HC Deb 05 April 1990 vol 170 cc1384-91

2 pm

Mr. Tony Speller (Devon, North)

It is always a pleasure to see my hon. Friend the Under-Secretary of State for Energy on the Front Bench ready to answer on behalf of the Government all the questions that I shall ask. The Government must give some sensible answers soon on energy conservation and efficiency. This is not a usual subject for debate in Parliament because by and large this nation, like this Parliament, has totally neglected all the sensible measures that can be taken on energy.

It is perfectly fair for British Gas or any other utility to seek to sell more of its product. The only problem comes when selling more of the product does nasty things to the environment, which we now all recognise as important. I have every respect for all the utility companies. Under their new plc logos I believe that at long last they will become energy-sensitive, whereas in the past they were simply sales-sensitive. That is in no way to detract from the excellence or efficiency of the utility companies, but as a nation we have never sought to be energy-efficient.

If one buys a refrigerator in the United States, there will be a label stuck on the side saying how much it will cost to run. In this country a label will probably be stuck on the side telling us how much more exciting, how much sexier and how much bigger it is. No one tells us the obvious truth that a big fridge costs more to run than a small fridge. We have always been hell bent on the search for turnover in the hope of a profit. Meanwhile, as we increase the sales, so we increase, for example, the greenhouse effect.

It is my happy view that the campaigner for energy efficiency and conservation—indeed, the energy environmentalist of the future—will not be seen as some pleasant woolly lady with a bobble hat on her way to Greenham Common, who is in favour of energy efficiency on the side. Instead, it will be the hard-headed, indeed perhaps hard-faced, business man with long-term plans who says, "I must plan for the future, and because I am building something"— perhaps a nuclear power station, although I hope not—"I must also think of the cost in 20 years' time of closing it down and getting rid of the waste." I am not having a go at the nuclear industry, but British industry has never been charged with the eventual cost of cleaning up its products.

We are aware of the costs of cleaning up now. We see it in the smog in the Antarctic and we all say that we are greener than thou. But we should be clean before we are green. The first place to do the cleaning is in our own industry—literally, in our own back yard—before we pollute the back yards of other countries. There is little distance between that and energy efficiency or conservation. Every time that we require a utility, whether the gas, electricity or oil industry, to produce more, we must also ask what else it will produce more of besides that which we want to buy.

In Barnstaple, youngsters are pushed around in pushchairs, at just the level for all the nasty vapours given off by the motor cars. Youngsters go swimming off our coast and when they have goggles, they do not like what they see below the surface. Our environment and its conservation and pollution are all part of the same matrix which, thank heavens, we have at last recognised.

I pay tribute to the Department of Energy, which has shaken off the sloth of some years, first under—I was about to say the premiership of, but it did not work out that way—my right hon. Friend the Secretary of State for Wales when it first took an interest in the alternatives, then under my hon. Friend the Minister for Local Government and Inner Cities, then under the Minister of State Department of Energy, who is now carrying on that work. I hope that the Under-Secretary of State will follow the same line and say that it is not enough to produce energy or even to produce it cheaply; we must first produce it cleanly and only then cheaply because the environment costs are so high. We do not yet have any idea how or whether we shall be able to pay that particular piper.

I am the chairman of the all-party alternative energy group and it has been my great pleasure for the past six or seven years, along with the hon. Member for Stockton, North (Mr. Cook) who is vice-chairman of the group, to work on a non-partisan basis. I am on the extreme right and he is on the extreme left, and we have met in the middle. Party political persuasion does not matter; what matters is how we persuade the globe that the search for more and more is not the answer; we must first ask at what cost.

We all talk of the unified market and the European Community. Happily, the EC appears to be facing up to some of its responsibilities. For example, it has been agreed by the Council of Ministers that the EC should improve energy efficiency by 20 per cent. between 1985 and 1995. That is a huge percentage increase, but no one has said how much that will cost. However, we must be talking of billions of pounds, all because, whether internationally at European level, nationally, or even locally in our communities, no one bothers about how much power we use because it is relatively so small a part of our total costs.

I am one of the few shopkeepers in Parliament. When my right hon. Friend the Member for Worcester (Mr. Walker) was Secretary of State for Energy and used to have his breakfast meetings around the countryside, I arranged for some of my people to attend. The only problem is that the cost of heating and lighting in our shops is relatively so small that they thought it would not be worth saving those costs. We all know the cost of our rent and various community charges, but we have never got down to the cost of energy in one's shop or business.

As we go home from the mother of Parliaments in the evening, we see great office blocks twinkling with light. Someone somewhere has given no thought to the cost of the energy that is being used or the implications of its use. We should start in the House. It may be boiling in summer and freezing or boiling in winter, but somewhere along the line we in this Chamber must give a lead and say that it is not enough to preach energy efficiency—we must practise it, too.

