My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Secretary of State for Trade and Industry. The Statement is as follows:
“I should like to make a Statement on the energy White Paper and the consultation on the future of nuclear power, which I am publishing today. Copies of these, together with a number of other accompanying papers, are in the Vote Office.
“Mr Speaker, as I said last year, we face two big challenges: first, the need, with other countries, to tackle climate change by cutting greenhouse gas emissions; and, secondly to ensure that we have secure and affordable energy supplies. Both are vital for our future prosperity. Both are global issues, calling for action internationally as well as action here at home.
“The evidence supporting the need for urgent action on climate change continues to mount. Sir Nicholas Stern’s report last autumn underlined the importance of acting now and together with other countries. If not tackled, climate change poses catastrophic humanitarian consequences and economic costs. Meanwhile, world energy demand continues to grow. It is expected to be 50 per cent higher by 2030 than it is today, and it is likely to be met largely by fossil fuels for some time to come. That means rising greenhouse gas emissions and greater competition for energy resources, which have massive implications for both climate change and security of supply.
“Here in the UK, our reserves of oil and gas are declining. While significant amounts still remain in the North Sea, production has hit its peak and is now falling. As we make clear, we will make the most of the reserves that we have, but as our economy grows we will become increasingly dependent on imports in a world where supplies are concentrated often in less stable regions. We need to take action to manage the risks that this brings. Over the next few years, energy companies will also need to replace ageing power stations and other infrastructure. So we need to create the right conditions for this investment to get timely and increasingly low-carbon energy supplies.
“The White Paper sets out a long-term framework for action to address these challenges at home and abroad. It sets out our international strategy, which recognises that we need to tackle climate change and energy security together. Influenced by the UK, the European Council has agreed to a new strategy, including commitments to competitive markets, cuts in greenhouse gas emissions, more renewable energy and a central role for the EU Emissions Trading Scheme as the potential basis for a global carbon market. We also need to influence the wider international community, notably in getting a consensus on the post-2012 Kyoto framework for reducing greenhouse gas emissions.
“The White Paper also sets out the measures that we are taking here at home. We have already published a draft Climate Change Bill, which for the first time would impose a legally binding duty on the Government to reduce the amount of carbon that is produced, as we work towards our target of achieving at least a 60 per cent reduction in carbon emissions by 2050; we are the first country in the world to do so.
“Faced with these challenges, more is needed. The first priority must be to save energy, so the White Paper sets out a range of measures to help us to become more energy efficient and to cut energy use.
“Consumers need better information as to how they can save energy. Next year and the year after, any householder who asks for them can get free, visual real-time displays of how much electricity they are using. In parallel, we will work with the industry to ensure that consumers have visual displays, together with smart meters, in 10 years. In addition, better and clearer energy bills will help.
“It is estimated that leaving electric appliances on standby uses about 7 per cent of all electricity used in UK homes. That is equivalent to the electricity generated from two 600-megawatt gas-fired power stations or more than 1,500 2-megawatt wind turbines. So we will work with industry and others to improve the efficiency of domestic appliances, to phase out inefficient goods and to limit the amount of standby energy wasted.
“If we are to make a real difference in reducing energy demand, we need a stronger obligation on energy companies to provide their residential customers with energy-saving measures. So the White Paper proposes that from next year they double their current efforts and, from 2012, we aim to transform the way in which they see their relationship with their customers, shifting the focus to the provision of energy services, increasing energy efficiency and saving carbon in the home, rather than simply selling them gas and electricity. We will also require big organisations such as supermarkets, banks or hotel chains and large public sector organisations to limit their emissions and to set tougher standards for the homes that we build and the products that we buy.
“We need more low-carbon generation of electricity and heat. We want to encourage the enthusiasm of individuals and communities to generate their own energy locally, such as in homes or schools, through solar panels and wind turbines. We are therefore bringing forward a range of measures to support this approach. As part of this, we will be removing barriers and simplifying licensing, so that more communities can follow the example of Woking, including, for example, by developing combined heat and power schemes.
