Carbon Capture and Storage

Lord Howell of Guildford Excerpts

Wednesday 20th December 2017 Lords Chamber

[Lord Howell of Guildford (Con)]

Further to the intervention from the noble Lord, Lord Oxburgh, on the work of his committee, would not it make more sense to give a priority to investment in clean coal through carbon capture and storage, supercritical boilers and other means of reducing carbon, rather than reinforcing and subsidising the burning of wood pellets, which is going on now, which means tearing down the world’s forests and generating quite a lot of additional carbon?

[Lord Henley]

Well, my Lords, we are where we are. I rather agree with my noble friend about the importance of zero-carbon options, and that is why we want to look at carbon capture and storage. But we should look not only at zero-carbon options but also at low-carbon options.

Energy: Domestic Tariffs

Lord Howell of Guildford Excerpts

Tuesday 19th December 2017 Lords Chamber

[Lord Henley]

My Lords, I am grateful to the right reverend Prelate for bringing to the attention of the House the Big Church Switch. Other people offer advice on how to switch, and there is a great deal that individual consumers can do about switching their energy and getting reductions. The simple fact is that most people do not know about this, which is why we are working through the government-funded Big Energy Saving Network to try to get more information across. We are very grateful for the work the Church is doing as well.

[Lord Howell of Guildford (Con)]

My Lords, would not one obvious way of achieving cheaper energy prices be to produce in this country rather cheaper electricity and to make less costly the reduction of CO₂ in the atmosphere? Would that not require cheaper nuclear power and cleaner methods of coal-burning, which can be very cheap if it is clean? Is our present energy policy not going in exactly the opposite direction?

Energy: Home Battery Storage

Lord Howell of Guildford Excerpts

Monday 4th December 2017 Lords Chamber

[Lord Henley]

Obviously there will be changes as more people make use of storage. That will have an effect on the grid because if some people increase their use of storage, they may even be able to go off-grid in future. The noble Baroness is right to draw the House’s attention to that issue. That is a matter for Ofgem; it can certainly look at that to make sure that it can create a level playing field for all consumers.

[Lord Howell of Guildford (Con)]

My Lords, I declare my interests in energy, as in the register. Is my noble friend aware—I am sure that he is—that offshore wind producers are now saying that they can produce electricity at £62.50 per megawatt hour? Of course, commercial storage will make it considerably lower, if we go for it. Does that not cast a shadow over the costs of the contract at Hinkley Point C, which are for £92.50 for the next 35 years, indexed? Is it not time to question some of these lavish expenditures, which are having very little effect on carbon reduction and greatly increasing the charges to poor consumers?

[Lord Henley]

My Lords, at this stage, I do not want to get into the wider question of Hinkley C costs. I think it would be rather dangerous for me to go down that route. My noble friend is right to say that increased use of home battery storage, possible greater use of batteries in cars as a means of storage in years to come and greater use of other forms of storage, which the noble Baroness and my noble friend referred to—he is probably aware that we already have about 5 gigawatts of storage in the system, which is mainly pumped hydroelectricity—have implications for costs throughout the grid, which will need to be addressed.

Productivity

Lord Howell of Guildford Excerpts

Tuesday 7th November 2017 Lords Chamber

[Lord Henley]

My Lords, I am not going to go into detail now but I am grateful that the noble Lord went to the meeting that my predecessor held and listened there. I agree that the figures are disappointing but again, if he can be patient and wait for the launch of the industrial strategy he will see what we are doing and what we are bringing together from all parts of the Government in this area.

[Lord Howell of Guildford (Con)]

Does my noble friend agree that these productivity statistics can be a bit misleading? It has often been suggested that they fail to take full account of the impact of the digital revolution on production and economic activity. Does he also agree that the very high levels of employment that we are currently experiencing could in a sense be seen as a compensating asset in the overall low-productivity puzzle?

[Lord Henley]

My noble friend is right to stress that it is very difficult to measure productivity, but I think we all agree that our productivity levels are lower than those of a lot of other members of the G7 and that we want to do something about them. My noble friend is also right to say that there is the compensating factor—I am very grateful to him for underlining it—of record levels of employment in this country. We can be very proud of that.

International Investment

Lord Howell of Guildford Excerpts

Tuesday 17th October 2017 Lords Chamber

[Lord Prior of Brampton]

My Lords, my noble friend is absolutely right that foreign direct investment into this country is essential. For example, Hinkley Point power station is funded largely by the French and the Chinese. We are absolutely open to investment from all over the world, so there is no intention at all of discouraging foreign direct investment coming into this country—on the contrary. I think that we are the third biggest end point for foreign direct investment after the Chinese and the Americans, and there is no intention of harming that. As far as the word “holistic” is concerned, I think that the noble Lord meant “joined-up government”; it was not in any way directed at some conspiracy to prevent investment coming into this country.

