Energy Bill [Lords]

Public Bill Committee, 20 May 2004.

Standing Committee B

Energy Bill [Lords]

Stephen Timms (Labour, East Ham)

I beg to move,

That—

(1) during proceedings on the Energy Bill [Lords] the Standing Committee shall (in addition to its first meeting at 8.55 am on 20th May) meet—

(a) at 2.30 pm on 20th May; and

(b) at 8.55 am and at 2.30 pm on each of 25th May, 27th May, 8th June, 15th June, 17th June, 22nd June and 24th June; and

(2) the proceedings shall be taken in the order shown in the first column of the following Table and shall (so far as not previously concluded) be brought to a conclusion at the time specified in the second column of the Table.

TABLE ProceedingsTime for conclusion of proceedings Clauses 1 to 5, Schedule 1, Clauses 6 to 14, Schedule 2, Clauses 15 and 16, Schedule 3, Clauses 17 to 30, Schedule 4, Clauses 31 to 41, Schedule 5, Clause 42, Schedule 6, Clauses 43 to 48, Schedule 7, Clause 49, Schedule 8, Clause 50, Schedule 9, Clauses 51 to 54, Schedule 10, Clauses 55 and 56, Schedule 11, Clauses 57 to 64, Schedule 12, Clauses 65 and 66, Schedule 13, Clauses 67 to 72, Schedule 14, Clauses 73 to 78, Schedule 15, Clauses 79 to 835.00 pm on 27th May Clauses 84 to 96, Schedule 16, Clauses 97 to 135, Schedule 17, Clauses 136 to 138, Schedule 18, Clauses 139 and 140, Schedule 19, Clauses 141 to 156, Schedules 20 and 21, Clauses 157 to 170, Schedule 22, Clauses 171 to 193, Schedule 23, Clause 194, new Clauses, new Schedules and any remaining proceedings on the Bill. 5.00 pm on 24th June

Laurence Robertson (Conservative, Tewkesbury)

I echo the Minister's remarks, not for the last time, I am sure. Indeed, I entirely agree that it is a great pleasure to serve under your chairmanship, Mr. O'Brien; I have done so before, and I know that an enjoyable experience awaits us all.

I also echo the Minister's remarks about welcoming other hon. Members. However, I extend an apology to those who attended the Programming Sub-Committee on Monday. Due to illness, I could not attend. I apologise for my absence, and thank those who did attend.

The Minister said that the Second Reading debate was interesting, and that we agreed on many of the issues raised. We also discussed one or two of the amendments to the Bill made by Members of another place. Those matters may be slightly more contentious, but they are also important. I look forward to debating them. The Minister spoke of the need to set up the NDA and to extend to Scotland the electricity trading arrangements for England and Wales. Those are both important aspects of the Bill.

The Bill has 194 Clauses and a great many schedules, and 24 June may seem a long time away. However, given that we have one week off for the recess and a day off for the local and European elections, and especially given that we must reach Clause 83 by 5 o'clock next Thursday, we do not have a great deal of time to debate much of the Bill. I acknowledge that there is a need to make rapid progress, but I hope that that does not mean that we cannot give the Bill the detailed consideration that these important matters deserve. That said, I am pleased to serve on the Committee. May I say again, Mr. O'Brien, that I look forward to serving under your chairmanship?

Andrew Stunell (Liberal Democrat, Hazel Grove)

May I, too, say that it will be a pleasure to serve under your chairmanship, Mr. O'Brien, and to work with so many hon. Friends and hon. Members with whom I have discussed a succession of energy-related issues time after time? Our sittings will be very interesting.

The Government's response in informal discussions on the resolution was very helpful, as was the reduction in the number of knives. The Minister said, quite properly, that he wanted to make quick progress. That is also our wish, but I made the point that the first two or three clauses are very meaty, and I hope that it will not be taken as a breach of our undertaking to make progress if we spend some time discussing them. We hope to speed up as we get going.

The hon. Member for Staffordshire, Moorlands made the point that the two missing sittings, which disappeared mysteriously, could be added if we ran out of time. I hope that that will not be necessary, but I also hope that the Minister will not forget his representative's words in that discussion.

Joan Walley (Labour, Stoke-on-Trent North)

May I say, Mr. O'Brien, what a great pleasure it is to serve under your chairmanship? May I also say how important it is for us to make great progress in our sittings, because the Bill covers such important issues? I am tempted to link the programme resolution and the urgency with which the Committee needs to get through its business in this place to the urgency with which we should deal, internationally as well as nationally, with global warming and climate change. I very much look forward to our future discussions.

Many Government Back Benchers have had a long-standing interest in energy efficiency measures and environmental issues. We have an opportunity to engage in constructive criticism of the Bill and to make progress on it in the allotted time, while ensuring that we obtain the best possible outcome. I am very pleased that the Minister and his most able colleague are serving on the Committee, and I look forward to making progress on the Bill.

Question put:—

The Committee divided: Ayes 13, Noes 4.

Bill O'Brien (Labour, Normanton)

I remind the Committee that there is a money resolution and a Ways and Means resolution in connection with the Bill. Copies of the resolutions

are available in the Room. I also remind Members that, as a general rule, adequate notice should be given of amendments. My co-Chairman and I do not intend to call starred amendments.

Clause 1 - Security and integrity of supply

Laurence Robertson (Conservative, Tewkesbury)

I beg to move amendment No. 41, in

clause 1, page 1, line 4, leave out from 'State' to end of line 5 and insert

', having regard to the regulatory arrangements, shall have a duty to enable the framework whereby the market can ensure the security of electricity and gas supplies and the Secretary of State shall make regular reports to Parliament on these matters.'.

Bill O'Brien (Labour, Normanton)

With this it will be convenient to discuss the following:

Amendment No. 38A, in

clause 1, page 1, line 5, at end add

', in particular by promoting energy efficiency in all sectors'.

Amendment No. 72, in

clause 1, page 1, line 5, at end add—

'(2) The Secretary of State's duty under this section shall be wholly delegated to GEMA save and except after—

(a) GEMA has made a report to the Secretary of State setting out its reasons for believing that it has insufficient powers to carry out this duty, and

(b) the expiry of one year's notice of intended reversion of the duty to the Secretary of State.'.

Amendment No. 73, in

clause 1, page 1, line 5, at end add—

'(2) Such a duty shall in particular require the Secretary of State to have regard to—

(a) provision of supply in a national emergency,

(b) estimates of the long-term requirements for energy at the point of use, and

(c) the reduction in energy use achievable through conservation and efficiency measures.'.

Amendment No. 74, in

clause 1, page 1, line 5, at end add—

'(2) In the exercise of this duty he shall have regard to the reports and recommendations of the Joint Energy Supply Security working group in respect of their responsibility for monitoring and assessing risks to security of supply.'.

Clause 1 stand part.

New clause 13—Security of supply report—

'The Secretary of State must in each calendar year, beginning with 2005, publish a report (''a security of supply report'') on the progress made in the reporting period towards maintaining and enhancing, if necessary, UK security of supply.'.

Laurence Robertson (Conservative, Tewkesbury)

The clause has aroused great interest throughout the industry, the House of Commons and the House of Lords. I first want to discuss the background to the clause, which was inserted in another place, before explaining why my hon. Friends and I have tabled amendments to it. It is important to put the issue in context, given what the industry has said.

The Electricity Act 1989, which the Conservative party introduced when in government, freed up the market through privatisation. There was also the privatisation of gas. Indeed, much of what we did then put us ahead of Europe in terms of liberalisation. The freeing-up of the electricity market led to the lowering

of electricity prices. Nothing in the clause should be seen as a reversal of that privatisation policy, and none of the words that I may utter should be taken to endorse such a reversal. I merely intend to explain the background to the Lords amendment and to our subsequent amendment to their amendment.

The House of Lords was persuaded to table an amendment after industry representatives expressed concerns about future security of supply because investment was not as forthcoming as they might have wished. Great concern was also expressed by many experts in the field, including Dieter Helm—who spoke about such matters on a visit to Tewkesbury—and Professor Ian Fells. I accept that much of that concern was expressed following the power cuts in California, New York and Italy and, in particular, those in London and the west midlands.

Paddy Tipping (Labour, Sherwood)

The hon. Gentleman mentioned the power cuts in London and Birmingham. Were they the result of a lack of generation capacity or of systems failures?

Laurence Robertson (Conservative, Tewkesbury)

The hon. Gentleman is right; there were different reasons for the power cuts. The problem arose mainly because of the system network, and that requires investment. There was deliberate confusion in the press about the two issues, which, in some ways, have nothing to do with one another.

Overall, however, there is concern about security of supply, and the Government's response has given us no comfort. The engineering inspectorate's investigation into the cuts in London and the west midlands was not published but kept secret; that was certainly the case initially, although the Minister will correct me if I am wrong. That did not help in terms of industry confidence.

I tabled a parliamentary question, which was answered on 29 October 2003, to ask what discussions the Secretary of State for Trade and Industry had had with National Grid Transco about the failures. The answer was that she had not had any but that she was being informed of the situation. The Government, having instructed the engineering inspectorate at the Department of Trade and Industry to investigate, did not help matters by not releasing the information.

I asked a further parliamentary question, which was answered on 11 February, as to whether the report's findings would be made public, and the answer was that they would not. Again, the Government's response to the problems in London and the west midlands gave us no real confidence.

We cannot blame consumers for feeling the way they do. During the past 30 years, people have not leapt out of bed in the morning and thought about energy, unless they have leapt out of bed, switched on the light and found that it has not come on. The power cuts in London and the west midlands brought the issue back on to the agenda.

There are problems and concerns in the industry, and I have been at meetings with the Minister where those concerns have been expressed. Following the

incidents and concerns, on 10 March the BBC ran the now famous programme, ''If . . . the lights go out''. That caused some alarm, but there would have been more alarm had it been announced in the programme, or in the subsequent debate on it, that, earlier that day—I do not know whether hon. Members remember, but it was a very cold day—National Grid Transco had given a notice of insufficient margin. That meant that its margin of surplus electricity had fallen below the desirable level. On that day, the margin fell to just under 7 per cent., when, as stated in a parliamentary answer on 26 February, it should have been 20.3 per cent. If that had been known when the programme went out, it would have had an even greater impact. Indeed, in 2003, 13 such notices were issued by National Grid Transco.

Added to the concern in the programme, those notices, the cuts that we have discussed and the industry concern about a lack of investment contribute to a general concern about the electricity supply in the medium term. As we discussed on Second Reading, our indigenous gas supplies are running down, and coal generation, coal-fired power stations and the mining industry are under great environmental pressures, particularly from EU directives such as the large combustion plant directive and the emissions trading scheme. As things stand, the nuclear industry will see further decommissioning from 2008; indeed, the Bill is largely about decommissioning. With renewables struggling to meet their target and further targets looking increasingly unlikely, the medium-term supply situation is not as comfortable as we have enjoyed in the past 30 years.

