13:30 Mr Tim Yeo (South Suffolk) (Con)

I stress that my commitment to low carbon energy goes back more than 20 years. When I served in John Major’s Government as a Minister in what was then the Department for the Environment, among other things I dealt with climate change, which in 1993 was much less understood or even talked about. If someone mentioned climate change at a social occasion, people would look at them as though they were slightly strange. However, it did not take me long to be convinced that climate change was occurring—the scientific evidence was powerful even then—and that the changes we were observing were caused at least in part, and in my view in substantial part, by the increased concentration of greenhouse gases in the atmosphere in the past 200 years, which was a result of man-made activity and the industrial revolution in particular.

As I recall, in the 1990s the scale of the problem was much less certain. Today, the need for substantial cuts in greenhouse gas emissions is widely, even if not universally, accepted. As we approach the Paris conference of parties at the end of the year, the world’s attention will be increasingly focused on how we can achieve a more rapid decarbonisation of our economies.

Here at home we had an historic announcement this month. The three leaders of the major parties united in a public joint commitment to continue to take action to tackle climate change. I do not recall any other major political issue being addressed in quite the same unanimous way just two months before an election. I welcome both those important political developments.

Equally important is the transformation in business’ attitude. Twenty years ago, much of industry was reluctant to acknowledge the need to engage in finding solutions to climate change. It felt that such demands for reduced dependence on fossil fuels were a threat to their business models. Today, by way of contrast, in many parts of the world business leaders are ahead of policy makers in recognising both the urgency and the scale of the need to move away from models that are dependent on fossil fuel consumption.

I also warmly congratulate the European Union. That is not something Conservative colleagues frequently do, but its recent, excellent decision, supported by the UK, to adopt a cut in greenhouse gas emissions of 40% for its 2020 target was at the upper end of aspirations. That is good for two reasons. First, it sets a challenging figure that will force businesses and consumers across the EU to think about how they can help achieve it.

Achieving the UK domestic target, which is enshrined in law, and the EU target will require in particular substantial decarbonisation of the electricity generation industry. We have the technology that makes that possible; the question is whether we are willing to adopt it. In effect, a transformation must take place in the energy industry in the next 15 to 20 years. Because it has one of the longest investment cycles of any industry, we cannot leave decisions for another five or 10 years.

The decisions we make in the next two or three years—before the end of this decade—will have a huge and material impact on what happens later on. In effect, those decisions will determine at what cost the decarbonisation of UK electricity generation will be achieved. If we get those decisions wrong and we lock ourselves into too much dependence on fossil fuels, we will be forced into making emergency, very expensive changes in the late-2020s and early-2030s.

This debate is about how to decarbonise electricity generation, and I want to start with the nuclear industry. I warmly welcome the fact that, broadly speaking, there is bipartisan political consensus that the UK needs a nuclear component in its energy industry. The latest figures from the Department of Energy and Climate Change show that even now, following the shutdown of a couple of EDF’s reactors, nuclear still provides roughly a fifth of our electricity, so it is a substantial component. Nuclear, as supporters such as me constantly remind people, provides reliable, base load, low carbon power.

Let me move on to gas, which is not everyone’s idea of a low carbon technology, although compared with unabated coal, it certainly is a lower carbon technology. The problem for Britain with gas is that our reserves are running down, so we are importing a great deal of gas. Luckily, a lot of it comes from our friendly neighbour, Norway, and we are not dependent to any meaningful extent on Russian gas for our consumption. However, we are importing a lot of liquefied natural gas. Interestingly—this came out in the debate that we had a few weeks ago on what was then the Infrastructure Bill—David MacKay’s report in September 2013 pointed out that net greenhouse gas emissions from imported LNG are actually higher than those from shale gas extracted by fracking, so if we continue to use large amounts of imported LNG instead of exploiting what may be significant domestic reserves in the form of shale gas, using fracking, which my Select Committee has reported on twice and regards as potentially a safe technology, we are locking ourselves into a slightly higher emission pattern.

