|
UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 278-i House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE Energy and Climate Change Committee
The work of the department of energy and climate change
RT HON EDWARD MILIBAND MP, MS MOIRA
WALLACE, Evidence heard in Public Questions 1 - 77
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Energy and Climate Change Committee on Members present Mr Elliot Morley, in the Chair Mr David Anderson Colin Challen Nadine Dorries Charles Hendry Ms Julie Kirkbride Anne Main Judy Mallaber John Robertson Sir Robert Smith Paddy Tipping Dr Desmond Turner Mr Mike Weir Dr Alan Whitehead ________________ Witnesses: Rt Hon Edward Miliband MP, Secretary of State for Energy and Climate Change, Ms Moira Wallace, Permanent Secretary, Mr Willy Rickett, Director General, Energy, and Mr Simon Virley, Head of Renewable Energy and Innovation Unit, Department of Energy and Climate Change, gave evidence. Q1 Chairman: Good morning, Secretary of State. You are very welcome before the Committee with your colleagues. Perhaps you would introduce your colleagues and make a short statement to the Committee. Edward Miliband: Thank you very much,
Chairman. Could I say what a pleasure it
is to be before this Committee and how important I think this Committee's role
is and how much I welcome its establishment. I have with me Moira Wallace, the Permanent
Secretary at the Department for Climate Change; Simon Virley, the acting Director
General for National Climate Change; and Willy Rickett, the Director General
for Energy Markets and Infrastructure.
I am grateful for the opportunity to make just a short opening statement
and I would like to make four points.
First of all, to locate our discussion on what are the purposes of this
department, there are three things: (i) secure and affordable energy for
people, (ii) shifting our economy and our society towards low carbon, and
(iii) reaching an international agreement on climate change. The second point I wanted to make is a point
about the integration of the departments, Climate Change and Energy, and
putting them together. I think this has
been broadly welcomed, and the reason is obvious in a way, that when we have
energy and production producing about two-thirds of our carbon emissions, it is
right to have an energy policy which reflects climate change. But I think the converse is also true, and it
is an important point to make, that we need a climate change policy that
reflects the need for energy security, the need for fairness, and the need to
be consistent with economic growth. To
that end, when we unveil our carbon budgets in the summer, the policies
supporting them will also be saying quite a lot about fairness and some of
those issues, and about how carbon budgets are consistent with energy
security. The third point I want to
make is about my approach to the work of the department. I gave a speech about this in December which
was to say that I think dynamic markets have a very important role to play in
securing energy security for Q2 Chairman: Thank you very much. Perhaps I could start off by asking you a few questions abut the role and purpose of the department, to pick up on one or two of the points that you have mentioned. The idea of bringing together energy and climate change is generally welcomed. It is clearly sensible to have that kind of integrated approach, but you are bringing in from the former Trade Ministry and now from the Department of Enterprise and Regulation people who for many years have been focusing on the needs of industry, and perhaps the needs of environmental issues and climate change and carbon budgets were of secondary importance. Do you feel that the department is welding together a coherent approach? Does it have a clear voice across government, because a cross-government approach is going to be crucial? Edward Miliband: Yes, I think it does. I think it would be wrong to pretend that there are not challenges in this area but there are trade offs. There are dilemmas, but it goes back, in a way, to what I said in the opening statement: What is the central reason for doing this? We cannot have an energy security policy which ignores the needs of the climate and pretends that that is not an issue. I think that there is a wide understanding of that across our department. I think that the integration process is going well - and I will let Moira say something about the structures of the department and how they have been designed to take account of that. Yes, there are challenges - there are always cultural challenges in bringing together different parts of Whitehall - but I think it is going well, and talking to members of staff throughout the organisation there is a wide welcome for this idea and for the need to have both parts of the jigsaw, if you like, represented in one department. Ms Wallace: We took the decision very early on that that we did not just want to bring bits of different parts together and kind of stick a rubber band around them, that we wanted to integrate the ways of working, so just before Christmas we changed the structure of the department so that it pushed people together from two different departments; for example, our international group now covers energy and climate change whereas before they were in two different departments. We have set up a group, which Simon is leading, which deals with national climate change and which is trying to give a clearer message to the consumer covering what would formally be seen as energy issues and climate change issues. We are trying to make sure that in the way the department is structured people are brought together, and that reinforces the strategic lead from the top to look at these things in an integrated way. Q3 Chairman: We are going to be talking about carbons budgets in the course of the session, but carbon budgets are a very new concept of government, they are very crucial. If we have any hope of meeting our targets then carbon budgets is clearly the discipline that we all have to follow. But when I say "all", I mean all. That means every department. Are you confident that every department has people who have the experience of how they work to a carbon budget? What lead can your own department give across government in relation to that? Edward Miliband: I think this is going to be a
big cultural change for government and I think you are right to highlight the
importance of it. The idea that it is
not simply about targets but about budgets within which people have to live is
a very new concept. It is going to be a
new concept for people. First of all, we
are working very closely with the Treasury on this because there are inevitably
financial aspects to the whole process of carbon budgeting, questions about
what happens if people do not meet their carbon budgets and how you take
account of that. We are working very
closely with them, both at ministerial and at official level. Secondly, it will be a big challenge for the
rest of Q4 Chairman: Is there a cross-government Cabinet sub-committee looking at this with an overview? Edward Miliband: There will be cross-Whitehall mechanisms. It goes to a particular sub-committee, Cabinet committee, in DEE at the moment but there will be special arrangements not only to establish the first carbon budgets which will be at the Budget, and then we will be saying more in the summer, but also to drive the process through Whitehall. Q5 Chairman: And you will be saying more in the summer about that. Edward Miliband: Yes. Q6 Chairman: Because it might be something which the Committee would like to follow up. Edward Miliband: Yes. Chairman: Thank you. Q7 Anne Main: Will you be trading carbon budgets between departments? Edward Miliband: We are still looking at the precise arrangements that we will follow on this, but there will inevitably have to be a process and there are a number of options for this. There will inevitably have to be a process whereby if a department breaches its carbon budget there will have to be implications. Either they will have to find space elsewhere where they can meet the carbon commitments or ----- Q8 Anne Main: Can you clarify what you mean by "space elsewhere"? Edward Miliband: If other departments come in under their carbon budgets. Q9 Anne Main: So it is carbon trading between departments. Edward Miliband: That is one of the options that we are looking at. It is also the case, as you know, that offset credits can be bought through the clean development mechanism and elsewhere if departments exceed their carbon budgets, but the most important thing about this - and we are obviously thinking hard about how exactly we do this - is that it must be an exacting discipline on departments. A lot of us believe in targets and targets are important to drive cultural change, but there is nothing like a budget to focus people's minds, and so that is very much the spirit in which we are thinking about this. Q10 Anne Main: Perhaps I could press that a little further. I believe there is a public will - you have said there is an open door - to go down this route. Edward Miliband: Yes. Q11 Anne Main: But I am not sure there is a public will to do some sort of horse trading on budgets. I think there does have to be a cultural change. You have touched on the Treasury, and can I ask if there is genuinely going to be the funding for this across all departments, such that in education the budget will be stepped up to make sure there are courses for green jobs, for green training, and so on and so forth. Do you have that assurance from the Treasury? Edward Miliband: Assurances from the Treasury
are always hard to come by, but I definitely have their assurance that they are
working co-operatively with us on this.