As I said, the Government's response to those problems has not been entirely reassuring, especially with the privacy over the engineering inspectorate's report. I am concerned that discussions with countries such as Russia regarding gas supplies are not as advanced as one would hope, given that we will become net importers of gas by 2006 and that the Norwegian gas pipeline, a treaty for which has been signed, will not deliver gas until 2007. We have had what can be described only as vague and ambiguous references to the future of the nuclear industry and an apparent obsession with wind power as the only renewable alternative. None of that is reassuring to the industry or the country. Against that background, the Lords understandably felt that they needed to act and so tabled what has become clause 1.

The clause concerns who is responsible for the security of supply. The Minister of the Crown, who is paid by the taxpayer, clearly has responsibilities; if the Energy Minister's role is not to keep the lights on and ensure that sufficient energy supplies are available to satisfy the demands of the fourth largest economy of the world, I do not know what it is. The question is not whether the Minister has that responsibility—he clearly does—but how it is exercised.

I know that concern has been expressed in the industry about whether clause 1 would lead to interference, and I would certainly not want that. However, we do not have a free market in energy,

which, in some ways, is to be regretted. Freeing up the industry helped enormously in terms of efficiency and price, and constraining the market might have the reverse effect, so I repeat that nothing I have said should be taken as endorsing a reversal of the privatisation policy, which we initiated. I have merely been explaining the background to the Lords amendment.

As I said, a free energy market does not exist. To start with, Ofgem regulates the proceedings to a greater or lesser extent, and it is ultimately responsible to the Secretary of State. The Government must implement EU directives. The renewables obligation was constructed by the Government. Although we do not oppose it, we recognise that it will, by its very nature, have an increasingly distorting effect on the free market as it increases from 4.9 per cent. this year to 15.4 per cent. The Government give capital grants to offshore wind farms. Planning policy is dictated by central Government. There is also taxation policy, such as the climate change levy that they introduced. My point is that the Lords amendment would not introduce distortion into the market; distortion is, in some ways inevitably, already there.

Added to the distortions are the functions relating to security of supply that only the Secretary of State can carry out, such as the signing of treaties with foreign countries for the building of gas pipelines. As was the case with Norway recently, that role is performed by the Government. The fact that National Grid Transco reports its notices about insufficient capacity or margins to the DTI also shows that the DTI has a responsibility in the matter.

Far from the Lords amendment being a ringing endorsement of state interference—I would not hesitate to vote against it if it were—it represents an attempt, in an uncertain energy world, to get the Government to take their existing responsibilities seriously and to address them urgently. The question is how the responsibilities are best exercised. I recognise the effect that the Lords amendment would have on the industry. However, the responses of industry representatives have been rather too similar to be coincidental. I suspect the presence of the heavy hand of Whitehall in the manoeuvrings. I am anxious to ensure that this place does nothing to destabilise further the already nervous potential investors in the industry, particularly on the generating side. That would be counter-productive; hence the amendment that we have tabled.

We have attempted to address the concerns of many people in the industry about the medium-term security of the supply of electricity—that point also concerned their lordships—and to address the concerns of those in the industry who feel that the Lords amendment might inadvertently impede the investment that the industry needs. It is a fine balance to try to strike, but I hope that our amendment has struck it. The market can provide and it has provided. That is why we have tabled this amendment instead of just sticking with the Lords amendment.

We want to create a duty, so that the Secretary of State can enable the framework to ensure that the market delivers and, importantly, to ensure that she regularly reports to Parliament on the effectiveness of her strategy. By framework, we mean the right remit being given to Ofgem, the right planning regulations, treaties being in place in time to secure gas supplies, the right taxation regime, an interpretation of EU directives that is sympathetic to our industry, a renewables obligation that delivers what it is supposed to and so on. We do not mean interference by Government that would be counter-productive.

Of course, we endorse the main objectives of the White Paper: security of supply, reduction in carbon emissions and affordable heating for everyone. We recognise that those objectives conflict, and that it will be difficult to achieve them all at once. Nevertheless, we support attempts to achieve them, and we hope that our amendment will provide the right setting to enable the Government—whichever Government that may be—to achieve them.

Brian White (Labour, North East Milton Keynes)

I seem to have been talking about these issues for a long time—often under your chairmanship, Mr. O'Brien—as I was a member of the Committees that considered the Utilities Bill in 2000 and my private Member's Bill, which became the Sustainable Energy Act 2003.

It is important to understand the sentiments behind clause 1, so I will make a few points on that before I talk about amendment No. 38A. Security of supply is one of the primary objectives of the energy White Paper. We must not be afraid to make that objective statutory, or to state that we are committed to it and that we are confident that we can achieve it. What is the worry about clause 1? It is important that the Government send out a strong message to the market that they will back their words with responsibility.

The clause would send a message to beneficiaries of the policies in the White Paper—the renewables and the combined heat and power industries—that they can take heart from the Government's serious commitment. The Government may say that they are already on board because of legislation such as the Electricity Acts, but to be seen simply to remove the clause without replacing it would cause serious damage.

There have been many misleading comments about last year's blackouts, and about the industry being down on capacity; my hon. Friend the Member for Sherwood (Paddy Tipping) asked about that. The blackouts are not an excuse for Government intervention in the market, but they were, as the hon. Member for Tewkesbury said, a wake-up call to the Government and industry to plan for the long term. There is a functioning, competitive wholesale market, which can deliver security of supply, but only within a properly regulated framework. That is where I part company from the hon. Gentleman.

The market has always been subject to short-term fluctuations, but it is important to get long-term investment decisions right. The message that we send out, particularly through this clause, about security of supply is important. The obsession with low prices and

small margins has not created a good environment for investment, but neither will a regulator without clear objectives. We need a clear set of objectives for the regulator, which signal to the market that there is a commitment to security of supply. I accept that there are several ongoing infrastructure projects, and they are to be welcomed. Of course, the industry will say that it does not want extra bureaucracy for Ofgem, because generators will simply pass costs on to suppliers, who will pass them on to customers, but we need a strong framework if there is to be investment in capacity over the long term.

One thing that worries me about this debate is that we talk about the upstream supply and about capacity in relation to supply only, but we do not consider the demand side of the equation. We must consider the different stakeholders. Plenty of companies could contribute to security of supply—for example, the whole CHP industry—as could our use of renewables and micropower, but we talk about pipelines in Russia and terrorist incidents, rather than the bread-and-butter issues that will ensure our security of supply. The Minister and the Government need to address them.

The regulatory impact assessment, which we received just before the Committee began, stated that no benefits would be accrued from clause 1. I would make a different argument; there are benefits. The clause is a signal to the market for long-term investment in some of these companies.

The regulatory impact assessment states that the provision would not have a direct impact on small firms. Again, I would argue to the contrary. Small firms in the microgeneration industry could ensure that each house could have microgeneration for a short time, which would enhance the security of supply. It is not enough simply to look at the upstream supply side; we also need to look at the demand side and at some parts of the grid where issues surround the security of supply.

We ought to be putting the work done by the joint energy security of supply working group on a statutory basis, and the Minister might consider that as an amendment on Report. My amendment is not meant to be put to a vote, but to draw the attention of the Committee to the issues about demand-side management. Given that we are looking for extra capacity, we ought to provide that by reducing demand.

I could go on for some time about some of the Government objectives, but I will not. I will concentrate on a rather parochial matter—I apologise for doing so, but it illustrates the point that I am trying to make. Over the next 30 years, 70,000 new houses will be built in Milton Keynes. If the Government remove clause 1 and say, ''It's all there—don't worry'', the message will go to the construction industry that building houses with zero carbon effect is not an issue of security of supply.

Measures could be introduced on how those houses are constructed that would enhance the security of supply for the country: building the houses with zero carbon effect and, as we build those houses, taking measures for renewable energy and combined heat and power. If those security measures are built in to the initial construction of houses, they will reduce demand and provide security if there are problems upstream.

If the clause is retained, the Government will send the message to the construction industry that the industry is part of the solution. Not taking demand-side management on board would say to the construction industry that the matter was a problem for the electricity companies and for international treaties. Security of supply is a matter for us all, and I urge the Minister to take that point on board.

I understand that the EU is also considering security of supply. I hope that the Minister will make sure that the issues of the supply side and the demand side are taken on board during those discussions. The Government have a good record over the last four years of making such points on a range of issues concerning climate change. There are opportunities, if we are prepared to take them. Clause 1 and my amendment, in particular, give us the opportunity to send a strong signal to the market that the issue is not simply about the upstream concerns.

Andrew Stunell (Liberal Democrat, Hazel Grove)

I wish to speak to the amendments tabled in my name and that of my hon. Friend the Member for Lewes (Norman Baker). Both of the speakers so far have made essentially the same point. The clause in its present form may need moderation, but its fundamental assertion, which the Bill ought to contain, is that the Secretary of State must take overall responsibility for delivering the United Kingdom's energy policy. I was disappointed that the Minister circulated a letter saying that he intended to oppose the clause, although I was a little encouraged by his suggestion that he might be persuaded to introduce something on Report. I very much hope that he will say more about that.

The reality is that we live in a sophisticated economy, the fourth largest in the world, as the hon. Member for Tewkesbury said. There are many overlapping markets and in some places the market leaves gaps. In the meantime, the Government have quite properly set the country some complex environmental objectives, which everybody recognises as challenging and difficult to attain. That process has highlighted the fact that the gaps in the market are bigger than they perhaps appeared at first.

Then again, the markets are changing. The sources and availability of supply are constantly on the move, as is the demand end of the market. The common assumption is that demand is inexorably rising, but it is not doing so as much as the scare stories would suggest. Gross energy consumption in this country over the last 10 years has increased only by between 2.5 per cent. and 3 per cent., despite a 30 per cent. increase in gross domestic product. The hon. Member for Milton Keynes, North-East (Brian White) suggested

that those trends might be due to the more efficient use of energy by those at the consumption end of the pipeline. The most profligate and least efficient users of energy are now those in the domestic sector.

Given those factors, the obvious signs that the market cannot and will not deliver on such key objectives as energy efficiency and conservation and the evidence of investment starvation caused by the difficulties and uncertainties that have already been mentioned, the Secretary of State has an obligation to plug the gaps in the market. Doing so might mean ensuring improvements in efficiency and conservation in the domestic sector or reinvigorating the combined heat and power sector. The hon. Member for Milton Keynes, North-East mentioned the possibility of micro-CHP, which we will no doubt discuss later.

There are problems with getting investment in generation and transmission renewal under way, particularly with a changing market externally. There are also problems in achieving another of the Government's objectives; to reduce fuel poverty. The market has delivered a significant reduction in fuel poverty but, with oil likely to stay at its current price of about $40 a barrel for some time, it is doubtful whether the market can continue to deliver such reductions.