“However, we still need large-scale energy investment. Over the next 20 to 30 years, we will need new generating capacity equivalent to over a third of our existing capacity. Our aim must be to ensure that companies have a wide range of options available, so that we can retain a diverse energy mix, which is good for our security of supply and will help us to move to an increasingly low-carbon economy.
“Renewables are of crucial importance. So we are strengthening support for renewable electricity. The reform to the renewables obligation is essential and will mean, we expect, that by 2015 around 15 per cent of our electricity supplies will come from renewables—triple the amount that we have today, achieved in just eight years.
“In transport, the road transport fuel obligation will save a million tonnes of carbon a year. We want to double it, only if we can be satisfied that it is sustainable to do so.
“New technologies will also help. We want British-based business to be at the forefront of new green technology. That is why we set up the Energy Technologies Institute, which brings public and private investment together, and now has a minimum budget of £600 million. We are launching a competition for the demonstration of carbon capture and storage, which has the potential to reduce carbon dioxide emissions from fossil-fuel power stations by as much as 90 per cent, which is important, as we will rely on gas and coal power, including coal mined in the UK, for some time to come. Details are set out in the White Paper.
“We want to save energy. We want low-carbon sources of energy. That is why we will do everything that we can to encourage renewables such as wind, wave and tidal power. But that alone will not be enough if we are to minimise our costs and risks.
“Alongside this White Paper, we are publishing a consultation document on nuclear power, so that we can take a decision on whether companies should have this option when making their investment decisions. We have reached the preliminary view that it would be in the public interest to allow energy companies to invest in nuclear power. But before we make our decision, we are consulting further.
“The White Paper makes clear the complexities of the challenges that we face in terms of climate change and energy security. There is no single answer to these challenges. We believe that there needs to be as wide a choice of low-carbon options as possible, so that we do not become over-reliant on any one form of electricity generation. Nuclear is an important part of our energy mix at the moment. We currently get about 18 per cent of our electricity from nuclear power stations—a low-carbon form of generating electricity. It provides a regular and steady supply of electricity, whereas electricity generated from most renewables is, by its very nature, intermittent. Every year a modern nuclear reactor saves about 2.5 million tonnes of carbon dioxide being pumped into the atmosphere compared with an equivalent gas-fired station.
“Most nuclear power stations are set to close over the next 10 to 20 years at a time when we know that demand for electricity is going up because of economic growth. Quite simply, in the public interest we need to make a decision this year on whether we should continue to get some of our electricity from nuclear, because new stations take a long time to build.
“If nuclear is excluded, there is every chance that its place will be taken by gas or coal generation, which of course emits carbon. Yes, carbon capture and storage, if it can be developed, would help, but at this stage we cannot be certain of that. There is no commercial-scale operation of carbon capture and storage on power generation anywhere in the world. And, although we want to get more renewable energy as part of the mix, it, too, is controversial. There are over 170 applications in the planning process at the moment.
“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. There are important issues to consider, including the question of waste. They are considered in the consultation, which will run until October.
“Our measures, including those in the White Paper, put us on track to make savings of carbon emissions of between 23 million and 33 million tonnes by 2020. Put another way, if we met the upper end of this range, it would be the equivalent of removing all the emissions that we get from every car, van and lorry on Britain’s roads today.
“By saving energy, encouraging new timely investment in gas import and storage infrastructure and maximising recovery of UK reserves of oil, gas and coal, our measures will also help security of supply. We cannot become a low-carbon economy in a single step. Further measures will be needed if we are to achieve our long-term goals and in the light of further international agreements in Europe and more widely.
“The White Paper sets out a framework for action to enable us to make real progress now towards tackling climate change and ensuring secure and affordable energy supplies. I commend the Statement to the House”.