[Lord Howell of Guildford (Con)]

My Lords, I particularly welcome the better news about Bombardier. Having, ages ago, been the Minister responsible for inward investment into Northern Ireland, I can confirm that the engineering skills legacy of Belfast and indeed of Northern Ireland is colossal. From the days of Short Brothers and Harland and Wolff, when I was involved right down through the years, there has been a highly innovative and skilled operation, and I am very glad that it will be preserved and encouraged with further investment, as it should be.

On inward investment generally, I agree with my noble friend and the noble Lord, Lord Mendelsohn. We have to be a bit careful. We rely on heavy capital and inward investment to balance the books in this country and compensate for our colossal trade deficit, and we need to avoid any implication that we are somehow turning against being an open house for most inward investment, although there obviously have to be some safeguards. Can my noble friend reassure us about one area that he mentioned—civil nuclear power? The nuclear scene is dominated by both foreign ownership and foreign inward investment and support, not least for Hinkley Point C, which will survive and prosper only with heavy Chinese help and involvement. Can he assure us that nothing that has come out today will get in the way or cause further disruption of our already rather difficultly placed nuclear programme? It is not going well now and will go even worse if we cut out foreign investment.

[Lord Prior of Brampton]

My noble friend makes a number of very good points. First, as he rightly says, the 4,200 people who work at Short Brothers have some outstanding, world-class engineering skills, and the fact that Bombardier and Airbus have come to this agreement is extremely good news for all of them. Secondly, as far as civil nuclear power is concerned, he is absolutely right. Hinkley depends on Chinese investment, as indeed do many economies throughout the world. I think that it would be very foolish of us to be at all concerned about the Chinese investing in our civil nuclear power industry. The Chinese will probably build 150 nuclear power stations in their own country over the next 10 years, and they will unquestionably be among the world’s best when it comes to building and operating nuclear power plants. We should take the fact that they are investing in the UK as a very good thing.

Nuclear Energy: Small Modular Reactors

Lord Howell of Guildford Excerpts

Monday 24th April 2017 Lords Chamber

[Lord Prior of Brampton]

My Lords, the Government’s position is clear on how to deal with the plutonium inventory that we have accumulated over many years: the NDA has been set up with the funds to assess the two broad options, which are either to reuse plutonium or to store it safely.

[Lord Howell of Guildford (Con)]

My Lords, I declare an interest as chairman of the Windsor Energy Group. Does my noble friend agree that the SMRs hold out one of the best paths for the development of cheaper but also safe nuclear power, and probably perform better than the existing vast creations and structures that have been built today? Does the competition cover not only the conventional SMRs but the other technologies, including stable salt reactors which offer an even cheaper and safer form of nuclear power? They are now being developed and taken up by the Canadians and may be the way forward for us as well.

[Lord Prior of Brampton]

My Lords, the honest answer is that we simply do not yet know whether small modular reactors will represent a cheap source of low-carbon energy for the future. We just do not know what the economics are, which is why in due course we will be publishing a technical and economic evaluation, based on assessing the 32 proposals that have been put to us for SMRs. The only truthful answer at the moment is that the jury is still out.

Industrial Strategy: Engagement

Lord Howell of Guildford Excerpts

Monday 27th February 2017 Lords Chamber

[Lord Prior of Brampton]

My Lords, a number of our leading companies have very innovative ways of engaging people in their business—for example, Google and other companies like it have installed table tennis tables. I wonder whether the noble Lord, Lord Fowler, might consider making way for a table tennis table in this place.

[Lord Howell of Guildford (Con)]

My Lords, does my noble friend concede that turning earners into owners and expanding employee share ownership in various forms can, in certain circumstances, be immensely beneficial and a great promotion for industrial competitiveness and effectiveness? Will he bear in mind particularly the case of the National Freight Corporation where a major share ownership by all employees had an enormous effect in improving productivity? It was a project carried forward with great vigour by no less a person than the noble Lord, Lord Fowler—now the Lord Speaker of this House—and me, as successive Secretaries of State for Transport in the 1980s.

[Lord Prior of Brampton]

I agree with my noble friend that employee ownership can be very beneficial—the mutual is another model that can be beneficial—but it does not guarantee success. There are many other aspects of corporate life that are very important. The Co-operative Bank is an example of an organisation that has not been a conspicuous success in recent years. It can be very important but it is not the whole answer.

