On both the occasions that I sought to intervene or have an exchange with the hon. Gentleman, he replied that the problem was my failure of understanding rather than his failure of explanation. Might we perhaps together put on the record the key facts behind that assumption?
3 pm
The carbon tax has just been introduced from nothing to £16 per tonne. It will go up to £32 by 2020, go up still further to £76 by 2030, and, incredibly, by 2050 it will be a minimum of £200 and perhaps £500 per tonne of carbon. That compares with less than £2 per tonne of carbon in the current EU trading system. If we assume enormous exponential rises in carbon tax, it will obviously be cheaper for consumers and producers of electricity to use grotesquely expensive renewables rather than cheap fossil fuels that have a vast tax is imposed on them. Even in that scenario, there is the benefit to the Treasury of the tax revenue. In many other areas of this debate, there is not that counter-benefit. The Treasury could use that revenue to fund the levy control framework, so that using gas would be enormously cheaper overall than using renewables.
I would like to trouble Members with one other quotation, because I think it sums up the Bill better than I can:
“The Government’s proposal for Electricity Market Reform (EMR), based on signing long-term fixed price contracts (Contracts for Difference) with its preferred mix of generators, is unsuited to a world of uncertainty. It is predicated on an assumption of relatively high future gas prices. It risks imposing large expense on UK energy bill-payers if that assumption proves wrong.”
Rather than the Committee on Climate Change, which the hon. Member for Brent North is so keen on citing, perhaps I should look at what the Department of Energy and Climate Change says. I do not agree with all its analysis, but in the impact assessment of the renewable energy strategy, the Department estimated that the net cost up to 2030 would be £12 billion on an assumption of high gas prices. On its central assumption of gas prices, it estimated the net cost would be £56 billion, yet it admitted that if gas prices were lower, the net cost of renewables up to 2030 would be £95 billion. That money would be added to our constituents’ electricity bills.
The uncertainty around the gas price is enormous. The estimates from credible authorities have been coming down. The International Energy Agency’s estimate has come down by 20%, and even DECC’s estimate has come down by 10% in just one year. If there is any serious exploitation of shale in this country, the EU and elsewhere that is similar to what we have seen in the US, the whole assumption of high and rising gas prices on which the whole energy strategy is based will be shown to be completely wrong and that will lead to us to locking ourselves into contracts that will cost our constituents enormous sums of money utterly unnecessarily.