Ian Lavery
Main Page: Ian Lavery (Labour - Wansbeck)
Mark Reckless
Yes, it is robust in that sense, but the reason it is robust is because almost any conceivable change in gas price is completely swamped by the enormous increase in the carbon tax from £16 now—and less than £2 in the ETS—to up to between £200 and £500 per tonne by 2050. Of course the conclusion is robust. If we assume that there will be a massive tax on carbon, it will be cheaper to have lower carbon rather than higher carbon, but so what? CFDs are included in the Bill, but they have virtually nothing to do with this amendment. We keep on hearing that it is about electricity decarbonisation, but it is not. That was only inserted in the Committee stage of the Bill.
The amendment is about hitting the renewable energy directive for 15% of all energy production in this country—not just the electricity sector, which makes up approximately a third—to be from renewables by 2020. However, that will set back decarbonisation across the whole country, because it is a very expensive way to decarbonise. All the savings we can make through energy efficiency, better insulation of people’s homes, or, I hope the Minister will not mind me saying, through different lighting that saves money across the network, are no good or will only work on the denominator, because we are forced to hit, by 2020, the 15% renewables target—33% of electricity—set by the EU Commission. That will be grotesquely expensive and will lead not to innovation in low-carbon technologies, but to the rolling out of fairly mid-tech current generation onshore and offshore wind at twice the price. That will absorb a huge proportion of the £9.8 billion and lead to very little advance in technology compared with what we could do with proper R and D focused activity. That will happen not because of decarbonisation, but because the EU directive that states that this must be done through renewables.
Domestically, we are making the situation even worse by inserting further restraints, such as a 12.5% cap on biomass. One way to get closer to hitting the EU target is to use dual firing, where half coal, half wood pellets emit approximately the same amount of carbon as gas, earning a half-renewable credit on the real constraint, the 2020 EU target. We are not allowing that, however. We could pay other countries—Germany, Spain and perhaps Poland—to do a lot of those things far cheaper than we could do them ourselves. We have a new Government in Iceland, and £2 billion is the estimate of the capital cost of an interconnector to Iceland for its renewable electricity. These measures are not being considered. Even if the objective is to reduce carbon, that can be done so much cheaper than the proposals that will be forced through by the Bill, which will be millstone around our constituents’ necks for decades to come.
Ian Lavery (Wansbeck) (Lab)
I understand fully the call in the amendment for the decarbonisation of the energy sector, and for a target to be enshrined in the Bill. What the target should be and whether it would be realistic is debateable. There have been wide differences and many suggestions about what an achievable target might be. If the target is too ambitious, it will be impossible to achieve. We need to bring some form of reality into the debate and forget the pipe dreams of what people would love to see. This is about what we can actually achieve between now and 2030, and between now and 2050. Is it achievable to decarbonise the energy sector to the degree of 50 grams of CO2 per kWh? That is one suggestion, and I am sure that plenty of Members believe that that is achievable. I find it difficult to believe, however.
Unlike the hon. Member for Edinburgh West (Mike Crockart), who had a shopping list of issues he wanted to discuss today, I want to focus on carbon capture, coal burn and gas burn—fossil fuels. I want to accentuate the positives in burning fossil fuels with carbon capture. I believe, and the expert advice shows, that it can contribute greatly towards an agreed decarbonisation target. The trick is to transfer the high-carbon electricity generation to low-carbon electricity generation. [Hon. Members: “How?”] Carbon capture and storage is the answer. People seem to forget that fossil fuels provide 70%—not 7%, but 70%—of the UK’s electricity supply, and that is set to continue for the short and medium term. Coal burning is set to increase not just in the UK, but across the world, over the next 20 to 30 years. For whatever reason, however, the role of coal, particularly in the UK, is often pushed aside, swept under the carpet, totally ignored. This is done deliberately in the Commons by many Members of Parliament, despite the fantastic role that the miners of this country have played. They have worked hard for many generations, producing the wealth and fuel to generate this country, so it is unacceptable that they should be ignored.
