My Lords, I am delighted to have this opportunity to follow the noble Lords, Lord Roper and Lord Cameron, because I, too, lent my name to the amendment. I draw attention to my entry in the register of interests and apologise for my croakiness. It will have one advantage: I will be brief.
I am delighted that the Government have tabled broadly similar amendments but I am very concerned about their tentative nature. I started out by being concerned about the backstop and how it would operate because the reality is that at the point at which the backstop kicks in, you are already at the 11th hour. If I may mix my metaphors, it is like saying to someone who is standing on at the edge of a crumbling cliff, “Don’t worry if you fall off; the RAF has a very good search and rescue operation”. It is very troubling that there is no recognition of the stage at which a company or project would be when the backstop was applied. I am delighted that someone as eminent and knowledgeable as the noble Lord, Lord Roper, found the Baringa report a bit impenetrable; I found it totally impenetrable. One of our main problems is that no one is certain about how this will work.
I am slightly jealous of the Minister because this is a classic situation in which a Minister could bring common sense through the middle. The Bill has been about two years in gestation—it has the gestation of an elephant—and we are still at a stage where we do not have the kind of clarity that, frankly, the funding market really needs. There is a fantastic opportunity over the summer for the noble Baroness, with her officials, to go through some rigorous testing of what
is proposed here. There is no doubt that we will come back to this on Report because when cold towels are wrapped around heads there will be recognition that we need to go beyond the theoretical and look at the practical. If there is one warning from how the market has operated so far, it is the current attitude of the financiers, the investors.
As the noble Baroness said, when we were discussing Amendment 53BB, no one is blessed with perfect foresight and energy markets are wonderful at knocking people sideways. Things happen off stage that disrupt the functioning of energy markets. That makes it all the more essential to have a degree of flexibility. I can understand why the department has relied so heavily on the big six because they are the big operators in the field, but they are not entrepreneurs. We had an interesting side debate the other day about capitalism. What we are talking about here is entrepreneurialism on the part of the independent generators.
If noble Lords cast their minds back, it was interesting to hear what the noble Lord, Lord Deighton, said at the Dispatch Box during Question Time on Tuesday about infrastructure development. He referred to how important renewable energy, particularly offshore renewable energy, would be in helping our investment in infrastructure to move ahead. Yet these independent generators are the very people who are coming along and saying, “Hold on a minute; we don’t have the certainty to invest”. I get the impression that some people, when they are looking at the scale of these investments, think that we are talking about something that will cost £200,000 or even £2 million. There is a project in Edinburgh that could supply sufficient energy for all of Edinburgh and Fife. Its cost is somewhere in the region of £1.3 billion—not small fry. You could buy a very big part of an aircraft carrier for that; you might even be able to buy some planes to fly on it. That project, Neart Na Gaoithe—I am glad that the noble Earl, Lord Caithness, is not here, because I suspect that he is a native Gaelic speaker, which I am not—is in the market at present. This is not a model that we are looking at here; this is men and women out knocking on investors’ doors now and having difficulty in raising money. I ask the Minister, during the summer, when she has had the opportunity to have a good break, to take the chance to jump over the lobbyists and talk to the companies that are investing and experiencing considerable difficulties.
Amendment 55AC refers to the green power auction market. Like the noble Lord, Lord Cameron, I am more attracted to that than I am to the idea of the backstop. It is strange for someone sitting on this side of the Committee to be saying, “I am in favour of a fully operating marketplace”, as distinct from those on the other side, where they are talking about market manipulation. I think GPAM would be a clearer way in which to operate but, frankly, I would settle for anything that gives us the certainty in the marketplace that those involved in these investments very much desire.
There is no doubt that we will come back to this. I very much look forward to hearing the Minister say, on returning to us in the coolness of the autumn, “We’ve worked out how this is going to work—this is
how we’re going to change it”. The downside is that we have about three months to go and there are investors out there having difficulty raising money. That is the thin end of the wedge and that is what we should be thinking about.