My Lords, my name is also on this amendment and I sat on the same committee, as the noble Earl, Lord Caithness, indicated. We are debating that whole subject on Monday night. The noble Lord, Lord Cameron, and the noble Baroness spelt out the general thesis of that report and I do not intend to repeat it.
I say to my noble friend Lord O’Neill that I do not think he entirely deserves the strictures from the noble Lord, Lord Deben, on fictional characters, but he does like to stir up a little controversy. In a sense, the title that we chose for that report in the sub-committee was intended to pre-empt the sort of attack that my noble friend Lord O’Neill produced. It is that no country is an island in relation to energy supply—not Scotland or Great Britain. Indeed, the other part of the United Kingdom, Northern Ireland, is already utterly dependent on interconnectivity both for its gas and electricity. The idea that we should ignore interconnectivity as part of the solution, particularly when we are discussing capacity markets and capacity mechanisms, seems to ignore something obvious. Certainly, by the end of our deliberations on that committee, it became obvious to us.
The noble Earl, Lord Caithness, asked what the Secretary of State’s response was to the committee. I thought that we had a very good session with the Secretary of State. He took it up. He obviously had some briefing and had to be a little cautious, particularly on delivery within the European context, but he was keen that we should take it up. To be fair to the Government, they have picked up this point but it is not yet reflected in the Bill.
The amendment of the noble Baroness, Lady Parminter, gives the Government a chance to have another look at this and see what relationship there is between an attention to interconnectivity and both the contracts for difference, which could include a contract for difference for generation occurring outside the United Kingdom, and the capacity mechanism, which should also include provision for interconnectivity to be part of it. Indeed, it is an obvious part of an overall capacity mechanism. Two-way connectivity must be a way of bringing down costs across Europe as a whole with the development of an internal market which at present does not really exist, despite what the Commission claim on occasion. That must be to the benefit of the costs of investment in energy as a whole and ultimately to the price to the consumer, whether a domestic or industrial consumer.
The message from our report—and that message also lies behind the requirement that the amendment would place on the Government—is to develop a UK strategy in order to push forward the European agenda on this, but with particular reference to those bits of interconnection between us and Ireland, us and France and potentially further afield in Norway, Iceland and Holland. For all those reasons, this needs to be seen as a way of meeting our energy requirements.
Unfortunately, in this context, the Government are not being as ambitious as the Secretary of State was in his response to the committee. They are saying that connectivity would effectively be regarded as a passive contribution. For example, in the letter that the noble
Baroness wrote recently—noble Lords may have seen it—she says that if interconnection provided 2 gigawatts then clearly that would have an effect on overall costs and would be of benefit. However, that is looking at in a very passive way. If we developed a strategy, we could look at the matter in a more constructive and creative way as one of the major contributions of the diversity of sources to meeting all our objectives: energy security, decarbonisation and lowering the price to industrial and domestic consumers.
Interconnectivity is big in that respect, and significant in avoiding disruption and shortages. My noble friend Lord O’Neill ought to look at this matter again and accept, without determining what the outcome of such a strategy should be, that part of the jigsaw must be a strategy on interconnectivity. I therefore strongly support the amendment.