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Energy Review

Volume 684: debated on Wednesday 12 July 2006

My Lords, somewhat exceptionally, I seek to repeat a Statement made by the right honourable Secretary of State for Trade and Industry in the other place yesterday. The Statement is as follows:

“Today I am publishing a report setting out the conclusions of the review. Copies will be 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.

“Mr Speaker, 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, delivering 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 reserves decline. The proposals I am announcing today set out our approach to meeting our energy needs over the next 30 to 40 years. Many of the proposals contained in this 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 emission by 2050, we need not just to reduce carbon intensity through low energy sources such as renewables, but also to save energy. So we make a number of proposals to encourage greater energy efficiency. For consumers we need better information about the amount of energy used, smart metering and 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, limiting the amount of stand-by 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 they sell their services.

“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 home owners 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 households more energy efficient and to sell them more insulation products. We are consulting on the most effective way of doing that.

“The EU Emissions Trading Scheme, which covers 11,000 high intensity users of energy and the climate change levy are key to encouraging businesses such as power stations or steelworks to save energy and to cut emissions. But there are around 5,000 large businesses and public services in the UK not covered by that scheme. We want to reduce energy inefficiency for these companies too. One supermarket chain in the UK alone is one of the biggest single users of energy in the country. These 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, which is something that they support. It 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, and we will encourage the use of lower carbon fuels, especially biofuels. 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 EU to consider the inclusion of road transport in the emissions trading scheme as well as including aviation.

“Last November, we announced in the renewable transport fuel obligation that 5 per cent of all fuels are to be from renewable sources by 2010. Today, we propose that the obligation, after consultation, should be extended after 2010, provided that some important conditions are met. This could provide a further carbon reduction of 2 million tonnes, which is equivalent to taking another 1 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 we use cleaner. We make a number of proposals. Most of our electricity is generated in large power stations, and around three-quarters of our heat comes from gas that is fed through a national network. It delivers economies of scale, safety and, crucially, reliability. 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 half of 1 per cent of our electricity comes from microgeneration. 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 it more attractive to energy microgeneration and to set up combined heat and power schemes. The Government believe that this is a major opportunity for the UK not just to invest in renewable energy but in 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. It is equivalent to around a third of today’s generation capacity. Power stations are long-term investments, and we need to put in place the right framework to incentivise investment decisions to limit carbon emissions.

“First, we remain committed to carbon pricing in the UK through the operation of the emissions trading scheme. 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 renewable generation of electricity.

“The renewables obligation is key to supporting the expansion of renewables. It has brought forward major developments, particularly onshore wind, 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 per cent to 20 per cent.

“We also want to give a boost to offshore wind and other emerging technologies to encourage the growth of other technologies—off-shore, wind or tidal, for example. So we will consult on banding the obligations to encourage these developments.

“The Government also see a continuing role for both gas and coal-fired generation. The Government will convene a coal forum to bring together UK coal producers and suppliers to help them find solutions for the long-term future of UK coal-fired power generation and UK coal production.

“Coal-fired generation continues to meet around one third of electricity demand. Last winter it reached as much as half. This shows the importance coal can play to the UK’s energy security. But to have a long-term future 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—strong oil industry and old oil fields where CO2 can be stored. The next step would be a commercial demonstration if it proved to be cost effective. We are working with Norway and the industry in developing this and a further announcement will be made in the Pre-Budget Report. Carbon capture could lead to saving several millions tonnes of carbon by 2020.

“The Government believe that a mix of energy supply remains essential. We should not be over-dependent on one source. That is especially so if we are to maintain security of supply in the future. We will continue to do everything we can to promote more open and competitive markets, which is why we are backing the Commission in securing an 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 will fall from just under 20 per cent today to just 6 per cent in 15 years’ time. And 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 potential barriers to new build and the HSE is developing guidance for potential providers of new stations. For nuclear, new-build consideration of safety and security will be paramount, as it is 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 will be consulting on this before the publication of the White Paper.

“The Committee on Radioactive Waste Management 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 it has developed for securing the future long-term management of the UK’s nuclear waste. CoRWM will publish its final report this month. The Government will respond thereafter.