My Lords, I thank the Minister for giving me advance sight of the Statement. The White Paper and the Statement accompanying it are characterised by one thing: confusion. The Government say that certain things must be done but their policy, at best, says only that they might be done. The current Prime Minister says that the replacement of nuclear power stations is back on the agenda with a vengeance. The future Prime Minister says that a new generation of nuclear power stations will be built across the country. Yet the most that the Minister has promised today is that nuclear plants could be part of the future energy mix and that it is for the private sector to take decisions over new power stations.
However it is dressed up, nothing in the White Paper guarantees that a single nuclear power station will ever be built. Where has the Prime Minister’s “back with a vengeance” gone in relation to nuclear power? It is certainly not here. Are the Government saying that the nuclear new build will definitely happen or not? How many new nuclear power stations will definitely be built as a result of this White Paper? Does the Minister have a plan B if Scotland rejects nuclear power and, if not, how does he expect the Government to deliver a UK-wide energy policy? If the SNP has rejected both nuclear in principle and wind in practice, can the Government acknowledge that the policy is anything other than lunacy?
Business will of course invest in nuclear power only if it knows what it costs. Without certainty about carbon, decommissioning and waste, it is almost impossible for businesses to take a realistic interest. The Government have given absolutely no greater clarity on those issues today, so what happens if no one comes forward to invest?
Over a year ago, the Prime Minister said of new nuclear build:
“If we don’t take these long-term decisions now, we will be committing a serious dereliction of our duty”.
Today in the Times, he just says that we must “consider” it. But can the Minister tell noble Lords exactly what decisions have been taken today to address this dereliction?
Last July, we in the Conservative Party set out our objectives. We called for a cap and trade scheme for C02 based on auctioned rights, for site and type licensing and for reform of the renewables obligation and climate change levy. In addition, we said that there must be long-term certainty for investors. As we, as a party, have said again and again on environmental issues, if that could lead to broad agreement between us and the Government, that would be very good for Britain. Today’s announcement contained detailed proposals for banding the renewables obligation, but those will not overcome its central flaws. On what basis, therefore, has the Minister assessed and chosen to reject the considered alternative put forward by Ofgem?
Hidden in this Statement is bad news about carbon capture. Will the Minister confirm that the failure of this Government to agree a pilot project for it means that any prospect of its happening has already been seriously delayed—or should I say postponed? Is not the real truth that, far from being on the edge of happening, carbon capture is about to be deferred and endangered? I wonder how on Earth CCS will ever get off the ground if it is still constrained by the climate change levy. When will the Government remove the perversity of keeping a dirty tax on a clean process?
On strategic infrastructure projects, we welcome site and type licensing and the streamlining of the planning process. However, I have grave concerns about entrusting that to an unaccountable quango.
The Conservative Party policy statement last July called for greater use of carbon trading. A broad and rational regime for carbon trading is, in our view, crucial for incentivising low-carbon technologies. The Government’s announcement that they will broaden the scope of carbon trading to cover a greater number of businesses is, therefore, welcome. It is our view that permits should be auctioned. Will the Secretary of State tell us how and when they will be?
Climate change is the greatest threat that we face. That is why the Government had the support of the Conservative Party in signing up to tough EU targets on emissions and renewables in March. At present, we get just 2 per cent of our total energy from renewables. Raising that to 20 per cent was always going to be challenging. Is it not true to say that today’s plans will at best get us only about half way to that target? Is it not also the case that, despite the clear wish expressed in the White Paper to encourage local and decentralised energy, there is almost nothing that amounts to a robust policy that will really make it happen?
Again and again, this White Paper wills the ends but not the means. In households, smart metering could greatly increase energy efficiency and help customers to export electricity back to the grid. But the Government are putting their support behind the limited clip-on visual electricity displays. Does that intervention not pull the rug from under the real smart meter market? Why are the Government going for the most basic option, when real smart meters would help to stimulate the microgeneration industry?
Today’s announcement has already been twice delayed. It is Labour’s third White Paper, following dozens of consultations, and the product of its third energy review, under its ninth energy Minister. It is yet another symptom of a wasted 10 years—10 years that have rendered the next 10 years a Herculean challenge for whoever has to take it on.