They do not give blank cheques - sensibly, in my view. I think every department will play its part
in this process of meeting our carbon commitments. I think every department is determined to do
so. As I say, some departments have
existing commitments, some departments will have to step up their
commitments. It is just worth saying,
because I think you raise an important point, that the scale of the challenge
is quite significant. If you think about Adair Turner's recommendations to the
Committee on climate change, he is talking about a 32% reduction in greenhouse
gas emissions by 2020 on the basis of the 20% European package or 42% reduction
in greenhouse gas emissions on the basis of the 30% European package that is
subject to a deal at Chairman: Thank you. You are the first Secretary of State in a brand new department and that is a very exciting appointment but it is also a very big challenge, particularly when you have to get the budget from two existing departments and negotiate that and set up from scratch. We had a very useful meeting within DECC with the Permanent Secretary, talking about some of the challenges we face. I know there are one or two points the Committee might like to pick up. Q12 Mr Weir: Secretary of State, you have quite rightly talked about the need to move to a low carbon economy this morning, but yesterday's Guardian published a table comparing economic recovery stimulus packages, showing that in the UK package only 7% went towards green measures - which is less than half of what President Obama is doing in the United States. Do you think that is enough to propel us towards a low carbon economy? Edward Miliband: I am not sure I recognise
those particular figures. The broader
point I would make is twofold. First
of all, we have done a lot in this country in terms of the move towards low
carbon - more than the Q13 Mr
Weir: Lord Stern has recommended that something like
20% of these packages should go towards green projects. According to this, the Edward Miliband: The Treasury obviously is in charge of these issues but we have and have been having detailed discussions with them around the low carbon industrial strategy and around a whole range of issues. As someone who used to be a specialist advisor on the Treasury, I sort of want to defend it somewhat - it is probably in my interests to do so. I do think that they understand and the Chancellor in particular understands - he is someone who has taken these issues very seriously for a long time - that when Britain comes out of the recession, when the storm clouds pass, we need to be in a position to take advantage of the great opportunities that there are. It is worth saying that this is a $3 trillion industry already across the world and it is set to double, and we need to find ways in which we take advantage of it. The other point I would make - and I think this is important - is that this is also a way of saving money for the public sector in the longer term. There is a scheme called the Salix scheme which some people will be familiar with, which provides loans to schools and hospitals and others to put in place energy efficiency measures. It is not only good in terms of stimulating economic activity but it also saves money down the line in energy costs. It is right for the economy, right for the environment too, and I think that is something the Treasury is very much aware of. Q14 Mr Anderson: When you were appointed, we were all looking forward to having a good working relationship, I think it is step in the right direction. One of the things that has been raised, and we raised it with the Civil Service when we met them, is the problem about getting responses to answers. Parliamentary questions that have been down for some time now have not been responded to. We understand that there are teething problems, but do you have targets for responding? Certainly we have targets for responding to people and they are not happy when we do not meet them. Edward Miliband: There has been an issue about the correspondence and various issues and it is being sorted out urgently and does need to be sorted out. In my view, it is partly the move to a new department, and the upsurge in activity and interest which maybe people were not adequately prepared for, but it is being urgently sorted out. Ms Wallace: I said to you when you came to the department for a briefing that we were not at all satisfied with our performance on this. While there are some factors that have played into that, they are not excuses. We are in the middle of a blitz on outstanding correspondence. We have halved the backlog in the last week, and our target is to clear the whole of the backlog (that is, correspondence that is over its target) by the beginning of March, so it is very actively being worked on. Some of the things that have delayed us have been simply the disruption of a new department which has generated more interest, and trying to make sure that we give people better answers as well as timely answers. But we want to move to a situation where we are performing well against a good target and we are sorry that we have not managed to do that in our first months. Q15 Mr Anderson: Can you have a blitz on parliamentary questions as well? Ms Wallace: Yes, we will as well. Q16 Mr Anderson: So they can be answered in less than two months. Ms Wallace: Yes. Q17 Nadine Dorries: I have a fairly affluent constituency, I suppose. If my constituency surgeries are anything to go by, with the number of people I have had in over the winter with a whole array of complaints about Warm Front, I think the main complaint is this, that the organisations which are contracted which are able to install or fit the new boilers or radiators or whatever the kit is, do seem to be ramping up considerably the cost for doing so as the approved suppliers. That means, therefore, that the finance available, particularly to the elderly, is not maximised to their benefit. I will give you an example. An elderly couple need a new boiler and two new radiators for their very small accommodation and they cannot afford both with the Warm Front grant because the supplier is charging almost the entire cost of the grant, and yet when they go out to other suppliers the cost is almost half. They do not have any money of their own and they cannot use the Warm Front money because of the extortionate costs. What are you going to do to try to knuckle down on this and stop this happening? Edward Miliband: I think you raise an important issue. There are two sets of issues with Warm Front, and you may have seen the recent NAO report on this. The first set of issues is that of some policy questions around Warm Front; for example, the level of the maximum grant. The level of the maximum grant has been at £2,700 for three or four years now. I personally think it needs to be raised and we are looking at the levels it needs to be raised to, because there has been a problem of people who cannot afford to make the contribution - maybe they are some of the people that you are talking about. We need to act on that and we are going to be doing so in the coming weeks. The second set of issues is that of operational issues around Warm Front: the handling of complaints, the delays that people have seen in getting the proper service, and a range of other issues. Again, we are urgently working on dealing with those issues, looking at the contract, and looking at improvement, because, frankly, although the NAO report shows 86% of people who have been helped by Warm Front are satisfied, and Warm Front I think does an insulation every six minutes, the standard is not good enough, in my view, and needs to be improved. We also need to think about the future contract for Warm Front and ensuring that that is properly structured. As you may know, it comes up for renewal next year. There are three sets of issues: the policy questions which we are working on, including the grant maximum which you have raised, the operational issues, and then the future. Ms Wallace: Interestingly, the NAO has looked across a number of sources, having looked into the question of whether the costs are on average higher than what is available, and have come to the conclusion that they are not really. Q18 Nadine Dorries: That is not my example. Ms Wallace: We are very conscious that a lot of people say from their own experience that they feel uncomfortable about it, which is why we are looking at it. Q19 Nadine Dorries: Exactly. When is renegotiation of the contract likely to take place? If renegotiation takes place, how long before the implementation of the new negotiations? What time frames are we looking at for an upping of the grant and an upping of the service levels? Edward Miliband: Very soon. We are going to be saying more about this in the coming weeks. This is not something we are going to leave for months. We know we have to move on this quickly, precisely to respond to the people who are coming to see you in your surgeries. We know this is urgent and we are getting on with it. Q20 Nadine Dorries: Hopefully we will see an improved service before next winter, before the people need it. Edward Miliband: That is definitely the intention. Definitely. Q21 Chairman: Before we leave the Department's structure, it is very difficult in terms of budgets. I have been looking through your departmental budget and some of the headings are very tight, shall we say. Do you feel that the settlement that you have had is adequate in relation to, say, the department having adequate resources? Edward Miliband: I think these are challenging times. We have turned two departments into three essentially, because you now have DECC, BERR and Defra, and we have done it within existing resources - and I think that is right in these challenging times. Obviously that makes both the administration side and the programme side tough in terms of the priorities you have to set out, but I think that is the sort of world we live in, and all of us have to play our part in ensuring not only that we do the right things in our department but that we meet the overall fiscal strategy of the Government. Yes, it is challenging, yes, it requires hard prioritisation, but, yes, I think it has been the right way to go. Q22 Chairman: There is one that looks like a bit of a bright spot but I wonder if you could explain whether it is ring-fenced, and that is the Nuclear Decommissioning Agency, where it appears that their income is substantially more than was originally projected. Is that substantial increase within a ring-fenced budget or is that available for the department? Edward Miliband: I believe it is a ring-fenced budget. It is an oddity, if you like of our department. When you think about the approximately £3 billion worth of spending, a very significant proportion of that goes on the NDA but it is doing very important work in terms of decommissioning and it is a ring-fenced budget, yes. I think it is important that that money that is needed for decommissioning is properly protected, as it is in all our interests. Chairman: Perhaps we could turn now to the issue of security of supply, which of course is one of your department's very important responsibilities. Q23 Charles
Hendry: Secretary of State, the Edward Miliband: Could I say first of all,
Charles, that it is a pleasure to have you on this Committee because you bring
experience from the front bench, although I know you are not here in that
capacity. Let me try to set out some of
the context and I will come to the specific question you ask. This winter is quite interesting as a test of
arrangements. We have had the
Russian-Ukraine dispute as people will know which had a significant impact,
really more on Europe than on us, but it has a knock-on impact on us because
the Interconnector which goes between ourselves and the Continent was exporting
much more time during this winter than would be normal. We have also had the coldest winter since
1996 so far and I think that the system has withstood that test reasonably
well. It is worth remembering that the
North Sea during this time - and of course the Q24 Charles Hendry: Two things come out of that. First of all, does it concern you that we have been seeing over this winter some of the gas storage which we have being tunnelled out through the Interconnector and so being sold off cheap to the Continent rather than being used for domestic use? Second, the list of 17 which you have - and I have it in front of me - looking at the largest projects on that list, Saltfleetby planning has been rejected; Albury planning has not been sought - it is not being taken forward; Bletchingley and Gainsborough have dropped off the radar and are not being pursued; Portland is on hold because the financing is an issue; and Fleetwood has been rejected by the Secretary of State personally - which I think it was your predecessor rather than you. That is several billion cubic metres of the projects which you have talked about. It is fine to have a long list of projects, but as one drills down into it one sees an enormous amount of it simply will not go forward because of the financing, because of the concerns about the cushion gas and the tax regime on that, and the planning opportunities. Edward Miliband: Some of those projects may be
less likely to go ahead than others, but I can read you a longer list of
other projects that are still being planned to go ahead. In a way, I do not think there is much point
in getting into that. The basic point
that we need more gas storage is correct.
