Energy Bill [HL]

My Lords, it is almost Christmas and at this time of year one is supposed to be merry, so I thought I might start by telling a joke, at which I hope the Minister might at least be able to giggle. I was looking for a joke on oil and energy. They are not too easy to find, but I did discover one about the BP oil spill, which we discussed last week in your Lordships’ House. Scientists have developed a way of running a car on water. The only drawback is that the water has to come from the Gulf of Mexico. Well, I did my best. I have been impressed by the breadth of welcome given to this Bill, although not from all quarters, of course. It ranges from environmental NGOs to the Committee on Climate Change to energy companies. The Bill builds on the framework laid down by the previous Government, and rightly so. As I have stressed many times in your Lordships’ House, it is very important that there is cross-party consensus on climate change and energy policy. I have crossed swords with the noble Lord, Lord Lawson, on many occasions and I respect what he says. However, it is very important that there is not a polarisation between left and right on this framework of policy and therefore I am happy to support it. We saw with what happened in the United States how disastrous it is if there is a polarisation between left and right around climate change and energy policy. Unlike the noble Lord, Lord Lawson, I congratulate the Minister, the noble Lord, Lord Marland, on the vigour and determination he has brought to this process. Not least important, the Treasury seems fully on board with the proposals incorporated in the Bill. This situation is reassuring because, again unlike the noble Lord, Lord Lawson, I think we are talking about revolution within the British economy and the broader global economy. The recent report of the Committee on Climate Change, again rightly, recommended that the power sector be virtually wholly decarbonised by 2030, which is a truly radical proposal. No doubt criticisms can be directed at some aspects of the Green Deal—noble Lords have already done so—and improvements suggested. The Government are right to place a great deal of emphasis on it given the poor quality of the housing stock in the United Kingdom in terms of insulation and heat retention, to which other noble Lords have drawn attention. I am also pleased to see that we are getting closer to realising the Government’s stated intention to put a floor price on carbon, with a final decision to be taken, as I understand it, in the Budget in March. The new provisions for enhancing energy security are very welcome, as is the proposal to limit carbon emissions from existing coal-fired power stations by means of an emission performance standard. I have three questions for the Minister; they do not concentrate solely on the Green Deal but on a number of issues surrounding it. First, have the Government given thought to the implications of Jevons paradox? This is very important. W Stanley Jevons, who was a famous economist, showed that greater energy efficiency leads to higher overall energy consumption; that you get a perverse outcome from increasing energy efficiency. He said: "““It is a confusion of ideas to suppose that the economical use of fuel is equivalent to diminished consumption. The very contrary is the truth””." He deployed a large range of historical evidence to this effect but I shall offer the House a humble and more macroscopic example: when fridges became more efficient, people simply started buying larger fridges and used more energy than before. The most energy efficient country in the world is Japan, but it has a steeply climbing carbon emissions curve. This is serious for the Bill because it means that the Government must place it in an analysis of the wider economy in terms of its knock-on consequences. I should like to know what thought the Government have given to this because otherwise, even though it sounds somewhat ugly, the Jevons paradox could undermine the whole thrust of what the Bill is supposed to achieve. Secondly, job creation is often mentioned as an important outcome of investment in home insulation, renewable energy and wider energy innovation. However, there is an awful lot of loose talk around this, some of which appears in government documents, I am afraid. Where it is said, for example, that wind power will create so many thousand jobs, what is important is not the jobs that are created by specific technologies or innovations but, because jobs will be lost in the older energy industries, the net new jobs that are created. Have the Government done a calculation of net job outcomes from the innovations in the Bill and the wider innovations that are proposed? Without that, you cannot say that these innovations will create net new employment. Most new technologies tend to reduce the need for labour rather than expand it. This is an important aspect of investment in new energy technologies and I feel that a lot more work must be done on it than I have seen. As I said, many statements on this topic are simply superficial. Thirdly, as outlined in the Bill, planning and the core role for the state are integral to the Government’s proposals. The noble Lord, Lord Lawson, called them ““dirigiste”” proposals, essentially as a way of dumping on them. I would say the opposite. I think that it is right and proper in energy and climate change, where you are planning for a 20-year or 30-year cycle, to have a plan. Planning is integral to this and the Government are right to say so, but why only here and not in other areas? This comes back to a point made by my noble friend Lord McFall. Energy is one area where there could be a renaissance of British manufacturing, as has been mentioned, but at the moment the situation is that, with most of the technologies involved, we will be dependent on foreign providers: the French for nuclear power, the Germans and the Danes for wind power and the Chinese for solar power. Why, then, do the Government not have an investment-led strategy for linking a renaissance of manufacture to the implications of the energy framework that they have introduced? Quite contrary to what the noble Lord, Lord Lawson, said, one needs an investment strategy with targeted regional planning if one is really going to use energy innovation as a means of helping to promote a renaissance in British manufacturing.