The White Paper offers nothing definite on nuclear or anything else. It heralds the collapse of carbon capture, while continuing an irrational regime for carbon penalties and incentives. It provides little or no prospect of hitting renewables targets and it does not offer the security that the country so urgently needs. The Government have had 10 years to think about their energy policy, and 10 months since the energy review to get it right, but what we are left with is not a carbon-free future, but a content-free promise.
My Lords, this White Paper is about the nuclear issue, as the noble Baroness, Lady Wilcox, has pointed out. I thank the Government. The White Paper seems to follow our questions and concerns about nuclear. If I were someone who was going to develop a nuclear power station, I would not take a great deal of comfort from the White Paper. As the policy of these Benches is against nuclear, I think that that is a step forward.
As the noble Baroness also pointed out, the Scottish National Party has said that it will not build nuclear power stations in Scotland. Do the Government see nuclear power as a local or devolved issue?
The raising of the nuclear issue is not greatly surprising because the White Paper pointed out that the Government will be changing the planning requirements for nuclear power stations. But will the issue of rising sea levels be taken into account in these great consultation documents? If the scientists’ predictions on climate change are correct and sea levels rise on the magnitude discussed, we will not be building nuclear power stations; we will be building nuclear submarines.
I was disappointed by way in which the White Paper deals with carbon storage and capture. As I have read the document only today, on its publication, I shall pick out only one point, on page 175, at paragraph 5.4.18. It states that the UK’s first commercial-scale demonstration of carbon storage and capture will be online in the next decade. That is the demonstrator model. If we are relying on carbon storage and capture to make a significant impact on the 80 per cent of our electricity projected to be produced from gas and coal, should the Government not be putting much more effort not only into a demonstrator model but into retrofitting already operating power stations with that technology over the next 10 to 15 years?
The White Paper gives the impression that we need to build these power stations because there will be exponential growth in the amount of energy used. However, it also refers to getting rid of stand-by, which would reduce the amount of energy we need by 10 per cent. That shows the importance of education and working with industry to reduce the amount of energy used. I hope that the Minister will take this opportunity to say how unfortunate it is that HIPs were delayed yesterday because of the energy performance certificates. On the DCLG’s own figures, the delay will result in the release of about 250,000 extra tonnes of carbon dioxide into the atmosphere.
The White Paper mentions renewables. I hope that the Government will look again at renewables. A pitiful sum has been spent on developing wave and tidal technology, technology which is far more reliable in producing a constant flow of electricity. The amount spent on that, compared with the amount spent on nuclear decommissioning, is laughable. I hope that the Government will also start looking at new technologies such as energy storage, which the department has frequently overlooked.
The White Paper also raises the issue of smart metering. I very much hope that the Government will bring forward a debate, in their own time, to talk about which type of smart metering we are considering. We could end up with a basic smart meter that provides very little information, or with smart meters that could be fitted in every house and provide massive amounts of information on electricity prices and when to use electricity and on the environmental benefits of using it at different times. Progress on that depends on the Government setting out clear guidelines to the industry.
I have one question but could not find the answer to it in the document because I am not a speed reader. It is about the renewables obligation. Of course we support renewal. However, do the Government intend to add nuclear power to the obligation? Defining nuclear power as a renewable power source would be an interesting step.
It will be very difficult for any power company to take a great deal of solace from the White Paper on how to go about building a new power station, be it nuclear or any other type. Our position is that nuclear power stations would be a mistake, but I welcome the White Paper.
My Lords, I do not recognise the confusion which the noble Baroness, Lady Wilcox, describes in the White Paper. I think that our position is absolutely clear. She also made some points on the consultation process for new nuclear build. The consultation on new nuclear build will be full and run over 20 weeks. Afterwards the Government will have a period of reflection and then take our final decision. As noble Lords said, we published our energy review last July and said that nuclear should form part of the future low-carbon energy mix. That is still our view.