The hon. Gentleman makes a very interesting point. Of course, marine technology is underdeveloped. If we had tidal, we could have greater control. In different parts of the country, the tides would be producing different types of electricity. We on the Committee on Energy and Climate Change looked at that, but not in enough detail. The Government need to look seriously at developing not just offshore wind, but the marine technology of tide and wave.

Let me give a plug to the importance of the carbon price. The biggest factor, in the long term, in investment decisions favouring low carbon technology will be a significant carbon price, which might be brought about through carbon taxes or through emissions trading. Personally, I have a preference for the latter; a cap-and-trade system has the great merit of making total emissions predictable. If there is a cap, there is a cap. If we rely entirely on carbon taxes, no one can be sure about the elasticity of the market’s response to a particular carbon tax.

I am pleased that the UK Government have been on the side of those arguing for faster and more radical reform of the EU emissions trading system. Unfortunately, it is a work in progress, and there is still a lot to be done to try to make sure that the system is capable of driving a significant carbon price before 2020. A carbon price across the EU ETS will not penalise any one country, because every country will have to face the same imposition. Those who fear that a higher carbon price in the form of a domestic carbon tax would simply drive industry to other countries would not have that fear if the price were driven through the EU ETS.

The fifth and most recent assessment report from the Intergovernmental Panel on Climate Change proposed the concept of a maximum level of greenhouse gas emissions that can safely be allowed if the world is to keep within the target of an average rise in temperature of no more than 2° centigrade. A maximum safe level of emissions leads naturally to the idea of a global cap-and-trade system, with that maximum as the cap. Although that dream will not be realised in the next five years, we should keep it in mind. The danger is that we will lock ourselves into systems that are incompatible with the achievement of that goal.

In conclusion, I believe that if Britain decarbonises its electricity generation system, our economy will become more competitive, not less. International concern over climate change will intensify quickly over the next few years. That will lead to a significant carbon price, either from emissions trading or from carbon taxes. Countries, industries, companies and perhaps even households that have taken the lead in decarbonising their economies, business models and patterns of consumption will enjoy greater prosperity, not less. Decarbonising electricity will also promote security of energy supply and accelerate the cutting of greenhouse gas emissions. I hope that Britain will continue to be a leader in that process. In the way in which it achieves that leadership, I hope it will keep clearly in mind the importance of getting the best value for money in each decision that is made to achieve decarbonisation. I emphasise the fact that the decisions we make today have a long-term effect.

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14:06 Albert Owen (Ynys Môn) (Lab)

It is always a pleasure to serve under your chairmanship, Mr Brady. It is also a pleasure to follow the hon. Member for South Suffolk (Mr Yeo), the Chair of the Energy and Climate Change Committee, of which I am a member. I was impressed by his very competent speech, and equally impressed by the fact that he delivered it from the modern technology of an iPad. He is the moderniser of the Conservative party, in many ways. I am pleased to have a quality Front-Bench team on both sides of the Chamber; the Minister and shadow Minister certainly know their brief. In addition, the Minister knows my constituency, so he is familiar with the places that I will talk about. I look forward to knowledgeable winding-up speeches from them.

On climate change, there are various similarities between my views and the hon. Gentleman’s. I have studied the matter for some time. The first job I ever had was to be a galley boy on an oil tanker, just after the middle east crisis. I remember the debates that took place at the time about oil sanctions and the conflict in Israel, and their global impact. We have learned nothing since then. At the time, we were talking about greater security, but when we had a windfall of oil and gas we more or less squandered it. We did not invest in some of the technologies that we are about to invest in, and that we have invested in during recent years. I believe that that was a wasted opportunity.

