19:57 Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)

It is a pleasure to introduce this evening’s debate on energy spending priorities. I will discuss this in relation to three reports from my Energy and Climate Change Committee produced in the past few months on investor confidence, carbon capture and storage and home energy efficiency.

In relation to energy policy, the landscape was anything but tranquil, calm and settled. There has been considerable upheaval since the Government assumed office last year. Last June, the Department of Energy and Climate Change announced the early closure of the renewables obligation subsidy for onshore wind, citing manifesto commitments. Although it was only one line, a fact check of three pages was required to work out what it meant, so woolly was the wording. Last July, DECC announced cuts to the renewables obligation for solar PV and biomass, and changes to the feed-in tariff accreditation.

That is just a few of the policy changes that took place last summer, but it is what happened between those announcements that exercised many in the sector and contributed to the decision of the Energy and Climate Change Committee, after extensive consultation with a range of stakeholders, whom I thank for their contribution to our work, to launch our inquiry into investor confidence in the UK energy sector. I thank Jenny Bird, the senior Committee specialist, for the hard work and diligence she put into this report, and I wish her well in her new post at the centre on innovation and energy demand at the University of Sussex.

Early last July, the Office for Budget Responsibility published figures relating to the levy control framework: a notional cap on the renewable energy subsidies that consumers pay through their energy bills which covers the renewables obligation, its successor, the contracts for difference, and feed-in tariffs. Part of the Government’s objective, quite rightly, is to put affordability at the heart of energy policy. The OBR projected in its July assessment that there would be a significant increase in levy control spending compared with its March 2015 assessment. Its March 2015 assessment, the figure was £7.6 billion. By July—in the space of four months—it had increased by £1.5 billion to £9.1 billion. It adds much fuel to the fire of claims and counter-claims about the OBR and the accuracy of its work when it produces such wildly different figures over a four-month period. That clearly influenced the energy policies that were announced over the summer.

It was noted by the Committee that increased uncertainty may increase premiums, and we raised that with Ministers recently. The cuts to renewable energy might therefore be counterproductive, as they are reckoned to be by many, because of the added costs of investment due to the Government’s sudden lurches in policy.

That is encapsulated in the Ernst & Young renewable energy country attractiveness index, which ranks 40 countries according to the attractiveness of renewable energy investments. The UK slipped from eighth place in June 2015 to 11th in September 2015. That was the first time since the index was established in 2003 that the UK had been placed outside the top 10. Since our report was published, the UK has fallen to 13th—unlucky for some and particularly for the investors. Ernst & Young attributed our fall to the Government’s

“claiming to want to decarbonise at lowest cost while simultaneously halting onshore wind”

It is usual practice in these debates to refer to the Government’s response to the Committee’s recommendations, but I am afraid that I am unable to do so. Initially, I thought that would be because the Government had failed to produce a response, despite our report being published four months ago. It is actually because we decided, as a cross-party Committee, to send the response that we did receive last Tuesday straight back to the Government. Our report contained 14 detailed recommendations, based on extensive evidence from stakeholders and experts, including the estimate from one of our witnesses that Government policies could raise the cost of financing projects by £3.14 billion a year. None of that was responded to. Instead, we were afforded only loose replies to themes set out in the report’s summary. Indeed, it was unclear from the response whether anyone at the Department of Energy and Climate Change had read beyond page 4 of the 47-page report in the four months since its publication—a rate of one page a month.

Carbon capture and storage is another example of the need to rebuild confidence. CCS is a technology in urgent need of development. We often talk about the energy trilemma, but there is a climate change trilemma as well. On current analysis it is difficult to see how we can have fossil fuels but no CCS and still meet our long-term decarbonisation projections at the same time. As the Secretary of State’s reset speech mentioned a dash for gas we know that fossil fuels feature in the Government’s plan. I checked on the GridCarbon app for smartphones—I am sure you have it, Madam Deputy Speaker—for current energy usage in the UK this evening. It is 51.4% gas and 5.3% wind. The key figure is the 295 grams of carbon dioxide produced for every kilowatt-hour. The 2030 target is meant to be 100 grams. It will be interesting to see quite how we are going to get to that, given the current trajectory.