The exact number of nuclear stations has not been decided. However, if we take no action, our nuclear capacity will decline over the next few years from about 18 per cent to 6 to 7 per cent. That would have a big impact on our emissions as that capacity would have to be replaced by gas or other forms of generation which are not as low-carbon. Security of supply issues would also arise.
The UK’s policy on renewables is clearly laid out in the White Paper: our strategy is to triple the amount of electricity generated from renewables between now and 2015.
The noble Baroness also mentioned investment in nuclear and asked why energy companies should invest in it. Energy companies have shown a lot of interest in investing in new nuclear in the UK. EDF has said that, providing that the Government make a decision relatively swiftly, it could have a new nuclear power station up and running by 2017. On subsidy, E.ON has said that it would require no subsidy whatever to build a nuclear power station in the UK. I do not see an issue there.
Our view on the EU Emissions Trading Scheme is that it should be strengthened. We want to ensure that there is a robust price for carbon. The EU ETS was particularly weak in its first phase but has strengthened somewhat in its second phase. We want to strengthen it further in its third phase.
The renewables obligation will be worth £1 billion annually to the renewable sector by 2010. We are consulting on the banding of the renewables obligation specifically to ensure that there is more support for the renewable technologies that are currently not viable. We are therefore looking at offshore wind, tidal and marine technologies and ensuring that we give more support to them than to others such as onshore wind and biomass.
We looked at the previous Government’s feed-in tariffs but felt that they were not effective in boosting renewables. Under the renewables obligation this Government have doubled the amount of renewable energy, with considerable increases in, for example, wind generation. It took 14 years to develop the first gigawatt of wind energy in the UK, and 20 months to develop the second. Only eight countries in the world, including the UK, have reached that level of wind generation.
I do not see the problem that the noble Baroness outlined on carbon capture and storage, which is going ahead. We are having a competition and expect to have the details in place by November 2007, and we are working closely with energy companies to take it further. We intend to proceed as the first country in the world to have a demonstration project for carbon capture and storage. As noble Lords will know, although CCS exists in a number of forms, no one has yet succeeded in putting the technology together on a commercial scale.
I acknowledged what the noble Baroness said. I mentioned the carbon reduction commitment and the benefits that it would have. I agree with that. We are currently on target to achieve a 60 per cent reduction in CO2 emissions by 2050. The White Paper outlines how we will achieve that.
On smart metering, the benefits of which were mentioned by the noble Lord, Lord Redesdale, I agree. If I may say so, the noble Baroness seemed to be misinformed about our proposals for smart metering. We are not abandoning it in favour of visual display units; we propose that it be introduced for all businesses within five years, apart from the smallest businesses, and within 10 years for domestic users. We are also offering the opportunity of visual display units free of charge for consumers during the next couple of years.
The noble Lord, Lord Redesdale, mentioned Scotland. Of course we do not intend to change the devolution settlement. The Scottish Executive have certain powers on planning matters and those will remain the same. We have undertaken some contingency work dependent on the final outcome of the consultation, but we are looking at strategic siting assessments for new nuclear power stations, which will obviously take into account the issues that he mentioned concerning rising sea levels.
On carbon capture and storage, the noble Lord pointed to page 175, paragraph 5.4.18 of the White Paper. The intention is that the first commercial-scale demonstration of CCS will be brought on stream between 2011 and 2014. That will be part of the bid criteria; proposals will have to take that into account. Companies will have to promise that they will deliver in that timeframe a UK CCS programme. These things take time, but if we do not take the decisions now, we will not have a CCS demonstrator in that timescale. Time is pressing, we are aware of that. That is why we are proceeding with all speed on the matter.
I agree with the noble Lord, Lord Redesdale, that energy saving is very important for both businesses and individuals. We have ensured that there will be a successor to the carbon emission reduction target which will double the obligation of suppliers to introduce energy-saving measures. The Government’s plans to introduce zero-carbon homes by 2016 will also reduce CO2 emissions and make individuals think more about their carbon footprint. That is very important.
