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Energy: Electricity Generation

Volume 698: debated on Wednesday 30 January 2008

asked Her Majesty’s Government:

What is their long-term policy for electricity generation.

My Lords, the Energy Bill will strengthen the framework for investment in power stations to help the United Kingdom to ensure secure supplies of energy and tackle climate change. Measures in the Bill will help to achieve a tripling of the amount of electricity from renewables by 2015 and pave the way for the demonstration of carbon capture and storage. The Government’s White Paper invited energy companies to bring forward plans for new nuclear power stations.

My Lords, I thank the noble Lord for that encouraging response but I wonder whether he can be a bit more precise about what the position might be in 2020, which will be a key year in the consideration of forward electricity policy. Does he recall that the Government estimated that, on present trends, the electricity mix could contain 55 per cent of gas, compared with 37 per cent at present? That would be entirely unacceptable in terms of security and emissions and contrary to present European policy. Can he therefore indicate, without precise commitment at this stage, what the Government would like the mix to be in 2020? Specifically, what could be the share of coal with carbon capture and storage, to which he referred, of nuclear in the light of the recent White Paper, of renewables, bearing in mind the EU proposals, and of gas? Furthermore, can the noble Lord indicate what would then be the proportion of distributed electricity?

My Lords, I pay tribute to the noble Lord for his great expertise in this field. He will know that generating capacity at the end of last year was: coal, 38 per cent; nuclear, 16 per cent; oil, 6 per cent; wind, 1 per cent; hydro, 5 per cent; and gas, the remainder; plus a two-gigawatt interconnector from France. Of course, I cannot be specific about what the figures will be in 2020, but the noble Lord will know that nine power stations will have to close by the end of 2015, which amounts to a total of 12 gigawatts—about a fifth of our peak electricity demand and around 15 per cent of our total generating capacity—and some of our nuclear power plants must close by 2018. How will this capacity be replaced? There are five gas-fired power stations where construction work has already started, three more have received approval from the Secretary of State, seven more have applied for approval, and—perhaps most significantly—there are 276 renewables projects with approval and a further 259 under consideration. So far as concerns new nuclear power stations, none is likely to have been built by 2020.

My Lords, in the face of this lack of planning by the Government and in the absence of the Minister, again, what does the noble Lord plan to do if the Scottish Parliament blocks the plan to build a new nuclear power station in Scotland?

My Lords, I am sorry that the noble Baroness does not think that I am a Minister. I think that some Members of the House do think that I am, but I understand. If I am not good enough for her, I again apologise. She asks an important question, although of course its premise is pure nonsense. The fact is that it is this Government who have looked to our energy future. At long last, the party opposite has come around to supporting what I would argue is absolute common sense: that there should be a nuclear element in that civil policy. I very much hope that the Liberal Democrats will do the same in due course.

My Lords, consequential on the very firm commitments now being made on carbon reduction and supported by all parties—Labour, Conservative, Liberal Democrat—does my noble friend agree that if we are to achieve these, electricity generating costs, as well as consumer energy taxes more generally, will increase, partly to reflect extra input costs and partly to choke off demand?

My Lords, I do not entirely agree with the point that my noble friend makes. Electricity generating costs are determined by a number of variables, including fossil fuel prices, operating costs and the costs of purchasing carbon allowances. Our policy is to encourage low carbon generation within our market-based framework—renewables, nuclear and carbon capture storage. However, I agree with him to this extent: other things being equal, higher carbon prices will increase the cost of generating electricity from carbon-emitting plants. Those plants will continue to play a role in the UK generation mix for at least the medium term.

My Lords, when does the Minister expect the first commercially viable and economic carbon capture plant to be operational in this country?

My Lords, that is a difficult question to answer. As the right reverend Prelate knows, a very important demonstration project is going on at the present time. We have high hopes of CCS; we think that it is a very important process. However, I am afraid that it is impossible to give him a date when the first project will be on stream. A great deal of work is being done at present, and this particular demonstration is of great importance for the future.

My Lords, the Minister has already indicated that the price of carbon is crucial to the future investment in electricity generating capacity. The White Paper referred to the Government being prepared to take extra measures to support the Emissions Trading Scheme, if that proved necessary to encourage investment. Could he tell us what the Government have in mind by way of additional measures to help the trading scheme?

My Lords, the scheme is of considerable importance to us.

The noble Lord, with his expertise as an ex-Secretary of State, will, I am sure, have had to find the bit in his briefing that deals with the question. He may remember those days; he may not. Let me tell him that it is not particularly comfortable. I will reply to him in writing as to our exact plans, but he can be sure that they are very effective.