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Energy: Low Carbon Transition Plan

Volume 712: debated on Wednesday 15 July 2009


My Lords, with the leave of the House, I shall repeat a Statement made in another place by my right honourable friend the Secretary of State for Energy and Climate Change. The Statement is as follows:

“All of us in this House know the gravity of the challenge that climate change poses. We know that to rise to the challenge will mean comprehensive changes in our economy and our society. We are one of the few countries to exceed our Kyoto targets; we are now the leader for offshore wind; and we are the first country in the world to legislate for carbon budgets. But the proposals published today are the first time we have set out a comprehensive plan for carbon across every sector—energy, homes, transport, agriculture and business.

A decade ago the carbon impact of most policies was not even measured. Last year, this House passed legislation for legally binding carbon budgets, measurable caps on carbon. This was a dramatic change in approach. But we need to go further because every part of government needs to be responsible for meeting these budgets.

So I can announce that not just the country as a whole, and not just the biggest departments, but from today, every department has its own carbon budget. Having been the first country in the world to set legally binding carbon budgets, we are now the first country in the world to assign every department a carbon budget alongside its financial budget.

The plan sets out how we will meet the carbon budgets set out by the Chancellor for an 18 per cent reduction in today’s levels by 2020, or 34 per cent compared to 1990, part of the necessary steps we have to make to get a global deal this December. Let me announce to the House how we make the 459 million tonnes of carbon savings to meet our carbon budgets. In agriculture and waste, there will be a 6 per cent cut in emissions—20 million tonnes—by the budget period centred on 2020, made possible by new policies on waste and new commitments on farming. In the transport sector, there will be savings of 14 per cent by 2020, or 85 million tonnes, as set out in my right honourable friend’s sustainable transport strategy published today. This includes plans for electrification of rail, tougher car and van emission standards, and the new £30 million fund to get low-carbon buses on the road in the next two years.

We are also doing more to bring about the transition to electric cars, with new funding making possible a recharging infrastructure in up to six cities. And across business and the workplace, we show how we can make 41 million tonnes of savings, or 13 per cent on today, including with the carbon reduction commitment being introduced next year.

The most important reductions to meet our carbon budgets come in the way we generate and use energy. In the power and heavy industry sector, we show how emissions will be reduced by 22 per cent, or 248 million tonnes. With North Sea gas production declining, if we carried on with business as usual, over the next decade our imports of gas would double. On the basis of the low-carbon choices I announce today, our forecast is that, rather than double our gas imports, they are kept down to 2010 levels for the whole of the following decade. So with more low carbon, home-grown energy, we avoid an ever-increasing dependence on imports.

I have listened to representations on renewable energy and I have concluded that for reasons of energy security and climate change, it is right to go ahead with plans for 15 per cent domestic renewable energy by 2020. In the final decisions of the Government’s renewable energy strategy that I have published today, we show how we can secure around 30 per cent of electricity from wind, marine and other renewable sources. We are also publishing the shortlist of Severn tidal schemes.

I believe it is right to go ahead with our plans for new nuclear power stations. We will publish our national policy statements on nuclear and other energy issues in the autumn, and the industry is planning at least 12.4 gigawatts of new stations, more than current existing capacity.

Alongside the most environmentally stringent coal conditions in the world, the Government have proposed up to four carbon capture and storage projects and we have proposed legislation in the next Session of Parliament to make it happen.

Let me be clear. I believe that when it comes to the future of energy in Britain, clean coal has an essential role to play. Renewables, nuclear, clean fossil fuels, as this plan sets out, are the trinity of low carbon and the future of energy in Britain. What would be fatal is to pick and choose between them. All of them should be part of our future energy mix. In total, our plans show we will get 40 per cent of our electricity from low carbon energy by 2020 and more in the years afterwards. To deliver the changes in our energy supplies between now and 2020, we must make it easier for investors to turn low carbon projects into reality. Having tackled rules on planning, I believe we now need to do more to address the issue of grid connection.

