Energy Bill

I am grateful to the Secretary of State for his introduction to the Bill, but what he outlined is not so much a complete energy policy as a set of technical amendments to existing rules and laws. Many of them are important measures, but the House will view it as a missed opportunity to tackle the full range of energy challenges that the country faces. Legislatively, there are elements on emissions relating to the Department for Environment, Food and Rural Affairs, a Planning Bill that sets out a framework for infrastructure decisions, the Energy Bill that we are considering, which addresses a hotch-potch of issues such as gas storage, carbon capture, the renewables obligation and decommissioning, and a so-far elusive Bill on handling nuclear waste. In addition, tomorrow the European Union will publish a package of measures designed to reduce carbon emissions and increase energy efficiency across the region. It includes a commitment to establishing an ambitious renewables target of about 15 per cent., not just for electricity but for all energy. The Government's attempts to disguise their incoherence on renewables with targets set far ahead in a fantasy future are now unravelling. Even today, in an answer to a written question asked by my hon. Friend the Member for Wealden (Charles Hendry), the Minister for Energy has watered down the Government's target of obtaining 10 per cent. of our electricity from renewables by 2010. He now says that the figure might be as low as 8 per cent. Now that the arithmetic is clear, we see that we have an almost insurmountable rock to climb. Given the way in which the Government have delayed for the past five years, the UK is not likely to meet the target by cleaning up; we will only meet it by buying our right to be dirty. That is like someone bribing a doctor for a sick note when they are too lazy to go to work. The challenges that confront the United Kingdom are twofold. First, for our own environmental integrity, and to secure even a hint of global leadership on the issue of tackling climate change, we must cut our carbon emissions. Secondly, we must ensure that while we move to a low-carbon economy, we do not compromise our security of supply. We must produce approximately 40 GW of power a year. We are likely to need more energy in future as our economy and population grow, yet over a third of our generating capacity will go out of service over the next 20 years. We therefore face two unpalatable options: a dash for foreign gas, tying us into the always unpredictable and often combustible state of international politics or, worse, an energy shortfall that will simply blow Britain's fuse. Our response must be immediate, radical and realistic. Non-carbon-emitting technologies may well be the most effective and efficient way of powering domestic households, but in the management of peaks and troughs in the intensive use of a chemicals factory, for instance, renewables may not provide sufficient consistency and horsepower. This is a serious ““get real”” moment for the Government. Underpinning all the policies in the Bill is the need for an effective carbon regime, which is the basic instrument with which to stimulate investment in the green market. The EU emissions trading scheme is not an effective system. We have seen wild fluctuations in the carbon price, from €30 to virtually nothing, and up again to €25. Under phase 1 of the EU ETS, which ends this year, only 5 per cent. of the initial allowance was auctioned. We face an almost obscene paradox: because oil prices are high, the most carbon-emitting companies have enjoyed a £9 billion windfall. We are rewarding the dirtiest, not the cleanest, producers. For phase 2, ending in 2012, the number of auctionable permits has increased to only 10 per cent. Very little is known about phase 3. The system is in disarray yet, paradoxically, the Government want a proper carbon regime to underpin their carbon capture, renewables and nuclear policies. There are no measures in the Bill, however, to strengthen such a regime. We want the EU ETS to operate as effectively as possible, but we believe, too, that investors in green technologies do not have time to wait for reforms to the ETS, so we urge the Government to look into our proposal to underpin the system with a carbon tax.