“If we are to see any of these developments, whether they be renewables or conventional power stations, we need to change the planning laws in this country. We will work with the devolved Administrations to make sure that we have an effective planning regime. There are some changes we can make now, for example, bringing together the planning process and consents on the Electricity Act but the Government believe that the current planning regime needs fundamental reform and the Government 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 and 25 million tonnes of carbon by 2020, over and above the measures announced in the Climate Change Programme review already. 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. These proposals will help us meet our twin objectives of tackling climate change and providing security of supply. The scale of the challenge is great. The proposals I set out show how we can overcome them to secure our prosperity and the health of our planet”.

My Lords, that concludes the Statement.

Since this Statement was made in the other place, it has come to light that the statistics quoted on electricity appliances on standby should have referred to electricity used in the home, not electricity generated in the United Kingdom. Arrangements are being made to advise the other place of that clarification.

My Lords, I thank the Minister for repeating the Statement made yesterday in the other place. I am pleased that Her Majesty's Government are, in theory, considering nuclear energy within the mix that we need to protect the security of supply to our small country, especially considering that we on these Benches had to fight the Government during the progress of the Energy Bill in 2004 to keep the nuclear option open. Indeed, one might argue that, welcome though some of the noises in the Statement are, the gist is more, “We’ve thought about it, now we are going to think about it again—a little more—and then consult on it”, or, as my honourable friend in the other place stated yesterday,

“not carbon-free but content-free”.—[Official Report, Commons, 11/7/06; col. 1265.]

Two years ago the Government had the opportunity in primary legislation to address many of the points that they have raised today. Yet I am sure that noble Lords from all sides of the House will remember that the Government resisted amendments that addressed sustainable energy, microgeneration, combined heat and power, energy efficiency and clean-coal technology, to mention just a few—perhaps because it was an election year. As the energy crisis deepens, we know that the Energy Act 2004 was a missed opportunity and that, with the rapid rise in the price of oil and the depleting gas supplies, the matter is now becoming critical. There can be no doubt that the Government agree with us that security of supply and carbon reduction are the two key priorities.

I will not repeat the comments of my honourable friend, who succinctly laid down the many areas in which there is now a consensus, nor shall I ask the questions that he did, unless there was no answer in the other place. However, I want to ask the Minister what consideration has been given to the flexing of muscles by Russia in the energy field and how that may affect our security of supply at the end of the pipeline.

I started by suggesting that, in theory, the Government seem to be considering nuclear energy. In a well publicised speech, the Prime Minister announced that nuclear power is,

“back on the agenda with a vengeance”.

However, in his preface to the energy review report, the Prime Minister spares 10 scant words to the subject of nuclear power. In his Statement in the other place yesterday, repeated by the Minister today, the Secretary of State said that the Government have concluded that new nuclear power stations could make a significant contribution to meeting our energy policy needs. I emphasise the word “could”—not “will” or even “should”. Is this a diminution of what the Prime Minister said about nuclear power being,

“back on the agenda with a vengeance”?

It is perfectly clear that, perhaps in deference to their vast body of anti-nuclear supporters, the Government, while offering to grasp the nuclear nettle, have done so with heavily gloved hands.

In the very next paragraph of that Statement, the Government said—I précis it—that it will be for the private sector to fund its full share of the long-term waste management costs. The Secretary of State was pressed by several of his Back Benchers in the other place to explain what the full share was. One honourable Member asked him whether it was 100 per cent. To all those questions, no answers were forthcoming, so, on behalf of the House and in the interests of clarity, I repeat the question: is the full share 100 per cent? A simple yes or no will suffice. I assume that nuclear waste from sources other than nuclear power—for example, medical and industrial waste, and isotopes—will not be charged to the generators.

I am conscious of time in a discussion in which many may want to take part, so I shall add only one more comment. In the Statement, the Minister repeated that we need a stronger obligation on energy companies to provide energy-saving measures. The Secretary of State pointed out that energy companies have a great incentive to sell as much energy as they can. The suggestion is that energy companies should be incentivised to sell more insulating products. It sounds to me like trying to get turkeys to vote for Christmas.