So I am today announcing that I will exercise the reserve powers provided under the Energy Act 2008 for government, rather than the regulator, to set the grid access regime. The new rules should be in place within 12 months and, instead of waiting for over a decade for grid connection, as can happen now, we can get the fast access to the grid that renewable projects need. We also know that as we generate power in a cleaner way, we also need to use energy in a smarter way in our homes. In total, in the plan, we show how cleaner sources of heat and better use of energy can cut emissions from our homes by one quarter compared to today and save 57 million tonnes.

We must transform the information on energy use available to all of us. So, as well as putting in place new funding today for smart grids, we are proposing to roll out smart meters to 26 million homes by 2020. We need new incentives, as well as better information. The plan makes clear that, on energy efficiency, we need a house-by-house, street-by-street transformation, like the transition from town gas to North Sea gas in the 1970s. Over the next decade, our plan sees families not having to pay up front but being able to spread the costs over many years, paid for out of the savings on their energy bills. Today, we take the first steps with the first pilots of the new pay-as-you-save scheme.

As well as information for individuals and the right incentives, we know from the Transition Towns movement the power of community action to motivate people. So, we will provide £500,000 each to fifteen areas of the country for people to come together to trial the newest technologies and be beacons for how other communities can cut their carbon emissions. From next April, I can confirm that individuals and communities alike will be able, for the first time, to generate their own renewable power and sell it back to the grid with guaranteed feed-in tariffs. The details of the rates and levels on which we are consulting are set out today.

We need reforms not just in the way we produce energy and in how we use it, but also how it is regulated. In the energy world of today, unlike 20 years ago, the job of the regulator is to help deliver on our climate change commitments because failure to act on this now will store up greater cost later. So, I propose to make changes to Ofgem’s principal objective. For the first time, reducing carbon emissions, as part of protecting the future consumer, will be explicitly set out in its guiding mission.

Competition is essential but we know from the experience of prepayment meters that it has not delivered for all consumers. So I will also make it clearer in Ofgem’s principal objective that, when competition does not deliver, it is Ofgem’s duty proactively to stand up for consumers up and down this country. With greater expectations of the regulator should come greater powers when it needs them. So I also propose to legislate to provide Ofgem with new tough powers to take action where it believes there is anti-competitive practice in the generation of electricity.

Strong regulation is all the more important given the upward pressure on energy prices in the coming years. Making the energy transition will have costs but, for households, they are significantly offset by savings on energy efficiency and reduced energy demand. Today’s plan will not increase average household energy bills by 2015, compared to now. For households in 2020, the plans today will mean an average of 6 per cent on domestic bills, or £75 a year, compared to today; and, including all previous policy announcements on climate change, the figure is 8 per cent.

Given the costs of transition and the priority of tackling fuel poverty, I believe we need to do more to protect the most vulnerable consumers. So, today, I propose to reform the system of social tariffs. At the moment, more than 800,000 households receive discounts and other help with their energy bills. It is part of a voluntary agreement with the energy companies. I propose that after the voluntary agreement ends in 2011 discounts for the most vulnerable will continue not from a voluntary arrangement but through legislation for compulsory support from the energy companies. We will legislate to increase the amount spent and intend to target new resources at the most vulnerable consumers, particularly older, poorer pensioners.

As we make the transition to low carbon, we must do so on the basis of energy security and fairness, and we must also seize the industrial opportunities using the money the Chancellor has allocated in the Budget. We have set out plans for the carbon capture and storage industry and, today, new investment in how Britain can lead in nuclear manufacturing.

In renewables, Britain has half the usable tidal energy in Europe. Today I am committing up to £60 million to build our wave and tidal industries for testing new technologies, expanding port access and deployment in key parts of the country. We also need to nurture the offshore wind industry, where we have a unique resource. I am making available up to £120 million to support the growth of a world-leading offshore wind industry in Britain. As well as supporting the demonstration and testing of offshore wind, the money will be used to attract offshore wind manufacturers to the UK. We estimate that these investments will help nurture industries that can support hundreds of thousands of jobs—investment we can make only today because, even in the tough times, we made the choice to invest in the economy of the future.

Climate change is the moral issue of our time. In five months, the world must come together at Copenhagen and follow through on the commitment of world leaders last week to stop dangerous climate change. Today we show how Britain will play its part. Our transition plan is a route map to 2020. It strengthens our energy security. It seeks to be fair in the decisions we make. Above all, it rises to the moral challenge of climate change. This is a transition plan for Britain. I commend it to the House”.

