Considered in Grand Committee
I beg to move that draft Order in Council be approved together with an Explanatory Memorandum, as required for all affirmative statutory instruments. This Order in Council confers, in the UK, the legal capacities of a body corporate on the International Renewable Energy Agency, IRENA. It is a new international organisation that will work to increase the deployment of renewable energy technologies globally. It has been established by a treaty, the IRENA statute. This Order in Council was approved by the House of Commons Committee on 14 July 2011 this year.
The UK signed the IRENA statute in 2009. The Government believe that the UK should now ratify the statute. To that end, a copy of the statute was laid before Parliament on 7 June, together with an Explanatory Memorandum, in accordance with the Constitutional Reform and Governance Act 2010. The statute requires that all members of IRENA should confer legal capacity on IRENA in their territories. We therefore need to make this order to enable the UK to ratify the IRENA statute and become a full member of the organisation.
Let me explain the background to IRENA in a little more detail. This was a German initiative. The statute was agreed in Bonn in January 2009 and subsequently signed by the UK on 26 June 2009. The treaty entered into force in July 2010, after the deposit of the 25th instrument of ratification in Bonn. The statute establishes an international renewable energy agency to promote the widespread use and increased adoption of renewable energy technologies. The principal effect of the order is to enable the UK to become a full member of the agency.
So far, IRENA has 149 signatories. To date, 82 of these signatories have ratified the statute, including the United States, Japan, 18 EU member states, the European Union itself and 49 developing countries. With such a wide membership, IRENA will be the first truly global organisation devoted solely to renewable energy technologies. This is a young organisation, with its first assembly taking place in April this year. However, it has high ambition and is seeking to become an international centre of excellence for renewable energy technologies, with a specific focus on the developing world. IRENA will be able to bring together renewable energy experts from across the world to develop best-practice technical and policy examples. It will also be able to produce objective reports on the renewable energy market to help inform regional development across the world.
Renewable energy needs to play a key role in meeting global energy demand. Deployment has been increasing rapidly in recent years. Of the approximate 300 gigawatts of new electricity-generating capacity added globally during 2008-09, 140 gigawatts, nearly half, came from renewables. Global co-operation, through an organisation like IRENA, will be essential to ensuring that renewable energy deployment continues to increase.
The use of renewable energy has great potential to tackle climate change. The Intergovernmental Panel on Climate Change estimates that between 2010 and 2050, renewables can make CO2 savings of between 15 per cent and 37 per cent against the world economic outlook 2009 reference scenario. There is also a role for renewables in increasing global and domestic energy security. The greater the deployment of renewable technologies internationally, the less pressure there will be on traditional energy sources such as oil and gas.
The deployment of renewable energy technologies can also support greater energy access, particularly in rural communities. IRENA will mean that the UK and others will have a framework within which to share technical and policy expertise with those most in need of securing innovative energy solutions.
The UK has a strong reputation internationally in the deployment of clean energy technologies. We are world leaders when it comes to offshore wind and have just introduced the world’s first financial incentive for increasing levels of renewable heat. In the future, renewable energy will play an increasingly important role in the UK’s energy mix. The renewable energy road map, published in July, sets out the Government’s vision for meeting our domestic renewable energy target for 2020. Increasing our domestic renewables capacity will mean that we can decrease our reliance on fossil fuels. Greater deployment of renewables globally will also mean that costs for these technologies will fall, making fulfilment of our domestic renewable energy ambitions more cost-effective. We want to remain at the forefront of this growing industry and ensure that UK interests are represented in what will be such a landmark global organisation.
The UK Government have made a commitment to push for greater efforts to tackle climate change internationally and to deliver investment to increase deployment of renewable energy technologies. We will thus be acting in accordance with this commitment by becoming full members of an organisation whose activities will help to make this happen. This is an important order, which reflects cross-party commitment to reducing global greenhouse gas emissions. I therefore commend it to the Committee and hope that it will receive the Committee’s full support.
My Lords, on behalf of the Opposition, I offer our support for this order, which is quite a significant positive step for mankind. It is a multilateral agreement in an area where multilateral agreement has been extremely difficult to achieve. Until relatively recently, the United States did not accept that climate change was a problem of any kind, yet it is signing up to this international agency to spread best practice in renewables. That is extremely welcome. We hope that Britain will try to play a leading role in IRENA.