Industrial Strategy Consultation

Lord Howell of Guildford Excerpts

Monday 23rd January 2017 Lords Chamber

[Lord Howell of Guildford (Con)]

My Lords, if this is feedback time, as I gather it is, will my noble friend accept from me the feedback that our energy policy is in a terrible mess and certainly not working for everyone? Our energy costs are still much too high compared with those of our competitors. Our costs of carbon reduction per tonne are much too high and reliability is severely compromised, certainly in the next two or three years. Therefore, will he take back to the authors of the Green Paper that if we can get an energy policy that is far more efficient, works for everyone and combines affordability, reliability and low-carbon targets much more effectively than now, we will make some progress with this strategy?

[Lord Prior of Brampton]

I completely agree with that. It is made very clear in the Green Paper that we must have a low carbon energy policy, but an affordable energy policy. Affordability is critical. It is no good going to Port Talbot or Scunthorpe and telling steel workers there that they must bear the cost of a green energy policy with their jobs. We have to be able to put high energy industries into a competitive position, particularly within Europe.

Hinkley Point C

Lord Howell of Guildford Excerpts

Thursday 15th September 2016 Lords Chamber

[Baroness Neville-Rolfe]

I will certainly look at what we can do about transparency relating to small nuclear reactors. It is something that, as a new energy team, we are in the process of looking at, as I have already said. The noble Lord, as always, makes a good point about the need for testing this idea.

I did not answer the point from the noble Lord, Lord Teverson, on tidal lagoons. We will take a decision on the future role of tidal lagoons in the UK’s energy mix following the conclusions of an independent review being undertaken by Mr Hendry, the former MP.

[Lord Howell of Guildford (Con)]

Would my noble friend accept that this was an incredibly difficult decision and that there were huge risks whichever way the decision might have gone? Would she agree that the main risks of going ahead—although, as I said, there were huge risks in not going ahead—are not so much the Chinese security issue, which has received a lot of press, as the rocky financial state of EDF, which the noble Lord, Lord Teverson, rightly raised, and of its supplier, Areva; the untried design, which still has not been proven and still is not working; the possibility of further cost inflation in the construction; and the enormous delay? Having visited Flamanville, I have seen how extensive that is: it is six years behind time and three times over budget.

Of course, as the noble Lord, Lord Teverson, again said, there are the new technology possibilities coming along by the time this produces electric current, as well as the possibility of falling renewable costs and the present possibility of very low oil and gas prices for years ahead. When I launched a programme in 1979 of nine new reactors—only one, Sizewell B, was ever built —it was the weak oil price that completely undermined the economics of the situation. That is the problem we face again today. Would my noble friend accept that it might have been wiser, faced with this Hobson’s choice, to at least have gone at it more sequentially and built just one reactor the same size as Flamanville to start with, and then see how matters developed from there, working with the Chinese and the French, not involving huge compensation and delay? One at a time might just have been a wiser course.

Finally, can we have a careful examination of how this decision ever came about and how my noble friends in the Government were confronted with it, so we are not caught out a second time?

[Baroness Neville-Rolfe]

I very much agree with my noble friend that we should learn from our experiences. That is something I always try to ensure we do in any area I am involved with. That obviously includes this. The honest truth is that this has been a difficult decision. That is one of the reasons why it was delayed, although we ended up with a decision in September, which was the most recent scheduled date.

My noble friend asks why there will be two reactors instead of one. There are two answers there. There are economies of scale. We have the skills and capability. The second point is that the consortium, led by EDF, came forward with a proposal for two reactors allowing for all of that and bringing many benefits that were weighed against the difficulties. We have made some changes, particularly relating to security protections, but we believe this project represents value for money for 7% of supplies of electricity over 60 years, of a sort that is a secure and reliable baseload, as they call it in the industry.

Carbon Budget Order 2016

Lord Howell of Guildford Excerpts

Tuesday 19th July 2016 Lords Chamber

[Lord Howell of Guildford (Con)]

My Lords, as another former Secretary of State for Energy—there are plenty of them around—I want to come down from the rhetorical heights that we have just experienced and congratulate my noble friend on her new appointment. It will be very challenging because there are many changes ahead. Some of them are not yet foreseen because of the pace of technology, which will transform a great deal of what we are talking about today.

I declare interests as in the register. I also declare that I come to this whole issue as one far from convinced that we are doing anything like enough to protect the next generation. My criticism is made not with a grand vision that there is a serious climate change challenge for this whole planet but that our policies are not nearly effective enough and, in many areas, are counterproductive in meeting that challenge.