The Prime Minister has referred to energy-saving bulbs. They are first class: they save power and last much longer than ordinary bulbs. But they cost several pounds each, and we obviously need to look for things that are not necessarily beyond the pocket of many people. What energy efficiency regulations will be imposed both on new builds and on conversions of existing properties?

Overall, the Statement poses more questions than it gives answers, because it lacks detail and calls for further consultation. How much more do we need? We welcome the Government’s focus on renewables, particularly for planning procedures. However, what else will they do to achieve those targets? I remind the Minister that the Government have had targets of 10 per cent by 2010, 20 per cent by 2020 and 60 per cent by 2050. Today, 3 to 4 per cent of our energy comes from wind power, so the question is: how will they achieve that? After nine years, six Secretaries of State and three energy reviews, our supply is not secure and carbon emissions continue to rise.

I started by saying that the Energy Act 2004 was a missed opportunity. This Statement has been, as well. It is, as my honourable friend said in the other place,

“a grave and perilous let-down”.—[Official Report, Commons, 11/7/06, col. 1266.]

I return to the cry so often heard. It is time, in the immortal words of Elvis, for:

“A little less conversation, a little more action, please”.

My Lords, I, too, thank the Minister for repeating the Statement, although it is rather unusual that we had to have it today. It seems that, through the usual channels, the Conservatives did not ask for this Statement. That is an interesting situation and it is the role of the Lord Speaker to adjudicate in such cases. However, I thank the House authorities for making the Statement available today. It is important, and must be made. Perhaps there is some way in which the usual channels could be changed so that we can get these Statements brought forward.

This is one of the most interesting Statements that I have ever had to talk to. It is the first time that I have been lobbied, as a Front-Bench spokesman, by Members from all sides of the House to make points on one side or the other against their Front Benches. The noble Baroness, Lady Miller, has made a strident and excellent speech in support of her view on nuclear power, but that strident view is not shared by her leader in another place.

My Lords, I know that this is timed, but I should like to point out that I did not make a “strident” defence of nuclear. I was asking about the Government’s opinion.

My Lords, perhaps a reading of Hansard will elucidate my misconception.

I am split on the Statement, because half of it—up to point 45—is, for somebody who has been fighting for renewable energy, Christmas come early. It is an excellent Statement, setting out many issues that will be welcomed by those fighting climate change and looking carefully at ways of reducing carbon emissions. Some points are very interesting. I find it particularly interesting because, when I took my Renewable Energy Bill through two years ago, the Government had not taken on board the need for some of these measures, but they are now taking them forward with some alacrity.

The issues in which I am particularly interested are smart metering, which should be in every house, microgeneration, eliminating standby, combined heat and power—especially large-scale combined heat and power, which is not utilised at the moment—and energy-saving light bulbs, which should not be underestimated. As has been pointed out, the use of energy-saving light bulbs in this Chamber is saving the House authorities £3,000 a year.

A number of questions have to be asked of this Statement. We on these Benches are against nuclear power for two reasons. The first is waste. Are the Government taking the interim report as the final report? Does the Minister believe that there will be any changes between the interim report and the final report? Is that why the Statement is being made before the final report has come out? The second reason is cost. The Government have clearly said that there will be no subsidies for nuclear power. I find that interesting because, in the past, nuclear power has always cost a great deal more than was set out. Indeed, this paper gives different prices for the provision of nuclear and wind power from the ones given in the 2002 paper. That might be because nuclear power has become cheaper, but I do not believe that wind power has become more expensive. Can the Minister say whether there will be no subsidy in relation to the emission of carbon or through the regulations dealing with carbon release and nuclear? Will renewable obligation credits be extended to nuclear? There is talk of increasing the renewable obligation from 15 per cent to 20 per cent, and the noble Lord, Lord Sainsbury, has said that he believes that nuclear is a renewable resource. If that is the case, are the Government changing their view and extending ROCs to nuclear?

Planning will be a vexed issue. The report mentions moving to a position where planning considerations can move forward nuclear power stations. I have some sympathy with the Government, because it is ridiculous to have to argue the case for any specific wind farm or power station when these cases have been argued so many times before. However, I believe that the talk of reducing the role of the public will lead to a backlash against nuclear.