My Lords, that concludes the Statement.

My Lords, I thank the Minister for repeating the Statement made in another place earlier today, and for making available an advance copy of this lengthy Statement. It is a challenge to absorb its contents, but noble Lords will have also known much of it from the press coverage over the weekend and throughout the week, as well as the now-obligatory “Today” programme interview.

We welcome the Statement as an important declaration of intent on the Government’s part in tackling climate change and carbon emissions, as well as seeking to bring together something that could be tagged as an energy policy. That is long overdue, but when the Government have provided us with 15 Ministers in 12 years, it is not surprising that they have found it difficult to find a coherent voice in this key policy area. Do we not have the lowest percentage of energy generated from renewables within the EU?

We have no argument with the Government in seeking to reduce carbon emissions by 34 per cent by 2020—or, if we take today’s figures, by a more modest 18 per cent at current levels. It will be the minimum needed to be on course for the 2050 target of 80 per cent. I note the climate change committee’s welcome, but point out that it is seven months since the committee published its report to which this is the Government’s response.

It is appropriate that the Statement starts with the Government’s own role. The Sustainable Development Commission’s 2008 report stated how variable the different departments are in achieving energy efficiency and performing to target. The Government should be taking an exemplary role in this matter, and they need to demonstrate that they are serious in their own endeavour if they expect business, households and consumers to do the same. There are too many areas where the message from the Government is mixed, or where they have failed to develop policies that reinforce this drive. The Minister will remember that, when discussing the climate change legislation, we wanted to include a provision that certain statutory instruments complied with the purposes of the Climate Change Act or furthered its purpose. This move was initially welcomed and accepted, the Minister in this House showing commitment to the cause, only for it later to be disregarded.

The Statement promised 6 per cent cuts in emissions from agriculture and waste. Can the Minister further elaborate on how this will be done without passing greater burdens on to farmers, to whom we look to provide more of the nation’s food? What funding stream do the Government intend to provide for this?

A substantial reduction of 14 per cent in transport emissions is likely to be heavily dependent on government funding. How will this be paid for? The Statement mentions electric cars. This simply illustrates one of the many commitments the Statement contains without declaring how it will be funded. Parliament and people are in the dark on public expenditure as, unprecedentedly, the Autumn Statement will not be delivered this year. It is not unreasonable to ask where the funding is coming from.

I do not doubt the need for the Government to set these targets, but the delivery of any government strategy depends on an accurate assessment of the cost involved within the public sector and from businesses, households and consumers. Without this, the Statement is merely a statement of good intent, rather than a comprehensive programme of action.

Of course, the Government are right to recognise the role of renewable energy. In a pre-Statement interview on the “Today” programme, the Secretary of State emphasised the need for land-based wind generation, and acknowledged that it was not enough simply to rely on offshore generation. How do the Government intend to use the planning system to deliver on this account? It has been estimated that the extra turbines will pass on a possible extra cost of £200 per annum to households. It is also estimated that the current rate of construction of these turbines is one a week. Does the Minister appreciate the physical challenge that this presents? The Statement mentions the Severn tidal schemes. Have the Government worked out how to deliver tidal energy from the Severn estuary without damaging it? How dependent is this programme on the delivery of the strategy?

I hope the noble Lord will get the drift of my argument. Much of what the Statement contains is good and worthy stuff, but without the reassurance that the Government are prepared to deliver, it remains primarily aspirational and lacks the counterbalance of a full financial impact assessment. The Statement talks about building more nuclear power stations. However, we will have to wait until the autumn for the national policy statement on nuclear energy, although it is obviously a key part of the strategy. In the mean time, the Government still have no plan regarding what to do with existing nuclear waste. The strategy announced today can hardly be comprehensive if it does not include this.

The Statement also announces that it will make changes in the energy supplies between now and 2020 to make it easier for investors to turn low-carbon projects into reality. How do the Government plan to do this? Will it involve further financial incentives or is it going to depend on an easing of planning restrictions.