On the renewables obligation, which I mentioned briefly, I return to the point made by the noble Lord, Lord Redesdale. As I said, it will be worth £1 billion a year to the sector by 2010. We have the marine renewables development fund, which contains £50 million to support tidal power. We are establishing the Energy Technologies Institute, which will have a budget of £600 million over 10 years to support a range of new renewable technologies. We have invested about £500 million in development grants for renewables. As I mentioned, we are looking at a renewable banding to give more support to wind and tidal power, among others.
Will nuclear power be included in the renewables obligation? No.
My Lords, perhaps the Minister can help me. Surely hydrogen cars—I believe that some cities in the United States have buses that run on hydrogen, consequently emitting no carbon dioxide exhausts—building regulations that would make all new houses contribute either by solar panels or heat exchangers plus or minus to the national grid, and the growing of agricultural crops for fuel are much better things to encourage than windmills, which cannot be relied on when the wind is blowing too strongly or when it is not blowing at all. Can the noble Lord help me on those matters? As always, I am seeking information and enlightenment.
My Lords, on hydrogen cars, we are looking at fuel cells and developing the technology on that level. As I mentioned, we will have the Energy Technologies Institute, which will support research in those areas. On vehicle emissions and the efficiency of cars, we are working with the European Union to increase the amount of biofuels used in vehicles from the 5 per cent that we have established under our proposals to the 10 per cent that the EU has outlined. We are saying that it is important that biofuels are developed in a sustainable way and that we have a second generation of biofuels that can be used in vehicles with a greater blending of fuels and all the rest. On agricultural crops, the argument is similar; we must be aware of sustainability when it comes to biofuels and the development of energy crops in this country for co-firing. We need to keep apprised of that. Again on transport, we are developing a low-carbon transport innovation strategy that will consider a number of issues and how we can improve the low-carbon element of our transport in the UK. We also support the Commission’s proposal that aviation should be included in the EU Emissions Trading Scheme, and are looking at surface transport. The noble Earl asked another question that I did not catch.
My Lords, I asked whether the Government would consider making the building regulations such that new houses always had heat exchangers or roof panels, so that they would be in and out of the national grid.
Yes, my Lords, we are looking at the building regulations. The Government have outlined the decent homes standard, which will ensure that homes have appropriate levels of insulation, and we have expressed the aspiration that all new homes should be zero-carbon by 2016. We are also looking at making government buildings and properties in the government estate zero-carbon. We are extending our carbon reduction programme to large-scale energy-intensive users such as hotels, supermarkets and local authorities, which will have to bear the programme in mind and make their buildings more efficient. We are also looking at the building regulations to see how we can reduce the number of barriers to technology such as CHP and ensure that many new housing developments and other buildings are supported by local energy generation, distributed energy and low-carbon energy. On microgeneration, we have the low-carbon building programme of £86 million, and we will introduce new planning regulations in the autumn to ensure that it is a lot easier for people to install wind turbines, solar panels and the rest on their homes without having to go through the whole planning process.
My Lords, surely someone on these Benches must be allowed to speak at some time.
My Lords, we have waited a long time to get a White Paper on this subject. I instigated a debate on this subject in 1978. The science has not changed, and the situation has not changed, so why has it taken so long to get to the point where there is a plethora of White Papers on the problem of carbon? Is it because of the division among scientists that carbon may not be the main cause of the problem? Indeed, the ice cores that have been collected and analysed in the intervening 29 years have indicated that global warming occurs before an increase in atmospheric carbon just as one cannot have smoke without fire—one has to have fire first. Secondly, there has been no mention of methane. The latest papers written by Kepler and Röckmann and published in Scientific American earlier this year indicate that growing crops, especially crops to produce biodiesel, may greatly increase atmospheric methane. Why has there been no discussion about this? Before we enter into a whole mass of legislation and new taxes, the science should be looked at again. The latest report from Russia is that the planet Mars has increased in temperature over the past 25 years by exactly the same proportion as the Earth has increased in temperature. Therefore, is solar radiation perhaps the cause of our problem?
