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Energy Bill

My Lords, we do not know all the numbers—I think the numbers were in the small hundreds. I notice that some of my former colleagues in the NHS were whingeing about this. People entered into interruptible contracts because they got a lower price. They can hardly start to whinge if the interruptible contract is actually operated. What seemed to have happened is that some organisations did not know that they had an interruptible contract. I do not think that is the Government’s fault. Regarding this Government being accused of delay in relation to nuclear—we came forward with the White Paper in 2008. We have a decisive policy. We have a very exciting prospect of developing new nuclear power stations. I would point out to the noble Lord that it was his leader Mr David Cameron who said: ""I think my policy, green energy first, nuclear as a last resort, is absolutely right"." Then of course during a leadership hustings he called offshore wind farms "bird blenders" and stated that they were not the answer and it was his right honourable friend Mr Kenneth Clarke who said that Britain was unsuitable for wind farms. What we have had from the party opposite over the past few years is a pandering to prejudice and a lack of cohesion. I have not read the full document that the noble Lord’s party published on Friday. I have seen enough of it to suggest that it is not the coherent policy that the noble Baroness suggested it was. I do not usually enter into these political issues but I felt I had to respond to it. Let me turn to the much less controversial area of wind. I know that not all noble Lords think that we should put all our eggs into the wind basket. Nor indeed do the Government. Wind will have an important role to play as far as future energy is concerned. All the signs are that there is now real momentum in onshore and offshore. The outcome of the third leasing round by the Crown Estate in January showed that companies are prepared to make considerable investment. I well understand the point raised by the noble Lord, Lord James, about whether the supply chain is in place. I understand his point about vessels. We have had discussions. My understanding is that there is considerable and intense discussion taking place at the moment between the developers, the Crown Estate and the Government to make sure we have the supply chain that will supply the necessary infrastructure. It is not just wind. The noble Lords, Lord Oxburgh and Lord Palmer, were absolutely right to put emphasis on the other technologies. Last week I visited MCT in Strangford Lough which is a tidal technology which looks to be very promising indeed. The noble Lord, Lord James, said that we were missing out on geothermal. I would point out to him that of course there is potential in Cornwall, the county of the noble Lord, Lord Teverson. The Government have made money available to support its development. Of course the noble Lord is right about energy efficiency and about the smart grid. We are not being complacent; we will come out in the summer with much more detail about smart meters, which I see as an essential foundation of a smart grid. We do not underestimate the potential at all. I was very interested in the comments of the noble Lord, Lord Oxburgh, about unconventional gas, particularly the potential for shale gas. I am sure that he is right. There are two issues here. The noble Lord did not mention the potential of UK exploration of shale gas and oil. We have commissioned the British Geological Survey to carry out that assessment. He is also right about the potential implications of LNG on our facilities for imports, given that the US is now unlikely to be a strong recipient of LNG sources of supply. Again, this Government’s foresight in setting a positive context for LNG import facilities to be developed has come to the fore. I was very glad that the right reverend Prelate the Bishop of Durham took part in our debate. We recognise that coal gasification has potential. The Coal Authority has recently granted six conditional licences for underground coal gasification, including one in the north-east, and is considering a further five applications. The technical and economic viability of this approach has not yet been demonstrated but we want to play our part in creating a regulatory environment that helps rather than hinders those ambitions. Coal power projects that utilise underground coal gasification will be considered for our planned CCS demonstration programme. So I do not accept that we are lacking in enthusiasm for gasification; we understand its potential. I come now to coal and CCS. The noble Lord, Lord Wallace, and my noble friend Lord Woolmer talked about the importance of coal and of developing CCS technology. The International Energy Agency predicts that demand for coal will increase by some 70 per cent over the period to 2030. That makes it clear that unless CCS technology is developed and deployed, I do not see how we could hope to meet the kind of global emission reduction targets we want to meet. That is the critical importance of carbon capture and storage. My noble friend Lord O’Neill cautions us about overclaiming what the UK can do in terms of technological lead. I know that other noble Lords think that we are not progressing CCS fast enough. I certainly agree with my noble friend that we cannot afford to be complacent, but the fact is that we are making considerable progress. We have very important coal reserves, which is why CCS is important in this country. But it is also important in terms of what it can contribute to emission reductions globally and the potential for the UK to export technology, skills and the expertise that will be developed as a result of the work that we are undertaking. We are making progress. No other coal-dependent country has a policy that no new unabated coal-fired power stations will be built. No other country has developed the kind of financial mechanism that is in the Bill. The noble Lord, Lord Jenkin, is right that we have recently awarded funding to E.ON and Scottish Power for detailed engineering and design studies. FEEDS—front-end engineering and design studies—are used by project developers to examine and refine initial outlined project plans and reduce technology risk such that a more detailed solution can be drawn up and more accurately costed. That is very important in terms of value for money, which a number of noble Lords have raised. These studies will be completed within 12 months, and that is when we will move to the final selection process. It is very much worthwhile for these studies to take place before we make the final decision, but we still hope that the first demonstration project will be operational by 2014. In the mean time, we aim to launch the process of selecting an additional three projects by the end of this year. I can certainly reassure noble Lords that in the light of the lessons learnt in the first competition will ensure that the competition in relation to the three other projects will be accelerated.