With your permission, Mr. Speaker, I would like to make a statement on the energy review which was announced by the Prime Minister last November. Today I am publishing a report setting out the conclusions of that review. Copies will available in the Vote Office in the usual way. The report is extensive, and of necessity my statement has to cover proposals in some detail.
We face two major long-term challenges—first, along with other countries, to tackle climate change and the need to cut damaging carbon emissions, and secondly, to deliver secure supplies of cleaner energy at affordable prices. Increasingly, we will come to depend upon imported gas and oil as our own plentiful but harder to exploit North sea oil reserves decline. The proposals that I am announcing set out our approach to meeting our energy needs over the next 30 to 40 years. Many of the proposals contained in the report will need further consultation. Thereafter, the Government intend to publish a White Paper around the turn of the year.
The starting point for reducing carbon emissions must be to save energy. If we are to meet our goals of a 60 per cent. reduction in carbon dioxide emissions by 2050, we need not just to reduce carbon intensity through low energy sources such as renewables, but also to save energy. We therefore make a number of proposals to encourage greater energy efficiency.
For consumers, we need better information about the amount of energy used, smart metering, real-time energy use displays, better and clearer energy bills, and more information for new buyers and tenants on energy efficiency in homes. It is estimated that leaving electric appliances on standby uses about 7 per cent. of all electricity generated in the UK, so we will work with industry and others to improve the efficiency of domestic appliances and to phase out inefficient goods, thus limiting the amount of standby energy wasted.
We also propose a range of measures to take us towards a long-term goal of carbon-neutral developments. New homes can use around a quarter of the energy to heat, compared with the average home. We aim to make the Government estate carbon- neutral by 2012. We will also provide strong support for the use of on-site electricity generation, such as solar panels. Energy efficiency will help people on low incomes especially. The review sets out our approach.
If we are to make a real difference to reducing energy demand, we need a radically different approach. We need a stronger obligation on energy companies to provide energy saving measures and a radical plan to change the way in which they sell their services. Yes, we will encourage Britain’s 27 million homes to become more energy efficient, but it is also essential that we incentivise Britain’s big six energy suppliers to work with homeowners to make their houses more energy efficient. Today, companies have the incentive to sell as much as they can. Instead, we need to give energy producers incentives to make homes more energy efficient and to sell them more insulation products. We are consulting on the most effective way of doing that.
The European Union emissions trading scheme, which covers 11,000 high intensity users of energy, and the climate change levy are key to encourage businesses such as power stations or steelworks to save energy and to cut emissions, but there are in addition around 5,000 large businesses and public services in the UK that are not covered by the scheme. We want to reduce energy inefficiency for those companies too. One supermarket chain in the UK alone is one of the biggest single users of energy in the country. Those businesses should be incentivised to reduce their emissions, so we shall consult on a proposal for an emissions trading scheme for them, along with other options to cut the amount of carbon produced—something they support. That makes economic and environmental sense.
Saving energy in businesses and homes is essential, but so too is the need to cut emissions from road transport. Fuel efficiency in transport continues to improve. We will encourage the use of lower carbon fuels, especially biofuels, and there will be more cost-effective opportunities to save carbon as new technologies are developed. Company car tax and vehicle excise duty have been reformed to encourage energy efficiency, and we will continue to press the European Union to consider the inclusion of surface transport in the emissions trading scheme as well as aviation.
Last November, we announced the renewable transport fuel obligation—5 per cent. of all fuels to be from renewable sources by 2010. Today, we propose that that obligation, after consultation, should be extended after 2010, provided that some important conditions are met. That could provide a further carbon reduction of 2 million tonnes, which is equivalent to taking another million cars off the road, once it is fully implemented.
Providing the right incentives to reduce energy is critical, but we also need to do more to make the energy that we use cleaner. We have a number of proposals. Most of our electricity is generated in large power stations, and around three quarters of our heat comes from gas fed through a national network, which delivers economies of scale, safety and—crucially—reliability. However, the Government believe that we can do more to encourage the generation of electricity on a smaller scale near to where it is used. Today, less than 0.5 per cent. of our electricity comes from microgeneration, while combined heat and power provides about 7 per cent. We need to do more.
There are technical and other obstacles to overcome, but we want to remove barriers to the development of what is known as distributed generation. We can do more to make microgeneration more attractive and to make it easier to set up combined heat and power schemes. The Government believe that this is a major opportunity for the United Kingdom to invest in renewable energy and other low carbon technologies. The environmental transformation fund, which was announced recently, will provide investment for energy funding services. Details of the scale and scope of that fund will be announced in the spending review in 2008. We will also encourage low carbon alternatives such as biomass, solar and heat pumps.
Over the next two decades, it is likely that we will need substantial new electricity generation capacity as power stations, principally coal and nuclear plants, reach the end of their lives—their output is equivalent to about a third of today’s generating capacity. Power stations are long-term investments, and we need to implement the right framework to incentivise investment decisions to limit carbon emissions. We remain committed to carbon pricing in the UK through the operation of the emissions trading scheme, and it is essential that there is a carbon price to encourage us to use less of it. Today, around 90 per cent. of the UK’s energy needs are met by fossil fuels, so we need to do more to encourage the renewable generation of electricity.