I, along with my noble friends, cannot resist using this as an opportunity for a short requiem for the Department of Energy and Climate Change. I never thought that it was a good idea. It was based on a flawed belief in certain branches of politics that policy and theory are more powerful than technology and market forces. Of course, they are not, as has been proved again and again.

I have a few questions. It is a quiet and empty House at this point in the evening but in fact we are presiding over issues concerning billions and billions of pounds. It is often the way that the really expensive matters get the least attention.

In the carbon budget now proposed for the five-year period from 2028 to 2032, we are planning, on the recommendation of my noble friend who has just spoken and the Committee on Climate Change, a total reduction of 1,725 million tonnes in carbon emissions, which is about 345 million tonnes a year. That is out of an estimated worldwide emission level—in as far as you can measure these things—in about 12 years from now of 40 billion to 45 billion metric tonnes. Therefore, if you can rely on these measures, the contribution that we are making to carbon emissions is rather less than 1/100th of that total, and of course that excludes consumption-based emissions and import-based emissions, as my noble friend Lord Lawson rightly pointed out.

The reality is that our hundredth is up against the 40 billion or 45 billion tonnes of emissions that will be going into the atmosphere at that time, with 70% to 75% of them coming from China, the US, Russia, India and Japan. They are the big ones and the rest of us are trying to do our bit. Therefore, the bigger question behind all this is: if we are serious about global CO₂ reductions and about climate change, rather than merely stating that we think we are doing our bit and that is it, and if we are really serious about meeting the challenge for the next generation, what are we doing about attempting to work with those nations to see that they turn the pace of their advance in technology towards reducing carbon emissions? The decision on whether climate change is grappled with and severely contained or whether it is undermined by a colossal increase in emissions will be made not in this country or even in Europe but in those countries.

All around us we can see danger zones: the vast growth in India of coal-fired power stations and vast growth in China, although that has been curbed a bit and the Chinese are using high-quality coal. The Indians are trying to use supercritical boilers to increase the amount of electricity they can get out of a tonne of coal. They are much criticised for doing so but that is the way they are going. My main question is: what is our underlying strategy for meeting the real climate change issues and the real curbing of CO₂, rather than just dealing with our own local affairs?

I now turn to the cost of it all. The Explanatory Memorandum for the Carbon Budget Order slightly disingenuously says that there is not a cost. The impact assessment says that it is nought. It goes on to say that the cost is not in the carbon budget but in how it is delivered—that is what influences prices and costs—and, in turn, that is determined by energy efficiency, energy prices and technology. The impact assessment, as opposed to the Explanatory Memorandum, rather ruefully admits that at the end of it all it could cost minus £5 billion if everything goes wonderfully but up to £9 billion if everything does not go so well. These of course are guesstimate figures of a high order.

Secondly, there is the crucial question that my noble friend Lord Ridley raised with the eloquence and precision he has in all his contributions. The impact statement reminds us that the Act requires the Government to publish policies and proposals soonest on how we achieve these carbon budgets. That prompts the question again and again, which never gets a very good answer: are we going much faster than the others? The Act requires account to be taken of the circumstances at European and international level. That is aside from whether or not we are in the European Union. A great many energy issues and co-operation with the continent can of course continue regardless of whether we are signed up to the EU treaties, and they probably will. We get a lot of our electricity daily and we will get more—up to 18 gigawatts through the interconnectors from continental Europe and from Norway. We are linked technologically with Europe whether we leave the EU or not.

Can my noble friend tell us exactly how detailed was the account taken in formulating these budgets—perhaps he can get advice from the Committee on Climate Change, chaired by my noble friend—and how it then explains our devastating domestic energy prices in Britain? They are now, as my noble friend Lord Ridley reminded us in an excellent Times article, 21% higher than the median or average, and our industrial prices are 43% higher than the average. How can we explain that?

Were we able to explain at the time of the closure of Redcar steelworks why our energy costs for steel were 40% above German costs? What is the explanation? Were these matters taken into account? We really are entitled to know how much account was taken of these extraordinary disparities, which give us a higher industrial energy price than any of our neighbours and competitors, let alone of course the great new competitors of Asia, Africa and Latin America. Why are our domestic prices higher than those in continental Europe, with the resulting suffering and difficulty that occurs—whatever my noble friend who spoke earlier says—when people have to go to food banks and face the agonising choice between heating and eating? These are real problems and we need assurances that they are properly addressed before we just tick the boxes and see a huge new impasse develop in areas where we ought to be helping people and not hindering them.