It would not do the Statement any injustice to suggest that it reads like a wish basket. For example, the noble Lord introduced the concept of smart meters into the Energy Act last year and it appears in this Statement. What progress is being made to develop this plan? How far have the Government got in discussing this with energy providers? Likewise, why have the Government resisted the concept of fixed feed-in tariffs? A debate in this House led from these Benches provided for this in the Energy Act when the Minister finally conceded the power of our argument.

In short, while we welcome the Statement and the White Paper, for it aspires to be on the side of the angels, such virtue has a price and the Government in the Statement have been coy not only on how big the costs will be but, more critically, on where the funding is coming from and who will end up paying. Despite the Statement promising that there will be no increase in household fuel bills by 2015, I expect most people will be in a family household that will have to pick up the bill.

My Lords, I, too, thank the Minister for repeating this Statement. I know the Government are keen to get on with the legislative programme of the House today, but given the importance of this subject, it was fitting that this Statement was heard, and I thank Ministers and the Official Opposition for allowing it to come forward.

This is an important Statement. It moves from discussions on the Climate Change Bill to statements of intent, targets and ideas about legislation to taking action, although I note that the shortest chapter in the Renewable Energy Strategy is concerned with implementation, so perhaps there is a little more still to do there. Given the shift in thinking from considering carbon dioxide to assessing greenhouse gases as a whole—in my opinion that is a correct shift—it is interesting to note that the 34 per cent reduction comes down to 18 per cent, which is very manageable and is important to achieve, although many of the relevant reductions have already been achieved. In that sense much of the low-hanging fruit has already been taken.

We are looking at this strategy up to 2020 in an environment of very tight public cash availability. Much of the investment will need to be private investment but we are still subject to a low carbon price. I have seen no reference to a carbon price in the documents or in the Statement, but clearly it will be one of the main drivers for the private sector. I do not think there is any real understanding of how we will ensure that those price signals are right to encourage the private sector to make the right decisions in this area. Indeed, I think that the ETS is mentioned in only one box in the accompanying papers.

These Benches welcome much that is in the Statement and the strategy. The feed-in tariffs are to be implemented in April, but what about heat? The Statement mentions the grid in that connection but there is no mention of heat tariffs. I should be interested to hear about that. We welcome the strong focus on Ofgem reducing carbon emissions. However, on first reading the Statement, I was alarmed to note how uncompetitive the Government feel the electricity supply industry is, given that many years’ study have been devoted to that matter.

We also welcome the measures concerning grid access. The fact that it can take 10 years to get connected to the grid, as the Statement says, is clearly unacceptable, and has been for some time. Do we not also need a smart grid to allow access for all the different types of electricity that will be available? What is the Government’s view of the European supergrid, which will lead to much greater energy independence not just for us but for our European partners? Do the Government take a more favourable view of that now? I also welcome the introduction of departmental carbon budgets. This may not be the Minister’s responsibility but it would be nice to see both Houses having their own carbon budgets. Perhaps that matter should be taken up elsewhere.

However, we have a history of relative failure in this area. Sweden has already achieved a figure of about 30 per cent with regard to renewable energy. The figure for Germany—a large economy—is 10 per cent. We are still at 2 per cent, and are bottom of the league. As regards aspirations for manufacturing, noble Lords around the House agree that we want to stimulate a renewable energy industry in this country. However, we have a track record of recent closures in that regard. In terms of costs to consumers, I am pleased to see that social tariffs, which have worked only partly, will be overhauled. But surely with fuel poverty having gone up substantially and fuel prices going up under this regime, we should introduce something more radical whereby consumers pay less for lower consumption and more for greater consumption—the opposite way round to the normal thinking on this issue.

I have asked the Minister a number of Written Questions on skills needs. I am still unconvinced that we have sufficient staff with the relevant skills in the nuclear or the renewable industries. Smart meters are rather old news but I am glad to see that there is a commitment to implement them by the date set out.

Insulation of the existing property stock clearly must be one of the most important areas. Although I accept that we need a programme that is similar to the North Sea gas conversion programme, the big difference is that households did not have to pay for that. They might have suffered inconvenience when someone changed their fittings or appliances, but they had no upfront costs to meet. Although there are various schemes to avoid cost, it would be dangerous to think that it will be quite as simple as that.