I said in my opening statement that when we produce our carbon budgets
report in the summer we will also be looking at questions around security of
supply, and we are looking again, as it is right for a new department to do, at
issues around gas storage. The only
thing I would caution the Committee on about this gas storage issue is that we
operate in a dynamic markets system with a role for government. We must not come up with proposals which are
going to crowd out the private investment that is being made in gas storage., because
there are incentives in the system to invest in gas storage. There are pretty big penalties for companies
if they fail to meet their obligations in terms of their winter
obligations. I think it is right to look
again at some of the issues around gas storage, really for the future to make
sure that we have sufficient gas storage in the future. But, as I say, I would caution about doing
things which might deter investors because I think the investment climate is
obviously difficult, given the credit crunch, which would deter some investors
from coming in to gas storage. You
raised Mr Rickett: I think you have summed up
the position very well. The only comment
I would make is in relation to your comment that we were somehow selling our
stored gas cheaply into Edward Miliband: Compare this to 2006, when we also had a Russia-Ukraine dispute, although admittedly a shorter one, since then we have had the Langeled pipeline, which on cold days is supplying I think 60 million cubic metres a day to Britain, we have had the BBL pipeline from the Netherlands, which is supplying another 25 million or 30 million cubic metres, and we have had investment in LLG. It adds up to about 100 million cubic metres out of an average winter demand of something in the 300s. Storage is not important. I do not want to underestimate the importance of it, but it is also important to have diversity of supply. The relationship and the investment there has been in Langeled and in BBL has been incredibly important and in a way shows that the system has responded to some of the challenges that we face. Q25 Paddy Tipping: I have a specific question to begin with and a more conceptual question afterwards. What is the volume of Rough at the moment? You have said that this year has been a really tough winter. Have there not been concerns that Rough would run out by the end of this month. The second issue Mr Rickett introduced himself. Do we really understand the workings of the European energy market when it comes to gas and electricity? Is it really open and transparent? This has been promised for ten years. Are you going to achieve it, Secretary of State? Edward Miliband: Let me deal with your second
question first. On the sort of conceptual
question, I think that liberalisation and transparency is very important. One of the first things I did when I came
into office was to go to the Energy Council and agree the third liberalisation
package. This has obviously, as you say,
been a long-running story. I think it is
important to get behind the sort of rhetoric of this. Why is it important? Because, talking to my European colleagues
during this crisis, if we had had greater transparency it would have helped,
particularly for those countries that were in difficulty, to work out where the
gas was and where it could go. I will
be honest with you, I think this has been a wake-up call to Q26 Sir
Robert Smith: I think you should reinforce the need for that
transparency, because Mr Rickett said that when the price is high in Europe gas
flows from here to Edward Miliband: You are tempting me into
Treasury business, Sir Robert. I am joking. I will come on to your
question. It is a two-part question
really. Absolutely we understand the
importance of oil and gas. By the way,
for members of the Committee who are interested, the National Grid have an
excellent website which can tell you everything you need to know. It is the world-leading website about gas
flows, gas storage, et cetera. Anyway,
anyone who looks at what has been happening this winter is reminded of the
importance of the Q27 Sir Robert Smith: One of the important things to reinforce to the Treasury is that one of the jewels in the crown of what has happened in the North Sea is a great body of expertise and experience, and in my constituency of West Hill, a place known as Surf Sister, where there is a cluster of sub-sea engineering expertise, that not just supports the North Sea but has a major export potential. Does your department have a role in seeing the export potential of the skills base within the industry? Edward Miliband: Yes, absolutely, it is
us. Very much so. The North Sea sustains something like 500,000
jobs throughout the Chairman: Can we now have a look at the security of electricity. Q28 John
Robertson: During the winter we were very
fortune in that the gas usage in the Edward Miliband: I think you raise an important issue which people are aware of about the future prospects around security of supply. I think it is worth drilling down into these figures, just to be clear about what the nature of the challenge is. If you look at the figures, about 16 GW of plant is due to close by the end of 2016 - that is 8.4 GW of coal, 3.6 GW of oil, and 4 GW of nuclear. If you look at what is under construction at the moment, that is 10 GW under construction - and that is not simply in planning but under construction - and there is about 10.5 GW consented but not yet constructed. Of that 20 GW that I am describing to you, about 14 or 15 GW I think is gas-fired, CCGT, power stations. I think there is a security of supply challenge. I am confident that we can meet it but I would reframe the challenge slightly. I think the challenge is one of diversity. In other words, can we ensure that we not only have gas-fired power stations but we also have renewables, we also have nuclear - which I know is an interest of yours - and nuclear is obviously going to be slightly further down the road than 2016, more like 2017/2018 - and can we ensure that we have clean fossil fuel, clean coal plants as well? I think we can meet a supply crunch, a supply challenge in 2015/2016. I think it is challenging but I think that the plans that are already in place take us some way towards doing that, but I think we need not only to meet the supply challenge but to do so in a way that we ensure there is diversity. One thing we learn in this energy sector is that diversity is an incredibly important guarantee of security. Q29 John
Robertson: I accept what you are saying
about diversity and it is important that we do not put all of our eggs in one
basket, but we are heading towards doing that very thing, with putting such
reliance on gas. We also had the period
during the dispute between Edward Miliband: If we were really relying on renewables, then we would be putting ourselves in a vulnerable position, but I think renewables can play an important part in the energy mix. When we make our calculations about security of supply, we take account of the intermittency of renewables, and you need that baseload capacity as well, and some of that will come from gas, some, in my view, has to come from clean coal, carbon capture and storage, some of it will come from nuclear. I think it is absolutely right what my predecessor did to open the way to new nuclear. I recently chaired the Nuclear Development Forum precisely looking at driving forward new nuclear. I think that you are right, you need that diversity. I think renewables can play its role in the energy mix, but I think it is one of a number of technologies. Q30 John
Robertson: I am concerned that you are
talking about a nuclear which will not come on line until 2018/2020. We are talking about carbon capture and
storage. At a conference I was at
last week, an expert was telling me 2025 before we can guarantee to have proper
output, so more and more reliance on gas at times when other countries are
coming on line. I have mentioned Edward Miliband: Yes, I think there will be
enough, as I have said. If you think
about what we are doing in relation to Milford Haven, for example, we are
building two enormous LNG terminals which I think can supply about 20% of our
total gas needs. I think it is two sites
of 10 billion cubic metres each. We are
talking about very significant investment which is part of our partnership with
