My Lords, I have listened to the two speeches on this with great interest. It is with some anxiety that I confess to differing from the view of the noble Lord, Lord Oxburgh. The intention is, as both speakers have said, to oblige the Government to declare the decarbonisation target for 2030 next year. In quarrelling with the proposals in this amendment, I make it clear that I entirely accept the scientific evidence on dealing with the long-term emissions of greenhouse gases. The evidence is overwhelming, it is accepted by the vast majority of scientists and one has to realise that it is part of the background of what we are considering. I wish that some of those who were putting it forward were a little more honest about the areas of uncertainty that still exist; nevertheless the evidence of the growing concentration of greenhouse gases in the atmosphere is compelling.
I believe that the origin of the proposal embodied in this amendment is a letter last February from the chairman of the climate change committee, the noble Lord, Lord Deben, to the Secretary of State, Ed Davey. It is a complicated letter which I do not propose to read. I would say only that the noble Lord, Lord Deben,
was at one time my Parliamentary Private Secretary, and I am proud to see him rise to such dizzy heights. However, he made the same case as the noble Lord, Lord Oxburgh: that to fix the level would give greater certainty to investors. I think that many of my colleagues know that I do my best to keep in touch with a large numbers of the players in the energy field—I call it cultivating my sources. It often gives one a more accurate view of the likely implications of carrying through this policy, because many of these players are among those who will actually have to do it. Only one group has approached me on this matter: the representative body, RenewableUK. All I can say is: I understand why, but they would, wouldn’t they? None of the others has made any reference to this issue, and I think the argument about giving greater certainty to investors is being overplayed.
It is clear that all parties, with some notable exceptions in this Grand Committee, have accepted the case for long-term decarbonisation in order to avoid the hazards of climate change. However, it should be possible to hold to that, and to convince the players of that, without necessarily going to this rather damaging intermediate step. The noble Lord, Lord Oxburgh, referred to the three objectives—and I was present at the lecture which he attended last night—of security, carbon reduction and affordability. In the brief I received from the Energy Networks Association, it was called the “energy trilemma”, a phrase I like. It is the Government’s job to try to balance those three objectives, because it is becoming clear that they cannot all be achieved, whatever the Secretary of State may have said in his press release last week.
For my part, the question of security of supply has to take top place. At the moment, the burden of all these things is falling primarily on consumers. As we were told last night, the purpose of much of the policy in this Bill, and of the Government’s policy generally, is to shift the risk from producers to consumers, and one is seeing the result in electricity bills. The Government’s Fuel Poverty Advisory Group, with which I have been in touch, estimates that the social and environmental costs per customer will rise from about £90 per annum to £220 per annum by 2020. If one takes that into account with other energy costs facing households, I submit that this is quite early on becoming quite unsustainable. The burden falling on customers really cannot be tolerated. I notice that the noble Lord, Lord Turnbull, in an article in House Magazine, made much the same point and was surprised that elements of the coalition seemed prepared to go along with it. I understand the point that he is making. However, not only domestic customers, businesses are increasingly complaining about being hit by rising costs of energy for industrial and commercial users.
Therefore, I ask myself whether the Government have got the balance wrong. Is balancing out these three objectives sustainable? As I have said, my top priority is energy security, which is often expressed in the phrase, “keeping the lights on”. But it is far more than that. We now live in a civilisation that has become almost wholly dependent on electricity for almost everything that goes on. The consequences of any significant interruption of supply create enormous hazards for every part of the community, which, to my
mind, has to be avoided. We really must have a secure and dependable electricity supply. In passing, one has to note that last week’s Electricity Capacity Assessment Report by Ofgem indicated,
“that margins will decrease to potentially historically low levels in the middle of the decade and that the risk of electricity customer disconnections will appreciably increase, albeit from near-zero levels”.
This is not the occasion to explore the reasons for that or how it has come to pass but simply to note the fact. I was the Minister for Energy in 1974 when the country faced widespread disconnections, not for want of capacity but because of industrial action. Whatever the reason, I have to tell my colleagues that it caused acute embarrassment to the authorities, of which I suppose I was one, and resulted in the loss of the general election that immediately followed. We have to recognise that that is an essential feature.
If the rising burdens for consumers are, as I believe, becoming increasingly unsustainable, and if we fail to give adequate priority to ensuring security, something will give. To my mind, in the present circumstances and, I emphasise, in the short term—not as part of a long-term policy—what must give is the current, very rapid and expensive priority accorded to fighting climate change. If we insist on setting ourselves ever-higher carbon reduction targets to be fixed by law for many years ahead, are we not simply locking ourselves into the present unsustainable balance?
As I have said, I do not challenge the longer-term policy on climate change. But we face the choice now either to require, as the amendment proposes, the Government to fix the decarbonisation target for 17 years ahead or, as the Bill stands, to allow Ministers to set the target three years from now after the climate change committee has given advice on the fifth carbon target and in the light of the circumstances at the time. The Government must be allowed the flexibility to do that. That is what the Bill provides in its present form. Not least must they take account of the impact on consumers’ bills.
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I point out that the decarbonisation target is not the only one that the industry faces. There must be an 80% reduction by 2050, with a renewables target of 15% by 2020. The noble Lord, Lord Oxburgh, mentioned this. The 2020 energy efficiency target involves a 34% reduction, established by the third carbon budget, and a 50% reduction by 2025, established by the fourth carbon budget, subject to review next year, in 2014.
I, too, listened to the arguments yesterday that none of this is attainable. My noble friend Lord Deben’s Committee on Climate Change has described it as feasible and desirable. This is an issue that somehow this Committee will have to look at. The assertion is based on what seem to me to be all sorts of optimistic assumptions about the pace at which we will be able to develop energy-producing industries. We should also take into account the cost to consumers. It is not enough to say, as some do, that energy bills will be lower than they otherwise would be without the Government’s policy. The question is, what will they be, as far as one can estimate?
One of the difficulties here is that it is extremely difficult to forecast the future—perhaps this is a warning that we must heed—because there are an enormous number of variables that are quite uncertain, and one has to ask how people can now predict these things. On the present balance, the risk clearly falls on the consumer. We must not allow the consumer to be held hostage.