The underlying assertion of the clause and of the amendment is right. For the Minister, to use the classic phrase, ''resistance is futile''. If the clause does not get him, events will. Sooner or later, a Secretary of State will find himself standing at the Dispatch Box or sitting in a TV studio saying, ''It's not my fault''. I am sorry to say so, but at that point there will be no escape, either for the Minister or the Secretary of State or for their successors.

I diverge a little from the hon. Member for Tewkesbury, in what I took to be his advocacy of the BBC programme about the planet shutting down in the near future because of energy shortage. That is not going to happen now, or soon. NGT's scenarios for next winter envisaged the bleakest possible set of circumstances that could arise; I will not detain the Committee by listing the eight or nine things that could simultaneously go wrong. But even if all that happened, NGT said that there would not be a shortage of power next winter.

The joint energy security of supply working group says the same thing in its predictions for the next seven to 10 years. We are not talking about an imminent crisis in energy supply. Perhaps that is okay from the Minister's point of view; I notice that the average stay of Energy Ministers in the Labour Administration since 1997 has been one year and five months, so he is probably in the clear, whether or not clause 1 is retained.

However, in the long term, the UK should acknowledge that the Government—of whatever party—must take the ultimate responsibility. I suggest to the Minister that he should gracefully accept that now and sign up either to the clause, or to one or more of the amendments that we are discussing. No doubt he will tell us that if he were to do that, it would lead to the end of civilised life on the planet and a lurch

back to the economic stone age, but it will not. I accept that if the Liberal Democrats assert that that will not happen, that assertion might have little credibility, but the Conservative spokesman also made that assertion.

It is time for the Minister to accept that such an acknowledgement is not about reversing the liberalisation and privatisation of the past 15 years. It is about ensuring that the UK has a secure energy supply for the future and that the Government of the day acknowledge in advance their responsibility for that, so that they plan for it, rather than being caught in a disaster at the last moment.

Amendments Nos. 72, 73 and 74 offer alternative and overlapping helpful suggestions to the Minister of some of the things that he might want to include on Report. Amendment No. 72 examines the mechanism by which the Secretary of State's responsibility might be exercised. It says that energy supply would continue to be wholly the responsibility of the Gas and Electricity Markets Authority, unless GEMA itself reported to the Secretary of State that, having examined its powers, its regulatory authority and the market, it could no longer deliver the security of supply objectives that it had been commissioned to fulfil.

If that were the case, GEMA would give 12 months' notice, and the Secretary of State would be required to take action—or at least his delegation to GEMA would be withdrawn. The 12-month notice period provides a soft landing; an opportunity for negotiation, and possibly for new guidelines or legislative powers to be put in place. We believe that the amendment offers a simple way of expressing more clearly the thinking behind clause 1 in its original form. The aim is not to take back all the powers and regulatory apparatus from the existing structure, but to acknowledge that that regulatory structure might, at some time in the future, find itself unable to deliver the overall objectives. The amendment would provide a clear mechanism for reverting that power to the Secretary of State, with the trip wire of GEMA acknowledging it.

Amendment No. 73 is rather a different animal. It tries to delineate the key areas in which action will not be easily achievable through the market; the areas in which the Secretary of State might, if he is to achieve his overall objectives, have to take action that it would be difficult for the regulatory environment to deliver. One of those areas is the estimation of long-term requirements for energy at the point of use. The words ''point of use'' are important; it is not just about generating capacity but, as the hon. Member for Milton Keynes, North-East made clear, it is about what happens at the demand end as well as the supply end. It is also about the reduction in energy use that is achievable through conservation and efficiency measures.

There is a paradox in trying to use the market to reduce the consumption of any product. It is difficult to encourage and incentivise a manufacturer to sell fewer cars. It is hard to incentivise an electricity generator to sell less electricity to make more money, and the current system struggles to achieve that. It is

also difficult to incentivise domestic consumers to take account of an almost insignificant marginal cost—their energy use—and invest in conservation and efficiency measures, even though that would further reduce their marginal costs. No market action has been effective at penetrating those problems, so it might be reasonable for the Secretary of State to have reserve powers. Proposed new subsection (2)(a) in amendment No. 73, which deals with the ''provision of supply in a national emergency'', is obviously of a different order but is also outwith the ability of the market to deliver.

Amendment No. 74 would improve the decision making about long-term investment or potential intervention by the Secretary of State. It would write into the Bill the role of the joint energy security of supply working group. I was interested to hear the hon. Member for Milton Keynes, North-East's suggestion that it would soon be time to write that into the Bill. I do not know whether he got far enough through the amendments to notice that amendment No. 74 would do exactly that.

New clause 13 addresses the question of reporting the action that the Secretary of State has taken or thinks should be taken. At the moment there are various streams of reports on security of supply, which come to the Secretary of State from the JESS committee, NGT, Ofgem and others. New clause 13 would require the Secretary of State to produce at least an annual report that draws that information together and sets out what action has been taken in the past year and is planned for the following year. The new clause could stand on its own and be a weak alternative to clause 1, but it could also stand together with clause 1 or any of the amendments. It would introduce a reporting requirement on the Government simply to say what advice they received in the last year and what advice they intend to take.

My hon. Friend the Member for Lewes and I will happily support the two previous amendments, but I should be particularly happy to support the amendment tabled in the name of the hon. Member for Milton Keynes, North-East were he to move it; I understand that he may not. Sparring partners may not be the right phrase, but he and I have certainly been co-workers in the fight to ensure that the United Kingdom has a workable and sustainable energy policy. His amendment would build into clause 1 something that is otherwise missing.

Unfortunately, the Bill is not, in fact, an energy Bill. Our amendments aim to ensure that a broader vision is taken of what needs to be done; they are not about destroying the market but about filling the gaps that are left when the market has done the things that it does best. That includes addressing efficiency and conservation and some long-term investment and direction issues where the signs are that an approach based on a short-term market vision, although good in many ways, cannot deliver results.

Colin Challen (Labour, Morley and Rothwell)

It is a pleasure to serve under you, Mr. O'Brien. I support the objectives of my hon. Friend the Member for Milton Keynes, North-East and, although it has not yet been moved, amendment No. 7, which adds environmental objectives to clause 1.

Bill O'Brien (Labour, Normanton)

Order. Amendment No. 7 has not been selected and will not, therefore, be debated.

Colin Challen (Labour, Morley and Rothwell)

I am grateful for that correction, Mr. O'Brien. I support the amendment in spirit. Nevertheless, my view remains the same. I hope that, on Report, the Minister will return—as he has indicated he might—with something to replace clause 1 that includes environmental objectives. It is important that the Bill should set out such objectives. At the moment, going by the regulatory impact assessment, we are giving great weight to the markets. As the hon. Member for Hazel Grove said, that does not necessarily meet all needs; in particular, it does not address global warming.

Recent experiences, particularly the dash for gas, have lulled consumers into a false sense of security about low-cost energy. Clearly, supplies are not infinite and will eventually run out. We have recently had to deal with new electricity trading arrangements, which have made it virtually impossible for combined heat and power schemes to operate because the prices are too low to sustain them. The markets alone cannot achieve our objectives. I doubt whether, without Government intervention and support, wind energy would have taken off as it has done.

The pressure to reverse the trend comes from many quarters, including the nuclear industry, which claims that it can produce energy at some 2.5p per kW. That is absurd. The original claim for nuclear energy was that it would be too cheap to meter. Some elements in the markets want to blow the Government off course in relation to their environmental objectives, so that they can rule the roost. I hope that if clause 1, as amended, is not agreed today, the Minister will offer us an alternative that ensures that the market is not left to its own devices and that that intention is at the forefront of the Bill, not buried somewhere where it can be quietly forgotten.

Michael Weir (Scottish National Party, Angus)

I shall be relatively brief. I support what the hon. Member for Milton Keynes, North-East said. I shall be sorry if he does not press his amendment, because it is important. It adds to clause 1 the recognition that security of supply is not only about generation but about use of electricity.

I do not know why the Minister is so frightened of the clause. The paramount duty of any Government or energy Minister will be to ensure that the lights stay on. No Government will last for long if the lights start going out. All too often, when we have talked about security of supply, it has been code for the nuclear industry to keep nuclear power stations going. We have heard about the gas situation in Russia and the former Russian republics, which are politically

unstable. It is probably true that to have genuine security of supply, one must have control of domestic supply. To use an old-fashioned phrase, there has to be an element of command economy from the Government. Whatever energy policy we choose to pursue, we must ensure the continuity of supply that is so important for our economy.

Later, we will discuss many amendments that, in one way or another, consider how, in moving towards greater use of renewables, we ensure continuity of supply. I made the point on Second Reading, and I make it again; I very much support the move towards renewables, but before we go too far down that route, we must ensure that they will all work and that they will provide enough electricity at a cost that we can live with. In many cases, that has not yet been proven. At present, the vast majority of renewable energy, apart from the old hydroelectric schemes, comes from onshore wind, which is meeting increasing resistance. The Government must oversee the security of supply, and it is important that the Bill contains such a duty.

I shall press the hon. Member for Milton Keynes, North-East to put his amendment to a vote, because it adds an important caveat. If we are to pursue the future of renewables, we shall need investment, particularly in the grid, as much of the potential for renewables is in areas to which the grid does not necessarily extend, or is fairly fragile, such as the north and west of Scotland and parts of Wales. If that investment does not come from central Government, I suspect that it will not come at all, and the renewable energy future would be stillborn.

However, I oppose the amendment tabled by the hon. Member for Tewkesbury, which relates to the market. Although he talked about previous privatisations and the role of the market, the fact of the matter is that we have a skewed market in energy, particularly electricity. The Bill will skew it further by setting up the Nuclear Decommissioning Agency. We are currently giving huge sums of money to bail British Energy as a nuclear provider, and are setting up the agency.

The Bill appears to give the agency the power not only to take over nuclear power stations but to continue to run them, so it will become an energy provider. It will be a Government agency generating energy and, presumably, putting it in to the national supply. There is almost an element of potential re-nationalisation of some parts of nuclear power. The amendment tabled by the hon. Member for Tewkesbury contradicts some of his later amendments concerning the agency, which seem to look forward to it running nuclear power stations, or at least the possibility of keeping them going. I am prepared to support clause 1 and amendment No. 38, but not to support amendment No. 41.

Desmond Turner (Labour, Brighton, Kemptown)

I have a lot of sympathy with my hon. Friend the Minister in wanting to knock out clause 1 as it stands because it is clearly redundant. He already has the responsibilities for keeping the lights on, and he knows that. We do not need to repeat that, as the opening statement of the Bill sets out the grand design from

which everything else follows. I fear that, apart from the amendment tabled by my hon. Friend the Member for Milton Keynes, North-East, all the amendments before us this morning either legislate for the present or, in the case of the Conservatives' amendments, for the past. That is not helpful. We must legislate boldly for the future. That was the purpose of my amendment No. 7, which sadly was not selected.