My Lords, the noble Lord says that the situation has not changed since 1978. Although I have not been in your Lordships’ House for that length of time, I can certainly say that from my standpoint things have changed since the publication of the previous energy White Paper in 2003. That is for two main reasons. First, the science on climate change widely accepts that it is manmade and is accelerating. I do not need to go into the details of the IPCC report and Sir Nicholas Stern’s report. It is now broadly accepted across the world, including in the United States and China, that there is a problem with climate change, that it is accelerating and that we need to tackle it.
The second reason, security of supply, did not exist in the same way even back in 2003. The relative price of energy and fossil fuel has increased quite dramatically since then. Increasingly, we are becoming more dependent on less stable parts of the world for our energy. We are witnessing a faster decline in our North Sea resources than we envisaged, which increases our energy dependence. By 2020 something like 80 per cent of our gas will be imported. While we currently import about 30 per cent from Norway, it is a fact that we will have to look further afield for our gas to countries such as Qatar, Algeria and Trinidad and to parts of Africa and central Asia—leaving Russia apart. Therefore, we need to increase the diversity of our supply. All those points, particularly tackling climate change and ensuring our security of supply, have changed the argument on nuclear from where I stand.
On methane, the noble Lord mentioned energy crops and the importance of sustainability, with which I would agree. On deforestation, we should ensure that the actions we take in the UK and Europe do not have detrimental effects on developing parts of the world. We ought to be very aware of that.
My Lords, my noble friend will have seen an interesting article by the Prime Minister in today’s Times in which he mentioned, among other things, renewables and so on. He set a target about which the noble Baroness, Lady Wilcox, was quite rightly sceptical. The Prime Minister referred to wave power and other things, but he did not refer to tidal energy, although my noble friend mentioned it a moment ago. Can he confirm that it is time to take a very close and earnest look at the Severn barrage, which would provide something like 4 per cent of our electricity and take us a long way towards that target, whether it is achievable or not? I would like to have that confirmation.
My Lords, I am grateful to my noble friend for his intervention. It is clear that we have a stretching renewable target, which we should tackle. The Commission has to bring forward detailed proposals on how that will be allocated to individual member states, depending on their starting points. Obviously, we will do a lot of work on that.
From where we stand, the most important issue is reducing greenhouse gas emissions, which is our overarching target in terms of reducing them by 60 per cent by 2050. There must be a central role for the European Union Emissions Trading Scheme and we must have a robust price for carbon. Within that overall framework, we have a major role for renewables as well.
My noble friend is right that the Severn barrage is mentioned in the White Paper. In terms of electricity generation, it would provide something like 5 per cent of the electricity needed for this country should we develop it. There are arguments for and against. In generation and renewable terms it would clearly be significant. We need to look at environmental issues closely, including EU regulations, the habitats directive and the impact on wildlife. The Sustainable Development Commission is undertaking a study on tidal and wave power. As part of that, it will look at the Severn barrage. It will report in September and we will take careful note of its report.
My Lords, does the Minister agree that there are many ways to harness the power of the River Severn that do not include the barrage? It is not a question of either/or; the generation of 5 per cent of our electricity could be achieved by accessing the tidal stream on the Severn in a variety of ways. Can he comment on power loss during transmission through the national grid? Are the Government considering the development of more localised, regional grids?
My Lords, the noble Baroness is right that we can look at other options in the context of the river Severn; the barrage is just one of those. It would be a large, extremely expensive and complicated project, but it would have real potential benefits in terms of renewable generation. However, as I say, we can look at other options. We are looking closely at the distribution of energy through the national grid so that the barriers to distribution are reduced to make the grid work more effectively, and ensure that we bring on the localised use of energy, in particular from renewable sources.