How do we do that? In some ways it is cheap. We can label appliances. I mentioned refrigerators in the United States. Will the Government consider, if only as a code of practice, telling manufacturers and importers of such equipment to stick a label on their goods telling the customer how much each unit will cost to run? That would be simple and easy.

I have one particular hate. This is the only country in the world that I know of where a new electrical appliance, whether a hair dryer or a toaster, never has a plug on it. People may wonder what that has to do with energy efficiency, but it has a lot to do with it. Why are we so backward in telling manufacturers to label their goods and put a plug on them? I wonder how many accidents happen when people like me do not know what wires go where because we remember the old colours.

What about lighting standards? We are probably all aware that the new soft, more expensive lights use only about 25 per cent. of the energy used by the old lights. Such bulbs will be paid for halfway through their lifetime and, thereafter, money is being saved.

We have never promoted the simple idea that energy conservation need not be expensive, and that the cost of insulating one's home properly will probably be recouped in the first year or certainly in the second. The money saved by the house owner over 10 or 15 years is almost as important as the environmental savings enjoyed by the community, in avoiding the unpleasant by-products of generating energy.

People who are buying a house are willing to pay for a structural survey, but no one considers the cost of heating it. The Department of Energy is keen on promoting energy audits, but perhaps more can be done. In the United States, an energy audit costs about $25, and for another $150, simple measures can be taken to improve insulation and to stop draughts. They are simple improvements of a type that we never get around to—like mending the staircase that always creaked in grandad's day. If energy can be conserved, fewer power stations will be required.

Whenever we want more of something, we build new capacity. The consequence is that we have more houses in this country than families even though they happen to be in the wrong place— but that is the subject of another debate. It would be a simple matter to require the vendor of a property to notify a prospective purchaser of its energy efficiency. Vendors would be likely to give more thought to that aspect before putting their property on the market—perhaps commissioning an energy audit and making improvements that they had hitherto neglected. If they did so, they would achieve a higher price for their property, and its value would also be enhanced in environmental terms.

There is a maintenance office within this building, but we should also have an energy efficiency and conservation office—as should many other major buildings. The cost of the staff would be saved many times over. Once a proper system is established, savings continue for ever.

Financial assistance always presents a problem, and I generally support the Government's view. Why should we give financial assistance for improvements that will help the owner to make money? Why should the state pay for insulation from which the householder will benefit financially in the long term? However, I should be happy to see loans made available for energy conservation purposes. Last night, we were arguing over student loans to be repaid over a number of years. It would be as good or even better to invest in insulating our housing stock.

There are many elderly people, most of them ladies on low incomes not enjoying any pension payable on their late husband's former employment, who cannot afford to live in reasonable comfort. They have to make do with the warmth provided by only one bar of an electric fire. There is no need for that. A little expenditure would provide for better insulation and allow a person to enjoy his or her remaining years in warm comfort.

The Building Research Establishment estimates that a 25 per cent. reduction could be achieved in energy consumption and in carbon dioxide emissions. The other side of excessive energy production is excessive production of carbon dioxide and of the other toxins produced by industrial processes. One cannot blame a vehicle manufacturer if the car that we all want pollutes the atmosphere with the oil and petrol that it must use. However, one can blame him if he does not take every possible step to reduce the volume of that pollution.

There have been market barriers and Government failings in not redefining the market so that there can be greater energy efficiency, but unlike in the United States, which normally leads us in energy efficiency, unleaded petrol is cheaper in this country than leaded. We have already said that we are prepared to tax petrol logically. Perhaps we should also impose less tax on other products that are more energy-efficient.

The Association for the Conservation of Energy would like value added tax removed from energy-saving products. Perhaps that is going too far, because it is likely that VAT will be with us for ever. Nevertheless, there is some logic in that argument, and we have already made something of a breakthrough in establishing the precedent of lower duty on unleaded petrol. We have said that we will tax less those things that are less damaging.

Let us consider the other side of the question. One sad example is British Gas—I have mentioned that company before, but not because I do not like it—whose tariff structure encourages customers who use less than 25,000 therms a year to waste gas. The bulk discount for the next level is such that it is worth burning and wasting power. The bulk tariff brings the total price and the unit cost down. These days that should be culpable. It should be legally wrong to be able to say, "The more you waste, the cheaper the price." That subject is also worthy of consideration by Government.