Beyond that, my questions for the Minister are as follows. The airline industry was not mentioned in the Statement, though there is a small reference to it in some of the supporting documentation. Is the airline industry included in these reduction figures? Will the carbon reduction commitment mentioned in the Statement at last discriminate between renewable and non-renewable electricity? Pre-payment meters are one of the greatest scandals of the energy supply industry and fuel poverty in this country, with pre-payment meter payers paying some £95 more per year for their energy bills. Will that be solved more urgently than the smart meter programme? It is clearly an area of major social injustice. From these Benches, we welcome this Statement. It is now all about implementing it and making it happen.

My Lords, I thank both noble Lords for their general welcome for the Statement and the various documents that accompany it. The noble Lord, Lord Taylor, said that the Statement was long overdue. However, the Government have made a series of announcements over the last year or two, culminating in the transition plan, which sets out a coherent path for our transition to a low-carbon economy and deals with the critical issues that we face on energy policy. There have been announcements on new nuclear energy, coal CCS, our intention to hit the target on renewables of 15 per cent by 2020 and our focus on energy efficiency. These all represent a coherent approach to energy policy.

The noble Lord, Lord Taylor, and the noble Lord, Lord Teverson, both spoke about where we stand on renewables. It is true that, in comparison with some European countries, our proportion of renewables is low. Much of that can be explained by other countries having made use of the natural resource of hydropower, which they have had for many years. My key point is that noble Lords should look at the increase that we have seen in the last few years. For instance, renewable electricity accounted for 2.3 per cent of electricity generated in 2003; that was up to 5.5 per cent by 2008. That suggests to me that we are making considerable progress, that we have a great deal of momentum in the system and that we can expect to see considerable increases in the future.

The noble Lord, Lord Taylor talked about the variability of departments. I agree that departments need to set an example. He kindly did not mention the energy performance of my department’s new building, which he will know is not the highest—or, rather, the lowest. However, it is working with the Carbon Trust and has a commitment to increase its energy efficiency by 10 per cent over the next year. The department accepts the challenge to practise what it preaches. Of course, carbon budgets by themselves are important in driving policy change in different government departments. The noble Lord, Lord Taylor, who knows a great deal about agriculture, asked whether a carbon budget would, as far as Defra is concerned, have a negative impact on agriculture. It need not. When I was at Defra, I took part briefly in discussions between the department and the agriculture and land sector on the best approach to reducing GHG emissions. I was encouraged by the positive view that was taken by people in the farming sector about their ability to do it. Of course, they will need encouragement, advice and support, but so far the discussions have been fruitful.

As for the planning system, it was always disappointing that the noble Lord’s party opposed key elements of our reform of the planning system. We think that the reform is very much in the national interest. Noble Lords will know that, historically, there have been delays in the planning system, particularly when it comes to renewables, but the same issues come up with other electricity generators. We will be publishing our national policy statements in the autumn. That was always the timetable. We think that that will be an important step along the way to a much more consistent and coherent planning system.

As to the supply chain on wind, yes, it is important that we have a good UK supply chain. Alongside this, the low-carbon industrial strategy sets out a range of actions that the Government are taking to support the UK supply chain industry. There is no reason why we cannot use the transition to a low-carbon economy as a way to grow the economy and grow high-quality jobs within the United Kingdom.

As for the Severn, we are announcing the short-listed sites. An important part of the assessment is to deal with the issues that the noble Lord raised about the environmental assessment, the impact on the environment and what has to be made good under European legislation if one of the schemes is selected. We are very focused on those matters.

As far as nuclear power is concerned, yes, it is very important that we make progress on publishing the national policy statement. As the Statement said, it is due to be published in the autumn. We have to get it right, but I understand the need for speed as well.

I was asked about financial incentives in relation to renewables. We will consult on increasing the financial incentives for offshore wind. On wave and tidal energy, we are prepared to look again at financial incentives if we receive evidence that suggests that we ought to do so. That is the basis on which we introduced the ROC banding system, which we debated only about nine months ago.

I welcome the general support of the noble Lord, Lord Teverson, for the Statement. He described what we are doing as moving from a statement of intent to one of action. I am glad to endorse that analysis.