My final point is about carbon storage and capture. On page 119, the report states that the Government will look at future schemes on carbon storage and capture. I am surprised that they have not listed the five schemes that are already taking place. I hope that they will consider substantially increasing the amount of money that is available for research and development, as well as implementation, of carbon storage and capture.

My Lords, before the Minister replies and before I leave the Chamber, I hope that the House will allow me to clarify the situation of the Lord Speaker regarding Statements. I understand that the House adopted the recommendations of the Select Committee on the Speakership, which did not include any responsibility for the taking and repeating of Statements from another place—that remains the responsibility of the usual channels. The Lord Speaker has responsibility for ruling on Private Notice Questions, but that is a separate issue. I hope that that is helpful. I know that the noble Lord, Lord Redesdale, would not wish additional powers to accrue to the Lord Speaker.

My Lords, I apologise to the Lord Speaker for giving that impression. There was a great deal of confusion. We used the example of the Private Notice Question in relation to the position of the Lord Speaker. I apologise abjectly for giving the impression that the Lord Speaker is involved in Statements.

My Lords, I am grateful to both noble Lords for their contributions, although I thought that the recollection of the noble Lord, Lord Redesdale, about past policy on renewables, on which his party has been active, somewhat contradicted the views of the noble Baroness, Lady Miller, who seemed to be claiming rather too much enthusiasm for renewables. I cannot recall during the debate—

My Lords, I realise that it is not traditional to interrupt the Minister, but, for the sake of clarity and because there is such a difference between us, I beg that we refer to the noble Baroness as the noble Baroness, Lady Miller of Hendon. That would completely clarify that, as the Baroness Miller of Chilthorne Domer, I do not support nuclear.

My Lords, anyone who has heard the two noble Baronesses discussing energy would never confuse them in any way, shape or form. I did not think that I had to refer to the noble Baroness, Lady Miller of Hendon, in quite such precise terms because she is the Front Bencher who has just questioned me and it is to her that I am making this response. But I am glad to clarify that point.

I was seeking to say that the party of the noble Lord, Lord Redesdale, has had a helpful position on renewables in the recent past and to contrast that with the rather lukewarm perspective of the Official Opposition until the changes that we have noticed in recent months. The noble Baroness made reference to the Energy Bill, which was some three or four years ago now, but I cannot recall the Official Opposition Front Bench being greatly to the fore on these issues at that time. Suffice it to say that I welcome her enthusiasm and pressure today, as I welcome what the noble Lord, Lord Redesdale, has said in reiterating his position.

The areas of energy policy where we need to be united as a country are future projections and the work that we have to do. It is welcome that a great deal of this review points to important consensus on many of the proposals—and I include renewals within that framework.

The noble Baroness asked us what we are doing about Russia. As was made fairly clear at the time, the Government do not believe that the nation should express undue anxiety on the question of Russian gas supplies. Russia is destined to be an important supplier to Europe. It is in its interest to supply to Europe. That situation has obtained for more than 40 years over very different regimes in the old Soviet Union and through the Cold War. These pressures on energy supply were subject to pronounced political factors. One of the reasons why we seek to emphasise that we need a full range of contributions to energy production in the country, including the nuclear option, is that, if we do not create a framework within which all potential producers can contribute, we will become dependent on foreign supplies over which we clearly have less control than we have had in recent decades over our own North Sea supplies. The whole House will recognise the change in circumstances there. The problem that occurred last winter when for a short while Russia clashed with the Ukraine was, although it rather dramatically emphasised the situation even for the UK, much more an issue of the European market, including the point about Belgium. We made the strongest representations on improving that market to guarantee future supplies.

In the market that we seek to create, in which we expect the possibility of nuclear provision, nuclear producers will be expected to bear the full costs of construction, operation and decommission. I hope that the noble Baroness recognises that, particularly with regard to decommissioning. We also recognise, as the Statement makes quite clear, that her emphasis on energy saving is well placed. A great deal of the Statement is about energy saving, although I want again to correct the point in the Statement about the 7 per cent of electricity wasted through standby devices. That applies to household energy only, not to the vast consumption of energy by other users.