As the Chair of the Committee on Climate Change, Lord Deben—from the Lords, obviously—said, not having CCS would cause the UK an issue. I love the brilliantly understated manner of that fine English gentleman’s statement of high alarm about the targets that the Government might have difficulty in meeting. He was quite right, and his delightfully understated way of putting it had far more effect than anyone shouting, running and screaming about the issue. It certainly made people pause on the morning he said it, which was the day of the launch of the fifth carbon budget.

I hope the Government will have more positive noises to make about CCS. People out there are still hanging on by their fingernails to see what the Government will say. They decided to ditch their £1 billion carbon capture and storage competition, on the day of the autumn statement. It was not in the statement itself, but was slipped out, alas, in a notice to the London stock exchange, which was deemed more important than Parliament at the time; we have certainly seen in recent days that it reacts more rapidly than Parliament when the news is bad. I note that Government promised £250 million to Aberdeen to help with the oil downturn, as part of the UK’s broad shoulders, but that one decision on CCS potentially took away £500 million, double that figure.

It is not just that the move on CCS on the day of the autumn statement was announced to the City without Parliament being told; the worst part of it is that there were serious bids in earnest preparation. People were working in good faith towards the Government’s competition. My Committee and the Procedure Committee may feel badly let down, but we are nothing by comparison with those working on the competition, devoting their working days, months and perhaps even years to it. In fact, I was invited by the Foreign Office to go to Alberta in Canada to see a carbon capture and storage project. One arm of Government thought that the UK would become a leader on CCS, but alas, within a month, it seemed that my trip had been wasted. I hope not; I hope that tonight the Secretary of State will give us some positive words on carbon capture and storage, with dates, timelines and the sort of thing that the industry is looking for.

Subsequently, in our report on CCS we criticised DECC’s decision as short-sighted, given that the costs of later projects are expected to fall rapidly, once primary infrastructure is in place. The Institute of Engineering and Technology set that out in a brilliant briefing paper for our Committee, as well. We also said that the Government should devise a new strategy for CCS in conjunction with a new gas strategy. We advised the Department to assess the financial and other benefits of using our North sea infrastructure. Work has shown that there would be enhanced recovery of up to 12% from the North sea oilfields if we used them as a place to store carbon. The work of the Committee put that forward, and I would like to take this opportunity to thank Dr Marion Ferrat for her work on the report. We did not send the Government’s response to that report back to them. I have it here with me tonight, as proof. However, the response still failed to address our recommendations in detail. There was no clarity on whether DECC envisages that CCS will be needed at all, on whether any CfDs will be available for CCS or on the proportion of new gas-fired plants will be retrofitted with CCS. Since then, the Committee on Climate Change has reiterated the need for carbon capture and storage, calling for a “strategic approach” to the development of CCS, and stating that the technology is of “critical importance” to the UK’s efforts to decarbonise. Alas, it was not critical enough on the day of the autumn statement last year.

The hon. Gentleman mentions how critical CCS is to the UK’s decarbonisation, and I for one hope that it makes progress, but other countries burn far more carbon than the UK. Germany burns four times as much coal, but has no interest whatever in CCS. Why does he think that the UK needs, unilaterally, to pursue this so avidly?

It is not simply a unilateral UK issue. CCS is in Canada and Norway. The fact that, unfortunately perhaps, I am not in the German Parliament and so am not scrutinising the German Government possibly explains why I am not talking about the point the hon. Gentleman raises. CCS is certainly not unilateral. Further, we could argue that German Government feel they are off the hook because other Governments feel it is nothing to do with them, either. Someone has to start taking responsibility somewhere. Other countries are. We should play our part. That competition would have helped immensely.

Let me start approaching a conclusion—that is more often a hope during speeches in the Commons than a statement of full intent. I thank my Committee colleagues for their excellent work on these inquiries, as well as the hundreds of companies and individuals who gave their time and expertise to inform our conclusions. It is appreciated. I Chair the Committee on Energy and Climate Change, but I am not an expert. I can, however, take information from experts, distil it, and hopefully get policy points out of that. Along the way, I will hopefully develop some expertise in those areas.

The Government’s response to our investor confidence report demonstrated disregard for the Select Committee inquiry process, and their response to our CCS report leaves important questions unanswered. Their response to the report on home energy efficiency appeared only this morning—eight weeks late. I hope that when the Secretary of State responds to this debate on the Government’s spending priorities, she will afford the House and my Committee a little more courtesy than her Department has sadly shown so far—I say that with regret because I like the Secretary of State personally. We have raised the issue with Ministers in Committee and several times by letter, and we need more information that businesses and homeowners might use and need to plan their energy futures. That would be an important step.