[Lord Grantchester (Lab)]

My Lords, I thank the Minister for her introduction of the orders. I congratulate her on her new skillset and wish her well on bringing energy into her brief.

That prompts me to reflect on the changes in the Machinery of Government paper merging the Department of Energy and Climate Change with BIS. The recent sudden lurches in government policy, especially with regard to renewables, have greatly affected investor confidence resulting in the House of Commons report. Ernst & Young has also issued a report highlighting how the UK has slipped to 13th in its investment attractiveness index. Here is yet another change and one where climate change has been dropped from the title.

Energy policy development as evidenced by the Climate Change Act 2008, which we are partially discussing today, is critical to countering climate change and the environmental consequences that follow. Some commentators have reflected that DECC has a closer affinity with Defra as a department, especially concerning the activity of the Adaptation Sub-Committee, air quality, flood defences and agricultural policy. Why is it that under paragraph 6 of the Machinery of Government paper, where it is mentioned that the merged department will have joint responsibility with other departments, no mention is made of the Department for Environment, Food and Rural Affairs? Mention is made of the Department for International Development, the Foreign and Commonwealth Office, the Department for Work and Pensions, the new Department for Exiting the European Union and the Department for International Trade, but no mention of responsibilities for Defra. Is this an omission or does it have deliberate consequences? Asking that is not to diminish the opportunities to interpret energy policy in relation to business and industrial strategy, as this statement does.

Secondly, let me praise the Government for bringing forward this SI in agreement with the recommendations of the Committee on Climate Change. The Climate Change Act 2008 was intended not only to put climate change at the centre of government policy but to depoliticise it in the UK and to be strong yet flexible. In this regard, I am happy to agree to the Climate Change Act 2008 (Credit Limit) Order 2016 in that it provides flexibility in allowing a credit limit to be utilised for purchasing unused abatement credits from other overseas countries. In agreeing to the order, can the Minister restate emphatically tonight that the Government have no intention of implementing this since the Committee on Climate Change has advised that it is unnecessary and so that the Government will concentrate on decarbonisation through domestic policies and opportunities?

Thirdly, let me praise the Government for agreeing with the fifth carbon budget recommendations by the end of June, albeit the 30th, just seven days into the tumultuous referendum result to leave the EU. This praise must be tempered with the criticism that the Carbon Budget Order 2016 should have been taken and approved before 30 June under the statutory provisions of the Climate Change Act. Let me not underplay this breach. Once again it highlights the somewhat relaxed attitude towards climate change evidenced by the abolition of DECC, as we have discussed already. Surely it cannot be right to backdate tonight’s approval to 30 June and see that as sufficient. Can the Minister clarify the implications of this breach? It cannot be buried with the legalities pertaining to the old departments. Can she also clarify that statutory obligations are important in her department, that decarbonisation will be championed in the Cabinet, and that energy policy will be a clear priority for the new Administration?

Fourthly, let me praise the Government again that in agreeing the fifth carbon budget which covers the period 2028 to 2032, they are in step with the timelines agreed for the EU in Paris this year. Once again this praise allows me to put a challenge to the Government and seek assurances on further issues by asking questions. The Brexit vote adds yet another cause for anxiety to investor confidence, which is already shattered. In the Paris climate change agreement, certain elements need to be ratified at the EU level and others need member state approval. Can the Minister outline the dates of the legal process for ratification in light of the vote and the departmental reconfiguration? I would underline for her the importance of our continuing to lead internationally on climate change. The former Secretary of State promised to ratify the Paris agreement early. The new Secretary of State has acknowledged that leaving the EU makes it harder to meet our climate targets.

I have many other challenges to put to the Government in the context of the Carbon Budget Order 2016, but perhaps I may finish on the issue of the importance of the policy statements that are a statutory requirement following consent to this order. I am sure that the Minister will want to commit to abiding by that tonight, as well as making a commitment to publicising future energy policy, The Carbon Plan: Delivering our Low Carbon Future, before the end of the year. Attention has been drawn in the debate to the fact that there is a gap in the projected emissions reductions and a lack of policy to close it. The Government must improve on the lack of accountability for the delivery of that plan and for managing carbon budgets. Their own National Emissions Target Board, which is responsible for managing carbon budget delivery between departments, has failed to meet on time or have adequate resources to hold the Government to account. Without public and parliamentary notification, this board has now been replaced by the inter-ministerial group on climate change, the substantial details of which the Government have refused to release, despite questions from Members of Parliament. If the Minister cannot clarify this tonight, can she perhaps write to me with details of dates and summaries of these meetings?