The noble Lord, Lord Redesdale, emphasised the issue of carbon storage. He is absolutely right. Breakthrough in that technology could do an enormous amount not only for coal consumption in this country, but for climate change. If we could find a safe, secure and non-carbon-emitting coal usage, that could point the way for China and India, which are huge coal users. That is why that research is so important. We will give full support to the research, but the noble Lord will recognise that these are still early days.

Both opposition Front Benches have acknowledged that the Statement covers the full range of energy options and is of the greatest significance to the nation. On that basis, and as the response in the other place indicated, we recognise that this is a common problem that must be solved through common solutions.

My Lords, does the Minister accept that if this country is to meet its energy emission targets, have security of supply and continue to grow at a satisfactory rate, nuclear power will play a vital part? When all is said and done about renewables, there are still many problems and uncertainties to overcome. Nuclear power has been tried and proven in France and elsewhere. Will he undertake that the treatment of the nuclear programme will in no way be disadvantageous compared to other forms of energy?

My Lords, we intend to create market conditions in which there are incentives to potential nuclear producers. The background is that nuclear production comprises 20 per cent of our present electricity generation. Of course we are pursuing renewable options with great vigour, but to suggest that through them we could readily bridge that gap within the necessary timescale is to ask a very great deal. That is why it is very likely that nuclear production will play its part in the energy mix.

My Lords, I welcome the Statement and the document, which is a helpful step in the consideration of our options, not least because it does not set one form of generation against another, as some people would try to do. However, there is a point that we should try to clear up at this stage. Will nuclear generation capacity still be subject to the climate change levy? That is one anomaly at the moment. Secondly, while appropriate attention is given to fuel poverty in the document, there is no reference to the targets that the Government set themselves for the elimination of fuel poverty. That will be made more difficult by the recent price rises. There may be some slippage, but there is a deafening silence in that area. What is the Government's view of the targets that they have set themselves for the elimination of fuel poverty by 2010 or 2016, depending on which way you look at it?

My Lords, the latter point is significant and important for the Government. Fuel poverty creates the greatest distress within families. That is why we set a target. My noble friend is right: the substantial increase in fuel prices in recent years has made that situation more difficult, but I reassure him that the elimination of fuel poverty is an important priority for the Government and we will take steps to make progress in that respect.

My noble friend also asked about the climate change levy. European law does not allow us to exempt nuclear power from energy taxes, although it allows some options to exempt renewable sources of energy from energy taxation. The UK applies these exemptions to combined heat and power and to wind power, but it will be recognised that, when we create the market into which nuclear bids will be made, there will be full understanding of the contours of that market. I emphasise that there is no form of subsidy for nuclear power.

My Lords, although I very much welcome the underlying principles of the Statement, can the Minister clarify a point that was made yesterday at Question Time when I intervened and stated my declared interest in carbon emissions from the manufacture of steel conductor rails? He may have mistakenly misled the House by saying that the manufacture of steel conductor rails was more energy-efficient than that of aluminium conductor rails. I have approached the manufacturers of aluminium conductor rails, who advised me that they are 25 per cent cheaper to make and more energy-efficient. Perhaps I can give him the figures that will come through to me this afternoon.

The only indication that daylight saving is not practical comes from the house-building side—that leaving the lights on makes it impractical. I have spoken to the author of the paper, which he wrote in 1990, and he is prepared to reconsider the figures and to include heating and the industrial side. However, no study has been made of the effects of daylight saving and why it cannot reduce the total amount of electricity used in this country by 1 per cent as it does in the United States. Will the Minister therefore look at this again and ask the Government to encourage a study similar to those being conducted in the United States?

My Lords, I am grateful to the noble Lord. I apologise to the House if I produced an inadequate reply yesterday. The only thing that I can do, in all honesty, is to write to him in detail about this, but I attempted yesterday to indicate that we had looked at his representation and, as I understood it, found that his proposal did not greatly reduce overall carbon emissions, which was the point at stake. The best thing that I can offer to do is to discuss this with him. I will certainly write to him.