Q31 Dr Whitehead: It is true that we do, indeed, need a diverse range of different technologies in order to fill the potential gap in electricity generation. You have mentioned the amount of renewable capacity that has been built and also what is awaiting construction. With quite a proportion of that renewable capacity, however, particularly onshore and offshore wind, even if that capacity is built and completed it will in large measure await slots for connection to the grid, in some instances slots as far away as 2015 for farms that are being built right now. Is it your intention to tackle that question of rather distant connections, which rather disrupts the idea that renewables can make the contribution to filling the gap by being able to put their supply on to the grid? Edward Miliband: I think you raise a very important question, Alan, which is about connection to the grid. There are three important things that we are doing to tackle this. The first is that National Grid have taken forward offers of 450 MW in relation to renewable technology that needs to come on-stream. It is ready to come on to the grid and they are in the process of making specific offers on that. Second, we cannot just have an ad hoc response to this. We need a different system than the current queuing system that we have, because the current queuing system is not, in my view, an adequate system. Industry and Ofgem and the Grid are in discussions about this. I take the powers in the Energy Act, which basically say that if they do not sort it out we are going to have to sort it out ourselves. I think it would be better if they came to a solution which was an agreed solution. One of the systems that they are talking about is the so-called Connect and Manage system, which gets away from this queuing system and accepts some of the limitations of the grid but gets people connected more quickly. I am expecting by the end of next month to get a final set of recommendations from them. If they do not act, I will have to do it myself, but we want this new system to come in from April 2010. Thirdly, there is the Electricity Networks Strategy Group which is looking at the grid going forward - so supergrid and how we can upgrade the grid going forward. That is going to be coming out with a vision for how the grid needs to develop, but I am totally aware of the urgency of this situation and it is something the department is taking very seriously. Mr Rickett: The long-term solution is investment in the grid to give us the capacity to enable people to be connected. The Electricity Network Strategy Group has been looking at that and developing a green vision for that which is going to involve £10 billion to £15 billion of investment or so. That then needs to be translated into reality and the price controls and regulation of the grid by Ofgem, and they are looking at their future investment regime. That is, in a sense, the longer-term solution to it, and then we have to have a connection regime which fits with that. As the Secretary of State has said, there are proposals being developed for the enduring connection regime, which might include a Connect and Manage option, and then there is the short-term issue about whether we can speed up the queue. We have over 50 GW of plant seeking connection to the grid by 2020, which is a measure of the interest in filling the capacity gap that we have just been talking about but also creates the problem about how do you prioritise this and get a handle on when people are really going to be ready to be put on to the grid. That work is ongoing and we are hoping that National Grid and Ofgem will be able to announce some progress in the next month or two. Q32 Mr Weir: Whatever the mix of energy for the future, obviously there is going to be a great deal of investment required in new generating capacity. Given that most of that is going to come from the energy companies, given that government also wants some green energy, given there are also pressures to reduce prices, is there a contradiction at the heart of the policy in asking energy companies to do all three things at once? Edward Miliband: I do not think there is a contradiction. There is a dilemma that needs to be sort of resolved. The energy companies need to make sufficient profits in order to invest in the future but at the same time it has to be at prices that are fair to people. I think this is a really important point and it is a point I have made to them ever since I got this job. It is not just about the overall level of prices, as this Committee knows; it is about some of the specific practices which people really object to, which may not make a huge difference to their balance sheets overall but are the things that people really find objectionable for reasons that I fully understand and concur with; for example, around the overcharging of people on pre-payment meters. I do not think there is a contradiction. I think there needs to be a recognition that energy companies need to make profits in order to invest. We are relying on them to make something like £100 billion of investment, but I think at the same time that is not an excuse and must not be an excuse for sharp practices in relation to specific groups of customers. Q33 Mr Weir: Do you believe in the current recession and credit crunch that they are going to be able to make that investment in time? Edward Miliband: I do. I think that the credit crunch poses challenges to it. The way I would describe it is that for the larger companies, the 'big six' energy companies, for example, which have pretty healthy balance sheets, let us be honest, I think it poses fewer challenges than for medium-sized and smaller companies that will have a lot more difficulty getting access to credit. I do not say there are not challenges for the bigger energy companies, but I think the challenges are less extreme. They need the right framework going forward from government and I think it is possible for them to make the investments, but I do not think that that need, as I say, is an excuse for some of the things that we have seen in relation to groups of customers. Q34 Dr Turner: The effects of the credit crunch is bad enough already, but would you agree that there is a risk - and I do not know what the department's view of this is, that it may affect the diversity of the energy sources in which we invest? Gas is easy, because it is cheapest and has less grid problems, but if we are looking into real security of supply for the future, the marine technologies have an enormous capacity to deliver within about the next ten years but, inevitably, because of their state of development they are expensive, so there is a clear investment hurdle to overcome there, and the credit crunch is undoubtedly making that even more difficult than it already was. Do you think the Government is doing enough in its support of emerging technologies in order to overcome that problem? If we really want security of supply, get tidal power. There is nothing - nothing - that could be more secure so long as the earth and the moon are still together. Edward Miliband: I know this is a very big interest of yours and I think it is a very important area. I know Lord Hunt, who is the Minister in charge of this Department, has been working with you. First of all, the banding of the Renewables Obligation is precisely designed to reward the more expensive, more challenging technologies. So it is 1.5 ROCs for offshore wind and I think it is a higher number for more adventurous newer technologies. I think we have taken action on that. I think it is right that we look not just at the general re-capitalisation of the banks that has happened, which I think is very important, and not just at the specific schemes, some of which are still getting going, from DBERR around working capital and around some of the smaller firms, which should help the different parts of the jigsaw. I think it is right we look to see whether there is further specific action that is required either in the sector you are talking about or more generally and that is something that we are looking at and I think it is right that we are looking at it. In a way intelligence is coming in all the time about the specific and differential impacts of the credit crunch because it is having differential impacts not simply in this sector, not simply by the size of company, which I have already mentioned, but in different areas. I think there are challenges in renewables, for example. Marine is obviously also a challenging area. This is something we are very much looking at. Q35 Dr Turner: We have always looked in this country at different generation technologies and the two implications in terms of encouraging through ROCs for renewables and non-CO2 production producing technologies. Would you agree that we have done rather less or less effectively in providing a disincentive to produce carbon in terms of the carbon price, because the ETS so far has had virtually no impact on generation companies as far as the cost of CO2 emissions is concerned and does not look likely to have a very high impact in the future? Do you think we should consider more, even a direct carbon taxation on carbon emitting generation, in order to help try and direct investment to produce the diverse mix that we want? Edward Miliband: The answer is no. It is right to stick with the cap and trade
system because I do think that is the way in which you can get the changes that
you need at least cost and I think there is a general recognition of that. I think what we are discovering inevitably is
that in the middle of a recession the carbon price falls because people have
significantly less need for allowances.