The renewable obligation is key to support the expansion of renewables. It has resulted in major developments, particularly in onshore wind power generation, landfill gas and the use of biomass in coal stations. Far from getting rid of the renewables obligation, as some have proposed, we intend to increase it from 15 to 20 per cent. We also want to give a boost to offshore wind energy generation and other emerging technologies—for example, tidal—to encourage growth. We will consult on banding the obligations to encourage those developments.
The Government also see a continuing role for both gas and coal-fired generation. We will convene a coal forum to bring together UK coal producers and suppliers to help them find solutions to some of the long-term problems of UK coal-fired power generation and UK coal production. Coal-fired generation continues to meet around one third of electricity demand, and last winter it met as much as half, which shows the important role that coal can play in UK energy security.
If coal-fired generation is to have a long-term future, however, we need to tackle its heavy carbon emissions. Carbon capture and storage could cut emissions by 80 to 90 per cent., and we have some natural and commercial advantages such as a strong oil industry and old oil fields where CO2 can be stored. The next step is a commercial demonstration, if the technology proves to be cost-effective. We are working with the Norwegian Government and the industry on development, and a further announcement will be made in the pre-Budget report. Carbon capture could lead to our saving several million tonnes of carbon by 2020.
The Government believe that a mix of energy supply remains essential and that we should not be over-dependent on one source, which is especially true if we are to maintain security of supply in the future. We will continue to do everything that we can to promote more open and competitive markets, which is why we are backing the Commission in securing the effective implementation of the energy market. We will also take steps to secure gas supplies, maximising the exploitation of oil and gas from the UK continental shelf. Last month, we saw a record number of applications for further development in the North sea. We also need to facilitate the construction of sufficient storage and import infrastructure.
Against a background where Britain’s nuclear power stations are ageing, decisions will have to be taken on their replacement in the next few years. If we do nothing, the proportion of electricity generated by nuclear could fall from just under 20 per cent. today to just 6 per cent. in 15 years’ time. Moreover, nuclear has provided much of the electricity base load, contributing to consistency of supply as well as security of supply. While some of that capacity can and should be replaced by renewables, it is more likely than not that some of it will be replaced by gas, which would increasingly have to be imported. The Government have concluded that new nuclear power stations could make a significant contribution to meeting our energy policy goals. It will be for the private sector to initiate, fund, construct and operate new nuclear plants and cover the cost of decommissioning and their full share of long-term waste management costs.
The review makes a number of proposals to address barriers to new build, and the Health and Safety Executive is developing guidance for providers of new stations. For nuclear new build, considerations of safety and security will be paramount, as they are now. We are setting out a proposed framework for the way in which the relevant issues on nuclear should be handled in the planning process, and we will consult on that before the publication of the White Paper. The Committee on Radioactive Waste Management—CoRWM—published its interim recommendations in April, confirming its preference for geological disposal of nuclear waste. The committee is to be congratulated on the open and transparent way in which it has conducted its work and the broad consensus that it has developed for securing the future long-term management of the UK’s nuclear waste. It will publish its final report this month, and the Government will respond thereafter.
If we are to see any of these developments, whether they be renewables or conventional power stations, we believe that we need to change the planning laws in this country. We will work with the devolved Administrations to ensure that we have an effective planning regime. We can make some changes now—for example, bringing together the planning process and consents on the Electricity Act 1989—but the Government believe that the current planning regime needs fundamental reform, and we will consult on proposals to do that later this year.
The proposals that I have set out will result in a reduction of between 19 million and 25 million tonnes of carbon by 2020, over and above the measures already announced in the climate change review programme. We are on course to achieve real progress in cutting emissions by 2020 and on the right path to attaining our goal of cutting the UK’s carbon emissions by 60 per cent. by about 2050. The proposals will help us to meet our twin objectives of tackling climate change and providing security of supply. The scale of the challenge is great. The proposals show how we can overcome them to secure our prosperity and the health of our planet. I commend the statement to the House.
First, I thank the Secretary of State for his courtesy in giving us advance sight of his statement.
This review has been much heralded, but sadly we find today that it amounts to almost nothing. After six months’ work, 2,000 submissions, and hundreds of thousands of civil service hours, the conclusion is that nuclear power
“could make a significant contribution”
to meeting our energy supply goals. This statement is not carbon-free but content-free. We have been told for months that urgent decisions must be made now. We have been told that delaying those decisions would risk the lights going out and that this is the most fundamental review of our energy needs ever undertaken—and then all we get today is this statement.
The statement proposes six new consultations—[Interruption.]
The statement proposes six new consultations and the convening of a new forum, and says that there is much to consider, yet there are no real policies, no real action, no real decisions, and no real energy review at all. There is nothing here. Everybody believed that the Prime Minister had made a decision to build new nuclear power stations and that this review followed to provide the air cover for that decision. Instead, the Secretary of State announced at the end of his statement that the Government believe that
“new nuclear power stations could make a significant contribution”.
Did the Prime Minister realise that he was so out on a limb that his views are not shared even in his own Cabinet, and that the Secretary of State for Wales agrees with us rather than with his Prime Minister?
Last week, we set out our findings. We said that the key aims are reducing carbon emissions and securing supplies—exactly what the Secretary of State echoed on the radio this morning.
We proposed a tougher carbon regime to tackle emissions; a capacity payment scheme to build security; a long-term framework to encourage investment, and a change in market structures to encourage decentralised energy and efficiency measures. Those combined proposals will spark a green revolution and guarantee reductions in carbon emissions. Almost everybody, even Stephen Hale, who used to be special adviser at the Department for Environment, Food and Rural Affairs, welcomed our proposals.