I hope that, on Report, my hon. Friend the Minister will bring back a new clause 1 to set out a simple, broad objective for the Bill, from which everything follows. I suggest something along the lines of ''promoting the most rapid progress towards a non-carbon fuel economy, having regard to the need to maintain security of supply.'' That would set out the fact, which must not be forgotten, that the White Paper recognised the overarching importance of reducing CO2 emissions by 60 per cent. by 2050.

Since that White Paper was published scientific opinion has been that even greater reductions may be necessary. Not only that, we have to start making them as soon as possible. If it is left too late to start making the reductions, the climate change scenarios that are already in process will be irreversible. There will be little or no amelioration of the consequences for our grandchildren or even our great-grandchildren. That is why we should legislate for the future and set out a Government intent to reduce carbon dramatically and as fast as possible. That is not in any way inconsistent with maintaining security of supply.

Members have referred to sending signals to the market. Such a move would send a strong signal to the market, telling investors to invest in renewable energy. By that I do not just mean wind power—it seems to have bewitched everybody yet can take us only so far—but all forms of developing renewable energy technology. If the Minister puts such a simple, radical, straightforward clause into the Bill, a lot will follow from it.

Anne McIntosh (Conservative, Vale of York)

It is an honour to serve on this Committee, especially under your chairmanship, Mr. O'Brien. I should declare my interests in PEPs and ISAs in BP and Shell, and a number of general ISAs that will cover the privatised utilities, which are an achievement of the last Conservative Government.

It is a pleasure to be working with the Minister in this Committee. As he mentioned, the security of supply pervades the Bill, and indeed was the purpose behind the energy White Paper. He has written to all members of the Committee to say that the Government propose to delete clause 1 as it is incompatible with the independent regulation of energy markets. The hon. Member for Hazel Grove alerted us to that. The Government may consider tabling an amendment on Report, and it would help the Committee if the Minister told us what the basis of such an amendment would be.

The hon. Member for Milton Keynes, North-East did the Committee a great service in speaking to his amendment, even if he decides not to press it. I would

go further than him and join my hon. Friend the Member for Tewkesbury in saying that either the original clause 1 or—if the Minister and the Committee prefer—our amendment No. 41 is needed, because I do not believe that the objective of placing a duty on the Secretary of State to ensure the integrity and security of supply of electricity and gas is met by existing legislation.

I do not want to go into great detail, but the Gas Act 1986—passed under the last Conservative Government—places a general duty on the Secretary of State and the director to exercise functions under the Act, one of which is

''to secure that persons authorised . . . to supply gas through pipes so far as it is economical to do so, all reasonable demands for gas in Great Britain''.

As my hon. Friend the Member for Tewkesbury said, we are looking at being a net importer of gas. Therefore, by definition, we have to consider the security of supply. I will come to the EU aspect of that in a moment. The Electricity Act 1989 placed a similar duty on the Secretary of State and the director in respect of electricity. The Utilities Act 2000 amended that provision.

Paddy Tipping (Labour, Sherwood)

The hon. Lady mentions the Electricity Act. Will she confirm that the Secretary of State and the regulator have a joint responsibility to ensure security of supply?

Anne McIntosh (Conservative, Vale of York)

Indeed, and I shall develop that point in the EU context, which greatly alarms my hon. Friends and me.

We are told that, under the Utilities Act 2000, the Secretary of State shall carry out these functions in a manner that will take account of the need to secure an economical supply of gas and a diverse and viable long-term energy future. The Act goes on at length, setting out its regulatory aims. The wording of clause 1 is fundamental in this regard: there is a duty to ensure the integrity and security of electricity and gas supply.

I had the honour to serve on the European Scrutiny Committee, which was considering a draft EU constitution, the status of which, especially in regard to energy provisions, was not clear. That is a matter to which I and several of my hon. Friends, supported by the shadow Secretary of State and SNP Members, drew attention. I ask the Minister to give the Committee and the House a categorical undertaking that the Government will robustly reject any proposed European Union intervention in ensuring the integrity and security of energy supplies. That is relevant to the point just made by the hon. Member for Sherwood.

I shall refer to one or two provisions from the EU constitution. If it is recognised that it is possible for the EU to intervene in the security of our energy supply, for whatever reason—for example, liberalisation and opening up the energy market—it appears that we would be faced with an EU regulator.

The Minister identified a concern in the energy industry about clause 1 as drafted, which is why the amendment suggests helpful alternative wording.

Surely he must appreciate that it would be preferable to state categorically that it would be better for the industry to face a British regulator, albeit in a privatised, deregulated market, than the spectre of an EU regulator. I say that as someone whose pro-European credentials cannot be in doubt, as I spent 10 years as an elected Member of the European Parliament and before that worked for the Conservatives in an advisory capacity for five and a half years.

Bob Blizzard (Labour, Waveney)

Is the hon. Lady aware that the so-called energy chapter has been deleted from the draft treaty, so the prospect that she raises could not possibly occur under the new constitution?

Anne McIntosh (Conservative, Vale of York)

Unfortunately, I am in the same position as the hon. Gentleman: I have read newspaper reports and the comment from the diplomat—presumably from the UK representation—who will be negotiating on behalf of the Government and this country. Until the draft constitution comes before the House, we are not in a position to comment. That is why I have asked the Minister, in the most open and helpful way, to give a categorical assurance on the matter.

The newspaper report tells us that the article referring to energy will be deleted from the chapter, but there are several articles. The key one—the one that we need to know is no longer in the constitution—is article 13, which sets out areas of shared competence. The Minister will, I think, accept that this is not a tidying-up exercise. As a non-practising Scottish advocate, I am from the camp that is wedded to the British constitution in its present form. Our greatest strength is our unwritten constitution, which is built on convention, Acts of Parliament and court cases. The spectre that we face, for the first time ever, is energy, in the guise of liberalisation policy as set out in article 13, becoming an area of shared competence.

Section X of the constitution is devoted to energy, and it specifically says that the matters set out in clause 1 will be taken from the exclusive competence of the UK Government and Parliament and passed to the Commission of the European Union. It gets worse, because the co-decision procedure will be used. Those are the relevant articles. All I seek this morning is an assurance on various provisions. I am concerned about article 13 and the whole of section X—article III-157 as well as articles III-129 and III-130, in particular the references in the latter to measures affecting directly or indirectly the availability of resources and

''measures significantly affecting a Member State's choice between different energy sources and the general structure of its energy supply'',

which run counter to the energy policy that the Government have set out in the Bill.

The Minister must come clean today and confirm that at the earliest opportunity a revised draft of the EU constitution will be presented, perhaps to the Committee. The Committee, in the context of the Bill—

Bill O'Brien (Labour, Normanton)

Order. I have listened intently to the hon. Lady. While we accept that continuity and guarantee of supply are important, I hope that we shall not stray too far into what is said in European directives. I would prefer hon. Members to discuss the matter before the Committee and the amendment.

Anne McIntosh (Conservative, Vale of York)

I was not intending to stray, but the Minister needs to know that Members on both sides of the House are concerned that clause 1 should state categorically that any issue relating to a duty to ensure the integrity and security of electricity and gas supplies must remain with the Secretary of State. That was my point in quoting: what I read out was word for word the text from the draft EU constitution, which we are now told that does not refer to energy. However, we cannot see that for ourselves until it has been agreed. Can the Minister say that this is a red line and that the Government will block any reference to energy?

Laurence Robertson (Conservative, Tewkesbury)

Even if the reference is deleted from the constitution that is being prepared, we have heard much in the past about how the EU will not gain competence over a certain matter only to find that it gains that very competence in the next treaty.

Anne McIntosh (Conservative, Vale of York)

I hope that the Minister will help the Committee and give a categorical assurance on the matter. He must now be in no doubt about why clause 1 has been drafted in this way; it is almost word for word the same as the draft EU constitution. The Acts to which he referred—the Electricity Act 1989, the Gas Act 1986 and the Utilities Act 2000—are not nearly as clear as clause 1 or our revision in amendment No. 41. I see no reason why Parliament cannot be privy to the draft EU constitution. I presume that the European Scrutiny Committee will have access to it to give him a steer.

More imminently, the Government are only too familiar with the fact that they may have to rely yet again on emergency powers because of another potential interruption of supply. The Committee is keen to progress with its work, but I wonder whether the Minister will comment on one final point. In September 2000, the Government exercised their powers under the relevant legislation, on which the House was not consulted. Those emergency powers may be used again later this year, if there is another fuel demonstration. In such circumstances, would he see fit to allow the use of those powers to be scrutinised by the House?

Joan Walley (Labour, Stoke-on-Trent North)

I rise briefly to add my support to the amendment tabled by my hon. Friend the Member for Milton Keynes, North-East. My major concern is that Government new clause 7 is not part of this group of amendments. That would have given us the chance to put environmental concerns at the heart of what we are discussing. In the absence of that new clause, amendment No. 38A is the next best option for including environmental considerations. It is important that we move as quickly as possible to a non-carbon-fuel economy.

If amendment No. 38A is the next best thing, we need to consider how to promote energy efficiency through various other measures. It also anticipates new clause 3. When we come to debate the next group, we must consider carefully the undertakings that I hope the Minister will give us. That will lead us to think about where in the Bill we are placing environmental issues.

It is important that we have joined-up government. Any commitment given by the Department of Trade and Industry should be matched by the Treasury in the comprehensive spending review. We need to look closely at amendment No. 38A, and we want the Minister to give some indication, as we move from consideration in Committee to consideration on Report, of how the Government intend to place environmental considerations at the heart of the Bill.

Bill O'Brien (Labour, Normanton)

Order. I am waiting for the hon. Lady to refer to security and integrity of supply. I know that the environment is important, but we will discuss that later. We are discussing security and supply. I ask her to stick to that.

Joan Walley (Labour, Stoke-on-Trent North)

Absolutely, Mr. O'Brien. I was addressing security and supply in respect of this group of amendments. I refer you and the Committee to the amendment tabled by my hon. Friend the Member for Milton Keynes, North-East.

Many of us see energy efficiency as integral to security of supply, but we cannot have that unless we change the culture and how we look at energy supply itself. How can we achieve that? Many of those who have been involved in these issues over the years—as you have been, Mr. O'Brien—recognise the fact that unless we have a change of culture and unless that change is reflected in how we define security and integrity of supply—unless we take account of environmental issues in that way—we will not make progress, nor will we be able to give commitments on our own energy supply. Neither shall we be able to use our experience to influence negotiations taking place at the global level, which will be very much on the agenda when the UK takes the G8 presidency next year.

