy policy.