The subject is very important. Does not the Secretary of State believe, like us, that political consensus is essential if we are to build the climate for investment in the energy sector that is badly needed? Even the Liberal Democrats announced today that they were not against nuclear power in principle.
Where there is agreement, we welcome it. The Government attacked our position on nuclear power, but now they seem to have changed their stance. They attacked us for saying that the renewables obligation was not working, but now they agree with us and say that they will consider—only “consider”—reforming it. They claim that they want to streamline the planning system—we agree. They say that there should be no subsidies for nuclear—we also agree. If they say that the costs must be transparent and a solution for waste must be found, we agree with that, too.
The Government say that they want to promote energy efficiency—we agree. They say that they approve of the EU emissions trading scheme—we do, too. Indeed, we went further because we made proposals for extending carbon trading. However, where is Government action? Perhaps we will have to conduct another energy review.
We do not agree that Nirex and the Nuclear Decommissioning Authority should be joined up. Independent bodies are better placed to ensure that safety remains paramount in the nuclear industry. Will the Secretary of State therefore confirm that those bodies will remain separate?
What are the proposals in the statement for increased gas storage? Where are the exact proposals for supporting decentralised energy? When will genuine action be taken to amend Ofgem’s remit? We have to wait until paragraph 55 out of 60 to reach the words,
“There are some changes we can make now”.
Even that means simply a further period of consultation on the planning process. The review is vague even about the future of nuclear power.
Far from being back on the agenda with a vengeance, as the Prime Minister told us, the Secretary of State now says that nuclear power
“could make a significant contribution to meeting our energy policy goals.”
Is not it the truth that the Prime Minister’s rhetoric is only rhetoric? That applies to the announcement of the Franco-British nuclear forum last month. In response to my questions, the Secretary of State was unable to say what it would do, who would pay for it, what its remit would be or even if it exists after all.
The Prime Minister says that he wants new nuclear power stations. However, the review does not tell us how he will make that happen. What exactly will the Government’s role be in ensuring that new nuclear power stations are built? Is it their intention, as reported today, to take existing nuclear sites away from British Energy and place them under Government control? To what extent will there be Government interference to get new nuclear power stations built? What deals have the Prime Minister or the Secretary of State done, about which they have not told us? How many power stations does the Prime Minister expect? Does the Department of Trade and Industry have a target—six, 12, any more bids? Will a number be set? Does the statement contain anything to match the Prime Minister’s macho, pro-nuclear rhetoric?
We need to spark a revolution in energy and we need green security. After nine years, six Secretaries of States, three energy reviews and God knows how many Ministers for Energy, carbon emissions continue to rise. The review could have done so much more. Three years ago, we were promised final decisions. Today, we have not got them. The review appears to have done almost nothing. It is a grave and perilous let-down.
The hon. Gentleman says, “Get on with it”, but I suggest that he start in his own backyard. In January, he said in the Chamber:
“I have… an instinctive hostility to nuclear power.”—[Official Report, 17 January 2006; Vol. 441, c.779.]
Only two or three months later, the shadow Chancellor said:
“I am happy to see nuclear power.”
Then, last week, the Leader of the Opposition gave the impression that he was for nuclear power, but maybe not yet. Once the Conservatives manage to get a consensus on what their policy is, I will happily talk to them about what we might do in the future.
The Government believe that nuclear power could provide—[Interruption.] Yes, I use the word advisedly. It is for the generators to come forward with proposals, whether they are for nuclear, renewable, oil or gas. The Government believe that some of the barriers that make it difficult for such developments to proceed ought to be removed. Yes, there needs to be consultation in some cases. Apart from anything else, if we are to provide a clear statement of need for planning inspectors, there will need to be a White Paper, and that will require some consultation before we produce it. However, we have a very clear sense of direction. We need a mix of energy supplies. We are quite clear about that. That mix has served this country well over the past few decades, and it will continue to do so.
The hon. Gentleman seems to have some difficulty with renewables. In the policy announcement that the Conservatives made last week, they made it clear that, under the Tories, the renewables obligation would go. The Leader of the Opposition made a classic statement on this, saying:
“There must be a level playing field for renewable and decentralised energy to compete on equal terms with nuclear power.”
Is he saying that nuclear should be subject to the renewables obligation, or that nothing should be subject to it? If there were no renewables obligation, even the renewable development that we have seen so far would simply disappear, because it needs that incentive. Anyone who is contemplating a future with more renewable energy, not only onshore but offshore, as we are, should be in no doubt that there would be no renewables obligation under the Tories. They would throw that whole industry into uncertainty. All their green talk is completely undermined by their actual policy.
We have set out a clear sense of direction, and a framework that will allow development to take place. As I said, nearly a third of our generating capacity will need to be replaced over the next 20 to 30 years. There is now a clear sense of direction to allow industry to plan, and there are measures to ensure that we reduce our demand for energy and become more energy efficient. It is no wonder that the hon. Gentleman is so embarrassed.
I thank the Secretary of State for his statement and for making an early copy available to me. Three years ago, the Government had an energy review, which the Prime Minister described as a “milestone in energy policy”. The then Secretary of State said that her White Paper established an energy policy “for the long term”. What went wrong? Will the Secretary of State tell us, for example, why the Government are not on track to meet either their renewable energy targets or their energy efficiency targets, which were set only three years ago, and why carbon dioxide emissions are increasing, not falling?