We will learn as we go along about the EU ETS and how it should be
structured. We have got Phrase 3 coming
up in 2012 and it relies on having the right level of allowances structured in
a way that will have a reasonable level of the carbon price. I also think that what we have said about 100
per cent auctions in the power sector, which is one of the aspects of the
scheme that has been agreed as part of the 2020 package in Q36 Anne Main: I would like to press you on energy through waste because it does seem to be remarkably absent when we are talking about a renewables policy. Do you believe you can get a buy-in to having energy through waste within local communities? What are you doing to explore education and public perception about the need or possibility of energy through waste? Edward Miliband: Energy through waste can certainly play an important role. When you look at our Renewable Energy Strategy that was published last year, it looks at a range of different ways in which we can get renewable energy, not just onshore and offshore wind, but also heat. We can make a real difference in this country through renewable heat. Currently it is 0.6 per cent of the heat market. We are looking for it at the moment to go to 14 per cent. That is a very significant increase. I think there is a lot more we can do. Mr Virley: We will be saying more about this in our final renewables strategy this summer. As the Minister says, increasing the use of energy from waste is going to be an important part of that, not least the incentives that we are going to be introducing in the Renewable Heat Incentive, but also the increase in the landfill tax which is obviously discouraging waste going to landfill. Q37 Anne Main: Are you going to be designating energy through waste plants as strategic parts of infrastructure? Mr Virley: The national policy statements will be consulting later this year. We will be saying more at that stage about the treatment of those plants. Q38 Anne Main: Can I press the Secretary of State to say whether or not he believes this would be something that will be led by the Government to be saying this is a part of strategic infrastructure? I am not asking you to divulge what might be in the Planning Policy Statement. Do you believe that is the drift? Edward Miliband: I think you are right about energy through waste, I think it can make a big difference, but I do think the consent of local communities on this is very important and I think one needs to respect that, but we will obviously be saying more about it in the coming months. Q39 Dr Turner: Ed, I realise that energy from waste is a slightly difficult area for you because responsibility for it is actually not just in your Department but in DCLG and Defra. Are we getting the most that we can from energy from waste possibilities? We are certainly not getting the amount of biogas which we could produce potentially from anaerobic digestion. We are still heavily dependent on large-scale municipal waste incinerators which are deeply unpopular with the public and produce vast quantities of ash which can only be disposed of by landfill. There are other technologies, such as advanced gas plasma, which now exist, which could be vastly more efficient in terms of energy from waste. Do you have any comments on our energy from waste policy? Do you think it could be uprated? Edward Miliband: It is good that you have asked this, Des. It is worth saying that in the Renewable Energy Strategy we talked about biogas heat, for example, as providing five per cent of their transition to a 15 per cent renewable energy target by 2020, which is quite challenging. I think generally in the area of heat in particular we need to make more progress because, as I said to Anne when she asked her question, that is an area where we need to do more and have not done as much as we might have done. I actually think thinking about biogas in relation to heat, for example, is important and I think the Renewable Heat Incentive will help in this because it does provide for the first time a proper incentive for renewable heat. It is also the case that we are working with Defra on a vision in terms of anaerobic digestion and what that can do and how we take those plans forward. Mr Virley: There is an industry and government working group at the moment on the future of anaerobic digestion. We are also working with National Grid on the injection of biogas back into the grid network. We will be saying more about our plans on that in the final renewable strategy in the summer. Q40 Dr Turner: Do you have a view on incinerators? Edward Miliband: It is clearly an issue in local areas. Moving towards energy from waste is one way of dealing with many of the issues that people face. Q41 Colin Challen: What confidence should we place in the nuclear industry's claims to build new nuclear perhaps at the earliest by 2017 when the Finnish nuclear power station is severely over budget and over time? Have we got some British formula that can somehow avoid all their mistakes? Edward Miliband: I do not think we would claim
great superiority. I always think that
is dangerous. Let me make a couple of points
to you about Q42 Colin Challen: Nobody has. Edward Miliband: There is definitely a skills
issue. Actually, given the ongoing work
in this country and the fact we still have ten nuclear power stations and that
there is decommissioning work going on, I think it is very important that we
take the right actions on skills to make sure that we can avoid some of those
issues. There are lessons to be learned
about the management of the project which I do not particularly want to go into
in any detail. I think there are broad
lessons from that, but I do not think there is any reason to think that because
Q43 Colin Challen: I would like to go into the Department's relationship with the nuclear industries in a little bit of detail. We have seen from the estimates that that is a very special relationship; they are almost joined at the hip. If one called the Department after its biggest budget it would be the "Department for Nuclear Decommissioning," but it is not. Edward Miliband: It does not sound so catchy somehow! Q44 Colin Challen: My question relates to an alleged cover-up from Parliament of the way that the contract to Nuclear Management Partners was awarded for the running of Sellafield, which was last year, when Parliament was denied the chance to review the case of the underwriting of that award. I believe we have a right to consider any underwriting by Government of over a quarter of a million pounds and this is rather more than that. It was described as a clerical oversight that MPs were denied the opportunity of looking at that contract, even though there is a well-documented paper trail showing that there was a consistent effort by officials to deny parliamentarians sight of the documentation. Do you have anything to say on that? Is it your view that it was a clerical oversight? More generally, would it be a future goal of your leadership of DECC to bring a level of transparency to its relationship with the nuclear industry so we can have confidence, even if we do not agree with nuclear power, that the predictions and assessments are actually accurate? Edward Miliband: The way I would put it is that you need fairness not favours in relation to all parts of the energy industry and I think that is very important. On the specific issue that you raise, I think it was right to apologise for the error. I think it was an administrative error that happened when the document in question was not placed in the Library of the House as had been promised. The procedure that was followed is an established procedure whereby when an urgent matter needs to be dealt with we write to the chairs of the relevant committees. In fact, I think it had been used previously and I do not think this has caused the same concerns around the award of the contract for the low level waste repository near Drigg as well as in relation to some of the indemnity questions. I think it is worth saying that this is a very technical issue around an extremely unlikely event occurring and costs therefore being incurred by the site licence operator and the question of who those costs would fall to and whether the Government should give them indemnity. This is not about new nuclear, this is about the management of the site at Sellafield. I sort of understand people's concerns about nuclear because it can give rise to concerns. I think our role as Government is to give people reassurance through showing fairness not favours and also reassuring people, as we have done in the legislation, that the costs of future decommissioning will fall on the industry and not on the public and giving assurances on safety. I think we have a relatively good safety record in this country. People who know my family background would know that I did not grow up in a pronuclear family, but I do think that climate change changes one's view about nuclear and about the role it has to play in our energy mix. It has got to be done in the right way, I completely agree with you. Q45 Colin Challen: Civil servants were writing to each other examining a strategy for preventing Parliament within the timescale learning of the details of the underwriting of the risk. That is documented. How is that an error? Edward Miliband: I have not seen that documentation. It obviously took place in the previous department. I have said that I think it was wrong and I have apologised for the fact that the relevant document was not laid in Parliament. I honestly do not see the complexion that you put on this. Q46 Dr Whitehead: Could I ask your thoughts on the development of the Renewables Obligation now that we have the prospect of the feedin tariff and the Renewable Heat Incentive coming on-stream? The proposal is that the RO is expanded to 30 to 35 per cent over a longer period. What thoughts are you engaged in at the moment in terms of making sure that the Renewables Obligation does not get itself tangled up with the feedin tariff and the Renewable Heat Incentive at the lower end? At the higher end, do you have thoughts on further variations of banding to accommodate that longer-term arrangement for ROs and perhaps the rolling up of ROs to facilitate earlier investment? Is it your understanding that the Renewable Heat Incentive is not likely to come on-stream until 2011? Would that not create the problem of a hiatus in investment whereby heat investors are waiting for the incentive to come in and perhaps therefore stalling on investment where they perhaps would not do that were the RHI coming in in line with the feedin tariff in 2010? Edward Miliband: On the RO, we have announced its extension to 2037, which does seem rather a long way off to me. That is to do with the average life of a renewables project and the way the capital costs are spread, so it takes account of a 17-year project and 2020 and so on. I think that is an important confidence that we need to give to people. It is important not to try and rewrite history in this area or second-guess history. We have the Renewables Obligation and it has led in the last five years to