The other side of the equation is pollution produced by that vast excess of energy. We all know about carbon dioxide and I shall not insult the intelligence of hon. Members by going on about its bad effects. We know what they are. We are scared of the greenhouse effect, although we do not know why, and we are scared of nitrous oxides. We know that something is wrong and we know about global warming—or we think that we do. Perhaps, as is the case with AIDS, after a while we shall say that it probably is not as bad as all that.

The relative contribution of greenhouse gases to global warming in the past 10 years is straightforward—carbon dioxide is 50 per cent., methane 18 per cent., CFCs from our careless aerosols 14 per cent., nitrous oxides—NOs—6 per cent. and surface ozone 12 per cent. Let us just consider the 50 per cent. Half our global warming problems are caused by carbon dioxide, most of which comes from industrial Europe, using machines that it uses to produce the wealth to afford such things as studying the greenhouse effect. We can go further, as 80 per cent. of carbon dioxide is caused by the burning of fossil fuels. It is now estimated that in United Kingdom 92 per cent. of carbon dioxide is caused by fossil fuel burning, even though most of us do not have a coal fire in the house —although we may have a log fire for show. Basically we have stopped using open coal fires and that is why the house looks so pleasant and clean, and why the fogs of my youth are no longer with us.

Fossil fuel divides into coal—with the largest share—oil and gas. Unless specific action is taken, fossil fuel consumption—we largely produce our energy from coal— and carbon dioxide emissions will rise dramatically.

My other sorrow is that every European Community country except the United Kingdom has shown willingness to commit itself to working towards a 20 per cent. carbon dioxide reduction as part of the initial global goal. An agreement was signed in 1988. It is a shame that our country is not a signatory.

My thoughts are not of great significance nationally or locally, but they are of some significance. We are a relatively little country and if every little country took a good look at how it wastes or saves energy, we could also make many people more comfortable. We should consider the by-products of energy and clean them up—the Secretary of State is keen to do that and may be talking soon about the alternative energy sources that are so dear to me.

We should reverse the cuts made in the Energy Efficiency Office and reinstate energy service schemes. We should study building regulations—although the new ones are good. We should say, "What about clean, alternative energy sources?" What about the wind? It causes no pollution—it causes damage, but the sheer power of it is wonderful. What about the waves? They can cause damage, but again the power is vast. I shall not say too much about solar power in Britain, but we should think of the power that exists around our coast. We must think about the potential for energy conservation and the need for energy efficiency.

2.18 pm
Mr. Frank Cook (Stockton, North)

The hon. Member for Devon, North (Mr. Speller) has already described to the Minister the alliance in which we jointly conspire—that is, the all-party alternative energy group.

I congratulate my colleague on winning the slot today and commend him for raising this issue. I also commend his comments to the Minister for serious consideration because much of what he says makes sense.

The hon. Gentleman touched upon the financial aspects of energy efficiency and technology. I shall briefly mention employment and the benefits that can be gained there.

The hon. Gentleman and I went to Norway where we saw two semi-tech pilot plants at Toffteshallen. One is a multi-resonant oscillating water column. The other is a tapered channel. Each is experimental, but they are producing electricity for less than 2.5p per kWh. That is better than our best nuclear and our best fossil fuel plants. Each of the plants uses British technology. The turbines were developed at Queen's university in Belfast. Each plant is producing electricity reliably, efficiently, cleanly and cheaply.

Why do the Norwegians want to do that when they have hydro-electric power coming out of their ears? The answer is simple. They do not need electricity; what they need is employment for their skilled technicians, men and women, who will come on to the labour market after North sea gas and oil have run out. The Norwegians are planning ahead, using British technology to put together generating stations that are cheap, manageable and easy to control. They can be introduced one at a time. One does not have to wait the 20 years necessary for the completion of a nuclear power station. Wind and wave electricity-generating stations can be built for several tens of thousands of pounds. They use labour for whom employment in this country is needed. It is what I call the City and Guilds type of labour—not boffins walking around in white coats with masks on their faces but honest-to-goodness blue-collar people.

Apart from the efficiency and cost-saving that such plants represent, they would provide immediate employment for people on the Clyde, the Tyne, the Tees—from where I come —and the Mersey. The European Economic Community believes that Britain has the best wave climate in the world. That would also benefit the Third world. If we developed alternative cheaper, safer and more efficient forms of renewable energy, the Third world would be able to manage them. People there would be able to understand such forms of energy. Above all, we should provide them with something that they could afford. They could have them tomorrow, if only the political will were there.