On energy efficiency and conservation, I welcome much of what the Government are now promising, but is it not possible to go further and faster on energy efficiency? Why, for example, after this review, will our building regulations still be weaker than those in Scandinavia? The Secretary of State has said some very sensible things on renewables, but he must be aware of the range of major renewable energy projects such as harnessing tidal power from a lagoon-based Severn barrage, the proposed 10 GW North sea wind farm, and the massive potential for marine energy in the Pentland firth. What sort of leadership and encouragement will his policy give to the market for such ideas? Is not there a huge danger that, by going nuclear as well, the Government will undermine and crowd out investment in energy efficiency and renewables?
The right hon. Gentleman’s predecessor told the House in 2003:
“It would have been foolish to announce…a new generation of nuclear power stations because that would have guaranteed that we would not make the necessary investment and effort in both energy efficiency and in renewables.”—[Official Report, 24 February 2003; Vol. 400, c. 32.]
What has changed? Is not there also a danger that nuclear energy could crowd out investment in clean-coal technology and carbon capture and storage? Surely we should instead be finding new ways of bringing forward major investment in those technologies, as they have the potential to deliver faster than nuclear. The Secretary of State talks about security of supply, but will he confirm that, under his plans, it will not be possible to build any nuclear power station within the next 10 years? Will he also confirm that the difference between a nuclear and a non-nuclear strategy in terms of gas supplies is actually not very large?
The Secretary of State has laid out an attractive future for decentralised energy generation. Does he not accept, however, that nuclear power would tie us into a centralised grid infrastructure that would minimise the potential for microgeneration and local combined heat and power? He said in recent interviews that he is a late convert to nuclear. He said today that, under his plans, nuclear power will get no subsidies or financial favours. Will he now answer the question that he failed to answer at last week’s Trade and Industry questions, when he could not name a single nuclear power station in the UK or abroad that had been built on time, on budget and without public subsidy? Is he prepared to guarantee, for the entire life of the nuclear plants, that there will be no hidden subsidy, no super-long unfair price contract, no cap liabilities, no Government support for nuclear waste decommissioning, no assistance with waste disposal and no stealth nuclear tax for consumers? If business does not build nuclear plants as he proposes, what happens to his policy?
On nuclear waste, can the Secretary of State confirm that the Committee on Radioactive Waste Management’s interim report only dealt with existing old waste? It only offers a solution over several decades for past waste, which still needs yet more billions of taxpayer’s money. Will he admit that the committee’s interim report was not a green light for nuclear, especially when it talks of the need to consider
“the social, political and ethical issues of a deliberate decision to create new nuclear wastes.”
As for Nirex, surely merging it and NDA would threaten independence in waste disposal, which would be a disaster.
The Government have put forward some sensible ideas today on energy efficiency and renewables. By caving in to the nuclear industry lobby, however, they have destroyed the potential for cross-party consensus. I regret to say that that means much greater uncertainty in future energy policy.
If the Conservatives have problems with consensus within their party, so do the Liberals. I can only refer the hon. Gentleman to what his hon. Friend the Member for Twickenham (Dr. Cable), who is in his place, said:
“Dogma about new nuclear power is unhelpful, for and against”.
One would not know that to listen to the Liberal spokesman today.
In relation to renewable energy, I am grateful to the hon. Gentleman for saying that he supports renewable electricity. In particular, he refers to renewable generation in the north of Scotland. Perhaps he will have a word with those Liberal Democrat Members who say that they are in favour of renewable energy and then object to wind farms when they are planned, and object to the power lines to take electricity from wind farms to where it is needed. If the Liberals are serious about those things, they must face up to the difficult and sometimes unpopular decisions, as well as the populist decisions that he set out.
When the hon. Gentleman talked about distributed energy, he gave the distinct impression that he was against having a national grid. I am in favour of distributed energy, and I think that we could do a lot more in that regard. However, having a national grid and being able to draw on such energy sources across the country, whether gas or electricity, serves us well. Apart from that, I more than happy to work with him on achieving whatever consensus is left between us.
The hon. Gentleman made points about wave and tidal power and mentioned the Severn barrage. In relation to the renewables obligation—which I believe is essential, although I am not sure what the Liberals’ position is—I said in my statement that we want to consult on banding that in future, so that it encourages newer and emerging technology. I think that we can do an awful lot more on that.
It is important that, when we consider our energy requirements, we have a mix of energy. I said to the hon. Gentleman that nuclear currently provides about 20 per cent. of electricity generation. If we do not do anything, that will decrease to 6 per cent., and the risk is that gas will be a bigger percentage, which would be deeply regrettable.
I totally reject the argument that if we go for nuclear, nothing else will happen. I remind the hon. Gentleman that, under the renewables obligation, the renewables industry will get the equivalent of about £1 billion a year subsidy by 2010.
I congratulate my right hon. Friend on delivering a measured statement this afternoon. Will he clarify, however, the point in paragraph 49 of his statement that nuclear generators will be required to pay their full share of long-term waste management costs? Does that mean 100 per cent. of waste management costs, and how can we guarantee that, as we do not yet know what the waste management costs will be?
The statement does mean that they are expected to meet the full share of those costs, which I would have thought was self-evident. My hon. Friend will no doubt be aware that, following the CoRWM proposals, it will be necessary to make provision for existing waste, but the cost of any new waste generated by any new plants would have to be met by the generators.