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20:28 Antoinette Sandbach (Eddisbury) (Con)

I want to look briefly at the macro background to those inquiries, which is really one of climate change. We know that climate change is one of the most serious threats the world is facing. We know we need to decarbonise our energy sector and we know that that has to be done in a way whereby UK consumers feel they benefit from the change rather than lose out. All too often, the perception has been that green policies cost them. That is a real danger in the current climate, in particular after the decision last week. I have already received correspondence from constituents who are concerned that the UK may abandon its environmental targets.

The Secretary of State for Energy and Climate Change went to Paris and played a part in negotiating very ambitious climate change targets. That matters in relation to these reports, because the investor confidence report deals with the delivery of those targets, and energy is absolutely key in delivering those targets—not just the electricity that powers our homes, but the heat and transport sectors, too. It was in those circumstances and against that backdrop that the inquiries were conducted.

The Secretary of State speaks very powerfully about the energy trilemma, but the investor community does not feel that a clear direction has been set to say this is where we are going and why. The Secretary of State explained that she wishes to remain technology-neutral. However, to look ahead and take advantage of some of the very best technologies that may come forward and deliver the best results for climate change and reducing the impacts of carbon emissions, there may well need to be some incentivisation, much as we have seen in the onshore wind sector. The Chair rightly referred to the change in Government policy in relation to the onshore wind sector and the switch to offshore. That has led to a decline in investor confidence in onshore wind farm investment, although we have not seen the same results in the offshore sector.

I am of course aware that the Scottish Government have a great deal of involvement in energy policy, in particular through their renewables obligation certificates. If they want to, they have the levers to incentivise different energy development in Scotland. It is clear that some of the announcements—on feed-in tariffs, the renewables obligation and the climate change levy—and the quick succession in which they came created uncertainty among investors.

I appreciate that there have been several reset speeches, but again we are now in a climate where the Brexit vote has happened, yet, judging by some of the quotes used, there has been a lack of long-term vision and concerns that there will be a policy cliff edge in 2020 unless we have clarity around the future of the levy control framework and carbon price floor beyond that year. In the short term, our dropping down the renewable energy country attractiveness index might in fact mask what is really happening. Pipeline projects are still coming through, so the real impact might only be felt in 10 years, when the successor projects to those part way through the process—the ones that have consent but are not built yet—are not there.

I urge the Government to have that cross-departmental working to deliver on home efficiency targets. That is where we will make some wins on climate change. We make wins from the comfort of the people who have had those measures installed. That instils positivity around green changes and the levy control framework because they feel they are getting what they pay for. There is much in the report that I urge the Secretary of State to adopt and look at, because the delivery on the ground matters to people who are paying for it through their bills.

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20:49 Dr Alan Whitehead (Southampton, Test) (Lab)

It is a pleasure to follow the hon. Member for Eddisbury (Antoinette Sandbach). She has made a very thoughtful contribution, most of which I agree with. I hope that this will set the tone for the rest of the evening’s debate, because there is now a wide consensus that the storm of changes that were made last summer to a whole range of renewables incentives has created enormous problems for investor confidence and substantial uncertainty over the Government’s direction on energy policy overall. The three excellent reports from the Energy and Climate Change Committee that we are also discussing this evening underline how the problems have arisen and what they consist of. However, we have also seen the acceptance by the Government of the fifth carbon budget in the past couple of days. It is great that they have accepted it. It would have been nice to have included shipping in it, but I understand that they are not going to proceed with that. Nevertheless, they have accepted the fifth carbon budget, which describes the onward march of renewables as absolutely essential for the reduction of our emissions.

The fourth carbon budget dealt with the essential nature of carbon capture and storage and the forward march of energy efficiency in homes. I made the point in an intervention earlier that the fourth carbon budget assumed that there would be 2.2 million solid wall treatments in homes, but the changes that have taken place over the past year have all pointed in the opposite direction to the imperatives that the Committee on Climate Change put forward in the carbon budgets. There are therefore real question marks in relation not only to investors but to future policy overall. How can we be on target with those budgets—as I hope we will be—at the same time as undertaking all the recent changes?