Only three years ago in 2010, the UK market demand for coal was roughly 54.1 million tonnes. That is what we burned in 2010. During the same period, only 18.4 million tonnes were produced here, with a rough 50:50 split between open-cast and deep-mine sectors. Beyond doubt, then, a lot of imported coal is required to meet the nation’s demands. Coal imports have easily exceeded indigenous coal production since 2003. Coal is not going away. It is here to stay, in the UK and globally. We will not be able to persuade the likes of China, India and America to stop burning coal; they are burning coal unabated right now—that is a fact of life.
Martin Horwood
There have been quite a few references to China, but China has set very ambitious carbon-intensity reduction targets, including a 45% reduction in carbon intensity by 2020, so actually it is stimulating huge investment in renewables and low-carbon technologies, including carbon capture and storage. The hon. Gentleman must see the potential in that strategy as well.
Ian Lavery
Absolutely. I fully agree with the hon. Gentleman. The Energy and Climate Change Committee, of which I am a member, visited China the year before last and saw the potential in China. Much was said in the meetings we had, but I would like to see happening on the ground what they said would happen in the future. It is looking not to decarbonise, but certainly to make huge reductions in emissions, and again I will want to see over perhaps 10 years what achievements can be made. I hope that it happens.
Martin Horwood
On the latest figures, China is ahead of target on those carbon-intensity reductions, so it is happening on the ground as well.
Ian Lavery
I am sure that the hon. Gentleman is correct, but it would not be too difficult in China to make a little headway, given how much carbon it produces. The trip to China was a learning experience. I am sure that other Members present were on that delegation. I think we ought to focus on its proposals for renewable energy, carbon capture and storage and the rest and take a leaf out of its book, although I will want to see how much progress it makes in the not-too-distant future—perhaps five or 10 years.
The amendment is concerned with coal and decarbonisation. At the same time as importing huge amounts of coal from Russia, China, South Africa and Australia, we have allowed our coal industry to be destroyed. The Minister might wish to refer to that. Only a couple of months ago, there was a big fire at Daw Mill colliery, one of the biggest collieries in the world, and the situation still has not been remedied, despite the Government’s promises to look after that and, with UK Coal and Scottish Coal, the open-cast mines in what is left of the UK coal industry.
Katy Clark (North Ayrshire and Arran) (Lab)
I congratulate my hon. Friend on the points he is making, which are not often made in this place. In my constituency, we do not produce coal, but we import it, mainly from Colombia, through Hunterston. There was a proposal to build a new coal plant at Hunterston, but that might not be going ahead now. It would probably have been a carbon capture plan using predominantly imported coal, because, I understand, the types of coal produced in Scotland probably would not have been suitable. I know that he is a strong supporter of carbon capture. How do we ensure that we use indigenous coal?
Ian Lavery
That is an excellent and important point that I will come to shortly. We have understood for generations that we closed profitable coal mines the length and breadth of the country, knowing full well that carbon capture was in the background. We have done nothing to protect the British deep-mining coal industry, and that has cost thousands and thousands of jobs. We have dillied and we have dallied with carbon capture and storage, including over the past three or four years. The first announcement was made by the previous Labour Government, who committed themselves to carbon capture and storage in 2007. Where is it? It is not here. It has been kicked into the long grass.
My view is simple. We should look to exploit the coal reserves up and down the country, with carbon capture and storage onsite and with clean coal power stations. That would decarbonise the electricity sector and go a long way to ensuring that we can meet the targets. It might even mean that we could reach 50 grams of CO2 per kWh. I am not too sure about that, but it is the answer. The demand for coal is significant here. Electricity consumption is set to increase, as is the consumption of coal, but as mentioned by several Members on both sides of the House, by 2015 approximately 9,000 MW of coal-fired plant is to be closed down, as a result of the large combustion plant directive, so the UK will become increasingly dependent on imported gas for electricity and domestic heating purposes.