a significant uplift in renewables. We have banded it in order to take account of the greater costs of technologies. It does have a fixed price in it. Assuming that we are in the situation we are in at the moment where the market is not oversupplied with ROCs, it has a buyout price which gives a fixed price. I think it is important to express confidence in the Renewables Obligation overall. Mostly at the lower end - and we are going to be consulting shortly on FITs and the way it works and you led a lot of the work that has been done on this - there is not a crossover with the Renewables Obligation because the kind of levels that we are talking about does not really crossover. Once you get up to the one megawatt, three megawatt, five megawatt you are more into a crossover. I think that what we will endeavour to do in the consultation document is give people confidence that they can carry on investing and that they will not lose out in this interim period between now and FITs coming in in April 2010. Why does it take longer to do the Renewable Heat Incentive? April 2011 was always going to be the timetable. We are just dealing with a much more new and complicated arrangement. I do not think there is any other country in the world that has the kind of Renewable Heat Incentive that we are talking about and really it is a desire to get it right. We have a lot of international experience to draw on in relation to FITs but we have much less in relation to the RHI. There are relatively low levels of investment in heat at the moment. I do not think it is going to lead to a blight in terms of heat investment. I think we need to get it right and get it as soon as we can. Mr Virley: We are moving ahead as fast as possible on the Renewable Heat Incentive. As you will know, we introduced the legislation a matter of weeks after the consultation closed in the Energy Act. It is a totally new market and we have got to establish regulatory structures to regulate the heat market. We will be consulting on the details of the RHI. When you think about the development of other instruments like the ROCs, this is a very fast timescale to get this whole new incentive in place by 2011. Judy Mallaber: I wanted to explore the relationship between DECC and other departments around recycling which at the moment is with Defra or the DCLG. I have got a very big plastics recycling plant in my constituency which is part of the biggest polythene and plastics manufacturers in Europe and I have been exploring with Defra ministers, but previously with the minister who is now in your Department, about the way in which we are not bringing in some regulations which could encourage recycling capacity within the UK, both creating green jobs, which I would have thought should be a priority for your Department, and which is about making sure that we are not shipping our waste overseas for recycling. There is a particular issue around farm plastics and other plastic issues. Is that something that is just within another department or are there mechanisms for you to discuss those issues which have a direct impact on climate change, where we are doing the work, we are increasing our emissions by shipping this stuff overseas and green jobs in this country? Do I have a capacity for talking to you as well as to Defra on those issues? Q47 Chairman: Defra lead on waste, but there are implications for you as well. Edward Miliband: We have regular discussions with them. In particular, we have Lord Hunt, who is a crossover minister if you like, half the time he wears a Defra hat and he also wears a DECC hat half the time, precisely in order that we have that crossover. I do not know about the specific issue that you have raised in relation to plastics, but I am very happy for us to look at it and to take it forward. Q48 Judy
Mallaber: Is it regarded as part of your remit to look
at such issues as the capacity for doing that within the Edward Miliband: If it has implications for carbon
emissions in the Chairman: I want to pick up this issue of the potential for new investment in coal and nuclear. Q49 John Robertson: Colin Challen and I probably come from different sides on this, but we do come from the same side in relation to openness and honesty and transparency. Secretary of State, I hope that you will make sure that the nuclear industry, which has been veiled in secrecy for decades in the past, does not have that in the future and that as we go down the road nuclear will become more open to the public to scrutinise at all stages and particularly this House. I do not particularly want to concentrate on nuclear as such but look at the waste to do with waste management. I have to say, I have been pretty disappointed with Coram. They have got together for years and come up with the same answers as every other country who has done any kind of investigation into nuclear waste and that is to basically put it in the ground. We have been promised policy statements in the summer. Perhaps you could tell us whether that is going to be the summer-summer, summer-autumn or summer-winter? Some of the statements that we are promised in the summer seem to creep into the winter. Edward Miliband: It is autumn actually. Q50 John Robertson: So I was right! Edward Miliband: As I understand it the nuclear NPS always was the autumn. Q51 John Robertson: It is always in the eye of the beholder when something starts and finishes. That is interesting. Tell me where we are with Coram in relation to the actual waste. Could you also tell us about jobs? I had one of my colleagues stand up in Parliament the other day and complain that the company E.ON was employing foreign workers instead of local workers. We have to remember that the jobs in the nuclear industry are not all nuclear energy jobs; a lot of them are civil engineering-type jobs and in a lot of cases are manual labour jobs. Could we say what kind of control we are putting on some of these companies that we are going to give orders to? Can we also talk about the skills training and what the Government is doing to encourage places like the Dalton Institute in Manchester who are doing excellent work and other universities who will remain nameless other than Strathclyde University, which is near my constituency, and where we are in that setup? Edward Miliband: On the first question about
geological waste, I understand why you are frustrated, but I think this is a
very difficult area to find a solution to.
We do have to learn from other countries. Geological storage does seem to be the best
option that is out there and that was the advice of Coram about the existing
waste and that is our view about any new waste that is generated. I think that is the right way to go from what
we can tell from the scientific advice that there is. That is a process that we are engaged
in. We are asking councils to come
forward in terms of volunteering to store some of this waste. Two councils have come forward and said that
they are willing to engage in that process.
That is a process that is going to take a long time. This is obviously a process which has to be
incredibly carefully done as to win local consent. We are engaged in discussions with Q52 Nadine Dorries: We have already had, as you are aware, the energy company chief executives before us and we asked them about nuclear power. There seemed to be an acceptance that via the planning process and via a slow, progressive movement on behalf of the Government anything was going to happen any time soon. We are aware that the research teams are making huge progress in terms of fusion power. It could be that going forward into the medium term there may be other solutions other than nuclear. Surely while we get to such innovative solutions as fusion power we really need to motor on, getting to a position where we are going to have nuclear power available to meet the shortfall that we have in our own energy supply and storage and all the other issues we have spoken about. Where are we in terms of once we do make the breakthrough in fusion power into implementing it and why can we not speed up what we are doing in terms of nuclear and get nuclear online to fill that gap for us? Edward Miliband: In terms of our plans on nuclear, I chaired the Nuclear Development Forum last month and I actually think there is a recognition that we have moved and we are on track for the timetable set out in the nuclear White Paper. If you think what we have done in the year or so since that was published, we have had the Energy Act which ensures that the costs of waste are properly catered for and ring-fenced by the companies, we have got the strategic siting assessment, ie where are these new nuclear stations going to be, which is out to consultation, we have made changes in the Planning Act around the Infrastructure Planning Commission, we are moving on the NII because recruitment of the inspectors is a big deal, and we are underway with the generic design assessment and we are on track to have our nuclear NPS in the autumn for designation next spring. Q53 Nadine Dorries: So when are we talking there? Edward Miliband: The timetable set out in the White Paper was 2018. I think some of the companies say Christmas 2017 but we are talking about 2017/2018. One of the things we want to ensure is we do not have just one player in this market. We have had EDF take over British Energy, but we also have two consortia that have come forward, one involving two companies and one involving three companies. My sense is, and the Committee may have heard differently, that we are on track with nuclear. I do not say it is not a challenging timetable, it is, but I think the Office for Nuclear Development supported by Tim Stone, who is the Chair of that, has done a good job in pushing this forward. I take very seriously my responsibility to push this forward. Chairman: Let us have a look at the potential for coal. You do not need to talk about the controversy associated with sites which are particularly known to have CCS. Q54 Paddy Tipping: You come from a coalfield background. What can you do to help the coal industry? I know you have been talking to UK Coal and you want to expand at Harworth, but in the present financial market it is pretty difficult. There may be something you could do there. Even if we get the economics right, the environment is important too. I am worried about the competition you are running on carbon capture and storage. It is too little too late. We need to do more. We need to be more positive. Finally, I am not at all clear where the money is coming from to fund the CCS budget. There is a rumour that there is not any money and the Treasury is jibbing. Could you please reassure me? Edward Miliband: That is very unfair on the Treasury. Q55 Mr Anderson: Is it true? Edward Miliband: Let me deal with both parts
of those questions. On the indigenous
coal industry, yes, we are talking to UK Coal and I think the indigenous coal
industry that we have is important. I
have a pit in my constituency which has reopened, Hatfield, which is owned by
Richard Budge. I think that is
important. As like other sectors, I
think they face a difficult investment climate.