I hope that the House will be given an early opportunity to debate the report at great length, as it relates to a very complex subject. In deference to your ruling, Mr. Speaker, I shall concentrate on one issue. Does the Secretary of State understand that while his analysis of valuing carbon is very good, his policy conclusions are, I fear, inadequate? He clings to the climate change levy and complex climate change agreements, which do nothing for the long-term market-based costing of carbon emissions and he invests too much hope in the EU emissions trading scheme. I do not believe that he is creating the stable market for carbon that will bring forward investment in clean-coal technology, renewables or, indeed, new nuclear power stations.
The EU emissions trading scheme is, at the moment, the only scheme, so I believe that we should invest substantial time and effort on trying to make it work. Given the nature of the problems that we have to deal with, it is important that any action is Europe-wide. I know that the hon. Gentleman has only recently got a copy of our proposals, but the Government have made it clear that they believe that there must be a long-term carbon price; otherwise, investors cannot make a sensible decision about whether to go ahead with proposals for new plant.
As to carbon capture, I believe that it is essential to do as much as we can. Britain can not only benefit itself from this technology, but benefit other parts of the world such as India and China, where they are building coal-fired power stations. Unless we take steps to capture that carbon, those power stations will be extremely damaging to the environment.
Finally, on the climate change levy, I know that the Conservative policy is to abolish it, but the fact is that, so far, it has made a major contribution to reducing the amount of carbon generated and I believe that it would be a big mistake to abolish it.
My right hon. Friend’s statement recognises that there is no single solution to our energy requirements. In welcoming the prospect of further investment in renewable energy, I am pleased that he also recognises the contribution that deep-mined coal can yet make to our energy needs. Research has shown that clean-coal carbon capture technology can deliver sustained and large-scale reductions in CO2 emissions.
My right hon. Friend has announced today that he plans to set up a coal forum, bringing together producers and suppliers. Would it not also be valuable to include Members of the House who represent former coal-mining areas and have experience of mining and mining communities, and also representatives of operations such as the hugely successful Tower colliery in south Wales, who would hugely benefit the discussions in the forum?
My hon. Friend is quite right that coal has made a substantial contribution. We relied on it very heavily last winter. The model we have in mind is similar to the system set up to bring together the oil industry and the Government, which is known as “pilot” and has been working quite well since 1998. That arrangement allows both sides of industry, suppliers and producers, to talk to each other and to the Government. I am sure that my hon. Friend the Minister for Energy will be happy to meet hon. Members who have coal mines in their constituencies and have further discussions with them. It is important to do whatever we can to encourage the coal industry and the point about carbon capture is equally important if we are to remove the harmful effects of CO2.
Can the Secretary of State foresee any circumstances in which he could meet his carbon dioxide reduction commitment without at least replacing, if not increasing, the share of nuclear generation in our overall generating capacity?
Without that generation it would certainly make it more difficult to meet that commitment, which is why I believe that nuclear should be part of the mix. The Government are not specifying that people should come forward with proposals for nuclear, but we have tried to set a framework—we have started the process today—that will encourage generators to consider that option. Nuclear does mean that we can generate electricity without carbon emissions and it has the further advantage that I mentioned earlier of providing a consistency or base load in electricity that wind power, by its very nature, cannot provide.
When the energy gap left by phasing out Magnox and advanced gas-cooled reactor nuclear power stations by 2020 is reckoned by the Government to be about 14 per cent. of electricity generated and when even the nuclear industry itself, no less, in the form of AEA Technology, has recently acknowledged in a comprehensive study that 25 per cent. of Britain’s electricity needs could be readily met by offshore wind power capacity within the time scale required, up from 4 per cent. today—in other words, far more than meeting the necessary gap—why are we going down the nuclear route at all? Nuclear power is far more expensive and hopelessly uneconomic. Decommissioning costs are enormous. There are mountains of nuclear waste, which we do not know where to put, and it will increase our risk of terrorism—
I think that I know where my right hon. Friend is coming from in this argument. As I said, in the light of the fact that we are likely to have a dramatic reduction in nuclear power generation, I believe that nuclear power ought to be part of the mix. I know that he does not. I said earlier that I want us to give a major boost to renewables, because they can do a lot, but I do not think that they can take the place of all the capacity that would otherwise go. I would add that my right hon. Friend has said—I know that he believes this—that we want more offshore electricity generation. I do too. However, those plants are equally as prone to planning objections as onshore plants. That is why the planning system needs to be changed as well.
The Secretary of State will know that hydrofluorocarbons will produce about 4 per cent. of our emissions. Why have the Government allowed the Home Office and almost every subsequent Government building to use HFCs, whereas the private sector is moving away from doing so? Why did they vote with the non-green group in the European Union not to put a date on banning HFCs? When will they actually do something about that essential issue and why has he not even mentioned it in the document?
I know of the right hon. Gentleman’s concern about these things. The Government took the view that the date was not practical, but I agree with him that we should do everything that we possibly can to try to make buildings as environmentally friendly as possible. I mentioned that we want to make the Government estate carbon-neutral by 2012; other measures are necessary as well.
If economic changes were to make nuclear power significantly more costly—for example, because of continued rises in uranium import prices—can my right hon. Friend advise the House whether, under the policy that he has announced this afternoon, the possibility remains that no new nuclear power stations would be constructed?