The hon. Gentleman—the Chair of the Committee—is right to raise those questions. The effect on the levy control framework of the change in prices—and it should be noted that the prices of gas, electricity and oil are now below the lowest conceivable scenario in the Department’s energy projections—was simply not anticipated by the Department when it designed the framework. Moreover, the framework only takes into account the expenses to consumers of power. As the hon. Gentleman said earlier, it is clear that investment in renewable energy is affected. The change in the merit order and the downward pressure on prices has a real effect on wholesale prices. It is estimated that for every pound that is invested, about 60p comes back. That has not been taken into account in the calculation of the costs of the levy control framework, and I think that it is an argument for another fundamental redesign of the framework after 2020.

That may not be particularly surprising. It is clear that all the billions of pounds that have been thrown up against the wall in relation to capacity auctions—when it comes to trying to get some new gas-fired capacity power stations on stream, or, failing that, to ensure that gas-fired, coal-fired and, indeed, nuclear power stations can continue to supply energy—bear no relation to the limits that have been set for the levy control framework. Not only do they bear no relation, but the Committee on Climate Change estimates that some £70 of a customer’s bill will fund renewables by 2020. It is currently about £35.

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21:01 David Mowat (Warrington South) (Con)

I enjoyed all three of the Energy and Climate Change Committee’s reports, and I congratulate the Committee on them. Before I get to my specific points, I will say that the Chairman’s suggestion that we should devolve energy policy to Scotland does have some merit. It is true that Scotland has the lowest carbon emissions per capita of any of the nations of the UK, which it achieved by having a higher proportion of its electricity come from nuclear power than any other region. To that extent, we can all learn from what Scotland has achieved.

My hon. Friend the Member for Eddisbury (Antoinette Sandbach) made the point that we have slipped from eighth to 13th in the table for renewables and wondered how that could be compatible with meeting our decarbonisation targets, which are the most challenging of any country. The answer to that is of course that it is not compatible. It would be better if that was improved, but renewables are only one part of how we are going to decarbonise.

The hon. Gentleman says that CCS is not “commercial”, whatever that means. The point I made was about meeting the climate change targets on grams of carbon dioxide. Nuclear is not commercial either; indeed, a former Energy Minister from his party said a few weeks ago at a breakfast meeting that Hinkley C was not chosen for reasons of economics. The hon. Gentleman cannot therefore make a commercial argument for one thing and then change it for the other.

We can spend a long time talking about the word “commercial” in that context. The former Energy Minister the hon. Gentleman just referred to is the one I am about to talk about in the context of the third report, which was on the green deal, the energy company obligation and some of those things. I am not going to try to defend everything that has happened over the past five or six years in that area, because it has not been good and the Government must do much better. There is a big prize to be gained in energy efficiency, and the one thing we can all agree on, whether or not we agree on nuclear, CCS or anything else, is that we have to do a lot better on energy efficiency. What happened on the green deal was little short of a disaster.

I wish now to discuss market signals, because we have made the biggest market signal over the past week that could be imagined: we have accepted the Committee on Climate Change figure of a 57% reduction in carbon emissions by 2030, although that is merely consistent with the Climate Change Act 2008. I am pleased that we have done that, but I wish to make the point I have made previously, which is that I am worried that others around the world are not following us in the way we might have expected or hoped they would. I am talking not about China or India—these economies that must catch up—but about other countries in Europe.

In these debates, we sometimes gloss over the impact on electricity prices, which means fuel poverty or uncompetitive manufacturing. The Department of Energy and Climate Change website this morning showed that our electricity prices are 60% higher than the mean in the EU, and our industry’s electricity prices 90% higher than the EU mean. When the Government talk about rebalancing the economy and the northern powerhouse, I just say this: if we are serious about manufacturing, we should be aware that it is very hard to do that with differentially higher electricity prices. Some of our debates about energy and the need to decarbonise must be seen in that context, notwithstanding the merit order effect, which we have heard about tonight.

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21:09 Alex Cunningham (Stockton North) (Lab)

Moreover, the Government are failing to provide the investment that we need in energy efficiency to support a low-carbon economy here in the UK, and have ditched support for low-carbon technologies such as carbon capture and storage, or CCS. I know through my chairmanship of the all-party parliamentary group on CCS that, following the decision in last year’s comprehensive spending review to withdraw the £1 billion for the CCS competition, the industry has spent several months considering and developing its thinking on the way forward for the technology in the UK, but industry wants answers from the Government.