What impact will the burning of gas have on our ability to meet our targets? People do not want to recognise that gas is a fossil fuel—coal is not the only fossil fuel—and emits just less than the suggested emissions performance standard of 450 grams per kWh, so when we talk about allowing gas to be burnt unabated, we must think of the consequences. It will mean that we will be unable to achieve any of our decarbonisation targets for 2030 or 2050.
Do people in this Chamber believe that shale gas will be the answer to our problems? Too many questions need to be asked about shale gas, although we need the general public to support it before anything else. There are a lot of problems with fracking. What is the cost of exploitation? We do not know what it is. Is it safe?
Ian Lavery
What are the emission levels? I am not saying it is not safe, by the way; I am saying that there are a lot of things we need to get right. As a member of the Energy and Climate Change Committee, I support the fact that we have said that the exploitation of shale gas should not have been delayed, but should have gone ahead months ago, if not a year ago.
Sammy Wilson (East Antrim) (DUP)
I have listened to the hon. Gentleman’s arguments. Does he accept that in America, shale gas has been not only exploitable, but exploitable at reasonable prices? It has turned the American economy around, to the point where manufacturing that had been outsourced to other parts of the world is now being brought back to America because energy costs have been reduced.
Madam Deputy Speaker (Dawn Primarolo)
Order. Decarbonisation is the focus. While I am on my feet, I would also like to gently remind all Members in the Chamber that this debate will end at 4 o’clock. The mover of the amendment will get a few minutes at the end, but a lot of Members who have been sitting in the Chamber all this time are still waiting to speak, so may we have some consideration to get them in as well?
Ian Lavery
Thank you, Madam Deputy Speaker. I understand exactly what you are saying. I waited four hours yesterday and did not get called, so excuse me for perhaps saying a little more than I intended to.
Madam Deputy Speaker
Order. My comment was not directed at you, Mr Lavery, but sitting in the Chamber all day yesterday does not necessarily qualify you for that. I was referring to the number of interventions by some who have already spoken and by those who have not been here all afternoon—and the fact that you have been on your feet for some time. I was just trying to help you along and explain the shortage of time.
Ian Lavery
Once again, thank you very much for your guidance, Madam Deputy Speaker.
The shale gas issue, which the hon. Member for East Antrim (Sammy Wilson) referred to in his intervention, is important. By the way, the situation in the USA is completely different from what might happen in this country. I hope that shale gas is everything that everyone wants it to be—no one would be more pleased than I if it was. We are looking, but if we are to achieve our targets, we have to get carbon capture and storage. We have to be serious and urgent about it if we want to decarbonise the electricity sector. There is no other way to do it. Coal power plant with CCS can diversify the UK’s fossil fuel requirement and, in addition, deliver national security of supply.
In summary, as I have explained—I am not sure whether I have explained it enough—fossil fuels provide 70% of the electricity generated in the UK, and that is likely to continue. Fossil fuels represent a major source of CO2, and CCS is a key technology that enables fossil fuels to become a low-carbon source of electricity. Fossil fuel electricity generation is not subject to the intermittency of renewables or the inflexibility of nuclear, is an important tool in meeting variations in demand, and, with carbon capture, will allow the UK to maintain diversity of fuel and energy sources. Fossil fuel with carbon capture and storage would undoubtedly enable the UK to decarbonise, in line with so many people’s hopes and aspirations. The message from me is quite simple. The Government need to stop dithering over carbon capture and storage. They should give equal importance, attention and focus to CCS as they have to securing nuclear power into the future. We should support the British deep-mine coal industry or forget any ambitions to meet the target of a decarbonised UK by 2030.
Peter Aldous (Waveney) (Con)
At the outset I should draw attention to the Register of Members’ Financial Interests. I have interests in family farms in Suffolk where renewable energy projects are being pursued. However, this afternoon I shall largely concentrate not on land, but on the coast and developments at sea, with a focus on the nuclear industry and, predominantly, the offshore wind industry.