It has a clear purpose, which is set out in paragraph 7.2 of the Explanatory Memorandum. Technology in this area is changing rapidly. There is a need for knowledge dissemination and not only competition but co-operation to make sure that technological advances spread at the most rapid rate throughout the year. There are well known market failures in applying renewable technologies, which means that there is a role for public intervention. As we know, the carbon price today does not reflect what it will be in the future as a result of the growing problem of climate change. Therefore, there is a problem about market incentives. In the developing world, where this type of organisation can play an important role, there are problems of governing capacity, project management capacity and access to finance. An organisation such as this, working in co-operation with bodies such as the World Bank and the world’s regional development agencies, can play an important role. Therefore, the UK should look at this positively as an opportunity for leadership.
I should like to probe the Minister on what kind of agenda Britain intends to pursue in this agency. If I may, I should like to indulge in a flight of fancy of my own about the kind of agenda that I would like to see explored. This is in line with the economic thinking of the Opposition. One of the risks that we face, and one of the reasons why it is important to have these multilateral institutions, is that climate change is falling down the political agenda as economic problems climb up it. That is a real problem; we saw it in the European Parliament vote on the 30 per cent target, and it is a worrying theme. This is precisely the moment, at a time when interest rates are very low and according to many experts a great depression is looming—we are facing a kind of Japanese decade in the West—when we ought to be thinking about the long-term investments that will pay off richly regarding renewable energy.
I should like to repeat an idea that I heard an eminent and far more distinguished person who is far more knowledgeable on these subjects, the noble Lord, Lord Rees, talking about at a conference on this subject. He thought that the kind of visionary project that we ought to be thinking about in Europe now is the use of solar renewables in the Sahara and wind renewables in the Aegean to power the industries of northern Europe, building grids from Africa, helping the Arab spring to have some kind of economic future and building networks to bring renewable energy to northern Europe. This is more important when countries such as Germany have announced that they are gong to abandon nuclear power.
Not only could this be a way of tackling the development problems of those countries that we so much want to help, particularly in north Africa, it could also help to revive the European economy in a major way at a time of crisis in the eurozone. However, it needs a mix of public and private finance. We must not be myopic about public deficits if we are going to be able to finance these types of very long-term projects, which could really pay off.
That is just an example, but there is huge potential for renewables, not just to solve the problems of climate change several decades hence but to help solve our economic problems in the coming decade. I would like to think that Her Majesty’s Government shared that view and would be using organisations such as this excellent IRENA to explore how such radical possibilities could be developed.
My Lords, it is an agreeable irony that the headquarters of this fledgling international organisation that we are in the process of legitimising, and which is supposed to spearhead the dissemination of renewable energy technology throughout the developing world, as the Explanatory Memorandum tells us, is situated in the city of Abu Dhabi, one of the hydrocarbon capitals of the world. If the Government of that state seriously believed that renewable energy was likely to replace fossil fuels in whole or substantial part as a source of power throughout the world, one wonders if they would be quite so happy to be the host to such a threatening body.
However, nothing is quite as it first seems in the wonderful world of renewable energy. In fact, developing countries have not the slightest interest in adopting renewable energy policies. Their interest, quite rightly, is in economic growth. Under present technologies, that is best provided—because most cheaply provided—by fossil fuels, chiefly coal. That was the lesson of Copenhagen, and it is why China and India abruptly refused to sign up to any global agreement to cut carbon emissions. That, though, does not suit the western developed countries, which have all foolishly signed up to cripplingly expensive renewable energy policies to leave developing countries to go their own way. That is because it is a manifest absurdity for developed countries to set out to reduce global carbon emissions on their own. To give an example of how absurd that would be, China’s annual increase in carbon emissions in recent years has been roughly equivalent to the UK’s total emissions. Those countries that have adopted these ruinous renewable energy policies, therefore, have to lay claim to be leading the rest of the world. For this claim not to look absurd, developing countries—or some of them—must be made to look as if they were co-operating in the pursuit of these policies.
This, of course, can be done if the West puts enough money on the table. Hence the extraordinary commitment undertaken at Copenhagen to provide immediately $10 billion a year to developing countries for climate change purposes with the aim of increasing this eventually to $100 billion a year.