My Lords, the 20 minutes taken do not eat into the 20 minutes for Back-Benchers. As the two noble Lords took 13 or 14 minutes, I think that I am allowed some discretion to answer the points. As I say, the time does not eat into the 20 minutes for Back-Benchers.

The noble Lord, Lord Teverson, talked about tight cash and the scale of investment needed by the private sector. He is absolutely right. The best approach that we can take is to present a cohesive policy and stability and deal with issues of planning and access to the grid. In the White Paper, he will see that there is a chapter looking ahead to 2030 to 2050. We are doing further work analysing scenarios for that period, which we hope to publish next spring. We recognise that it is now and in the next few years that companies will make investment decisions that will impact, for instance, on energy supply going from 2030 to 2050, so I agree with his remarks on that.

I know that companies are concerned about the low carbon price. There is to be a tightening of the EU ETS cap from 2013. I think that it must follow that, if there is a successful conclusion to Copenhagen, the EU will have an opportunity to look at its own targets again and potentially to tighten further the EU ETS cap.

We always said that we thought that it would be 2011 before the renewable heat incentive could be brought in. The noble Lord will recall that this is a completely new policy. We need to get the work right and we hope to consult on it later in the year.

As for grid access, interim changes have been made introducing a system of connect and manage, which allows early access to the grid, but we must have permanent arrangements. Ofgem and the companies have not been able to reach agreement on this, which is why the Government are going to intervene. We will publish our deliberations in due course.

Finally, I understand the concerns of the noble Lord, Lord Teverson, about ensuring that we have the right skills in nuclear, renewables and, indeed, coal carbon capture and storage. We are very much committed to working with our partners in government and business to make sure that we do. The work of the National Skills Academy is one example of how we intend to do it. I thank both noble Lords for their overall welcome.

My Lords, I very much welcome this far-sighted announcement by the Minister. The noble Lord has followed the intention to reduce CO2 by the means of emissions and energy distribution. Does he accept that there is another way to reduce CO2, which is to remove it from the atmosphere? Will he confirm that it is the Government’s policy to increase the amount of woodland planted in England by 10,000 hectares a year for the next 10 years, thereby reducing the carbon emissions over this country by 50 million tonnes by 2050? I declare an interest as chair of the Forestry Commission.

My Lords, my noble friend speaks with great authority and he is right to point to the positive impact that forestry and woodland can have. I am glad to confirm that the Government very much accept the point that he makes.

My Lords, is the Minister aware that, whatever view one takes of climate change, to pretend, as this Statement does, that the enforced move from cheaper to dearer energy, greased by lavish bribes at the taxpayer’s expense, is economically beneficial displays a level of economic illiteracy that even a first-year student should be ashamed to exhibit? Further, when the Statement boasts that this is the first country in the world to set legally binding carbon budgets—not to mention the departmental budgets—is he aware that that is so only because there is not a single other country in the world that has the slightest intention of pursuing such a foolish and damaging policy?

My Lords, when I saw the noble Lord, Lord Lawson, sitting there, I did not think that he would take a positive approach to this announcement. I certainly have been proved right on that. I do not agree with him at all. It is, in fact, a mistake to think that remaining as a high-carbon-emitting country is somehow an easier and cheaper option; nor do I accept his premise that the UK is alone in understanding that we need to move to a low-carbon world and that, to do so, decisions have to be taken. We believe that carbon budgets are the way in which to ensure that individual government departments develop their policies to ensure that they are consistent with a low-carbon economy. I would just say to the noble Lord that the recent G8 meeting—

My Lords, it showed a commitment among the G8 countries to take action towards ensuring that climate change does not increase by more than 2 degrees centigrade. I think that that is significant. It gives me optimism for agreement in Copenhagen. I should also say to the noble Lord—he will not like it when I mention the noble Lord, Lord Stern, because he does not agree with the noble Lord’s analysis—that the point that the noble Lord, Lord Stern, made is that the sooner this country gets on with moving to a low-carbon economy, the cheaper it will be. So I do not agree with the noble Lord, Lord Lawson.