Andrew Stunell (Liberal Democrat, Hazel Grove)

I have been following the hon. Lady's argument closely. Does she not agree that to worry about security of supply without worrying about demand is like turning on the bath tap and pulling out the plug?

Joan Walley (Labour, Stoke-on-Trent North)

I agree—that is the theme that the hon. Gentleman and my hon. Friend the Member for Milton Keynes, North-East developed earlier. The issue has also been debated in relation to transport policy. We hope to move away from a demand-led transport policy and to look instead at what the earth's finite resources are as well as how we can meet our transport policy commitments. Similar considerations apply to energy policy.

For those reasons, I urge the Minister to look carefully at the thinking behind amendment No. 38A and to assure us that even if he cannot accept it now, he will bring us some comfort on Report.

Norman Baker (Liberal Democrat, Lewes)

I hope that the Minister has noted that no one has spoken in defence of his position that the clause should be deleted and nothing should be put in its place. Everybody has either supported the clause or suggested an alteration to the form of words, as a replacement. That is because there is unanimity among all parties in the Committee that some words are needed to fill in the gaps on the issues we have identified.

The problem of the lights going out is the final, back-stop problem that the Minister or one of his successors might have. It is inconceivable that he would sit in a darkened television studio lit by candles and say, ''I'm afraid the lights going out is nothing to do with me—it's Ofgem's responsibility. I have no role whatever. The fact that there's been a market failure is, I'm afraid, the consequence of an Act that was passed a long time ago. My hands are clean.''

If the country's energy supplies were threatened, by terrorist activity or whatever, the Minister and the Government would of course get involved. It would be ludicrous to think otherwise. Will he set out explicitly what powers or duties he already has under existing legislation to ensure the integrity and security of electricity and gas supply, so that we can have an informed debate? It has been suggested that he has powers under the Gas Acts and the Electricity Acts, so he should list them.

Will the Minister say what duties or powers he or the Secretary of State would have under the Civil Contingencies Bill to ensure the integrity and security of electricity and gas supply? It is inconceivable that that Bill, which is approaching enactment, would not place a duty on the Minister, or at least give him a power, to ensure that the lights are kept on. If it did not do so, it would be a faulty Bill. Its purpose is to ensure that life as we expect to enjoy it carries on normally in difficult circumstances. Can he say what powers would be introduced under the Civil Contingencies Bill? If he does not know, I hope that one of his officials passes him a note with the answer.

I refer the Minister to comments that the Economic Secretary made in response to an Adjournment debate that I introduced yesterday on the effect of economic instruments on environmental policy. I have a lot of time for the Economic Secretary. He seems to talk a lot of sense and what he said yesterday is germane to this group of amendments:

''The Government believe that markets provide the best means of allocating an economy's resources. However, many markets are subject to imperfections and failures, and that is particularly true for environmental matters.''

He continued:

''Evidence of the nature of market failure may mean that we have to use a range of policy instruments, including economic instruments, and the Government are committed to using such a

range of policy levers to pursue environmental objectives when appropriate.''—[Official Report, Westminster Hall, 19 May 2004; Vol. 421, c. 309-10WH.]

Members of the Committee, including the hon. Members for Milton Keynes, North-East and for Brighton, Kemptown (Dr. Turner), as well as my hon. Friend the Member for Hazel Grove, have suggested that levers are appropriate in a case such as this in which there is market failure because the market will not deliver energy conservation or energy efficiency. Nor, incidentally, will it deliver a new generation of nuclear power stations unless this or a future Government seek to intervene. So, it is quite clear that there is a need to intervene.

I wholly commend the comments made by the Minister's colleague, the Economic Secretary. I do not understand the Minister's objection to the clause, which seems almost philosophical, or does he object simply because the provisions were introduced by Opposition Members? We need a more lucid explanation of the need to remove the clause than the one we have had so far from his colleagues in the House of Lords. However, the Minister and his successors will ensure that there is integrity and security of supply for electricity and gas, whether the clause is included or not.

Ministers will ensure that the lights are kept on. They will pursue, as they are currently pursuing to some extent, a policy of energy conservation and efficiency. They will ensure, as they have ensured under the renewables obligation, that renewables are promoted. These things are happening, so what is the objection to writing them into the Bill so that everyone knows where we stand?

Bob Blizzard (Labour, Waveney)

I, too, am delighted to serve under your chairmanship, Mr. O'Brien. I look forward to hearing the arguments of my hon. Friend the Minister on whether the clause is necessary. I believe that the wording is inadequate and that the clause should not stand part. It does not recognise that energy policy, although primarily about security of supply and keeping the lights on, must also be about reducing CO2 emissions, as set out in the energy White Paper. Unless we move towards that target of a 60 per cent. reduction in CO2 emissions by 2050, it will be increasingly difficult for any Government to keep the lights on throughout the country. I say that as a Member who represents a coastal constituency in which climate change has an even starker relevance.

On Second Reading, it was widely recognised that the main problem with our energy policy is that even if we meet our renewables targets of 10 per cent. by 2010 and 20 per cent. by 2020—it will not be easy to do so—zero emissions generation will simply replace the current 21 per cent. of nuclear power generation as those nuclear power stations reach the end of their lives. We need to do something else if we want to exceed that 20 per cent. target—indeed, if we want to improve our current position.

Many hon. Members favour the nuclear option, but I believe that it is wrong to have only one option. We need to consider not only zero emission generation, but near-zero emission generation and carbon

sequestration. Those options require immediate and thorough examination. When I raised the matter during Environment, Food and Rural Affairs questions—

Bill O'Brien (Labour, Normanton)

Order. I draw the hon. Gentleman's attention to the fact that the subject to which he is referring relates to a later debate. I ask him to stick to speaking to the amendment to the clause, whose title refers to security and integrity of supply. That is what I said to the hon. Member for Stoke-on-Trent, North (Ms Walley) earlier.

Bob Blizzard (Labour, Waveney)

I obviously respect your guidance, Mr. O'Brien. I am simply trying to make the case that we will be able to ensure security of supply only if we also have regard to our policy on emissions. The part of the country that I represent cannot have a secure supply if it keeps being flooded because sea levels are rising as a result of global warming. I also argue that, to maintain security of supply, we will need to rely on fossil fuels for some time. To make that fossil fuel generation acceptable, however, we need to consider carbon sequestration. I hope therefore, Mr. O'Brien, that you will allow me to pursue this point a little further.

Bill O'Brien (Labour, Normanton)

As I said, if the hon. Gentleman sticks to the question of the Secretary of State's duty to ensure the integrity and security of supply of electricity and gas, I will welcome his contribution.

Bob Blizzard (Labour, Waveney)

The main point that I want to make is about carbon sequestration and, in particular, a form called carbon capture and storage and enhanced oil recovery. That entails capturing the carbon from the power station, which we need to ensure security of supply. It is then buried in depleted oil reservoirs in the North sea, squeezing more oil out of those reservoirs, which also helps to maintain security of supply, and enriching the oil to make it more effective as a source of energy for security of supply. That is my case.

Beyond that, the carbon can also be buried in the aquifers deep beneath the North sea, so it is not just a medium-term solution to ensure security of supply but a long-term solution. That was recognised in the energy White Paper, which recommended that a report on it be commissioned by the Department of Trade and Industry. That report appeared in April and showed that oil producers regard CO2-based EOR as a proven technique from experience with onshore applications and that they know how to apply it in the North sea without the need for a demonstration project.

The consultation also confirmed the conclusion of the carbon capture and storage review that, under current market conditions, EOR using CO2 is not a commercial option for the North sea. However, it has the advantage of providing some financial return partially to offset the costs, and the injection of CO2 into the oil reservoirs underlying the North sea is accepted as permissible under the London and OSPAR treaties controlling the dumping of waste in the North sea. It is a solution to ensure security of supply because it does not conflict with those treaties.

The point is that we may not be able to ensure security of supply while also working towards our CO2 emissions reduction targets if we rely on just the two pillars of renewables and energy efficiency. We have to consider the carbon capture technology. We must also consider its time scale. As with any major project, there is a long lead-in time, and the opportunity to use the depleted oil reservoirs will not exist in 10 to 20 years, because current pipelines, which could be used, will have to be decommissioned. However, there will be another use for those pipelines and that infrastructure if we follow the carbon capture route.

To sum up, we have a real opportunity to bury carbon and to get the last drops of oil out of reservoirs, which is good husbandry of resources. That must be part of the efficiency referred to an amendment No. 38A, but we have a chance to take the world lead in the technology, which will be good for jobs and British industry.

Developing countries that are using fossil fuels, and perhaps not so keen to turn away from them as us, will need the technology if we want to achieve global environmental targets. The market will not deliver that; the Government need to give direction. They know that the market has not been able to deliver renewables on its own, which is why there are obligations, and we know that the market will not deliver nuclear power stations on its own. What I am saying is let us explore the option. We need to move now and commit ourselves, because in it we have the missing link in our energy policy.

Paddy Tipping (Labour, Sherwood)

I am pleased that you are chairing the Committee, Mr. O'Brien, because you, above all, understand the importance of security of supply and the role that the coal industry can play in providing such security.

I support the White Paper. It is challenging; it takes us to a carbon-free economy from the old fossil-based economy. The plan is ambitious and will be difficult to achieve, but I support it. I do not believe that there are security of supply issues in the short term. There may be issues to do with systems failure, but the market showed in the winter just gone that it can respond to market signals. In the mid-term, however, if we do not achieve our renewables targets, if our nuclear energy begins to decline—as looks possible at the moment—if coal is subject to environmental constraints and if we are heavily reliant on gas, there could be some security of supply issues. According to Department of Trade and Industry figures, by 2025, 70 per cent. of our energy needs could be met from imports, 90 per cent. of which would be gas. That explains my interest in the clause.

What powers does my hon. Friend the Minister have? That has been the subject of discussion in Committee already. It is clear that one of the four pillars of the White Paper is security of supply; that is writ large. The hon. Member for Vale of York (Miss McIntosh) has drawn our attention to the Gas Act 1986 and the Electricity Act 1989, both of which place responsibilities on the Secretary of State.

The hon. Member for Tewkesbury made it clear that a Secretary of State who did not deliver security of supply would face difficulties. I want to contrast the amendment proposed by him and his colleagues with the comments made on Second Reading, when, in the winding-up speech, the hon. Member for Eddisbury (Mr. O'Brien), supported by the hon. Member for Tewkesbury, made it clear that clause 1, as it then stood, was acceptable. The hon. Member for Tewkesbury has now changed his position, as is shown by amendment No. 41.

Laurence Robertson (Conservative, Tewkesbury)

The hon. Gentleman's recollection of what was said by my hon. Friend the Member for Eddisbury and me is not accurate. My hon. Friend extended an invitation to the Minister to discuss clause 1, as we were not entirely happy with it for the reasons that I have given. If the hon. Gentleman checks Hansard, he will find that that is the case.