There is also the lamentable so-called clean development mechanism. This is a mechanism to pay developing countries for projects that are supposed to reduce emissions instead of cutting our own emissions. Needless to say, this has developed into a complete scam riddled with conflicts of interest and dubious validations. I would refer noble Lords interested in further details to a marvellous new book, Let them Eat Carbon, by Matthew Sinclair, director of the TaxPayers’ Alliance, which dissects brilliantly most of the ramifications of renewable energy policies. Readers will find in it most of the points I am making and many other revealing ones besides.
IRENA, I am afraid, is a part of this charade in which developing countries are lured into showing sufficient interest in renewable energy to enable the West to claim that it is leading the world. IRENA, of course, is only a small cog in the machine. Nevertheless, it has its costs. I note from the minutes of the first session of the IRENA assembly in April this year, that it attracted 950 participants, including one head of state—of Tonga I think—30 ministerial-level officials and 670 country delegates. The climate is probably quite agreeable in Abu Dhabi in early April. It would be interesting to know how many carbon emissions such a gathering was responsible for.
I gather from what the Foreign Office Minister said in another place on 14 July that the annual budget to keep this show on the road is $25 million a year. He also said that the United Kingdom contribution is £700,000 per annum. I wonder if the Minister can confirm that figure and say whether the department expects it to remain at that level in future years.
One day in this country we will have to wake up and shed a policy that is quite pointless in the absence of a global agreement and which we certainly cannot afford. In our straitened circumstances, and desperate as we are for economic growth, that day cannot come a moment too soon. When it does, it is us who will be following the lead of the developing countries and not the other way round.
I absolutely agree with the noble Lord, Lord Reay, in his use of the word “crippling”. What we have seen over the past few years is a crippling increase in fuel poverty in this country, something like a doubling. I do not know the exact figures, but is up to about 6 million because of the increase in fossil fuel prices that households have to pay. I also agree with that word “crippling” in terms of the increase in energy prices that we have seen. Gas, a well known fossil fuel, has increased by some 30 per cent this year. Those prices are truly crippling. That is the word to use in terms of the repercussions of the fossil-fuel based economy that we have at the moment. I do not want to get into that argument too much.
With regard to renewable energy worldwide, it is tempting to look just at new technologies, but we should remember that, globally, renewable energy was the only energy until the Industrial Revolution; before oil it was a major part. Renewable energy already accounts for about one-sixth of the world's energy production. Of course, that is not wind power or the other new technologies; it is largely biomass—I must admit that not all of that was renewable, but, I hope, most of it now is—and hydroelectricity, which is a major proportion of world energy generation even today. Renewables account for about one-fifth of energy production worldwide.
From what I read on the body's website, it is not just about future technologies, which are not greatly applied, but traditional renewables. That is why it is important to bring together the world community on renewable power. I was pleased to see that there are already 149 signatories and 82 members—including, as the Minister said, the European Union. I was disappointed to see that although the United States is a signatory, that is not true for China, Canada, the Russian Federation or Brazil. I do not know whether they are in the queue to join; I very much hope that they are.
Outside the argument of the cost of renewables against that of fossil fuels and technologies such as nuclear power, it is undeniable that renewables are, have been through human history and will be a really important contribution to energy production globally. That is why it is important that IRENA has been founded. I am surprised that it took so long—until 2009—before it was. The noble Lord, Lord Reay, magnifies imperfections that we all see, but I hope that it will be a body that will help the evolution of renewable power more effectively and successfully.
It is easy to set up international organisations and pay for administrations and bureaucracies, but I would be interested to understand what the priorities are in the practical programmes of IRENA in its next time horizon of three years. That is slightly more specific than the question asked by the noble Lord, Lord Liddle, which is important, of how the UK will contribute. I was not clear from the publicity of IRENA exactly what it was trying to do over the next few years in research and co-ordination, because however worthy an international organisation and its cause is, it must be effective. It costs money, so it has to produce results.
I very much welcome the Government’s move to complete our signing up to IRENA as this is clearly an important area of technology for our future.
I thank noble Lords who have contributed. Perhaps I may answer the question from the noble Lord, Lord Liddle, and then extend it to the question of what IRENA’s agenda should be for the next three years.