My Lords, I want to ask about two related areas in the White Paper. The graph on page 109 is alarming. It shows that by 2030 it is likely that we will be producing only about 10 per cent of the gas we produced in 2000. Even on the best case scenario for indigenous gas supplies, we will be importing the vast majority of our gas in the foreseeable future. Does that not cause a question to be raised about the dash for gas, as well as whether burning most of it in our power stations and thereby producing energy for essentially just one generation will be seen by future generations as rather short-sighted? Linked to that is the issue of carbon capture. Coal is out of fashion because of the absence of economic carbon capture technology. Can the Minister tell us a little more about where the problem lies? Is it in the separation of carbon dioxide from other flue gases, the transmission of carbon dioxide to a storage site, or the costs of actual storage itself? For all that it says, the White Paper does not come clean on where the problem is in this matter.
My Lords, I am grateful to the right reverend Prelate. On the question of the dash for gas, I agree with him that we need a diverse energy mix and that we should not be over-reliant on any one particular form of supply. Gas currently generates approximately a third of our electricity, as does coal, but this can vary. When we encountered tightness in energy supplies a couple of winters ago, the amount of electricity generated by coal rose by 50 per cent, but as a result we found that CO2 emissions went up. We have to have a diverse energy mix both to ensure security of supply and to reduce CO2 emissions. One of the ways of doing that is to develop carbon capture and storage. However, a number of issues arise with CCS. Several countries are already using parts of the available CCS technology. The Norwegians, for example, already store gas offshore, and the energy sector has often used the injection of gas to enhance the exploitation of oil and gas fields. There are regulatory issues in this area, such as the London and OSPAR conventions, which need to be amended to ensure that we can store gas under the North Sea. While the London agreement has been amended, the OSPAR agreement has not, so there are legal issues to consider. But the main point is that no one in the world has put all the different elements of the technology together and shown that they can work on a commercial scale, and that is really the task of this programme.
My Lords, I have been studying the consultative document on the future of nuclear power issued alongside the White Paper. In particular, I have been looking at Chapter 13, which sets out the proposals for the Government’s facilitative action that they would undertake if, after consultation, they conclude that energy companies should be allowed to invest in new nuclear power stations in the United Kingdom. Bearing in mind the long lead-in period before a nuclear power station becomes operational and the long decommissioning period at the end, have the Government made a real study of the likely cost of the electricity produced, particularly in so far as the consumer is concerned? How can they be so sure, when they talk about facilitative action, that some government financial assistance will not be necessary?
My Lords, the Government have carried out extensive modelling on this issue and some of the costs were outlined in the energy review last year. One of the reasons we are putting forward the nuclear consultation at this point is that the cost picture has changed compared to the position in 2003 when the previous energy White Paper was published. It was the Government’s assessment in 2003 that nuclear was not viable. Since then, bearing in mind the increase in oil and gas prices and the likelihood that they will remain relatively high for the medium to long term, that cost picture has changed. The Government’s assessment now is that, given the energy mix and the likely change in prices in the future, nuclear will be competitive compared to other forms of energy generation. We believe—and some energy suppliers say this themselves—that that can be done without subsidy. However, we need to create the right framework in the development of nuclear if we go down that path. We have overhauled the planning system and we are looking at the strategic assessment processes mentioned in the chapter. We also want to ensure that there is a real and robust price for the cost of carbon because that will be a key to the development of low-carbon energy in the future.
My Lords, building on that last interchange, will my noble friend take the opportunity to knock on the head the contention that the White Paper gives special privileges to nuclear? Is it not the case, leaving aside the fact that the underlying price of gas and oil is rather higher than it was a few years ago, that not only has nuclear hitherto not had privileges but the tax treatment of nuclear can, in some respects, be considered less privileged than other renewables? We are looking for a level playing field, which is exactly the basis of the economics of the White Paper.
My Lords, I agree with my noble friend that we are aiming for a level playing field.
My Lords, the Government have had 10 years in which to make a decision on how they are going to prevent the lights going out in this country. It would appear from the White Paper and all I have heard from the Minister today that no decisions have yet been made. The Government are right up against the backboard. Will they, in a very short space of time, come back to the House and tell us that they have made a decision and have a clear strategy on how they are going to stop the lights in the United Kingdom going out in the not-too-distant future?
My Lords, yes, yes and yes.