We are talking to them about the finances that might be available from
the European Investment Bank and elsewhere to help them and we are obviously in
discussions with them. On the wider question
about coal and CCS, let me just describe what my position is. There is one position that says coal is just
a dirty fuel and we should not build any coal fired power stations, there is a
moratorium situation and I do not think that is right for energy security and I
do not think it is right for climate change either. If you think about Q56 Chairman: Is it on track and on budget? Edward Miliband: I think we can achieve the demonstration project and it is certainly our intention to do it. We were due by next year to choose a bidder and that remains our intention. Q57 Mr Anderson: When you opened you talked about dynamic markets and strategic government. It does not seem very dynamic when you have reopened one colliery in the last ten years and the other one that Paddy mentioned is struggling to reopen, despite the fact there are at least 40 million tonnes of coal there ready to be waiting to be got and if it is not reopened 800 jobs will go there. You wrote to me to say that European legislation would not allow you to help in Harworth, for example. Figures from your own Department show that coal is our biggest supplier of indigenous energy in this country. Are there any plans at all to go into other areas to redevelop collieries or other forms of utilizing the coal in this country because there is clearly lots of coal there but we need to close the gap on that? Edward Miliband: You need both parts of the equation, it seems to me. When UK Coal come to us and say, "We've got these plans at Harworth and we want to talk to you about them," obviously we talk to them. We are talking to them about them. I do not want to give a misleading impression. I cannot sit here and promise that we are going to provide a big subsidy to get that to re-open. They are facing a credit crunch like everyone else but, like governments round the world, we face a difficult fiscal environment quite apart from the European rules. What we do want to do is work with them as much as we can to work out ways in which, if this is an economically viable project and that is an important thing to say and they think it is and lots of people think it is, there might be finance available. That is why I mentioned the European Investment Bank. I agree with you about the role indigenous coal can play. I mentioned in answer to Paddy's question about Hatfield in my constituency. This is not a publicly owned industry; it is a privately owned industry. If people come to us and say we have got plans in relation to a particular pit that we want to re-open or that we think can go forward, as UK Coal have done to us on Harworth, then we discuss it with them and that is what we are doing. Q58 Mr Anderson: What about further development in things like underground classification? Is any support being given to that? Edward Miliband: When Paddy asked me about the demonstration project I said we wanted more than one demonstration project. Part of it is finding ways in which we can test out and support a range of technologies. I know you have got a particular interest in the technology that you are talking about. I think we need to support a range of technologies in this area which can make coal cleaner, that is very important. Charles Hendry: I am delighted to hear the Secretary of State moving towards the Conservative Party's position on carbon capture and you saying that carbon capture readiness --- Chairman: You are not on the Frontbench here! Q59 Charles Hendry: --- is not adequate and we need to see more than one pilot demonstration. I think it is very encouraging that common ground may be developing there. Does he understand the frustration which I think is greater here than any other area of energy policy? When the Government started talking about carbon capture and storage there was real excitement that Britain would lead the world on this and now we are being overtaken by Australia, by the United States, by Canada, by Norway, by Abu Dhabi and by China who have got their pilot scheme up and running and are looking to develop this technology with a view to exporting it back to Britain rather than importing British technology and that we have lost the lead that we had there. The Financial Times reports today that this is being delayed. Is the Financial Times wrong that there are delays? Can you confirm that there are not disputes with the Treasury on how this goes forward? Edward Miliband: There are no disputes with the Treasury. We are trying to get to the right policy. I do not want to make this a party political issue because I do not think it is right to do that at a Select Committee, but what we are not going to do in this process is have a policy which essentially has a moratorium on any coal fired power stations. What we want to do is drive carbon capture and storage. We have got to find a way which is properly funded as well and I think that is very important. That is what we are working on, a policy which drives carbon capture and storage into the market and works with other countries to show what it can do and a policy that hopefully has more than one demonstration project. As I say, I think it is important to get the policy right and hopefully it will be worth waiting for. Q60 Charles Hendry: I think it is important to have as much common ground as possible. Will you look at also setting up, in the same way you have set up the Office for Nuclear Development, which I think has done some outstandingly good work, an Office for Carbon Capture and Storage development so it can look at where the obstacles are? Edward Miliband: I think the OND is a good model. Q61 Charles Hendry: Do you recognise a role for Government in this in terms of the infrastructure that Government needs to provide the pipelines rather than expecting every individual power station to have its own pipeline to a sequestration facility and recognise that if Government does not take the lead in that it simply will not happen? Edward Miliband: I think the general point you make is right, which is that the market can play a role in this, but given the nature of the technology it does need Government support, yes. Q62 Chairman: In terms of your own local constituency interest of Hatfield, you will be aware of the Yorkshire four proposal for a pipeline running from Hatfield, where I think there is planning permission for a carbon capture power station along the Humber Bank, past all the energy intensive industries, past the steel industry, past the power stations, past the chemical industries, past the refineries and out to the North Sea. That has not been supported. Edward Miliband: I had better not talk about
my own constituency interest in this, Chairman.
I think generally in the Q63 Paddy Tipping: You have mentioned affordability and prepayment metres. You have said some pretty tough things outside the Commons about PPMs. With Ofgem and the big six companies you have threatened legislation if we do not get this right. Could you comment on that? Secondly, I think you are aware of a fairly robust campaign that the Nottingham Evening Post is running around the back charging when PPMs are changed from tokens to other tariffs and the big bills that E.ON are landing consumers with. Would you say a word about those unfair practices? Edward Miliband: I support the Nottingham Evening Post's campaign. You have drawn it to my attention as have others. This is what I was talking about earlier on, that the energy companies sometimes do not help themselves. We all understand the need for investment and the fact that they need to make profits to make investment, but when you have a situation where people who are not on prepayment metres cannot be back billed for more than a year but we have people on prepayment metres that certain companies are back billing for more than a year - and the Nottingham Evening Post has sent me, through you, some of the examples - I think that the companies should show their responsibilities not just to their shareholders but to their customers as well. I think it is very important to say that. Just on the more general question about prepayment metres, Ofgem has just finished a consultation on legislating to change the licence conditions to prevent this unfair practice. I think it is right that they have done that. I think it is right that they should be tough. The energy market only commands respect if you have tough regulation, you have consumer groups playing their role and you have also Government speaking up on behalf of investment but also the consumer and it is my intention to carry on doing that. Q64 Dr Turner: Kingsnorth would be a decision just as controversial as the Heathrow third runway one way or the other, so I do not envy you having to make that decision. When are you likely to make it? Would you agree that one of the greatest drivers to getting CCS in operation would be if power companies were not able to build coal fired stations without CCS? Edward Miliband: Decisions on Kingsnorth will follow our consultation on the new conditions around coal fired power stations. I agree with you, we need to do all we can to drive CCS into new coal fired power stations. We must not do it in a way that achieves neither CCS nor our energy security. The Californians have an emissions performance standard - and I am not prejudging the issue on this - which means that no coal fired stations have ever been built with CCS or not with CCS. That is why we have to think this through quite carefully in a way that combines energy security and carbon capture and storage as well. Q65 Sir Robert Smith: You have mentioned throughout your evidence that the energy companies could do a better job in terms of the some of the smaller issues on prices, but in previous speeches you also expressed a frustration about prices not coming down as fast as they went up. Are you disappointed that not all energy companies have announced price cuts yet? Do you think those that have made cuts could have gone further, particularly with gas customers? Edward Miliband: There is no question that there are lags in the system. Energy companies buy their gas in advance and therefore there are lags in the system which means that price cuts take time to come in. Other companies should follow suit to the price cuts that have been announced. I think it is really important that the full benefit of the reduction in wholesale prices is passed on in retail prices to consumers. Ofgem will be publishing very shortly their first analysis of the link between wholesale and retail prices because we need transparency in this market so that the consumers do get the full benefit of the wholesale price reductions that there have been. Q66 Sir
Robert Smith: The impact of a cold winter and high prices
has meant that the Government's strategy for fuel poverty is not being
recognised and I think the Government recognises it is not going to reach its
target by 2010 of all vulnerable households.