Paddy Tipping (Labour, Sherwood)

Let me quote Hansard. The hon. Member for Eddisbury said:

''I have made it crystal clear that the intention is not to be interventionist''.—[Official Report, 10 May 2004; Vol. 421, c. 55.]

I pressed him on that point: clause 1 is interventionist. The hon. Member for Tewkesbury is right that an offer was made to have further discussions. I am pleased that the letter from the Minister states:

''These are concerns which are also shared by the industry. We continue to discuss with the industry how we might address the issue in a way that is helpful to them.''

The letter acknowledges that a further amendment may be introduced on Report.

Our discussion today has focused on how far clause 1 is interventionist. It is clear to me, from my discussions with the generators, that they have real concerns. Hon. Members will have seen the briefing from Powergen and received a briefing from Centrica. I have had the opportunity to discuss the clause with Scottish Power, which says, interestingly, that no one has leaned on it and that the DTI has not been in touch with it on the issue. Nobody is, as the hon. Member for Eddisbury said on Second Reading, talking ''behind cupped hands''.

There is, however, clearly an issue with the clause 1 as it stands. Industry is saying, ''We are concerned. We want to invest in the long term. We believe in a regulatory framework. We also believe that clause 1, as it stands, gives the Secretary of State the opportunity to intervene.'' The hon. Member for Tewkesbury acknowledged that by tabling amendment No. 41. It is a helpful step forward, but there is still an element of conflict in it, because the Secretary of State would have a duty to have

''regard to the regulatory arrangements''

as well as

''a duty to enable the framework whereby the market can ensure the security of electricity and gas supplies''.

He will then have to

''make regular reports . . . on these matters.''

On the one hand, the regulatory framework should be left intact; on the other, however, the Secretary of State must still consider matters. The tension is still there.

There is a tension in clause 1. I strongly believe that the private sector—the generators and electricity companies—has invested immensely in energy supplies. Even if we accepted amendment No. 41, there would still be difficulties with the clause. I accept, as the hon. Member for Lewes said, that everyone who has spoken in the debate is concerned about security of supply. However, the clause is not acceptable as it stands, and amendment No. 41 does not take us much further.

Andrew Stunell (Liberal Democrat, Hazel Grove)

I have been following the hon. Gentleman's argument closely. Would amendment No. 72, which is in my name and that of my hon. Friend the Member for Lewes, solve the problem by leaving it to GEMA to safeguard the regulatory system, except in cases where it brings matters before the Secretary of State?

Paddy Tipping (Labour, Sherwood)

Such a proposal—whether we are talking about GEMA or the joint energy security supply group—certainly takes the discussion forward. However, those bodies report to the Secretary of State, so he would still be in conflict with the regulator.

I am simply saying that there is a problem, and I am delighted by the Minister's comments on Second Reading and in his letter to members of the Committee. He said, ''Yes, there is a problem. I know that I've got to provide security of supply—it's a political imperative, if nothing else. The form of words isn't right. I'm backed by one of the four pillars of the White Paper on security of supply, but I need to do some more work and get back to you.'' I look forward to what he has to say now and to a proposal that will help us move forward on Report.

Denis Murphy (Labour, Wansbeck)

It is a great pleasure to serve on the Committee, especially under your chairmanship, Mr. O'Brien.

Like many other hon. Members, I am concerned about future security of supply. One of the main guarantees of the security of the electricity supply is a sensible fuel mix, and the mix is just about right at the moment, with 38 per cent. gas, 35 per cent. coal and 22 per cent. nuclear and renewables. However, the energy White Paper projects that, by 2020, the electricity supply industry will use 70 per cent. gas, 8 per cent. coal and just 9 per cent. nuclear. There will be almost total reliance on one fuel, most of which will be imported. Yet, coal is currently the cheapest fuel used in electricity generation, at about 1.5p per kWh.

The Institute of Civil Engineers has little confidence in the system coping with heavy winter demand for energy, especially if gas is allowed to dominate energy supply. The institute argues forcefully for a balanced fuel mix as the only way to ensure a stable and secure power supply in the United Kingdom. In its response to the White Paper consultation, the Institution of Chemical Engineers pointed out that:

''The energy review was complacent about future gas supplies. It looked at the UK in isolation and overlooked the impact on process of Europe's parallel growth in gas demand. Prices will

inevitably rise because of growing European dependence on gas supplies imported from far flung countries. Major new infrastructure will be required but—even when that is installed—the UK will be vulnerable on the end of a complex international gas grid.''

Two major organisations are warning against further reliance upon gas.

In 2003, the Trade and Industry Committee contended that much more investment was needed in gas infrastructure. It also concluded that the regulator's concern to drive down costs should not be the only policy aim. Reliability and security always come at a price. British coal can continue to play a major role in providing the secure supply of electricity for the nation, and the Government should be congratulated on the financial support that they have given to Britain's mining industry. That support must, of course, be maintained.

Norman Baker (Liberal Democrat, Lewes)

Does the hon. Gentleman accept that although the benefit of security of supply from the use of indigenous coal can last for hundreds of years, there is, nevertheless, an environmental problem with it? Does he share my disappointment that little seems to be happening with regard to the gasification of coal and other techniques that would make coal's use more acceptable environmentally?

Denis Murphy (Labour, Wansbeck)

The hon. Gentleman makes an excellent point. I agree with him. I was about to say that we can guarantee the coal industry for the long term only by investing heavily in clean coal technology, which will only be able to be used in an environmentally acceptable way. Perhaps the Minister can enlighten the Committee as to what investment he intends to make in clean coal technology and how he intends to support the mining industry so that it can play a genuine role in ensuring a secure supply of energy.

Stephen Timms (Labour, East Ham)

We have had a valuable debate and I am pleased that we have started the work of the Committee with a serious consideration of energy security. That is the central issue for energy policy, along with the imperative of reducing carbon emissions and tackling the challenge of global warming, as my hon. Friend the Member for Stoke-on-Trent, North reminded us at the outset. We had a good discussion on the topic on Second Reading and have had another useful debate now. I hope that the Committee will continue to talk about the issue and to find shared ground, drawing on the submissions from industry and taking forward the discussions to which my hon. Friend the Member for Sherwood referred.

We all want to achieve the same objectives. We just have to find a way to encapsulate that in the Bill without creating any of the knock-on problems of which we have become aware in recent weeks and that have been mentioned in the debate.

Joan Walley (Labour, Stoke-on-Trent North)

Is my hon. Friend saying that the kind of debate that we have had will continue in subsequent sittings and right up until Report and that a genuine attempt will be made to get things?

Stephen Timms (Labour, East Ham)

I do not know how long it will take to reach the end point. I hope for, and am optimistic that we will achieve, the situation that my hon. Friend describes. I shall explain a little more about how that is to be done.

The Committee has been reminded that maintaining reliable supplies of energy is one of the four key goals in the White Paper and, as my hon. Friend the Member for Brighton, Kemptown said, ultimate responsibility for energy security must rest with Government—in particular, with my right hon. Friend the Secretary of State. There is no escaping from that and nobody would want us to escape from that responsibility.

I listened with great interest to the hon. Member for Tewkesbury, and my hon. Friend the Member for Sherwood is right to say that there has been a shift in the position of Opposition Members since Second Reading. I welcome that, as it rightly reflects a response to representations that have been made to us by industry. The hon. Gentleman referred to the BBC 2 programme about what happens if the lights go out, and I noted with particular interest the fate of the Energy Minister in that dramatic broadcast. I welcome the greater spotlight on energy policy since that programme, and some of the discussions that have arisen from it. However, the scenario that was presented—of a pipeline somewhere in Russia being blown up and, a few hours later, the whole of the south-east of England being plunged into darkness—is rather implausible, because we are working on a range of diverse sources of supply of gas and, more broadly, energy. If there is a problem in a particular area, alternatives will be available to address it. Nevertheless, looking forward, there are certainly some challenges for us in the UK as we become net importers of gas and oil in future, having depended on the North sea for the past 30 years or so. It is important to have a public debate about managing the transition successfully.

The hon. Member for Tewkesbury referred to the fact that we had agreed a treaty with Norway. That is not quite right, so I should clarify the position. Last October, I signed an agreement with my counterpart the Norwegian Minister, which has, I am pleased to say, allowed work to go forward on the proposed new pipeline from the Orman Langer field in the Norwegian part of the North sea to the UK. There will need to be a formal treaty, and I hope that it will be signed later this year.

Laurence Robertson (Conservative, Tewkesbury)

I think that the Minister would acknowledge that the point that I was trying to make is that the Secretary of State has a role in the delivery of gas to this country.

Stephen Timms (Labour, East Ham)

I take that point entirely; the hon. Gentleman is quite right.

The other point that the hon. Gentleman made, with which I want to disagree, is that we are obsessed with wind power. I do not think that that is right. I expect wind power to contribute more than any other form of renewable form of energy by 2010, but that is a reflection of the different stages of the current

technologies. What is driving the large amount of activity and investment in wind power is economics, not a Government obsession. Beyond 2010, a more diverse range of technologies will be deployed, a number of which will make a substantial contribution to meeting UK energy needs. The renewables obligation—the main lever here—is technology blind. It does not force the introduction of wind power or any other sources.

Through capital grants, we currently support the development of biomass, solar energy, photovoltaics, wave power and tidal power. By providing funding, we can improve technology and bring down future costs. We are not putting capital grants into onshore wind farms, so the economics are driving their expansion. As the hon. Member for Tewkesbury said, we are putting capital grants into offshore wind farms, which are just starting. The first is operating at North Hoyle off the coast of north Wales, and I am looking forward to visiting tomorrow the second offshore wind farm currently being constructed at Scroby Sands offshore from the constituency of my hon. Friend the Member for Waveney (Mr. Blizzard).

Laurence Robertson (Conservative, Tewkesbury)

The Minister has anticipated the point that I was going to make. The Government have committed £117 million to developing offshore wind farms, so it is not correct to say that wind power is developing because of its own economics. It is being pump-primed by the Government. He mentioned the money being allocated to other forms of renewables. I do not expect him to have the figures on that to hand but, for comparison, it would be useful if he could obtain them for the Committee, so that he could demonstrate the Government's commitment to other forms of renewable energy.

Stephen Timms (Labour, East Ham)

The figures are published, and I will be happy to show them to the hon. Gentleman. However, the central point that I wanted to put to him was that the Government are not putting capital funding into the development of onshore wind. Someone listening to the debate and hearing him charge us with being obsessed with wind power might think that we were doing so, but we are not. The current—and welcome—expansion in onshore wind energy is being driven by economics.