My Lords, I congratulate my noble friend on this very balanced Statement, which deals not exclusively with generation but also with the needs of our less well-off citizens and longer-term environmental issues. Perhaps I may say as chairman of the Nuclear Industry Association that, although we are grateful for the warm words, we need rather more if the new power stations are to be connected to the grid. I am not quite sure what is meant in the White Paper when it states that later this year there will be,

“a high level vision of a future smart grid”.

That is an exercise in modern speak about which some of us are a bit cynical. Later this year, a statement will tell us that the national grid will be in step with the rest of the electricity industry in terms of planning for the future. I think that insufficient attention has been given to that. I am not greatly reassured by expressions such as “high level vision” because I am not sure what they mean.

My Lords, I welcome my noble friend’s first comment. There are two issues. First, we have to ensure that the grid is fit for purpose in view of the enormous developments that will take place in electricity generation. I have already spoken about the Government’s intention to intervene because of the disagreement between Ofgem and the companies, and we will do that. A smart grid is somewhat different but is very much linked to the idea of smart meters. It is about ensuring that we have a system that is as efficient as possible with regard to electricity transmission but which also links into smart meters. Such meters give householders and customers much more control in terms of information about their energy use and their ability to switch suppliers, and they will allow the generating system as a whole to be used in a much more efficient and effective way. The other point, which I did not answer earlier, was about the super grid, which is a proposal that has been put forward. We are interested, but it is very expensive. I have met the EU official who is leading work on that and I would be happy to provide more information on it in due course.

My Lords, as a member of Sub-Committee B, which has investigated the energy sector and to which the Minister gave evidence, I welcome the report as being a prompt response to many of our recommendations. However, I draw the Minister’s attention to the somewhat dismissive way in which it deals with the value of such things as railway electrification, more or less saying that electricity has to come from somewhere and the railway does not carry much traffic. We know that small amounts of electrification of the railway will add considerably to the amount of use that can be made of the rest. Perhaps he would bring that to the attention of the Secretary of State. I also warn him that £30 million spent on new buses is probably a waste of money if the people who let the contracts for the use of buses make it a condition that they emit less energy.

My Lords, I am glad to be able to show that the Government listen to your Lordships’ Select Committees. The report was extremely helpful. I do not need much persuasion on the benefits of rail electrification. Any comments on the impact on the grid and electricity use should not be taken to mean that we do not support my noble friend Lord Adonis in his encouraging attempts to enhance the rail network as a whole. The importance of today’s White Paper and the associated document produced by my noble friend Lord Adonis is to show the consistency of approach across Whitehall. That is where carbon budgets are so important. The Department for Transport has to accept responsibility for carbon emissions in its sector. That should drive the right policies and I am sure that the noble Lord would welcome what is a much more co-ordinated and holistic approach.

My Lords, I have some familiarity with the way in which ordinary budgets work. If we exceeded them, my noble friend Lord Lawson used to come down on us extremely heavily. What happens with a carbon budget? When you reach the budgetary level, do you have to turn off the lights?

No, my Lords, essentially I hope that there will be a similar stringent approach to departments that do not meet their carbon budgets. In the end, if they do not meet their carbon budgets, they will have to pay financially for that. The noble and learned Lord allows me to make clear that carbon budgets will indeed have a powerful impact on the policies of government departments.

My Lords, first, I wish that Ministers would not say that climate change is a moral issue of our time. It is not for a secular Minister of the Crown to tell us what should be the great moral issues of our time. Many would not agree that this is one of them. Was there any consultation with representatives of the very large body of opinion that does not agree with the consensus on the carbon situation?

Secondly, I understand that the Government are supporting 24,000 megawatts of onshore and offshore wind turbines. Does the noble Lord agree with the figures that have been bandied about for the capital cost of construction of £90 billion, plus £10 billion for connection to the grid? Is that not a huge and uneconomic cost for plant with a load factor of only 30 per cent? It is the worst option of all the renewables options available.

My Lords, I take the noble Lord’s point about morality, but the reality is that climate change is one of the most critical issues that we face. That is why it is so important. I know that the noble Lord is not convinced of the science. He is perhaps not alone in this House. I am certainly not unaware of those views, but the overwhelming scientific consensus—the work of the IPCC—is clear about the hugely negative impact that climate change is having and will have in future. We have to make the appropriate arrangements both to deal with it and adapt to it.