Although the EU referendum result has undoubtedly left UK politics in a state of turmoil, the climate change agenda and therefore the CCS agenda must remain a strong priority. Just last Thursday, a mere week after the EU referendum, the UK agreed its fifth carbon budget as part of the Climate Change Act, committing the UK to cut emissions by 57% from 1990 levels by 2032. This is a more rigorous target than the collective EU agreement to cut emissions by 40% before 2030 as part of the Paris accord, and as such was a commitment to be welcomed and embraced. However, there is no doubt that CCS and, I would argue, industrial CCS, must have a significant role to play if we are to meet that goal.

The carbon budgets determine the direction for the UK’s low-carbon transition. Any uncertainty about the status of the target is therefore disruptive at best and catastrophic at worst. The Government have already slashed funding for greener energy options. Further ambiguity will not secure the investment needed, but will lead to increased costs. We need the Government to clarify the status of climate targets in the light of the outcome of the EU referendum, and to clearly prioritise energy spending intentions to ensure that realistic and responsible goals are retained and achieved.

I would argue that following the referendum, it is more important than ever that the Government commit to being a world leader in important areas such as climate change and energy policy, driving innovation and investment, rather than sitting in the passenger seat attempting to give directions.

The importance of carbon capture and storage to meeting the UK’s climate change targets was confirmed when, on the same day as the fifth carbon budget was agreed, the Committee on Climate Change published its 2016 progress report, which specifically recommended that the Government urgently come forward with a new approach to CCS technology.

I know that the Minister of State, Department of Energy and Climate Change, the hon. Member for South Northamptonshire (Andrea Leadsom), has been busy working for an EU exit and is now preoccupied with becoming the next Tory leader, but she has promised a new plan for CCS for eight months now, and it is time that we saw it. I firmly believe that in the light of what happened less than two weeks ago, the Government’s new approach now promised towards the end of this year is far too late, and Ministers need to come to the House much sooner. I would none the less welcome hearing from the Minister’s boss, the Secretary of State, that the events of 23 June will not be allowed to cloud our collective judgment and create a barrier to progress.

The absence of the CCS demonstration projects, which had been expected to contribute towards decarbonisation of power generation by around 2020, is extremely worrying and is something that I know the energy intensive users group has raised previously with the Energy Secretary. I share the group’s view that it is difficult to see how the Government’s absence of policy ambition for CCS can be reconciled with the recommendations of the Committee on Climate Change for power sector decarbonisation, or with the Government’s stated desire to enable energy-intensive industries to remain part of the UK economy in the longer term.

The Tees valley, in which my Stockton North constituency falls, represents one of the largest clusters of manufacturing industries in the UK. Industries in the region contribute more than £10 billion to GVA— gross value added—annually, provide more than 25,000 manufacturing jobs in the local area, and produce a significant share of the UK’s manufacturing output, but they also emit some 22% of the UK’s total emissions from manufacturing industries, meaning that industrial CCS has the potential to protect these energy-intensive industries from future high carbon prices, while curtailing CO 2 emissions.

We know that CCS is a core component in a number of energy-intensive sector 2050 industrial road maps developed by the Department of Energy and Climate Change and the Department for Business, Innovation and Skills, alongside industry. However, despite that and the expectation that CO 2 abatement costs may be lower for some industrial applications than for power generation, there is no specific support policy for industrial CCS deployment. I would be grateful if the Secretary of State could outline what steps her Department is taking to address that disparity.

Some energy-intensive industries have started to benefit from the Government’s carbon compensation package, following approval from the EU. I welcome that, but what is the future for carbon taxes and compensation post EU membership? Will the burden of EU carbon taxes still exist? If so, to what extent? Will the extra costs imposed by the British Government, over and above the EU costs, be removed any time soon?

Importantly, the Committee on Climate Change singled out new CCS transport and storage infrastructure as crucial for meeting future carbon budgets, and it recommended that separate consideration be given to the support needed to enable the development of that infrastructure. Only by developing it in places such as Teesside, which has the capacity and expertise to make such projects work, can the UK even hope to secure a stable future post EU.