Bob Blizzard (Labour, Waveney)

Is not the key point that some of those other technologies, such as tidal current, are not yet ready for commercial production. If we wait until they are—although I hope that they will be soon—we will not maximise the use of wind. Is it not also the case—to return briefly to gas—that as well as getting gas from Norway and from pipelines from Russia, we are also likely to import a lot of gas as liquified natural gas, which will be shipped across the seas? We will therefore not be reliant on single pipelines.

Stephen Timms (Labour, East Ham)

My hon. Friend is right on both those points. With regard to gas supply, there is the pipeline from Norway, to which I referred. I also hope that the existing interconnectors between the UK and

continental Europe will be expanded. Moreover, as he rightly says, there are three projects to import LNG into the UK, which I hope will make rapid progress. We will therefore have a diversity of sources for the supply of gas and, for the longer term, discussion is taking place about a pipeline from Russia.

My hon. Friend is also right about the state of other renewable technologies. I caution everyone against taking the view that we support renewable energy except the form of renewable energy that is most cost-effective at present. As he rightly said, if we adopted that position, we would not be doing anything at present. Once those new forms of renewable energy are at a stage at which they can be commercially deployed—thanks to Government funding and support, that should be sooner rather than later—I have no doubt that the concerns now being expressed about wind power will also be raised in respect of those technologies. We will then need to address those concerns. We would be mistaken if we took the view that there are other alternatives a few years down the track and that if we wait for them, we will not have any problems.

Clause 1 would give the Secretary of State a duty to ensure the integrity and security of electricity and gas supply. It was brought forward as an amendment to the Bill by both Conservative and Liberal Democrat peers during consideration on Report in the Lords. I understand that their intention was to strengthen the security of supply obligations in legislation, and to make it clear that responsibility for that matter rests with the Secretary of State. I have no doubt that Members in the other place who introduced the amendment did so with the best of intentions.

It has since become clear, however, that the clause as drafted would have unintended and harmful consequences. In particular, it could require widespread intervention by the Secretary of State in the operations of the market and the decisions of Ofgem. Numerous industry spokespeople have made clear their worry about consequent uncertainty in the market and the danger, in particular, of undermining firms' incentives to invest in secure energy supplies and to commit themselves to investment in a timely manner.

The hon. Member for Lewes asked me to spell out the problem. I hope that he has seen the representations that we have received. The problem, in a nutshell, is that the provision creates a good deal of regulatory uncertainty. It would be an invitation to people who disagreed with decisions that were made to go to the Secretary of State or to apply for judicial review, and to say, ''In our view, this step or decision does not maximally secure energy security and should therefore be challenged.'' There would be a great deal of uncertainty and the consequence, perversely, would be to harm the security of our energy supplies.

Norman Baker (Liberal Democrat, Lewes)

I hear the Minister's argument with interest, although I am yet to be convinced by it. So that I can judge his argument in context, would he set out his existing duties and powers under previous Acts

so that we can see what else is being proposed? Secondly, will he deal with the point about the Civil Contingencies Bill?

Stephen Timms (Labour, East Ham)

If I am able to convince the hon. Gentleman, I shall be absolutely ecstatic. I shall certainly have a go.

The principal obligations currently set out are in the Electricity Act 1989 and the Gas Act 1986. Section 3A(2)(a) of the Electricity Act requires both the Secretary of State and Ofgem—the key point is that they both have obligations in respect of the security of supply—to exercise their functions

''having regard to . . . the need to secure that all reasonable demands for electricity are met''.

Section 4AA(2)(a) of the Gas Act has a similar obligation in respect of gas, to secure that

''so far as it is economical to meet them, all reasonable demands in Great Britain for gas conveyed through pipes are met''.

The Electricity Act also contains another subsection, which requires both parties—the Secretary of State and Ofgem—to carry out their duties under the Act in the manner best calculated

''to secure a diverse and viable long-term energy supply''.

Those are the principal obligations as currently set out.

Anne McIntosh (Conservative, Vale of York)

As I said earlier, I did my homework—I quoted the draft constitution earlier—and did not have to rely on the Minister to do it. He is no doubt aware that paragraph 1(a) of article III-157 states:

''In establishing an internal market and with regard for the need to preserve and improve the environment, Union policy on energy shall aim to''—

and continues in sub-paragraph (b)—

''ensure security of energy supply in the Union''.

Are the Government in favour of that and are they adding that to their red lines in negotiations with the European Union? Does the Minister wish responsibility for security of supply to remain with the Secretary of State and Ofgem, or are the Government now in favour of EU regulation of energy supply?

Stephen Timms (Labour, East Ham)

The hon. Lady asked those questions earlier. I will come on to where our discussions with Brussels have reached. I want to make crystal clear the obligations on the Secretary of State and Ofgem, which will continue to apply. Those obligations are the principal sources of confidence about the security of energy supply in the UK.

In its current form, the provision should not stand part of the Bill. Members of both Opposition parties have recognised that there is something of a problem with the clause as drafted and they have tabled and proposed amendments, which we have argued about already. In the light of what has been said in the debate, I am hopeful that we may find an agreed way forward, which would allow me to make another proposal on Report.

I want to respond in detail to the proposals made to the Committee this morning. Amendment No. 41, tabled by the hon. Member for Tewkesbury, and new clause 13, tabled by the hon. Member for Hazel Grove, would both place a duty on the Secretary of State to make regular reports to Parliament on security of

supply. Amendment No. 41 would provide that the report should deal with how the Secretary of State enabled the framework for market delivery of secure electricity and gas supplies, whereas new clause 13 would require her to report on the progress made each year towards maintaining and, if necessary, enhancing UK security of supply.

I want to make it clear that placing a duty on the Secretary of State to report annually to Parliament on security of supply is a helpful idea, and I am grateful to both hon. Members for tabling their proposals. Such a duty would clearly reflect the Secretary of State's ultimate responsibility for security of supply, which I have gladly acknowledged to the Committee, and her accountability to Parliament for its delivery. It would give Parliament an opportunity every year to scrutinise her account of how security of supply is being delivered.

I am also aware that the industry favours such a basic element in the approach, so I am happy to consider the amendment and new clause with a view to introducing something on Report that will command widespread assent. I hope that there will be further discussions, as my hon. Friend the Member for Stoke-on-Trent, North suggested, with industry and the Opposition in order to reach such a conclusion.

Amendment No. 41 would remove the existing requirement for the Secretary of State

''to ensure the integrity and security of electricity and gas supply''

and replace it with a requirement for ''having regard to'' and so on. I say to the hon. Member for Tewkesbury that I shall certainly give that form of words further thought, although I am concerned that it could give rise to undesirable consequences. It helpfully reflects important elements of the way in which the system currently operates—for example, regulatory structures are in place, including an independent regulator—and the fact that we have a market-based approach, which the Secretary of State seeks to facilitate. I have no problem at all with any of that, but I am concerned about the consequences of such wording.

I do not believe that it is possible for the market to ''ensure'' supplies will always be secure. Putting that into statute could give rise to enormous costs being placed on consumers in the interest of delivering levels of security that are much higher than they are willing to pay for. The form of words in the amendment could well result in uncertainties in the market about how the duties would be exercised, and the representations that we have received from the industry have constantly underlined the potential harm that uncertainty would cause to investment. I shall reflect on the wording in the amendment, but I do not want to raise too many expectations that I will necessarily introduce a provision reflecting it. However, I welcome the central idea in the amendment and the requirement for an annual report, as suggested in the new clause tabled by the hon. Member for Hazel Grove.

Laurence Robertson (Conservative, Tewkesbury)

I appreciate the Minister's sympathetic approach to the amendment. He will acknowledge that I said that we were attempting to strike a balance to satisfy those in the industry who were concerned about the medium-term security of supply and those who thought that the Lords amendment might inadvertently impede that. I am grateful to him for saying that he will consider introducing a sympathetic amendment on Report. How does he intend to finesse that? Does he intend to hold discussions with the Opposition parties?

Stephen Timms (Labour, East Ham)

That would be very valuable. I suggest that we have a fairly informal discussion shortly after the recess to determine whether we can come up with a form of words that would obtain general support. That is my aim and the time scale that I suggest.

On the other amendments in the group, amendment No. 72 is helpful in reflecting the important role that Ofgem already plays. However, it does not adequately take account of the existing framework of the respective functions of the Secretary of State and Ofgem as set out in the Electricity Act 1989 and the Gas Act 1995; it would disrupt that framework. I hope that the hon. Member for Hazel Grove feels able, in the constructive way that he has approached the debate, not to press the amendment.

I assure the hon. Gentleman that the Secretary of State and Ofgem already have regard for the three issues set out in amendment No. 73. As a result, the Department of Trade and Industry's electricity and gas industries emergency committee has detailed contingency plans in place to deal with energy supply emergencies, and we review those plans regularly. He will be aware that the JESS committee considers the long-term requirements for energy at the point of use as part of a wider examination of the security of supply. I agree with him about the importance of reducing energy use through conservation. There are several important Government initiatives on that. However, in setting out those three issues, the amendment does not take account of other important considerations such as the need to safeguard the interests of consumers. Therefore, it would be damaging to pick out those three issues.

Andrew Stunell (Liberal Democrat, Hazel Grove)

The point that I made about conservation and efficiency measures is absent from the Bill; surely it ought to be there in some shape or form. In the spirit of what the Minister has already said, perhaps that is a matter for further discussion outside this Committee, which I would be happy to take part in. He must recognise that there are market gaps and that his role will still be of great importance if he is to deliver the objectives that he has set out to the Committee.

Stephen Timms (Labour, East Ham)

There are important things that the Secretary of State and I have to do to achieve objectives that we all agree on. As the hon. Gentleman will know, a couple of weeks ago, we published the annual report on energy efficiency, which sets out that there is much work still to be done. I am pleased to see that he has a copy of the report.

Leaving aside the wider debate on the clause, I assure the hon. Gentleman that the Secretary of State and Ofgem already have regard for JESS when exercising existing legislative duties. It is one of a number of important sources of information that are examined closely. Another such source is NGT's winter outlook report. I hope that he feels that amendment No. 74 is not necessary.

On amendment No. 38A, I agree with my hon. Friend the Member for Milton Keynes, North-East that promoting energy efficiency is key to achieving security of supply, as well as our objectives on climate change and fuel poverty. We have set out our intention to deliver substantial improvements in energy efficiency and reductions in emissions of greenhouse gases in the climate change programme, the energy White Paper and the action plan published a couple of weeks ago.

I pay tribute to my hon. Friend's work on the Sustainable Energy Act 2003, which he was responsible for, and on a number of avenues that he has actively pursued for this purpose. He will know better than anyone that, under that Act, the Government are required to report annually on progress towards our carbon reduction and wider energy policy goals. We are specifically required to set a domestic energy efficiency aim for England and take all reasonable steps to deliver it. That is also covered in the recently published plan, which sets out in detail the steps taken to improve energy efficiency across the UK and establishes the energy efficiency aim in accordance with the Act for which he was responsible. We are subject to binding obligations under the Kyoto protocol. We have made it clear that we will strongly support further, more ambitious international agreements. Improvements in energy efficiency will have to play a major part in meeting those commitments.

