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Energy Bill [HL]

My Lords, now that the point has been put in terms of a mechanism, I begin by not having any knowledge about whether a conflict is likely. Assuming that it is conceivable, as in the case made by my noble friend Lord Whitty—my noble friend Lord O’Neill has questioned whether it is just either/or as regards renewables having preference—I thought that the general philosophy with which we deal with energy policy is that we put a price on market externalities. In other words, we level the playing field financially, whether that is through Kyoto, carbon tax or something else. Everyone pays the same price through a carbon tax or something like that, but once you have done that, you do not make a separate judgment about preferring renewables to hydrocarbons. That market externality to meet our medium-term targets should be incorporated into the fiscal system. We are gradually doing that through the myriad consultations about carbon price floor, entry tariffs, the document produced by the Treasury before Christmas entitled Carbon Price Floor, and so on. If I could take the suggestion that has just been made a stage further, the word ““criteria”” is not just a mechanism because the Department of Energy and Climate Change cannot be left just holding a pup, it has to know the criteria on which it has to operate. How far is it that this famous level playing field can be made level by not treating all forms of energy alike? That is not what we mean. We are trying to make the level playing field level on the basis of market externalities which are made into financial quantities in the tax and subsidy system. We do not need to do it twice. As I understand it, that would be the criterion. You cannot just ask the department to have a mechanism without stating so that there is no ambiguity how the market externality is translated into a level playing field price. I hope that that can also be fed into the thinking and the way in which my noble friend Lord Whitty takes forward this thought in his amendment.