I disagree with the hon. Gentleman that this Government are the greenest ever. For many of the things that the Government have delivered, the consents were arranged by the previous Government. A lot of the hard work was done in the Climate Change Act 2008, and things such as the renewables obligation and the feed-in tariffs were the work of the previous Government. It is important to note that a consensus was built between the main parties at the time so that we could deliver continuity on such long-term projects.

There have been problems. I remember that when I arrived in the House in 2001, we had energy review after energy review, and nuclear was the big issue that split the Labour Government. It split the Opposition as well, and I remember the current Prime Minister hugging huskies in one of the colder regions of the world, trying to embrace Greenpeace and being very anti-nuclear, to the extent of thinking that it would be the last resort. Nuclear is now the Government’s flagship, and I am pleased about that change. The Secretary of State for Energy and Climate Change is another convert to the cause, which I welcome. I remember debating the subject with him when I first came to the House, and not only was he against nuclear but his party was never going to go down that road, yet we are now moving in the right direction and building consensus.

I am a member of the Energy and Climate Change Committee. In this Parliament, we have made an important contribution to shaping the debate on energy. The Committee has held inquiries into various energy sources, from marine technology to shale gas. As the Committee’s Chair indicated, we held an inquiry into shale gas early in the Parliament, and in 2011 encouraged the Government to make progress. I am afraid that the Government’s initial response was not positive, and here we are again saying that nuclear is a flagship and the way forward. We are shaping the debate in many ways. We have considered prices and the future affordability of energy for domestic consumers and businesses. We have scrutinised the profits of the energy companies, which was positive. We also considered the issues of fuel poverty. We have done a good job. All those inquiries have been topical and interesting, and the public understand their importance.

All parties in the House can agree on the need for stability and certainty on energy policy. That is what businesses and consumers want, and politicians need to shape a policy whereby we can offer such certainty for investors, whatever technology we are talking about. We can benefit from creating a thriving low carbon economy through energy generation. A low carbon economy will go through a number of phases. Importantly, today we are talking about energy generation, but there is also the phase of surface transport, of cars and trains, which are hugely important for the future. How will we carry goods and people across the United Kingdom efficiently not only in terms of speed and time but in terms of energy? We will need to move away from diesel and petrol towards electricity, which is a huge task. We also need to consider sea transport and the built environment. This is phase 1 of a long-term plan to decarbonise our economy, and there will be important economic decisions that create benefits.

The Horizon nuclear project at Wylfa Newydd, or Wylfa B, is exciting. Investors, including Hitachi, have proceeded with that project, and I recently went to the site with the shadow Secretary of State for Energy and Climate Change, my right hon. Friend the Member for Don Valley (Caroline Flint). The site is vast and has created 1,000 permanent jobs. Importantly, there will be indirect jobs in the supply chain, too. The Leader of the Opposition also went to the site when he was Secretary of State for Energy and Climate Change—the project started in 2008-09.

Research and development are important—we have also taken the lead there—as are links between the energy industry, electricity generation and low carbon, and colleges and universities. The university of Bangor in my constituency has a faculty on Anglesey, the School of Ocean Sciences, which has been pioneering climate change research not just on UK and European shores but in the south Atlantic, where it has been doing excellent work on climate change. We can give individuals career paths not only in the operation of energy generation and low carbon, but also in research and development, software technologies and all the things that I have seen that faculty use on Anglesey. There is great potential for jobs in construction, engineering, mechanics, security, catering and supplies in the area. All those downstream jobs help build a more prosperous economy in areas where energy development is going forward.

This is not just a debate at the fag end of a zombie Parliament; it is a restatement of the fact that we as a United Kingdom are forward-looking when it comes to climate change and low carbon energy, and that we will create the quality jobs, education, training and transferable skills that are needed to make UK plc and Anglesey energy island world leaders.

