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Page 2, line 18, after ("environment") insert ("(whether by way of pollution or otherwise)").

The noble and learned Lord said: My Lords, after that disagreement with my noble friend, Amendment No. 2 and Amendment No. 5, to which I wish to speak at the same time, are put forward in response to the concerns expressed by my noble friend a week ago at Report

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stage. His concern was that the definition of the environment, which we were lifting from the Environmental Protection Act 1990, did not encompass the prevention of harm to living organisms and the ecological systems of which they form part.

As I made clear at Report, the Government do not consider that the downstream gas industry is likely to have significant effects on wildlife. However, to the extent that such effects exist, it is appropriate that they are taken into account. Having taken advice from the draftsman, we consider that these amendments are the most appropriate way to introduce the additional definitions from Section 1 of the Environmental Protection Act 1990, and I hope that my noble friend will accept that they meet his points though, I regret to say, not with the economy of words which he himself proposed.

The Earl of Cranbrook: My Lords, I am most grateful to my noble and learned friend for taking these steps. I am totally perplexed by the ingenuity and the mind set of those who frame such legislation. I would point out to him that the downstream effects are in fact potentially enormous. Methane itself is a greenhouse gas of great power. Carbon dioxide when burnt is also a greenhouse gas. There are many effects also of disturbance of the environment—for instance, in pipe laying and so on—where it is the living environment which is as much affected, and potentially significantly affected, as the physical environment. Therefore, I am glad to have this amendment in place. I sincerely hope that it performs the function that it is intended to fulfil.

One of the morals that we might learn is that it could be important for people in this House and the Government to put their heads together and get a definition of "the environment" which actually means what we all know "the environment" to mean (going back to the point made by the noble Lord, Lord Desai), which includes living organisms. I am sorry that we have lost that opportunity in this Bill. So I shall amuse and perplex your Lordships by waving one that might perhaps have potential after further thought in suggesting that the environment "consists of all or any of the following media, namely, the air, water or land, and the biological diversity which these media support". That definition is economical, truthful and pretty exact. I realise that that is not where we have got to, but I am grateful to my noble and learned friend all the same.

On Question, amendment agreed to.

The Earl of Cranbrook moved Amendment No. 3:


Page 2, line 18, after ("of") insert ("—(i)").

The noble Earl said: My Lords, this amendment was presaged by what I said just now. There are large effects from the consumption of gas. I think I have been over this ground sufficiently in discussing previous stages of the Bill. The consumption of gas produces carbon dioxide. I hope that my noble and learned friend will agree that the importance of the Government's climate change programme makes it necessary to lift one's eyes above the narrow objective of efficiency, to which he referred in his previous answer. The reference to the

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environmental effects of gas cannot ignore the critical impact of the release of carbon dioxide at its combustion by the consumer.

As I have previously emphasised, the consumption of gas by the consumer differs from the consumption of electricity. As my noble and learned friend pointed out at col. 764 of the Official Report at Report stage, the Government's climate change programme has to look across the range of greenhouse emitters. The ground that other alternative sources are not simultaneously considered does not oblige us to avoid the present opportunity to provide guidance applicable to one source—piped gas. I pointed out on Report that the argument that we should not move forward with one regulator as against others is not tenable. It prevents all progressive legislation, it has not been observed in practice and in any case it would easily be resolved—I would willingly agree to do so—by the prompt introduction of further amending legislation to level the playing field. All those things could be done.

I predict that at some stage it may become necessary to introduce special measures to combat global warming. I believe that the industry could suffer great perturbations if the basis of this consideration was not in the Act. Those are the reasons why I have brought this matter forward once again for consideration. I beg to move.

4.15 p.m.

Lord Fraser of Carmyllie: My Lords, as my noble friend has indicated, we have debated this matter previously and that previous debate was certainly an important and useful one. I hope that noble Lords were reassured by the explanations I gave then about the existing duties of the director to promote the efficient use of gas conveyed through pipes and the important duties in the draft licences which will be designed to promote energy efficiency in the gas market. However, I still have the same concerns about the potential effect of these amendments in giving the director a wider duty to consider the effect on the environment of the use of gas in carrying out her functions. I remain of the view that it is difficult to conceive of an issue relating to the environmental impact of the use of gas which is properly within the director's remit that is not already covered by the efficiency duty already in the Bill.

As I indicated previously, the concern is that the duty of the director would become wider than appropriate if she was required to look at environmental questions arising from the burning of gas other than those relating to its efficient use. Matters such as the comparison of the efficiency of different fuels are for government to consider in the light of overall policies. In our view it would not be appropriate for a regulator who was rightly focusing on issues relating to the gas industry alone to have regard to or to be responsible for these wider measures.

