Thank you very much indeed. In fact, last month the Government already had their first auction of phase three allowances. They made £34 million and sold 6.5 million EUAs at €6.62 per unit—a terrible price in terms of carbon pricing but not a bad price, given some of the other prices that have been found. Unfortunately and regrettably, since then the price has fallen below €6. The German Government have sold some as well more recently and that price fell. There is an intention to auction in excess of 50 per cent of these allowances in phase three and once auctioning starts, it seems that will be one of the ways in which the price will go up because the free issue has ended.
I would also hope that the Government’s intention to raise the bar on 2020 carbon reductions to 30 per cent will be successful. That would also mean that the number of these allowances would decrease in the market. This seems to be an obvious revenue stream, some of which could be used towards reinvestment— I am not saying that it must be—of those carbon reduction revenues into green growth and into making sure that that whole process is reinforced.
I must apologise to the Grand Committee in that Amendment 11, on a second area, has a mistake in it. In subsection (3), at the very end, it should say Clause 1 instead of “section 1” and I apologise to noble Lords for that. I have been looking for a way in which, when the time is right, we could lever extra money into the Green Investment Bank without having all the effects of increased public debt, which is why the current £3 billion comes from asset sales. It means that there have to be other ways of finding that money, with all the borrowings, but the debt is not changed. As I understand it, it would be absolutely the same as for the Nuclear Liabilities Fund, which is currently worth some £8.6 billion. Again, this is a way in which the firepower of this bank could be increased quite substantially without the effect on public debt that other forms of fundraising might have. It would not require outside borrowing by the bank and would take over the trustees’ functions.
I do not know how many of your Lordships have read the excellent report by Professor Gordon MacKerron, Evaluation of Nuclear Decommissioning and Waste Management, which came out earlier in the year. I am sure that my noble friend the Minister was closely associated with it, given his responsibilities in that area. Very importantly, it makes the point that at the moment the vast majority of that £8.6 billion has to be
invested in the National Loans Fund for a very low return. I would be interested to learn from the Minister whether he or his officials know what that current rate of interest is. Professor MacKerron was clearly particularly concerned at the low rate of return. On understanding the net present value of the fund’s existing liabilities, he said,
“though its current rate of accumulation is significantly less than the discount rate applied”,
which was 3% . He went on:
“Whether the fund will be able to meet all the … liabilities will depend on a range of factors (in addition to whether the current approach to its investment regime are maintained)”.
He questioned whether putting that cash into the National Loans Fund would maintain a sufficient value for the decommissioning costs of the existing nuclear fleet. There is a simple solution to that as well: the purpose of the Green Investment Bank is not only to invest in green infrastructure but to create a proper commercial return from its investments, so we have a double-win situation here. We increase the firepower of the Green Investment Bank quite substantially and also make it far more certain that the NLF will be able to meet its liabilities and not put the liability back on taxpayers, as would happen otherwise in future. So we have a double success. I beg to move.