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14:25 Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)

I am pleased to see the hon. Member for Wyre and Preston North (Mr Wallace) in his place again. The Minister of State, Department of Energy and Climate Change, the right hon. Member for West Suffolk (Matthew Hancock) is not here. I think I might have upset him; whenever we have a debate in this Chamber or on a statutory instrument, the hon. Member for Wyre and Preston North seems to be here in his place. That is a good thing, as he is more than capable of explaining and discussing the Government’s position, and of course the Energy Minister is a busy and important man who probably has busy and important things to do elsewhere. However, he might benefit from coming to some of these debates, because they help illustrate the wide range of issues that come within his Department’s brief and that we seek to discuss.

The hon. Member for South Suffolk started by talking about climate change and the need to tackle it, mentioning the statement from the leaders of the three larger parties within the last week or so. It is important to remember that the reduction in emissions from energy, as my hon. Friend the Member for Ynys Môn (Albert Owen) said, is only part of the challenge in terms of emissions; there are also challenges in relation to transport, heating and industry. However, in energy supply and electricity, significant progress can be made. The hon. Member for South Suffolk, and my hon. Friend the Member for Edinburgh North and Leith (Mark Lazarowicz) in an intervention, mentioned today’s announcement on the contracts for difference auctions.

The hon. Member for South Suffolk touched on the attitude of business, and said how refreshing it was that in his time as an advocate of low carbon technology, the attitude of business seemed to have changed, which is to be welcomed. He will recall our debates on what is now the Energy Act 2013. We discussed various issues, particularly around longer-term targets for decarbonisation, which was advocated by non-governmental organisations with a particular interest, but a lot of businesses advocated a 2030 decarbonisation target, too. The cross-party amendment that he supported did not make it into the Act, sadly, but it was supported by people in various parties. There is need for a longer-term signal; that is significant.

The hon. Gentleman talked about lowest-cost decarbonisation. I tend to prefer best-value decarbonisation. There is value in seeking to ensure that various technologies are developed, and that we do not run the risk of missing out on technologies that can help, particularly in relation to renewables that may be less intermittent than those that are currently commercial viable. It is important that we continue, as my hon. Friend the Member for Ynys Môn said, with the research going on at the university in his constituency. Just in the past few months, at the university of Hull, I have seen software development to help cut the costs of installing offshore wind without compromising safety, for example. I have seen the energy research centre at the university of Strathclyde under the leadership of Professor Sir Jim McDonald, and, in Edinburgh, the facility for testing marine technology. Those are all good examples of the great academic and research expertise that should benefit the UK more widely. Economic benefits can come from the inevitable and desirable need to move to a much lower carbon mix for our generation supply.

The hon. Member for South Suffolk celebrated the broad consensus on new nuclear being part of the mix. He may have been slightly churlish in his comments about party political support, because he will know that Brian Wilson, a former Energy Minister and Member of this House, began the process of identifying sites and agreeing the process. It is important to get that right to give the confidence that the hon. Member for South Suffolk spoke about. It is important to maintain confidence following Fukushima, but the process was established at a time when his party leader said that nuclear was a last resort, and the party of the Secretary of State for Energy and Climate Change was implacably opposed to nuclear. I am glad that we have got to a position where there is support for new nuclear as a low carbon-based technology in the lower carbon mix, and I hope that continues.

The hon. Gentleman touched on the amount of gas that we need. Members here today will know that 80% of our heating comes from gas. We will continue to need gas for heating for a significant period. We will also need gas as a source of peaking power capacity, so the debate around the sustainability of our gas supplies and where they come from is an important one. I note that the Committee on Climate Change has published new information, following the debates on the Infrastructure Bill, on how shale gas might be a part of the mix, in line with climate objectives.

Issues around investment and business certainty are important. My hon. Friend was on the Committee considering the Energy Bill, which became the Energy Act 2013, and he will recall that the head of energy finance at RBS gave oral evidence to the Bill Committee, saying that the 2030 decarbonisation target was

That is where we are, because we have visibility to 2020 through the levy control framework, but not beyond that. Again, that is an important issue for the next Government to address properly when taking forward the levy control framework and considering both its structure and the amounts. It is also important in respect of the longer-term decarbonisation target.