2.22 pm
The Parliamentary Under-Secretary of State for Energy (Mr. Tony Baldry)

I congratulate the chairman and vice-chairman of the all-party alternative energy group, my hon. Friend the Member for Devon, North (Mr. Speller) and the hon. Member for Stockton, North (Mr. Cook), on their contributions to the debate. It is an important but large subject, and in the time available to me I shall be unable to respond to all the points that have been raised, or to deal with the subject as it ought to be dealt with. However, I know that my right hon. Friend the Secretary of State for Energy welcomed the opportunity that was afforded to him recently to address the all-party group. I assure my hon. Friend the Member for Devon, North and the hon. Member for Stockton, North that Ministers in the Department consider with great care everything that the all-party group puts forward. We are grateful to it for all the work that it does.

Energy efficiency can make a significant contribution to alleviating the problems of climate change. The Government believe that climate change could represent the greatest world challenge to sustainable development. We shall do whatever is necessary to meet that challenge. However, to act alone would be pointless. The United Kingdom alone produces about 3 per cent. of the world's carbon dioxide. So all nations must act together. A global problem requires a global solution.

The analyses of the Intergovernmental Panel on Climate Change will help us decide on the actions that we should take, and we shall fully meet our responsibilities once the necessary actions are determined. We shall also need to consider how climate change will affect different areas of the world so that affected regions can adapt in the future. The United Kingdom is taking a lead. As my right hon. Friend the Prime Minister announced at the United Nations General Assembly last November, we are establishing a new centre for the prediction of climate change.

My right hon. Friend the Prime Minister also proposed that the work of the IPCC should continue in order to provide a proper scientific base for any protocols setting targets for restrictions on greenhouse emissions. Global targets have to be broken down for each country. I am sure that that is the right approach and that the Prime Minister has wide international support for that initiative.

However, international consensus is still some months off and in the meantime we would clearly be foolhardy to do nothing. Nothing is not an option. The widespread international concern about climate change is clearly felt here. The Government share that widespread concern and are fully committed to protecting the environment. Energy production is a major contributor to greenhouse gases and we have been taking positive steps to do what we can now to reduce emissions of greenhouse gases into the atmosphere. One of the obvious ways to do that is to obtain whatever contribution we can from renewable sources of energy. Direct electricity producers such as wind and tidal energy give no gaseous emissions, and biofuels, although they involve combustion, recycle the carbon dioxide so there is no net increase.

Our policy, therefore, is to stimulate the development and application of renewable energy sources wherever they have prospects of being economically competitive and environmentally acceptable. We are doing that via an extensive research, development and demonstration programme in collaboration with industry and by ensuring a legislative infrastructure which allows renewable energy sources to compete equitably in the market.

The research and development programme on which £161 million has been spent to date is identifying the markets and developing and promoting the technology where appropriate. A prime example of a project to promote renewables was a recent joint study with the North-Western electricity board, which identified a potential of 400 MW with good prospects of commercial development in the next decade or two. Our earlier success story was the use of landfill gas as a fuel, which has additional benefits, as methane is a much more potent greenhouse gas than CO2. The technology was researched and demonstrated within departmental programmes and the first 300 commercial applications are under way with a further 30 planned or under construction.

The Electricity Act 1989 provides for a private sector market in which renewable sources of energy can compete equitably when they are fully developed. In the shorter term, however, they will need some market protection while experience is gained and a manufacturing industry built up. We have therefore also provided the non-fossil fuel obligation, which should enable renewable energy to develop during the 1990s with a premium price being paid for the electricity. Renewable energy, however, will be able to contribute on a significant scale only in the somewhat longer term and we must therefore also look to shorter-term measures.

One item that all Governments will include in any internationally agreed response strategy is promoting energy efficiency. My hon. Friend outlined the need for that. We are already doing it. Energy efficiency is worth while in the economic and in the wider environmental sense. But the community as a whole, not just the Government, has to act and the community as a whole gets the benefit. We must all take action and make an immediate impact. The consequences of our inefficiency are felt not just in environmental pollution but in the bills that we pay each quarter, as individuals and as businesses. The economic beauty of cost-effective energy efficiency improvements is that they do not really cost anything; savings of up to 20 per cent. of energy costs can usually be realised through simple, effective measures. Some cost literally nothing. On others we get our money back through lower energy bills in about two to three years. Savings after that come free.

At the end of the day, the efficient use of energy is the responsibility of each one of us. Where the Government are directly responsible for energy costs, we are taking positive action: Government Departments are looking to save 15 per cent. of our annual £300 million energy bill within five years, which is expected to involve a doubling of investment in energy efficiency measures.

However, the Government cannot force people to use energy more efficiently. The Government can offer advice and information to consumers on which they can base their decisions on investment and energy management, but the initiative to make the savings ultimately rests with the individual. In both the economic and the environmental sense, energy need not cost the earth. It is up to all of us to ensure that it does not.