Secondly, on daylight saving, on which the noble Lord again waxes eloquently, he may regret that there has not been sufficient study of the amount of energy that could be saved through changes to daylight saving. It will be recognised that this issue has been before both Houses of Parliament for three or four decades, to my knowledge, and has been proposed and debated on very many occasions, but until there is a political will to effect the change, which has quite considerable implications for parts of the country that would be adversely affected by it, it is not surprising that the Government have not undertaken full-scale research into its benefits.

My Lords, are the Government aware that not all of us on these Benches oppose nuclear power? In fact, quite a few of us support it. Is there not something preposterous about some green activists—I do not include my noble friend Lord Redesdale—warning us about the apocalypse of global warning and at the same time advancing ideological objections to the one safe and reliable alternative of nuclear power, which now provides 20 per cent of our energy? In a generally balanced Statement, which we welcome, is there not a certain element of make-believe in trusting that renewables will provide 20 per cent of our energy needs? This is especially true of wind power, which is far more expensive than nuclear power and is environmentally rather destructive because it takes up an enormous amount of land and is harmful to birds. Should the Government not address this without political correctness?

My Lords, the Government have been accused of political correctness in a wide range of policies, but never, to my mind, in relation to energy. Clearly, the evaluation of the benefits of wind power has been carried out very fully and the intermittent factor is an important consideration. Wind power is difficult to locate, certainly onshore. Many people may be in favour of it in principle, but not in favour of the towers when they appear in their environment. On the noble Lord’s more general issue, I recognise that there are differences in his party on the virtues of nuclear power. The task of the Government is to identify energy needs and the productive sources from which energy can be generated, which is why we are creating circumstances in which nuclear may make its contribution.

My Lords, I have given the noble Lord notice of this question, which may seem rather detailed, but I hope that it will seem very relevant. I warmly welcome the proposals in the document—paragraphs 5.132 and 5.133—for a new pre-licensing design authorisation procedure for nuclear reactors as part of a revised planning process. I have been pressing for this for some time and it is very good to see it in the document. Will the noble Lord recognise that this will require a substantial increase—perhaps 25 per cent—in the staff of the Chief Inspector of Nuclear Installations? Is the Minister aware that the Health and Safety Executive wrote in its report to Ministers only last month:

“This may be a significant issue for HSE as recruitment of appropriately qualified and experienced staff has proven difficult for NII in recent years”?

Will Ministers now swiftly approve the HSE’s proposed pay and rewards measures to address that problem? Is it not abundantly clear that without adequate staffing of the inspectorate, the review’s welcome proposals will be gravely prejudiced?

My Lords, I am grateful to the noble Lord for giving me notice of that question, as I doubt that I would have been able to give him much of a reply had he not indicated the nature of his interest. The present prediction for work, excluding new build, is that we will need 192 inspectors. At present, there are 163 in post. The noble Lord has also indicated that a much greater number would be needed under new build. We intend to discuss requirements with the HSE. I reassure the noble Lord that there could be no contemplation of new build and development of the nuclear industry without absolute guarantees on safety, which means a fully staffed inspectorate.

My Lords, in the 1980s, I had the honour to serve in another place on the Select Committee on energy. I remind the Minister and the House that many of the proposals being put forward were recommended by that Select Committee in the early 1980s—such as energy saving in homes and factories. The Atkins report recommended that we should proceed very quickly with more combined heat and power. If all those things had been done at that time, including the building of the Severn Barrage which could have provided 6 per cent of our energy, we would not be in this mess now.

I should like to ask two questions. First, on the cost of nuclear power, I understand that the cost per kilowatt hour is estimated to be 2.4p, which is exactly the figure that was given to the Select Committee way back in the early 1980s. But when the industry was privatised and the City got on to the figures, it went up to between 5.5p and 6.5p. What is the real cost of nuclear energy? Does the figure of 2.4p include the costs of decommissioning and the storage of nuclear material?

Secondly, bearing in mind that energy is now one of the top priorities of policy not only in this country but also throughout the world, is it not time that we set up again an independent department of energy rather than subsume it into the Department of Trade and Industry? I hope that the Government will take this request seriously.

