My Lords, I am grateful to the noble Lord, Lord Oxburgh, for tabling this amendment and to the other noble Lords who have lent their name to it. It has been a springboard for a good and necessary debate this afternoon. In response to the question asked by the noble Lord, Lord Jenkin, on how we got here, I point out that under the last Government, between 1997 and 2010, we saw 26 gigawatts of new capacity added to the grid. In the last three years—2008 to 2010—we saw 7.8 gigawatts added. There was clearly a healthy investment system under the last Government. What happened next is old news. We had a decision to reform the electricity market and in that process, which, let us face it, has been going on almost since 2010, there have been a lot of conflicting messages coming out of government. This has created an investment hiatus and an uncertainty that have led us to where we are today.
Let us not be overly dramatic. In 2010, we had historically high capacity levels. That has partly contributed to the hiatus and it needs to be cleared out for there to be a signal to the market to reinvest. Against the 26 gigawatts or 7.8 gigawatts that were added in the last few years of the previous Government, we have lost since then only 8 gigawatts of old coal. Much mention is made of this, but the LCPD—the large combustion plant directive—took out 8 gigawatts. That 8 gigawatts has already shut and the lights are still on. We must put this in perspective. I am convinced that there is an issue of long-term planning, but right now let us keep it in perspective. We are at the tail end of this Bill process, which has been going on an inordinately long time. Things, I am sure, should get better soon, but for that to happen we have to get this Bill right. I think that all noble Lords who have spoken today would
agree that the key to get out of this now is to have a clear regulatory framework that will do the job of restarting investment in our energy infrastructure.
The other factors that have contributed to the hiatus, which I think it is fair to say no Government could have been fully aware of or on top of, were issues outside our control. One example is high gas prices. We have gigawatts of consented gas capacity in this country. Why is no one building it? They simply cannot afford to take that decision. Boards in energy companies all around the country are asking: “Will this pay back?”. They cannot give a definitive answer, because the price of gas is uncertain. They will also say: “We’re in the middle of an Energy Bill process. We’d be mad to commission something now. Wait until the dust has settled”. The Bill is partly in the Government’s control, but the price of gas is an unexpected issue that has arisen quite recently.
The second thing that has gone wrong, for which my party has some responsibility, is that we have dropped the CCS ball. We have been utterly hopeless at getting CCS away and demonstrated. That is partly because—and this where I have some sympathy with the noble Lord, Lord Oxburgh—we have been relying on civil servants to devise a strategy for picking winners to develop CCS in this country. Quite frankly, we have failed. A succession of wrong calls has been made. Our first call was that it should be post-combustion coal, because somehow we were going to help China. Well, it turns out that that is not what we need, so, understandably, those projects have not gone forward. There is a great need to address the future of CCS and to have more market-based commentary on that and less control from the Civil Service.
The third thing to have happened, which, again, has been outside any Government’s control, is that the economics of nuclear have changed. Fukushima was a disaster that happened on the other side of the planet and public attitudes towards nuclear remained remarkably resilient, but in Germany it was a completely different story, with the phasing-out of nuclear. That obviously has an impact here because we have two large German utility companies in this county. Having pulled out of nuclear in Germany, quite quickly, they pulled out of nuclear in the UK. That could not have been predicted, but it definitely contributes to the situation that we are in today, where we are reliant on only one nuclear project, certain aspects of which have proven difficult.
It is fine just to look back and to try to explain why we are where we are today, so I go back to my statement that the way out of this is to get this Bill right. The way to do that is to think about the regulatory framework that it creates. I have some sympathy with the proposal of the noble Lord, Lord Oxburgh, because there are echoes of it in the way in which we govern other aspects of our society. Perhaps the most obvious one is the Monetary Policy Committee. As the noble Lord, Lord Deben, pointed out, we also have the Committee on Climate Change. The creation of that independent body of experts, able to advise the Government publicly and to publish reports, was a major aspect of the Climate Change Act and one of its most successful components. It has depoliticised an
issue that I am sure would otherwise have been more debated and undermined than perhaps would be appropriate.
There are, therefore, examples of how the creation of an independent advisory body can work, but I would argue that, if you are going to create such a body, you would want to give it clear parameters within which to advise. Advising on the totality of energy investment is a large task and I defy any group of experts, no matter how many are on the board, to get their heads around every aspect. Setting clear parameters within which you would require independent advice would help to give the body a purpose in providing the right level of scrutiny and advice for the Government.
The levers that the Bill creates are clear. We will have a capacity market, in which the Government will have to make decisions about the levels of capacity that they will try to secure through auctions. That could certainly benefit from advice. We have the decarbonisation obligation, which, I think it is fair to say, has not to date been handled in a suitable or effective way. The hard part has been put off, which is not what we want. I have great sympathy with noble Lords who have said that the tendency in government is to put things off; it is much easier simply to shrug your shoulders and wait for the next person to come and take the hard decisions. Unfortunately, that is what has happened with the decarbonisation obligation.
Another key parameter within which the Bill operates is the levy control framework and the amount of money that the Treasury has put aside. Again, that could do with some external scrutiny. It might be necessary for a body of experts to advise both the Treasury and DECC to depoliticise the issue and to create unity. The last parameter in the Bill, which we will discuss in more detail shortly, is the energy performance standard, which could also benefit from external advice to depoliticise it and underpin it with independent scrutiny and analysis.
Many noble Lords have commented on what such a body might look like and how it might operate. The key themes were that it should be independent, it should have a long-term view, it should issue its advice in public to both Parliament and Ministers and it should address energy efficiency—the noble Lord, Lord Teverson, spotted that that was missing from the list. I am sure that, as the noble Lord, Lord Oxburgh, would say, the amendment will stimulate debate and cause the Government to come forward with something more complete.
I think that the Government recognise that they need advice. They would not have created three specialist advisory groups commenting on aspects of the EMR and a technical advisory group to see them through this process if they thought that they had all the answers themselves or if they could go to Ofgem, the National Grid or any of the other agencies for advice. Clearly a deficit was recognised.
I hope that the Government will come forward with positive words about considering this proposal in greater detail, as we have heard eloquent arguments about why something such as this might be necessary. I hope that they will at least concede that they have created
bodies to advise them. Those bodies have been doing a short-term task, but we are asking for the creation of a body that takes a slightly longer-term view, working within parameters. Perhaps they could also consider whether the bodies that they have created already need to be converted into something more permanent. If a clear process is established for what they will do, how they will advise us and the parameters within which they will operate, that would go a long way towards answering many of the concerns that have been raised today. I thank all noble Lords who have spoken and I look forward to the Minister’s response.