As I told the House earlier, the Government’s policy on all electricity generation is that it is for the generators to come forward with proposals. Generators, looking at what the Government policy is, at the carbon price and at the prospects in relation to fuel and so on, will form a judgment on whether or not it is economic to build a nuclear power station, the life of which might be 20 or 40 years. The generators say to us, “You set out the framework, so that we can make these plans. You tell us what the parameters are.” The Government are not going to build a nuclear power station or, indeed, any other sort of power station. We are setting out a clear direction so that generators can make their decisions on investment in nuclear and other plant as well.
The nuclear fuel workers in my constituency will welcome the Secretary of State’s remarks today on the future of their industry, but does he recognise that, if their skills are to be retained for the benefit of new nuclear build, the legislative and regulatory framework decisions must be made in the very near future? Can he assure me that those changes will be introduced for the House to decide upon before the end of this Parliament?
As the review document says, there are a number of things that we need to change, some of which may require primary legislation and some secondary legislation, but I very much agree with the right hon. Gentleman: we want to provide as much certainty for the industry as possible, including for those who work in it.
There is a great deal to welcome in the review, particularly the emphasis on energy efficiency, renewables and new technologies and the structures to encourage them. On the nuclear question, I very much welcome my right hon. Friend’s very clear statement that there will be no public subsidies, but he will know, as I do, that there has been a history in the nuclear sector of bankruptcies over the years. What guarantees will there be? For example, would he consider asking for a bond on new investment to cover decommissioning and nuclear waste charges?
I am grateful to my hon. Friend for his welcome for much of what is in the review. During his nine years as a Minister, he substantially contributed to the Government’s thinking, particularly on energy efficiency. In relation to nuclear, I refer him to what I said a short while ago about the costs, and about the contributions to be made by the industry. He mentioned the difficulties in the past. Quite simply, that is a classic case of something that happened to successive Governments too often: people did not make the right calculations and, in the case of the nuclear industry, they did not factor in all the costs that they would have to meet. I am clear that, if generators come forward with a proposal, they must meet the costs of the construction, running and decommissioning of a nuclear power station.
I welcome the fact that the Secretary of State did at least say on this occasion that we should maximise our oil and gas production as part of meeting our energy needs. As we have them on our own doorstep, it makes sense for us to get the best out of them, but how does he expect to deliver that? We are at a crucial stage in the North sea, in which, if anything goes wrong now, the oil and gas will be locked in forever, and investors will not return if we lose the infrastructure. Therefore, will he ensure that the Treasury has bought into the statement and that it will deliver a stable and reliable fiscal regime to encourage investment?
I think that the hon. Gentleman will find that the Treasury is in complete agreement with anything that I say this afternoon, and with anything I stated in the report.
I recognise the point that the hon. Gentleman makes about North sea oil. We need to ensure that we have the right fiscal regime, so that we can exploit the resources that remain in the North sea. There is a lot of oil and gas still to be got out there and we want to encourage that. He may be aware that, despite the fact that last autumn many people—including a Member sitting right behind him—predicted gloom and doom after the tax changes made by my right hon. Friend the Chancellor, last month there was a record number of applications for exploration in the North sea. That just goes to show what a vibrant sector this is.
The Secretary of State is right to say that there would not be renewable energy use if there were not some subsidy, largely because the unit cost of such energy has to be driven down to the level on the grid. However, although I accept that he is not proposing to introduce a subsidy for nuclear, will he make sure that the rules for nuclear investors are clear and that his remark about planning is rapidly clarified, because there can be no investment if there is uncertainty about the planning process?
I agree. It is evident that, without the renewables obligation, there would not have been even the comparatively modest development of renewables that there has so far been; everybody in the industry is clear about that. That subsidy will be worth about £1 billion a year by 2010. That is why we want to increase the obligation, not abolish it, as the hon. Gentleman’s Front-Bench team has suggested.
Nuclear will not be subject to a renewables obligation. What the industry needs is a clear framework that will allow it to make sensible investment decisions. It wants a carbon price—it wants the certainty of that, as the hon. Member for Mid-Worcestershire (Peter Luff), who chairs the Trade and Industry Committee, has said. It also wants a planning framework, so that it can get a sensible decision—a yes or a no—within a reasonable time. I hope that the official Opposition—indeed, the whole House and the other place—will support us when we make proposals to reform fundamentally the planning system. Without such reform, I find it difficult to see how we will get any large infrastructure in this country—for energy, transport or anything else.
I congratulate my right hon. Friend on the boost that he has today given to energy efficiency and renewables, although I believe that he is sending the wrong signals to the financial institutions by bringing new nuclear back on to the agenda. He said in his statement that, by 2020, the proportion of nuclear generation of electricity would be down to 6 per cent. What contribution would new nuclear generation of electricity make by 2020? What proportion of electricity would come from nuclear and what carbon savings would result?
I acknowledge my hon. Friend’s strongly felt opposition to new nuclear plant and I acknowledge that, on any view, nuclear power stations cannot be brought on-stream instantly. Given the planning process and the time taken to commission and construct such stations, they are bound to be some time down the line, but with respect, I do not think that that is a particularly good point. We are dealing with energy policy and generation over the next 20 to 40 years, which is why I believe that setting out a framework now that allows people to take long-term decisions, including in relation to nuclear, is the right thing to do.