As my noble friend rightly says, in the future special measures may be needed to combat global warming. Those may well involve the promotion of gas use as a low carbon fuel rather than its restriction. They could involve taxes, although I have mentioned before the

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difficulties with those. However, all these matters are clearly ones which it should be for government and Parliament to assess. In our view they are not matters for an independent regulator in a particular industry to pursue. We therefore feel that the balance of environmental and efficiency duties is right in the Bill as it stands.

I hope that my noble friend will in particular appreciate what I said in acknowledgement of his concern about special measures possibly being necessary in the future. I trust that I have said sufficient so that he will feel that he can withdraw his amendment. In harping back to the last amendment, I certainly acknowledge that methane clearly contributes to global warming. In that respect I have no doubt that where there is, for example, leakage from a gas pipe there could be in the longer term significant environmental implications. However, as I am sure he will appreciate, the existing duty provided for in the Bill would allow the director to take environmental issues in that respect into account.

The Earl of Cranbrook: My Lords, I take note of my noble and learned friend's opinion that the matters I raised are adequately covered and that the prediction I made will be able to be dealt with without this amendment. I therefore beg leave to withdraw my amendment.

Amendment, by leave, withdrawn.

[Amendment No. 4. not moved.]

Lord Fraser of Carmyllie moved Amendment No. 5:


Page 2, line 28, leave out ("has the meaning given by section 1(2)") and insert ("and 'pollution', in relation to the environment, shall be construed in accordance with section 1").

The noble and learned Lord said: My Lords, in speaking to Amendment No. 2 I spoke also to Amendment No.5. I beg to move.

On Question, amendment agreed to.

Clause 6 [Licensing of gas suppliers and gas shippers]:

Lord Fraser of Carmyllie moved Amendment No. 6:


Page 10, line 7, leave out from ("conveyed") to end of line 12 and insert ("otherwise than by a public gas transporter").

The noble and learned Lord said: My Lords, at an earlier stage of this Bill I indicated that there are a large number of technical and drafting amendments. I propose to move them briefly unless any noble Lord wishes to ask further questions about them. In moving this amendment, I shall speak to Amendments Nos. 8 to 11. They are all technical and drafting amendments. I beg to move.

On Question, amendment agreed to.

Lord Peston moved Amendment No. 7:


Page 10, line 13, leave out subsection (6).

The noble Lord said: My Lords, I now revert to what we might call the mainstream part of the Gas Bill. The origin of the amendment I am putting before your Lordships is an excellent article in the Financial Times of last Monday by Robert Corzine. That was followed

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by an equally interesting piece by him on Tuesday. Perhaps I may say, en passant, that he has another fascinating piece in the Financial Times today on the vexed question of the long-term contracts of British Gas. I suppose that I would be trying your Lordships' patience too much if I were to go over that ground again, but it is an important matter.

The essence of what Mr. Corzine had to say in his first two articles, which concerns us at the moment, is that there would be a delay in the introduction of the network code and that this would in turn delay bringing into effect the main purpose of this Bill, which is to extend competition in the market for gas.

Although we have differed on detail, we have all welcomed this Bill because of the benefits it is intended to bring to consumers. Certainly, for that reason alone, we would not wish to see the effects of the measure being delayed. There has been some suggestion that the delay has been due to the slow passage of the Bill through your Lordships' House. I am surprised at that. We have not spent an undue amount of time on the Bill. It would have been good if we had completed it before the Recess, but were unable to do so because the Government's business managers could not find the necessary time either here or in the other place. Certainly nothing that I or my noble friends have done has held things up: quite the contrary, I believe that it will be agreed that while we have subjected the Bill to very detailed scrutiny we have been at pains not to use delaying tactics. I may add that the Minister too has proceeded as expeditiously as possible.

Having said that, I do not see how the precise date of Royal Assent could or should have affected the planning process. The pilot programme for testing competition in the domestic market does not depend on that date. The ability of TransCo to sort out its relationship with the potentially independent gas shippers does not depend on that date. The construction of the computer database does not depend on it. In sum, I can see no good reason for the delay.

My main purpose is not to express my own view but to use this amendment as a means of asking the Minister to tell us how things are going. I hope that he will be able to assure us that no important snags have been discovered either in his department or in TransCo, and that what the Bill calls "effective competition" will emerge in the very near future. I beg to move.


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