I must declare a non-financial interest as Vice President of Energy
Action Scotland, a fuel poverty charity.
You have said in earlier evidence about the Edward Miliband: We need all three: you need income, you need proper action on housing and you need prices that are affordable but also fair to people so that the most vulnerable people do not end up paying the highest prices. I think you need to act on all three fronts. We have seen an increase in fuel poverty because of the price impacts. Some of that will unwind. Q67 Sir Robert Smith: I think you have accepted in earlier evidence that the long-term pressure is higher prices. Edward Miliband: There is a high carbon world in the future which will also be a high cost world and the better way to go is the low carbon world where you plan for that and you seek to minimise the costs that people face and the way you do that is with energy efficiency measures. That is why we announced quite ambitious plans in relation to household energy efficiency, not just insulation but some of the new technologies that people could use because I think that could make a real difference. Q68 Sir Robert Smith: One specific group that have lost out is those that live in rural areas without access to a gas main and so relying on oil, LPG, coal and some other solid fuels. Do you have any specific proposals to try and tackle their needs? The DBERR Committee recommended that maybe Ofgem should have a role with the oil and LPG suppliers. Do you have any views? Edward Miliband: I know this is a big interest of yours and I do not have an immediate answer for you on this. One thing is to get people onto the grid, but that is not always practical. One of the things that we are looking at in relation to Warm Front, for example, is how can we help those people who are off the gas grid convert and get the kind of central heating that they need which takes account of their particularly higher needs when they are off the gas grid. So I think there are a range of things that we can continue to look at in this area. Q69 Miss Kirkbride: How much is the climate change agenda going to cost the British public in the form of higher fuel bills than would otherwise have been the case if we had relied on fossil fuel generation? Edward Miliband: The costs tend to fall in the longer term beyond 2015. I cannot give you a figure today because I think they depend on decisions we make about the Renewable Heat Incentive, for example, and the costs of that, the feedin tariffs and the costs of that and, also, the final decisions we make in the renewable energy strategy about the different mix that we have. There is no doubt that there is an upward pressure on prices through the high carbon future. Some of the moves to low carbon also place an upward pressure on prices, but the way you minimise that and the way you ensure that people are protected from that is with the energy efficiency measures that I was talking about because that saves people, on average, £300 for the most simple energy efficiency measures. So the best antidote to some of the pressures that we see is around energy efficiency. Q70 Miss Kirkbride: They could do that anyway and still cut their costs of fuel/gas bills, could they not? Edward Miliband: I think we would be under an
illusion if we think there is a low cost high carbon future because we know
that, given the Q71 Dr
Whitehead: What would you regard as a success from Edward Miliband: There is no question that
President Obama is already making a huge difference on the climate change
agenda in his deeds and in his words and there is a real sign of commitment
from the Q72 Chairman:
I
think the whole Committee is very much committed to seeing a good outcome at Edward Miliband: Definitely. Chairman: The Government has given a very strong international lead and in fact has been very ambitious in its programmes, but there is an issue over how we take the public with us and how we get these issues over to the public. Judy has a question on this. Q73 Judy Mallaber: Defra's own research shows they have had limited success in changing behaviour over the last few years. People think it is down to the Government, down to industry, but the figures are they do not really believe it is down to them very much. What will DECC do differently? What are your views on personal carbon trading? What plans do you have to get the younger generation more on board and to do work in schools around it as well as changing the behaviour of adults? Edward Miliband: It is two things that seem to me to be absolutely essential, one is information and the second is incentives. I think that is the stage we are at in relation to climate change. On information, I think the "Is it happening?" question has been answered. 98 per cent of people think that climate change is happening. We are working with Defra on some of the climate impact studies. I think there is a "Will it affect me?" question. So people might well think, "Oh well, it is going to affect people a long way away from here. It's not going to affect me." I think we need to persuade people that climate change is something that will affect them in their communities if we do not do something. Then I think there is the "Is there anything we can do?" question and I think that goes to the point about information. Then I come to this question of incentives. I think incentives is a really big part of this. When you think about something like energy efficiency - and we are in very tough times - in a way that is a no brainer because it is good for people's bills, it cuts people's bills, but it also cuts their emissions. That is why I think we need to be much more ambitious in relation to household energy efficiency, for example. On your point about schools, there are some figure that I saw which show that 50 per cent of people pay attention to their kids when considering what to do about climate change and two per cent pay attention to politicians, which I think may well be true! I actually think young people is not the biggest problem in this. My sense is that young people do get it. Kids at school definitely get it. Q74 Judy Mallaber: How do you give them the information so that they can educate their parents? Edward Miliband: I am sure there is more we
can do. The "Act on CO2"
campaign is precisely about that. I
think lots of young people are doing that.
The other thing is and it goes back to this question about Q75 Judy Mallaber: On "the Great British Refurb", which is obviously very important in this, can I be confident that any of my constituents, if they phone the right number, can get quite substantial help towards paying the cost of doing that? Is this new money or how much of it is money that has already been announced? Edward Miliband: "The Great British Refurb" itself is for a couple of years' time, but there are lots of ways in which your constituents can get help. If they look on the "Act on CO2" website they can find out more information. Q76 Colin Challen: I wanted to ask another question about the feedin tariff. I very much welcome this development and particularly welcome your very constructive part in bringing it about. After that little bit of buttering up, I want to ask why the Government feels it is necessary to close early the Low Carbon Buildings Programme this June, leaving a gap of perhaps ten months. Many of those small companies may now go out of business if the custom base is reduced as a result of this ten month gap. They will have to start all over again next year. Why does it have to be the case that they could be left in an under-spend of £19 million in a low carbon buildings budget whilst we wait for the feedin tariff? Edward Miliband: I do not think the under-spend is going to be nearly that much. We are in constrained times in terms of budgets, but it is something we are looking at, ie what can be done about the Low Carbon Buildings Programme. We do understand the concern that people have about the gap. I cannot give you a promise today about what can be done, but it is something that we are looking at. Q77 Chairman: Thank you very much, Secretary of State and your colleagues, for your patience and the detail of your answers. There may be some issues that the Committee may wish to follow up. We very much appreciate your attendance. Edward Miliband: Thank you very much.
|