The United Kingdom has accepted the position of chair of the IRENA policy and strategy committee, so we will be playing a leading part in defining the agenda. British interests are clear. First, we want to support the channelling of investment in energy in the developing world as far as possible towards renewable energy and away from the further consumption of fossil fuels.
Secondly, we wish to promote the full ownership by developing countries of the switch towards renewables. I have to say that the role of Abu Dhabi and the UAE is extremely positive in this. It demonstrates that it is not simply the West pushing this agenda on the developing world, but that we have partners in the Arab world who are themselves actively concerned to assist developing countries in investing in renewables. I will come back to the role of Abu Dhabi in a minute. Thirdly, there are opportunities for UK expertise and industry, both in exports and the economies of scale that come from a larger market, which will then drive down the prices we have to pay for renewable technologies at home.
In terms of a practical programme for the next three years or so, I understand that the underlying purpose of IRENA is to encourage co-operation in renewables across the developing world. In the same way that the IPCC at an early stage put a great deal of effort into training experts from developing countries so that it was not simply a western argument about climate change being put across the developing countries, so IRENA will try to encourage the development of expertise and adoption of these technologies in those countries—both at the macro level and very much at the micro level. In a lot of these developing countries where the population is dispersed, micro power, for which renewable schemes are often extremely helpful, will be very much the local example.
The noble Lord, Lord Reay, made a number of points. I should say to him, first, that we face long-term rising demand for fossil fuel, which is, as we already notice, driving up long-term prices for fossil fuel. Further development of and investment in renewable technologies is moving in the opposite direction, driving down the prices and costs of renewables. That is part of the process we of course wish to encourage.
The Matthew Sinclair book has, as the noble Lord will know, very kindly been sent to, I think, all Members of the House of Lords, and I dare say that a number of us may read it. Countries such as Tonga are not just along for the ride. Tonga is, after all, one of those Pacific islands that have very little land way above sea level, and it is thus directly threatened by the impact of climate change. The Pacific islands are therefore among the most active countries in pushing for a switch to renewables and a really serious effort to contain the expansion of CO2 in the atmosphere.
There is also an energy security dimension to this, as I mentioned in my opening remarks. Dependence on a small number of countries for supplies of fossil fuel over the long term is potentially a major source of global insecurity, and the more that we can reduce dependence on imported fossil fuels for all countries, the better we do.
The UK’s contribution to IRENA’s budget is on the scale provided for in British contributions to the United Nations and other agencies. It is currently £750,000; it will increase to £1 million and, no doubt, in the long run will increase further. The Government’s view and that of our predecessors is that this is a worthwhile and modest investment. I should perhaps add that so far the largest contributors by far to IRENA are Germany and Abu Dhabi, which, in addition to the scale of their contributions, are making some substantial and very valuable voluntary contributions. The interests of Abu Dhabi, I understand, are that fossil fuels should not last for ever as the driver of its economy and that it wishes to diversify its economic interests. This is very much an enlightened approach. German interests are also mixed. Germany has a highly developed renewable energy industry and its Government certainly see major opportunities for exports as this area expands. That is something that we as a country also need to look at, and that is part of where we hope the future revival of British exports may indeed come from.
On renewable energy, I simply say to the noble Lord, Lord Reay, that I spend my summers walking around the Yorkshire Dales, past weirs that used to produce power and in one or two cases, as in Grassington and Upper Wharfedale, used to produce electricity 60 or 70 years ago. We are now at last, although very slowly, beginning to put some of those weirs back into production, producing electricity. The French have been doing this for 30 or 40 years. There is a great deal that we can still do in this country.
I had an argument with a Conservative MP recently who said that it would deface the southern Yorkshire plain if we were to have windmills on it. There are in fact a number of ruined windmills scattered across the plain, but when I drive across it I find that the biggest eyesores that one faces are Drax and the other two big coal-fired stations. If I may say so, I find those who object to switching to renewable energy and wish to go on burning fossil fuels on the scale on that we do, importing coal from Poland, Australia and elsewhere, a little short-sighted in terms of our long-term interests in energy security and the balance between imports and exports.
Having, I hope, answered most of the questions raised, I hope that I may take the Opposition’s welcome as being very much cross-party approval.
Committee adjourned at 5.41 pm.