My Lords, I want to follow up on some of the comments made by the noble Lord, Lord Davies, because I think they were important. I refer to my entry in the Register of Lords’ Interests. I support the noble Lord, Lord Oxburgh, in his Amendments 2, 3 and 4 and will also speak to my Amendment 7. Amendment 7 explores the issue of the date and whether it should be 2014 or 2016.
First, it is very important that there is now a decarbonisation section of this Bill. Noble Lords should remember that when this draft Bill was first published, there was no decarbonisation section, so it is a very important shift. It sends out a very powerful message to the industry and those who are concerned about climate change that the United Kingdom is not only concerned about this issue but wants to be leading the argument in favour of decarbonisation and decarbonisation targets. It was a very considerable success for the new Secretary of State, Ed Davey, to have agreed the insertion of this decarbonisation section.
Coming from Scotland, I am very interested in the politics of coalition. The noble Viscount, Lord Hanworth, referred to this earlier. I was in government for eight
years in Scotland in a coalition with the Labour Party. I must say, I smiled a little when I heard criticism being made of whipped votes, and the idea that the Labour Party would ever play any of these devilish games made me reflect on some of the very tough and difficult negotiations that I was involved with in Scotland, some of them on energy matters. When we reached an agreement, it was important that we were able to deliver that vote in the Parliament. I think every politician here understands that principle, as do the Cross-Benchers.
In the United Kingdom, we are still relatively new to coalition politics and we should be open about it. We should try to explain more often and more clearly some of the negotiations and difficulties involved in reaching agreement. One way to find the areas of greatest difficulty is to look at the wording. When you see more words, or more complex wording, on a particular issue, you know that there has been tough coalition discussion—that is probably the safest way to describe it.
Here, you see the extraordinary sight of us introducing a decarbonisation section, but some of the wording is really quite complex, most clearly in Clause 1(5), where we are trying to fix a date. It states:
“The earliest year in relation to which a decarbonisation target range may be set is 2030”.
That is pretty straightforward and simple, but the next bit is not, stating that,
“the first decarbonisation order may not be made before the date on which the carbon budget for the budgetary period which includes the year 2030 is set by virtue of the duty of the Secretary of State under section 4(2)(b) of the Climate Change Act 2008”.
I am particularly curious about the words “may not be made”, because, as the noble Lord, Lord Jenkin, said, this should be about flexibility and empowering. Why, then, are we saying that the decision “may not be made” until after 2016? Why not give flexibility to the Secretary of State? I suspect that it is because there was a difficulty in the negotiations. A lot that was achieved by Ed Davey, the Secretary of State, is in the Bill, but not everything. That is no secret; there has been quite a lot in the media about how difficult the negotiation has been. In fact, the negotiation involved delay and a lack of clarity, and some really quite central issues to do with the support to be given to the renewables sector were thrashed out between the Conservative side and Liberal Democrat side of the Government. All that pushed the Bill back and it led to criticism.
In this area, therefore, it is clear to me that some sort of compromise was pulled together. I do not say that in a derogatory way—compromise is the very essence of reaching agreement in coalition—but it left us with the possibility of delay in introducing a decarbonisation target. The noble Lord, Lord Davies, correctly pointed out that that is not the most concerning aspect, but there is also the fact that the whole of the first part of Bill, which is on decarbonisation, effectively becomes optional. That is the greatest concern that I have as a Liberal Democrat. Looking at the negotiations and wondering about how these compromises were reached, I am left hanging on to the belief that this important decarbonisation part of the Bill should not be left optional.
I support the amendments in the name of the noble Lord, Lord Oxburgh. I would be very happy if a decarbonisation target was set in 2014, but I would not die in a ditch over it; I would be prepared to see a later date. There are good reasons, to do with the European Union and the report from the committee, why 2016 could be a reasonable date. By tabling Amendment 7, I wanted to test the view of Parliament on all this—not today obviously; today, I just want to put the argument out there. The amendment states:
“A decarbonisation order must be made by 31 December 2016”.
That does not prevent an order being made next week—it could be 2014; it could be sooner—but it gives reasonable flexibility to the Secretary of State and allows confidence to be given to the industry that we are serious about this Part 1 and about decarbonisation.
That is what industry is looking for. I was very influenced by the comments of the noble Lord, Lord Kerr, at Second Reading. He was quite right in what he said about industry in the United Kingdom. I think that ScottishPower, SSE and a number of companies that are based here would be relatively relaxed about the date being fixed in 2016. However, overseas investors such as Gamesa, Siemens, Mitsubishi and Samsung which are making commitments to this country, are looking all the time at how this is playing out in the media. They are getting briefings and reports back and are looking at what the renewable sector, the Government and parliamentarians are saying. This issue now has a very high profile. I go out of my way to explain that the decarbonisation target is not some totemic issue that is absolutely central to the Energy Bill. It was bought in at the initiative of the Secretary of State to try to strengthen the Bill. It can be a very important part of the Bill but I do not think that it should be used as some sort of battering ram to undermine its foundations which relate to the contracts for difference, the balancing payments and so on. The important message that we have to get out to the industry not only in the UK but throughout the world is that we are serious about moving forward the renewables sector, we want to move to this new system as quickly as possible and that there has already been too much delay.
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I do not think that anybody felt that the ROC system was perfect. However, it worked and delivered a lot of expansion of the renewables sector in this country. The system changed over time. For example, multiple ROCs were introduced and were very important in encouraging the offshore sector, not only offshore wind but offshore tidal and wave, the development of which is strongly supported by a lot of people in this country. However, the imperfections of the ROC regime were clear to many. Arguably, it put too much subsidy too easily into the hands of companies that did not necessarily need the full ROC support, so it was at times wasteful of taxpayers’ money or of consumers’ money. I think a lot of people agree that the new system which has been put in place with the contracts for difference is a better system and one that can drive the industry to greater things. However, we must not
replace the certainty of something imperfect with the uncertainty of something better. That is the danger that we face here. Unless we show certainty and get away from the divisions and the delay that have clearly existed within government, we will send out the wrong messages to companies involved in this sector and we will fail to achieve that £100 billion of investment that is so vital to driving the future of the industry.
The offshore sector in the United Kingdom has not been kick-started yet, and the passing of the Bill will be vital to that. It would be terribly ironic if we achieved that but, because of the delays and the signals coming from government over the past six months, and potentially the next six months, we failed to persuade Siemens, Gamesa, Mitsubishi and Samsung to invest in the United Kingdom, the growth and development of that industry ended up being serviced from other parts of Europe and the world and the jobs we want to see created here were lost. That is why all this is so important. We have to get it right.