My Waveney constituency, Britain’s most easterly constituency, stands to benefit from some of the larger projects that will hopefully flow from the Bill, such as the construction of the Sizewell C nuclear power station in the constituency of my hon. Friend the Member for Suffolk Coastal (Dr Coffey) and the development of the East Anglia Array, the largest round 3 offshore wind farm, for which Lowestoft, the largest town in my constituency, is the nearest port. These projects provide a once-in-a-lifetime opportunity to bring jobs and prosperity back to an area that has been hard hit in the last 30 years by the dramatic decline in the fishing industry, the closure of factories and the rise of package holidays, which has hit the domestic tourism industry. If we can build a strong domestic supply chain for low-carbon energy generation, we will have an opportunity to reverse that decline and properly rebalance the economy. This opportunity is not restricted to East Anglia, but is repeated all around the coast of the British Isles. To me, the issue before us in this debate is the role that having a decarbonisation target in the Bill could play in building a domestic supply chain and creating jobs.
It is important to emphasise that there is broad agreement, at least between the Front-Bench teams, on this Bill’s direction of travel—the promotion of a mixed energy supply economy with appropriate demand-side measures. This collegiate approach is needed to attract much-needed investment—an estimated £110 billion by the end of this decade and £330 billion by 2030—in the UK energy sector. For the Government and the Opposition to be singing from completely different hymn sheets would have unnerved investors and seen them fleeing these shores. Instead, despite differences, largely of emphasis, most of the feedback that I receive from industry is that the British energy sector as a whole is a good place to do business. What we are debating is what needs to be done to make it the world leader—the come-to place.
In considering whether there should be a decarbonisation target in the Bill, I have had regard to the evidence and opinions provided by a wide variety of colleagues, local and national businesses, and non-governmental organisations. Let me go through some of these; there are differences of opinion between some of them. The CBI is of the view that the most important factor driving investment decisions is electricity market reform—the proposals in the Bill on contracts for difference, the capacity mechanism and the levy control framework. It is vital that this debate on the decarbonisation target should not hold up the Bill’s receiving Royal Assent. Electricity market reform will be the main catalyst for the investment we all seek. Likewise, it is important that the draft strike prices are published on time next month.
I take note of EDF’s findings. EDF, too, emphasises the importance of a decarbonisation target not preventing the Bill from passing through Parliament in a timely way. EDF expresses the opinion that if such a duty is to be provided for, it should be in secondary legislation, subject to adjustment in the light of new evidence. That would help to ensure that the required pathway to 2050 is realistic and deliverable. I am also mindful of the importance of a Europe-wide target and the need for agreement at EU level. The EU emissions trading scheme should be the key target in decarbonising European economies.
The issue that especially concerns me is that if no target is provided before 2016, investors’ uncertainty will be prolonged. There is a particular risk to the investment in round 3 projects, from which my constituency and East Anglia have the opportunity to benefit through economic development providing new opportunities for local businesses and creating new jobs.
The forthcoming publication of the offshore wind strategy is welcome, but the feedback that I receive from industry is that, on its own, it might not be enough to maximise inward investment. I have studied closely the Committee on Climate Change’s recent report, and in particular its conclusion that a decarbonisation target would help to deliver savings of £25 billion to £45 billion on consumer energy bills. Further, it emphasises the need for a strong signal about the future direction of travel in order to support supply chain investment, which has long payback periods, and the development of new projects that have long lead-in times. There is a risk that, owing to a lack of visibility beyond 2020, supply chain investment and project development might not proceed, as the Government have not yet clearly set out their intentions for that period.
In considering energy policy generally, regard should be given to three factors: affordability, security of supply and environmental responsibility. At this time of prolonged economic downturn, there is a fourth: the opportunity to promote economic growth and attract inward investment in order to rebalance the economy towards the regions in favour of engineering and manufacturing and to create jobs.