Investment in such infrastructure holds the potential to secure thousands of jobs, which are more important now than ever before, in the light of the failures in the Government’s handling of the steel crisis and the subsequent rises in unemployment on Teesside. However, with the UK having stated its intention to vacate its seat at the top table as far as policy making at the EU level is concerned, can the Minister reassure the House that plans are in place to guarantee that DECC officials can continue to collaborate with their EU counterparts as policies for CCS are developed?

I would also welcome the Minister confirming that the industry will not lose out on current or future support as a result of our leaving the EU and that backing for these technologies will be a priority for the Government. She will be aware that EU funds have supported, and continue to support, CCS projects in the UK, such as the Don Valley project, which receives in the region of €180 million from a European economic recovery package. I would be grateful if she could outline how the Government intend to replace those moneys for existing and potential future projects once the UK ceases to be part of the EU.

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21:17 Graham Stuart (Conservative)

The Government have approved the fifth carbon budget—the framework of all frameworks. That is the why people should be optimistic. That is the message that needs to go out from this place to investors. That is where we are headed—to 2050, with the Climate Change Act 2008 intact and supported by the Government and the Labour party.

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21:19 Steve McCabe (Birmingham, Selly Oak) (Lab)

The problem is that so successful is the direction of current Government policy that by 2017 about 200,000 homes, as opposed to 1.3 million, will be eligible for some assistance with energy efficiency measures, and the total level of investment in energy efficiency will have halved. In essence, we have ended up with a policy where only those who qualify as fuel poor can get any help to invest in energy efficiency measures. That is no doubt partly why the Committee on Climate Change recently claimed that cutting carbon emissions from the home was now a policy in reverse. Matthew Bell, its chief executive, has made it clear that the best way to reduce consumer bills and tackle climate change is to make sure that more homes are properly insulated, but instead this Government have managed to ensure that the rate of home insulation has fallen by 90%. A recent estimate shows that over the course of the last Parliament and the present one, the number of households receiving help will decline by a staggering 76%. The Government have scrapped ideas for new homes to be zero-carbon, thus, as the Chair of the Committee pointed out, ensuring that we store up additional retro-fit costs for the future.

In terms of energy savings, new technological developments, and a growth in green energy jobs, this Government’s achievement has been not to be the greenest ever but the biggest failure ever. We need a settled Government policy and an environment where businesses and consumers can plan ahead. We need a fair and simple plan that incentivises households and the rented sector to invest in home energy improvements. We would be helped in this by a signal from Government that they intend to support the Leasehold Reform (Energy Efficiency) Bill. Alas, we have a Government bereft of practical policies to meet more than half of the emissions reductions required by 2030, and many of the existing EU-linked initiatives are now in doubt because of the botched referendum. The abandonment of the carbon capture and storage initiative is just the latest in a series of U-turns by a Government who are without direction and any coherent energy policy.

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21:24 Patrick Grady (Glasgow North) (SNP)

Here we are again: yet another estimates day debate where the one thing that does not actually get discussed is the estimates. The motion authorises a reduction in the expenditure of the Department of Energy and Climate Change to the tune of £2,605,722,000, as outlined in HC 967 of 2015-16 —all 652 pages of it.

The impact that the reduction will have on investors and consumers has been ably investigated by the Energy and Climate Change Committee, which is so effectively chaired with flair and panache by my hon. Friend the Member for Na h-Eileanan an Iar (Mr MacNeil). He is one of only two Scottish National party MPs ever to chair a Select Committee, the other being my hon. Friend the Member for Perth and North Perthshire (Pete Wishart), who also has things to say about the estimates process.

Page 238 of the booklet suggests a cut of £184 million to the Department’s budget for managing the UK’s energy legacy safely and responsibly, which I am sure will help all of us sleep at night. Page 241 lists the EU Government grants received. I suppose they will not appear much in future, which I am sure the Minister of State, Department of Energy and Climate Change, the hon. Member for South Northamptonshire (Andrea Leadsom), will be happy about—interestingly, she is absent this evening, although I do not know what could possibly be keeping her away—but the 78% of my constituency who voted to remain will probably beg to differ.

It is also clear that estimates days are not very useful in scrutinising the detail of Government policy. Despite the fact that we are considering three Energy and Climate Change reports, my hon. Friend the Member for Na h-Eileanan an Iar has outlined how woefully inadequate the Government’s response to them has been. Even though this is supposed to be a chance for Select Committees to have their reports discussed on the Floor of the House, the reality is that time is compressed. There are 30-plus Select Committees and three estimates days a year, which means that, at best, a Committee has a one in 10 chance of actually getting its reports debated on the Floor of the House. It is not just the estimates process that needs to be reformed, but the way in which Select Committees and their reports can be best used to hold the Government to account.

