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Energy Bill

My Lords, the main purpose of this Bill is to introduce a subsidy mechanism to enable the trial of carbon capture and storage to proceed. The mechanism is to be a levy on electricity suppliers, which they, in turn, are expected to recover from electricity users. The amount to be raised, we are told by Ministers, will be £9.5 billion over 10 years. At the same time, to offset the effect of the levy for those in fuel poverty, the industry will be obliged to make available at least £300 million per annum by 2013-14 to support the most vulnerable consumers—twice the maximum amount that companies will have spent per annum hitherto under a voluntary agreement negotiated with the Government, which will now be superseded. Electricity bills for the remainder of consumers will then, of course, rise further. The levy raised will be spent by the administrator, Ofgem, on promoting four trials, which it is hoped will be completed by 2020 or thereabouts. Then we will know, we hope, whether the technology passes the test of being technically and economically viable on the scale required for mass deployment. By "economically viable" is presumably meant whether the Government decide that they can afford, or the electricity consumer can afford, whatever additional subsidies will be judged necessary to incentivise the rollout of the technology. Then there is the whole paraphernalia of the transport and storage of liquefied CO2 through a vast network of pipelines to some cavernous spaces under the North Sea, as the noble Lord, Lord Oxburgh, described. That is not cheap and is achievable only with further subsidy, no doubt, or by making any alternative even more expensive by means of a carbon tax, for example. I do not see us being carried very far along the road of installed CCS by means of the £9.5 billion alone. The moment may come when we have to decide to accept that there is a limit to what we can do to reduce further our carbon emissions and, for the sake of our energy security, accept some coal together with its emissions. This might be plan B for the noble Lord, Lord Oxburgh. After all, it is what we do today in the case of gas, whose emissions are far from zero and whose deployment is proceeding apace. What happens if the CCS trials do not produce a satisfactory result? Do we really expect that India and China will abandon their use of the abundant cheap coal to which they have access just because we have discovered that clean coal is too expensive? Do we expect that they will have held back while we conducted the trials? The CCS levy is only the latest, and will not be the last, in a series of costs that the Government are imposing on the British electricity consumer in the cause of persuading the rest of the world to reduce carbon emissions because of their supposed effect on global temperatures. As the noble Lord, Lord Jenkin of Roding, listed in Grand Committee on 11 March 2010, before CCS we had the EU Emissions Trading Scheme, the renewables obligation and the carbon emissions reduction scheme, while still to come are feed-in tariffs, the renewable heat incentive and smart meters, not to mention electric cars, although in that case it may be the taxpayer who is going to be called on in the first instance. How much the consumer will be willing to take is a moot point, especially as he is now learning that for the past 20 years climate science has been corrupted by politics to deliver the warnings that justify all this expense. I was pleased, therefore, when my honourable friend the shadow Energy Minister declared, during the passage of this Bill in another place, that he wanted energy bills received by customers to list the amounts attributable to environmental legislation. I am even more pleased that this has now been carried over into my party’s latest energy consultation paper, which was published last week, as was discussed. Towards the end of that document is this passage: ""The first step ... is to be absolutely transparent about the costs to consumers of existing and future subsidies, so that the public has a clear view of the extra burdens mandated by policymakers. Under a Conservative Government all consumer-paid subsidies will be disclosed on energy bills so that bill payers can be informed about the level of contribution they are making"." The present Government have made no move in that direction. Transparency is the last thing that they have shown any interest in in this field. The Conservative energy paper goes on to say that the next step is to clarify that no energy subsidy should be permanent and that it should cease when a technology is mature. There is not much danger of that happening to CCS within the lifetime of most of us—the baby is still in the cradle. However, it raises the interesting question of what should happen to wind. Wind is now promised enormous subsidies by the present Government. It is estimated that three quarters of the £200 billion required investment in our energy infrastructure is necessitated by the Government’s determination to build 10,000 wind turbines. Is wind power not a mature technology yet? Will it still not be so in 2037? Or does its need for subsidy have nothing to do with its immaturity and everything to do with the fact that its uncontrollability as a power source makes it completely unsuitable for electricity generation in an advanced economy, as has been the case from day one? All parties seem tempted by the notion that CCS, with these trials for which the Government are organising these subsidies, offers this country a glittering industrial opportunity. Leaving aside the whole question of whether it is desirable for Governments to attempt to pick winners—or losers more likely in the field of renewable energy—there is a danger involved in setting out to build an industry in a sector that would not exist without subsidies. Governments eventually abandon policies that turn out to be uneconomic. They even run out of money—if not here, in other countries. Export markets can disappear for that reason. Moreover, the subsidies are a cost that subtracts from purchasing power in an economy and therefore lowers economic activity generally. The jobs gained for wind turbine blade construction in the north-east, say, can be more than offset by jobs lost throughout the economy as a whole as a result of the steep rise in electricity prices produced by the subsidies. It is likely that the subsidies will create far more jobs overseas than they create here. That may be a reason why China plays along with wind power and other renewable energy technologies. It sees ahead very profitable export prospects. In Germany, feed-in tariffs have produced an exploding demand for photovoltaic installations—a most unsuitable development, one would have thought, in that country of gloomy skies. It has now been found that, although Germany is a manufacturing and exporting powerhouse, half of the demand in recent years has been met by imports from China and Japan. Here I fear that we are all set to let the same thing happen under present policies. In conclusion, I shall be interested to hear what the fate of this Bill will be with so little of the Parliament left. I imagine that its fate is largely in the hands of the opposition parties. Perhaps the wind-up speakers can enlighten the rest of us about what parts of the Bill they feel inclined to wave through, as I believe they are entitled to under our strange constitutional procedures.