In the past few weeks, the noble Lord has asked a series of Questions for Written Answer about the cost of wind farms. I understand his concern. Yes, there is clearly a cost to renewable energy. The points he raises about load factor and the intermittency of wind are true. That is why we believe that we need to pursue a diverse energy policy. We are committed to 15 per cent renewable energy by 2020. We think it right to go down that route. We have tremendous natural resources to take advantage of that, but that is why we have also supported the development of other energy sources. We believe very strongly that our approach should be to have a diverse energy supply.

My Lords, will the noble Lord spell out more precisely the Government’s estimates of the taxation implications of the policy that they have just announced? Is he aware of the very serious historical in-depth studies that question the degree to which the phenomenon of global warming is actually attributed to mankind and man's activities? What proportion of the global warming taking place do the Government perceive as being the responsibility of humankind rather than natural cycles?

My Lords, on the question of science, I can really only repeat what I said to the noble Lord, Lord Stoddart. The main advice that we take comes from the IPCC. The evidence that the IPCC has assembled is that climate change is indeed a phenomenon that is happening and that much of it is indeed manmade. It is on that basis that we are bringing forward these policies.

On the question of the cost of the proposed measures, there is an analytical annexe to the White Paper which has a number of tables about the cost of bills and takes account of energy efficiency. We should not knock the thought of energy efficiency, because the evidence is that such measures work. Essentially, Table 16 says that if you take account of the impact of all climate change policies, including some of the costs to which we have already referred in this Statement about renewables, but also the reduced costs through greater energy efficiency, an average householder’s bill would increase by about 8 per cent, or £92 per householder, in 2020.

My Lords, this Statement is a step forward in the Government putting their cards on the table. We must all do our homework and look especially at the annexe. I have some sympathy with the question raised by the noble and learned Lord, Lord Mackay of Clashfern, in this respect. During the passage of the Climate Change Bill, six or nine months ago, my noble friend Lord Rooker indicated that there was a debate to be had about hypothecation of carbon budgets in the traditional financial sense of the word “budget”. I suppose that if you say carbon is £30 per tonne, you can make corresponding money tables to these tables.

Hypothecation will be an important question. If people are going to pay more petrol tax and more for a lot of other things—the price mechanism is the main way to change people’s behaviour—they will want to know that it is not regressive. Indeed, the Government have committed to that. How are we going to ensure that people know that the Treasury will not just use the money for something else and that the Treasury is half way to agreeing the principle of hypothecation? Would my noble friend care to comment?

Not really, my Lords. Talking about Treasury hypothecation usually lands Ministers in trouble. There are two points to be made. First, as was debated during proceedings on the Energy Bill and the Climate Change Bill, it is important that there should be transparency. That is why we have been very clear about what we believe to be the additional costs that householders will have to pay as a result of all of the climate change policies that are taking place.

Equally, when it comes to price and tariffs, we have to ensure that the system is fair. That is why we are very keen to ensure that Ofgem has the powers to intervene where necessary. The other side of the coin is that we have to help householders to become more energy efficient, to give them support, and to have new mechanisms so that when it is expensive for them to take measures they can do it in an affordable way and with a payback period over the length of any loan that might have to be taken out.

My Lords, I have not had time to read the accompanying documents. In reference to the energy efficiency of homes, can the Minister say whether there are any new measures to deal with the private rented sector where many elderly people on low incomes live?

My Lords, we fully recognise that that is an important area. We do mention it and I would be very happy to send further details to the noble Baroness on that important point.

My Lords, I broadly welcome the thrust of the policy but I think it is too complacent on the shape of the British civil nuclear industry which, in the lost decade since the Government’s first White Paper, has virtually disappeared. It will take far more than is in this White Paper to resuscitate it.

My Lords, I am more optimistic than the noble Lord. I chaired a meeting of the Nuclear Development Forum, which brings together many people in the industry. There is a great deal of enthusiasm. I also spoke at a conference run by EDF for potential suppliers within the industry to encourage a UK supply chain. It was attended by 300 to 400 people and there was a great deal of enthusiasm. There is huge potential. We are determined to do everything we can to ensure that we have a strong UK supply industry. This is very important and the Government are by no means complacent.