The technology that we have not really touched on is carbon capture and storage. No serious modelling of our energy mix in 2030 does not include a role for fossil fuel plants and industrial processes running carbon capture and storage. CCS is a key tool that we need to meet our decarbonisation agenda. We must use it in a way that helps sustain some industrial processes that are important for our wider manufacturing base; we must not just offshore that activity. We sometimes overlook the potential cost savings of meeting carbon targets. Hon. Members will be aware of the Energy Technologies Institute estimate that states that deploying CCS could reduce the cost of meeting UK carbon targets by between £30 billion and £40 billion, or up to 1% of GDP, by 2050. That is an important piece of work.

We in the UK have a degree of academic and expert knowledge in this area. We know that lots of work is going on in places such as Edinburgh. Two projects are currently undergoing front-end engineering design studies. On taking forward the tools and mechanisms for low carbon investment, it is important that the contracts for difference are tweaked as needed so that they are appropriate for CCS development into the future, because it would be remiss of us to have two exemplar projects funded through the competition, and for nothing else to come after that. The key to that is ensuring that the contract for difference is properly applicable to CCS, which is a differently structured investment to new nuclear or many renewable technologies. It would be good for whoever is in government in a few weeks’ time to be clear about their ambition for CCS, and to seek to unblock issues that have caused some delay in the progress of CCS.

I am conscious that there has been a lot of talk about consensus in this debate, particularly with regard to the policy tools for incentivising low carbon investments. Unfortunately, in other debates in this House over the past five years, the consensus on the need for such investment has become a little bit frayed. Having only been here for five years, my sense is that, among some hon. Members, that consensus has deteriorated. It is right that the costs of decarbonisation be properly scrutinised, and that people carefully consider the potential impact of technologies in different places, but we should all resolve the matter for the future—beyond the election, for those of us who might be here. We need to ensure that consensus again, so that we can renew our generation supply in the lowest carbon way possible, and in a way that benefits the UK’s wider economy. I hope, regardless of party political differences on other issues, that this can be taken forward in the new Parliament, because it is far too important not to be.

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14:47 Mr Ben Wallace (Wyre and Preston North) (Con)

I am delighted to serve under your Chairmanship, Mr Brady. I pay tribute to my hon. Friend the Member for South Suffolk (Mr Yeo). I am not sure if this will be the last time we debate and listen to his contributions, but I pay tribute to his work for his constituents and for his party in serving the Government over the years, and to his work for the Committee on Energy and Climate Change.

Before the Minister moves on from renewable energy, I am not making a partisan point, but does he share my frustration at the lack of development of commercial-scale marine energy? There have been a lot of good demonstrations of it that have not moved forward. What more does he think can be done to make it happen? Everyone agrees on the potential of wave and tidal energy, but it has not increased in scale. Since I have been a Member of this House—I was interested in energy from day one—it has always been three or four years hence, but it has not happened. What can be done so that we can get good commercial projects up and running in order to get the predictable energy supply that we need?

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15:08 Mr Yeo

It is important that we maintain cross-party consensus about the importance, above all, of tackling climate change. That is the central issue for policy makers in the 21st century, and it will transcend all sorts of existing anxieties on the security front. The truth is that the prosperity of the human species is directly threatened by dangerous and irreversible climate change. Actions that we take will affect generations unborn for centuries to come.

As the hon. Member for Rutherglen and Hamilton West (Tom Greatrex) mentioned, there has been a slight erosion of the consensus on the science of climate change, particularly in the Conservative party. Nevertheless, I celebrate the fact that a vast majority in all the political parties, with the exception of UKIP, still accepts the overriding necessity of tackling climate change. Britain has played a leading role on this, partly because of our strong science base and partly because we take a thoughtful approach to sustainability issues, and I hope that is maintained.

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