The Secretary of State said today that he is giving the green light to the nuclear industry, that he wants companies to come forward with plans for new build, and that, to achieve that, there should be a price for carbon. I agree, so can he tell the House when we will have detailed and robust plans for carbon pricing? Without it, no companies will produce robust financial plans for building the nuclear power stations that he and I would like to see.
I congratulate the hon. Lady on adopting a slightly clearer position than did the Conservative Front-Bench spokesman. I agree that there needs to be a carbon price and the Government are clear that the best carbon price is the one that is fixed and Europe-wide. However, we have said that if, for one reason or another, that does not happen, the need for a carbon price remains very clear. We are working with the European Union, and there is a carbon price in Europe, which affects us. We should seek to maintain and build on that system, which is the best way to ensure consistency.
I welcome much of the statement, particularly what was said about reducing energy demand, but of course, nuclear is a contentious issue. Will my right hon. Friend confirm that there will be no indirect subsidies to the nuclear industry, such as guaranteed prices, guaranteed purchases or insurance cover?
On guaranteed prices, no. My hon. Friend will of course be aware of the European directive on insurance, which requires all states to carry a certain amount of insurance. I do not know where he stands on nuclear, and I know that there are many Members—in all parts of the House—who are against it, but I have tried to make the position as clear as possible. If people come forward with proposals to build nuclear, they have got to consider meeting all the costs that I referred to.
The limp and tentative language on nuclear power in the Secretary of State’s statement is a major disappointment. Will he be assured that, if the forthcoming White Paper firms up this commitment, he will receive the support of those who want to do something serious about the threat of climate change, and of those who are worried about security of national supply—a consideration not adequately captured by any purely market solution? Given the urgency of the situation, what is his target for reducing the presently long period between proposal and completion of a nuclear power station?
I can see now that the right hon. Gentleman must have been one of those whom the hon. Member for New Forest, West (Mr. Swayne) had in mind when drafting his e-mails on the conflict within the Conservative party. I agree with the right hon. Gentleman that there needs to be a degree of certainty for anyone considering making a long-term investment. On our consulting on the planning processes, the time that can elapse between first application and the ultimate conclusion of a planning inquiry is important. I want that to be reduced, so that we can have certainty, and it also helps objectors to know what the position is—yes or no—regarding a particular planning application. However, I disagree with him in that the Government’s position is now clear. We have a clear direction of travel not just on nuclear, but on renewables and other forms of generation.
I welcome the Secretary of State’s announcement, in particular on behalf of the 40,000 nuclear workers in the UK and the 17,000 in my constituency; indeed, I welcome the nuclear element. Where the Government have shown courage on nuclear, the Liberal Democrats have shown confusion and the Conservatives have shown cowardice. May I suggest a new slogan: “Vote blue, go yellow”? The Secretary of State will of course be aware that time is of the essence. May I volunteer Copeland as a site for new nuclear reactors—at least one, but we will take more? May I also say that, as probably the only—
My colleagues and I are pleased that the Government are to encourage the use of electricity near where it is generated, especially as Scotland produces six times as much electricity as we actually use, and there is no need for new nuclear power stations. However, will the Secretary of State give a clear, unequivocal answer to this question? Does a full share of the long-term waste cost mean 100 per cent.—yes or no?
The internationalist tendency of the Scottish National party is there for all to see. The SNP is saying, “We do not need any more electricity, so we do not need any more power generation.” I am glad that the hon. Gentleman welcomed what I said about renewables. Let me tell him what I told the Liberal Democrats: that is fine, but let us now see a bit of support for some of these wind farms rather than the pretence that they can be built in someone else’s constituency. As for nuclear power, I have nothing to add to what I have already said.
I welcome what the Secretary of State said about facing up to responsibilities to the United Kingdom people and not being blinded by ideology, which seems to inform many of the arguments against nuclear power. I am sure he has considered the fact that since we began to run down Magnox, there has been an increase—between 2000 and 2004—of 3 million tonnes in the amount of carbon used just for electricity generation. Can he assure me that the carbon price will be set at a level that will allow people who wish to invest in nuclear power and other forms of carbon-reducing energy to be rewarded adequately for their efforts and their investments?
My hon. Friend is right: there has been an increase in the amount of gas and coal burnt. That was especially the case last winter, and it is likely to be the case next winter as well. We want to avoid precisely that problem in years to come. We do not want the gap between demand and supply to become so narrow that there is not enough capacity in the system. As for the carbon price, the motive behind it is to ensure that there is certainty. The European trading scheme is designed to reward those who are more energy efficient than others. By any reckoning, the present system needs to be tightened and improved, and we are working with the European Commission and others to ensure that that happens.
Does the Secretary of State welcome the fact that “consensus” seems to be the word on the lips of many Members? I certainly welcome the new consensus on the Government Front Bench and the chucking out of the old consensus. We are seeing a welcome U-turn.
Does the Secretary of State recognise that the consensus in the industry and beyond is that this debate is five years late? A good deal of urgency attaches to the Government’s discussions. The framework he described must be established as soon as possible to secure our long-term energy supplies.
I agree that the framework needs to be completed and consensus is highly desirable, but we shall have to wait and see. What I am clear about is that the review represents an important step towards providing a framework that will encourage people to make the long-term investments that the country needs.