Many of the policy points have already been discussed, including the importance of energy efficiency both for cutting climate change emissions and for improving wellbeing and reducing fuel poverty. I declare an interest, because on Friday I had smart meters installed in my home. I look forward to the impact that will have on my own energy efficiency, as well as on my time efficiency.

As is so often the case in this House, it is the Scottish Government whom we have to look to for the best lessons and examples. On renewable energy, 49.7% of Scotland’s electricity consumption now comes from renewable sources—well on track to meet the Government’s target of 100% by 2020. That has helped us reach our world-leading climate change targets, and the Scottish Government have also committed to investing £103 million to increase the number of warm homes and reduce fuel poverty.

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21:29 Callum McCaig (Aberdeen South) (SNP)

I welcome the fact that we are debating these important Energy and Climate Change Committee reports, but as my hon. Friend the Member for Glasgow North (Patrick Grady) has ably demonstrated, it is a pity that we are doing so tonight when we should be discussing how we spend all the money that the Government spend—it is a whopping figure. There is a tinge of irony in the fact that less than three weeks ago, this country apparently voted to take back control to make this Parliament sovereign once again, and yet we cannot even properly debate how we spend our money.

The undermining of our renewables industry in Scotland has been damaging. The discussions about carbon capture and storage are hugely undermining the Scottish industry. We had the potential in Peterhead to have both the world’s first floating wind farm commercially deployed, and carbon capture and storage in Peterhead power station. That would have given a relatively small part of Scotland a chance to be right at the global cutting edge of the carbon reduction and climate change technological advances. Unfortunately, one part of that is not going ahead, and that is substantially regrettable.

We have heard discussions about the regrettable fixation on one side of the levy control framework and the fact that there is an opaqueness around the levy control framework. I add to the Select Committee’s call for us to be shown the detailed working behind that. We need an understanding from the Government that if investment in low-carbon technology drives down price, thereby increasing the notional overspend on the levy control framework, it does not necessarily lead to greater cost for the consumer. If we are undermining investment in the low-carbon industries based on a desire to protect the consumer—that would be a reasonable position to start from, although not necessarily one that I agree with wholeheartedly—we need to look at what we are doing in the round. The report says that the increase in the cost of the levy control framework from the fall in the wholesale price of conventional electricity will be half a billion pounds, but that is not an additional cost to the consumer. It is certainly not a reason to cut the support—the long-term investment in the future—that investment in renewable energy will bring.

There is huge uncertainty over how we will deal with our European neighbours following the vote two weeks ago. In her reset speech, the Secretary of State for Energy and Climate Change discussed at length the benefits of energy union and how it needs to be worked upon. We have no idea whether that will carry on or whether it will be part of the emissions trading scheme.

The hon. Member for Beverley and Holderness (Graham Stuart) said that he was delighted and that the only signal we needed to give to the markets was the welcome announcement that the Government accepted the targets of the fifth carbon budget. I share his enthusiasm that the Government have done that, albeit somewhat later than was expected by many, but as the Committee on Climate Change has suggested, we need a little more of the “how”, as well as the “what”. Again, I hope that the Government will soon deliver a bit more on how we will do it. These are fundamental questions and they cannot go unanswered.

To conclude, the Government have created uncertainty in this field and that uncertainty has since been magnified. That stresses the fundamental importance of having a long-term plan that has cross-party buy-in, and that is not subject to the whims and changes of Government. The climate change legislation provides a model for how we can work collaboratively across parties and across Parliaments and Assemblies. Another model is the National Infrastructure Commission. Following the uncertainty that the Government have created themselves and the uncertainty caused by the Brexit vote, we need a plan that we stick to and deliver.

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21:38 Barry Gardiner (Labour)

I thank the hon. Member for Na h-Eileanan an Iar (Mr MacNeil) and his Committee for initiating this debate, for giving the House the opportunity to consider the direction of the Government’s energy and climate change policy, and for their excellent reports.