My Lords, the organisation of government is the preserve of the Prime Minister, but no doubt he will read with the closest attention the suggestion of the noble Lord that there should be a separate department of energy. Perhaps I may also say that hindsight is a wonderful thing. We lived in a rather different environment in the 1980s. It is also true that it is a joy to stand at this Dispatch Box and say that my party had no responsibility for policy during the 1980s, as he may have noticed. If he is being critical, he can leave this Government and my party out of that criticism.

On the more general points that the noble Lord made regarding costs, in a changing situation the evaluation of costs is very difficult. However, nuclear is currently cheaper than wind generation, but it is more expensive than gas and coal; that is the position it occupies. We intend to create the circumstances in which a full evaluation of what can be contributed to the production of energy over the next 20 to 30 years, and that will include careful consideration of costs by potential producers. The nuclear industry will make up its own mind on those issues.

My Lords, following the questions put by my noble friend Lady Miller of Hendon, I should like to give the noble Lord another opportunity to respond. My question relates to the costs of long-term waste management. The Statement referred to the full share of these costs being met by the private sector. The word “share” implies less than 100 per cent. My noble friend asked the Minister to confirm whether or not this referred to the private sector meeting 100 per cent of those costs and she invited him to respond by answering yes or no. I so invite him now.

My Lords, the issue is not quite as simple as the noble Baroness suggests. First, we face very substantial historic costs that run into billions of pounds and involve the application of high-level technologies to solve the issues. The noble Baroness will know that CoRWM is to produce its full report by the end of this month and that the Government will respond to it. We are not loading those costs on to the future development of the nuclear industry, but we do say that future costs—build, operation and decommissioning—will be borne by it.

My Lords, the energy review rightly devotes a good deal of attention to energy saving, admits that more needs to be done and recommends further measures. However, is there not a risk, with the round of measures now in place to stimulate energy saving, that consumers will get rather confused? The Statement repeated by the noble Lord refers to “incentivising” the suppliers. Should we not be seeking to incentivise the users? Is there not one way in which they can be really incentivised—a way to really concentrate the mind—and that is by linking energy saving to reductions in council tax? This is something that most of us would have a good go at if we were given the opportunity. It has been tried by some local councils, with the help of energy suppliers, and I believe it has met with great success.

My Lords, I am grateful to the noble Lord who, as ever, is constructive on these matters. It is quite a daunting task to incentivise the whole of the nation to energy saving, although we think that companies can improve the situation by the development of metering systems which convey accurately to the consumer both the cost of their energy—rather than just a series of figures going around in the rather indecipherable way we all recognise—and potentially perhaps the carbon content to show the impact on the environment. That is something which the companies could do and we are looking at the situation. It would certainly help to alert the consumer to the consumption of electricity, particularly against a background—I am sure the whole House will share my concern—where 7 per cent of our electricity is consumed by standby. That is an appalling figure. If we can succeed in communicating that figure effectively to the nation, we may get improvements in that respect.

I shall pass on to my colleagues the noble Lord’s specific proposal in regard to the relationship between saving power and the council tax. It is an interesting and constructive suggestion but I have no comment to make on it at this stage.

My Lords, I do not think the Minister had a chance to properly reply to the second part of the question of the noble Lord, Lord Stoddart of Swindon. Surely we need in this country a new energy tsar and department so that we can have joined-up thinking between Defra, the DTI, the Department for Transport and the Treasury where all energy matters are concerned.

My Lords, I always love appeals for tsars. There are very few tsars that I hold in high regard, from Vlad the Impaler to Alexander II. I am not sure that problems are solved by that model. It is certainly the case that we need co-ordinated operations by government departments—it is a very important area—but if one were to ask noble Lords to identify other areas where co-ordination could take place, we would revise the structure of Cabinets almost weekly. The noble Lord must recognise that the Statement represents from the Secretary of State for Trade and Industry and the Cabinet a significant analysis of the energy needs of this country for several decades ahead and the quite dramatic policies that will need to be put in place in order to guarantee that the lights remain on.