Yesterday, representatives of the heavy energy using industries came to a meeting in the House organised by Amicus. They strongly expressed the view that the high gas prices that they face at present are due to a rigged gas market, and they pointed fingers at the owners of the interconnector. What hope can my right hon. Friend give those important industries that they will be in business next year, the year after and well into the future?
Along with the Minister for Energy, my hon. Friend the Member for Croydon, North (Malcolm Wicks), I met some high energy users last week. There is understandable concern about high energy prices and about the fact that the market in Europe is not operating as it should. That is why we strongly back the European Commission’s action against some companies. We need an open, transparent system. There should be a market that functions properly across Europe so that we can obtain the gas that we need. If anything is preventing that, the Commission must take firm action to ensure that it stops immediately.
One of the greatest risks to climate stability is the degree to which we allow dirty coal to be burned in both the developed and developing world over the next 15 years. I put it to the Secretary of State that simply announcing today a talking shop for UK coal producers and reheating an old announcement about a demonstration project is a wholly inadequate response to the risk and opportunity of clean coal.
I thought that the hon. Gentleman was going to make a further proposal, but there we are. It is important that we develop carbon capture: I said that in my statement and repeated it in several exchanges this afternoon. However, as the hon. Gentleman will know—at least, I assume that he knows—the technology is comparatively young and much development work will be necessary to ensure that it is technically possible and cost effective. The Government recently announced an agreement with the Norwegian Government to do some further work on it and, if it is successful, we want to see it proceed. We have huge potential in this country to ensure that that happens.
I disagree with the hon. Gentleman on the coal forum. The oil industry and the Government entered into a similar arrangement seven years ago, which has been very successful, with both sides understanding the problems and the Government playing their part in encouraging the oil industry. As for the coal industry, I do not know whether the hon. Gentleman represents a coal mining constituency—I have my doubts—but he may find that those hon. Members who do take a different view.
My hon. Friend makes a sensible suggestion. Part of the rationale behind the coal forum is to try to ensure that more regular discussions take place. I hope that the hon. Member for Ruislip-Northwood (Mr. Hurd), who is no longer in his place, has heard what my hon. Friend said.
Will the Secretary of State spell out the Government’s responsibilities when the market price of electricity falls below the cost of privately generated nuclear power, making the company insolvent? Is it not inevitable that the taxpayer will have to subsume the liabilities, as it did with British Energy in the past?
The system that we have in place should ensure that we have viable generating companies. The hon. Gentleman referred to problems in the past that, as I said earlier, largely stemmed from the fact that successive Governments did not pay enough attention to the true economic costs of generation, especially nuclear power. The system that we have now is far more robust than the system we had then.
I warmly welcome the Government’s statement that they will provide strong support for on-site electricity generation, including solar panels. That will be warmly welcomed in Wrexham and by Sharp, which manufactures solar panels. Some £50 million was made available by my right hon. Friend the Chancellor in the Budget for microgeneration, but when will the detailed roll-out of that scheme be clarified by my right hon. Friend’s Department?
I am grateful to my hon. Friend for his support. He is right that solar panels have made a contribution, and I hope that they will make a greater contribution, to providing energy for households. We should be in a position to make some further proposals in the not-too-distant future.
Is the Secretary of State aware of how disruptive offshore wind farms are to inshore fisheries? Is he aware that there are no proper compensation arrangements in place for fishermen, especially those who fish in the Wash? Will he look carefully at that issue before the offshore wind farm programme is further rolled out?
I noticed that the e-mail from the hon. Member for New Forest, West said that wind power did not get a good review. He obviously had the hon. Member for North-West Norfolk (Mr. Bellingham) in mind. I am well aware that many people find offshore wind farms visually intrusive and fishermen have expressed concerns. However, it is possible to reach a compromise on all those matters. I visited a wind farm off the north Kent coast this morning. It generates a substantial amount of electricity, enough for about 100,000 houses. The hon. Gentleman perhaps illustrates the problem that, whatever form of generation we decide on, there will always be people prepared to object to it. I happen to think that offshore wind generation should be encouraged, provided that we get the arrangements right in each case.
I have said that people coming forward with proposals to build a nuclear power station will be responsible for meeting the costs of building, operating and maintaining the plant, and of decommissioning it. I appreciate where my hon. Friend is coming from, but I happen to disagree with him as I think that it will be important to have a mix of energy generation in the future.
Given what Labour Members on the Benches behind the Secretary of State have had to say, I do not think that he is in a position to lecture anyone about consensus. I welcome his nod towards nuclear, but his statement leaves more questions than answers. A few months ago, the Minister for Energy announced that co-firing would be included in the energy review. I assume that the right hon. Gentleman knows what that process is—
Approximately 800 million tonnes of coal lie under my county of Leicestershire—part of which I represent—and under the constituency of the hon. Member for Rutland and Melton (Mr. Duncan), who speaks for the Opposition on these matters. I therefore welcome the references that my right hon. Friend the Secretary of State made to the role of coal in future energy policy, but within what time frame does he expect the investment in clean-coal and carbon-capture technology to bear fruit? There is a real risk that a continued and expanded role for coal will be met only through higher coal imports and more open-cast coal extraction, in England and elsewhere.
I agree that we need to press ahead as fast we can, but the answer to my hon. Friend’s question depends on how quickly we can solve the remaining technical problems. However, I assure him that I feel very strongly about the matter and that I want to make progress. A bigger role for coal would benefit this country and the industry right across the world. It represents a huge opportunity, if we can only get it right.