Like the hon. Gentleman but, I suspect, unlike the Secretary of State, I look forward to the publication of the findings of the National Audit Office’s inquiry into whether the Government will have to pay compensation to carbon capture and storage project developers. That could result in a multimillion pound bill for the taxpayer. I hope that the Secretary of State will acknowledge that this might have been an extremely expensive decision indeed. One would be forgiven for imagining that DECC has received instruction from the right hon. Member for Surrey Heath (Michael Gove) when one looks at the way in which it led the industry on until the very last minute, before finally applying the knife to carbon capture and storage. Well, there we are. It is no wonder that the hon. Member for Warrington South (David Mowat) regretted the decline of the CCS projects. He was quite right to do so. He also spoke very powerfully about the green deal, calling its demise nothing short of a disaster.

The hon. Member for Beverley and Holderness (Graham Stuart) quite rightly praised the Government for agreeing with the Committee on Climate Change on the fifth carbon budget. I agree with him. I just wish that they had actually set it by the statutory limit in accordance with the Climate Change Act 2008. It had to be set and voted on under the affirmative resolution procedure of this House by 30 June. That did not happen. I hope that the Secretary of State will clarify the legal status of the budget to the House. It is one thing to accept the recommendation of the Committee on Climate Change, but simply accepting is not good enough. The Climate Change Act is very clear on that point: it has to be set. So far, it has not been.

In its latest report, “Meeting carbon budgets”, which was published last Thursday, the Committee on Climate Change showed that there is a need for

“is likely to cause project investors and banks to hesitate about committing new capital, and could cause a drop in renewable energy asset values.”

The Institutional Investors Group on Climate Change, which represents more than €30 trillion of assets, said that the aftermath of the vote

These are deeply worrying times, but the Government do not seem to recognise the urgency of quashing such uncertainty and instability. Will the Secretary of State’s Department push for access to the internal energy market as a negotiating priority, and how will the Government gain support from EU member states to accept that? SSE has said that collaboration with other European countries on energy matters is important for UK consumers. What calculations or estimates has the Department made of price premiums on loans that will be demanded by investors in UK energy infrastructure to cover the costs of political uncertainty? How much will that add to the cost of building new electricity generating capacity? To reduce that uncertainty, it is imperative that the UK provides a clear direction of travel on domestic policy. Why did the right hon. Lady fail to uphold her statutory obligation under the Climate Change Act 2008, and not take the necessary steps to ensure that the order was set by 30 June?

Hundreds of thousands of families cannot afford their energy bills, and in 2014-15 that contributed to 43,900 excess winter deaths. However, Ministers are still letting energy companies off the hook and failing to ensure that the drop in wholesale prices is passed on to people’s bills. Will the Secretary of State ensure that the UK ratifies the Paris agreement before the Prime Minister leaves office?

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21:49 The Secretary of State for Energy and Climate Change (Amber Rudd)

I welcome the hon. Member for Brent North (Barry Gardiner) to his place. I am grateful to all hon. Members for their contributions, in particular the Chairman of the Energy and Climate Change Committee for his involvement in today’s debate and for his leadership in the Committee.

We have all agreed that carbon capture and storage plays a potentially important role in the long-term de-carbonisation of the UK’s economy, but our view is that it is currently too expensive and that costs must come down. While CCS projects are happening globally, more innovation is needed to reduce costs. That is why we are committed to working with industry to bring forward innovative ideas for reducing CCS costs, having invested more than £130 million in CCS research and development since 2011, and why we continue to work with others to progress the technology collaboratively. In parallel, DECC continues to provide support to the CCS advisory group, chaired by Lord Oxburgh, whose findings and recommendations will inform our thinking on the way forward.

It was interesting to hear from the hon. Member for Stockton North (Alex Cunningham) and my hon. Friend the Member for Warrington South (David Mowat) and to hear about their support for CCS. To both I would say that the door is not closed and that we recognise the important role it will play. I urge my hon. Friend, when he draws comparisons with low-carbon targets in other countries, to look also for signs of progress, and not always to point out the negative side in other countries. I am sure that he, like me, will welcome the fact that the French have announced a carbon price floor. I am sure that there will be improvements from other countries as well.

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21:57 Mr MacNeil

I would have liked to hear some timings on CCS from the Secretary of State. Many in the industry come to me concerned that, despite her warm words, there are no timelines. I am sure her commitment and that of the Government is sincere, but quite what that means for the industry is something else entirely. Perhaps when the capacity market comes up, she could think of a demand-side response.

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