Norman Baker (Liberal Democrat, Lewes)

The Minister is setting out what he intends to do, which is welcome. The concern being expressed by some hon. Members is that the regulator does not necessarily have a clear responsibility to promote energy efficiency in the same way as the Minister indicated the Government would like to do. Are they planning any further guidance to the regulator to promote energy efficiency?

Stephen Timms (Labour, East Ham)

We already provide the guidance on sustainability. We now have a set of levers that will enable us to deliver our objectives.

I am grateful to my hon. Friend for saying that he is not going to press his amendment to a vote. The difficulty with the amendment is that it would leave the Government open to challenge by groups with wide-ranging views on what promoting energy efficiency should entail. That would increase uncertainty and have all the undesirable effects that we have discussed. That is an important point that reflects the Government's central objective.

Brian White (Labour, North East Milton Keynes)

There is a whole range of Government activity that has an impact on security of supply. Can the Minister assure the Committee that there will be joined-up government and that other Departments

will buy into the measures that they need to take, particularly in the planning sphere, to enhance the security of supply? Will he consider that point in the light of the amendment that he will table on Report?

Stephen Timms (Labour, East Ham)

My hon. Friend is right. That is why we have set up an across-government committee of Ministers, chaired jointly by the Secretary of State for Trade and Industry and the Secretary of State for Environment, Food and Rural Affairs. It will bring together Ministers from other Departments such as the Office of the Deputy Prime Minister, the Ministry of Defence, the Foreign and Commonwealth Office in exactly the way that my hon. Friend describes. They will work together to achieve both our security of supply objectives and our climate change and carbon emissions objectives the other aims set out in the Energy White Paper. I can give my hon. Friend the assurance that he seeks.

I should like to take a couple of minutes to respond to some of the other points that were made in the debate. I am particularly grateful to my hon. Friend the Member for Sherwood for pointing out to the Committee that the serious power cuts that we had in London and Birmingham last year were the result not of a shortage of generating capacity, as was suggested at the time, but of technical problems within the network. Those problems need to be rectified. They are serious and should not have happened. I hope that they will not happen again.

My hon. Friend the Member for Milton Keynes, North-East was right to say that we need to look at the demand side, too. I am sure that he will be pleased that both the National Grid Transco winter outlook report, which is being published this week, and Ofgem's response to it discuss the important contribution that can be made to security of supply on the demand side. He was right to make that point.

My hon. Friend and the hon. Member for Vale of York asked a number of questions about the European dimensions of all of this. There was concern for some time about the initial proposals for the energy chapter in the European Union constitution. I pay tribute to my hon. Friend the Member for Waveney who did much to draw attention to the concerns about the impact on prospects for investment in the North sea if the original proposal had gone ahead.

We made representations in the earlier round of negotiations about the constitution and, by and large, people were reassured. The North sea industry was certainly reassured by the amendments to the energy chapter. However, matters have now moved on and the Irish presidency has proposed the complete deletion of the energy chapter and, to pick up the point made by the hon. Member for Vale of York, the reference to energy in the list of shared competencies in article 13. I do not know what the ultimate outcome of the negotiations will be. We shall have to wait and see. However, when there is a final and agreed version of the constitution, we shall have ample opportunity to

debate it. The Government have repeatedly said that we will not sign up to a proposal that is inconsistent with the United Kingdom's energy interests.

Anne McIntosh (Conservative, Vale of York)

I am most grateful to the Minister for his clarification. Is he confirming that we now have a red line? The wording of clause 1 is almost the same as the wording of the energy section, which is why the concern arose. Will he confirm that a red line will be written in the sand if another delegation tries to reinsert energy in the article and that there will be no regulation of energy at European Union level? [Laughter.] I am trying to stay in order and be fluent, too, Mr. O'Brien, but it is not always easy.

Stephen Timms (Labour, East Ham)

I cannot sign up to the hon. Lady's last point. There have been welcome moves to open up the European gas market—for example, in the European Union. Discussions are taking place at European level about energy, and rightly so. I am not sure what colour line in the sand we are talking about, but we will not sign up to a proposal that is contrary to the United Kingdom's energy interests. The direction of recent developments in discussions has been helpful in that respect.

Paddy Tipping (Labour, Sherwood)

Before the Minister leaves that point, would it be in the British interests if the European market were liberalised? Companies such as Electricite de France and the gas market could benefit from greater liberalisation and British industry would be in a position to capitalise.

Stephen Timms (Labour, East Ham)

My hon. Friend is right. He has made an important point. We are moving substantially in the direction of a genuinely liberal energy market in the European Union, and it will make a big contribution to the assurance of the security of the UK's supplies and a proper market operation.

I do not want to take up too much of the Committee's time, but I want to refer to a couple more points. My hon. Friend the Member for Milton Keynes, North-East expressed his worries about what would happen when 70,000 new homes are constructed in Milton Keynes—a parochial, but important, point. A revision of part L of next year's building regulations will further raise the standard of new and refurbished building. That will be helpful.

I remind the hon. Member for Hazel Grove that statutory fuel poverty targets are already in place, thanks to the Warm Homes and Energy Conservation Act 2000. He said that, while prices were going down, making progress on fuel poverty was not too difficult. However, I think that he will acknowledge that improvements in benefit levels during the past few years have also made an important contribution to reducing the incidence of fuel poverty since 1997. They have more than halved it. However, there are already statutory targets that require the Government to take all reasonable steps to eradicate fuel poverty among vulnerable households and groups by 2010 and in all groups by 2016.

I ought to respond to the points made by the hon. Member for Angus (Mr. Weir) about nuclear issues. He talked about the nuclear decommissioning

authority running nuclear power stations. I need to make it clear that the NDA will not be able to run nuclear power stations, except pending decommissioning, and it will not be able to operate non-nuclear stations, except in support of its functions in relation to clean-up management of designated sites. The hon. Gentleman gave the impression that something rather larger was intended.

Michael Weir (Scottish National Party, Angus)

Will the Minister give way?

Stephen Timms (Labour, East Ham)

Let me just comment on the other point and then I will give way very briefly.

The hon. Gentleman talked about a partial nationalisation of British Energy. That is another rather misleading phrase. We are playing our part, along with other stakeholders, in allowing British Energy to attempt a solvent restructuring. We have made a loan available to British Energy. There are currently no outstanding drawings on that loan. I hope that he will accept that what has happened with British Energy certainly cannot be described as partial nationalisation.

Michael Weir (Scottish National Party, Angus)

The Minister has accepted that the NDA would be able to run nuclear power stations prior to decommissioning, but there is no time scale in the Bill for decommissioning a station once it has been taken over by the NDA. In fact, the NDA could conceivably run nuclear power stations for a considerable period prior to decommissioning.

Stephen Timms (Labour, East Ham)

I assure the hon. Gentleman that the NDA's running of power stations will be limited, in the nuclear case, to the Magnox situation, with a defuelling and decommissioning programme being established. The role of the NDA is about decommissioning.

Bill O'Brien (Labour, Normanton)

Does the Minister want to reply to the hon. Member for Wansbeck (Mr. Murphy)?

Stephen Timms (Labour, East Ham)

I am grateful to you for reminding me that there are a couple of other points that I ought to respond to, Mr. O'Brien.

The points made by my hon. Friend the Member for Waveney about carbon capture and the use of carbon for enhanced oil recovery, and those made my hon. Friend the Member for Wansbeck about clean coal technology are very important. We will publish a carbon abatement strategy later in the year. I have to say to my hon. Friend the Member for Waveney, who is very close to the industry, that I get the sense that the industry does not have not a great deal of enthusiasm for enhanced oil recovery. We will need to take that further and there will need to be some enthusiasm. Clean coal will feature in the carbon abatement strategy to be published later in the year. We are currently committing resources to the development of clean coal technology, and I agree with my hon. Friend the Member for Wansbeck that that technology has the potential to make an important contribution to our energy needs in the future.

Laurence Robertson (Conservative, Tewkesbury)

We have had a long debate—two and a half hours—on this clause, but it has been worth while. I think 13 Members have taken part and a good many points have been raised.

On Amendment No. 41, I listened carefully to what the Minister said and, as I said in an intervention, I thank him for his sympathetic approach. My understanding is that he wants to consider our amendment and that discussions with the Opposition parties will take place shortly after the recess at the end of next week. Given that he recognised that the Government have responsibility for energy supplies and security—I think that his exact words were that that responsibility must rest with the Government—

It being twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.

Adjourned till this day at half-past Two o'clock.

Standing Committee B

Clause 1 - Security and integrity of supply

Jonathan Sayeed (Conservative, Mid Bedfordshire)

I remind the Committee that with this we are discussing the following:

Amendment No. 38A, in

clause 1, page 1, line 5, at end add

', in particular by promoting energy efficiency in all sectors'.

Amendment No. 72, in

clause 1, page 1, line 5, at end add—

'(2) The Secretary of State's duty under this section shall be wholly delegated to GEMA save and except after—

(a) GEMA has made a report to the Secretary of State setting out its reasons for believing that it has insufficient powers to carry out this duty, and

(b) the expiry of one year's notice of intended reversion of the duty to the Secretary of State.'.

Amendment No. 73, in

clause 1, page 1, line 5, at end add—

'(2) Such a duty shall in particular require the Secretary of State to have regard to—

(a) provision of supply in a national emergency,

(b) estimates of the long-term requirements for energy at the point of use, and

(c) the reduction in energy use achievable through conservation and efficiency measures.'.

Amendment No. 74, in

clause 1, page 1, line 5, at end add—

'(2) In the exercise of this duty he shall have regard to the reports and recommendations of the Joint Energy Supply Security working group in respect of their responsibility for monitoring and assessing risks to security of supply.'.

Clause 1 stand part.

New clause 13—Security of supply report—

'The Secretary of State must in each calendar year, beginning with 2005, publish a report (''a security of supply report'') on the progress made in the reporting period towards maintaining and enhancing, if necessary, UK security of supply.'.

Laurence Robertson (Conservative, Tewkesbury)

I begin this part of my remarks by saying what a pleasure it is to see you chairing this Committee, Mr. Sayeed. We look forward to working with you.

Before lunch, I was in the process of saying that we had had a good debate on the security of supply. It took all morning, but it was probably right to take so much time, because it is an important issue. In summing up, the Minister expressed sympathy for the clause that had been inserted by the Lords and, in particular, for my amendment No. 41. My understanding is that he promised to consider the amendment further. He said that he was not happy with all of it, but that there were parts that he would discuss with the Opposition immediately after the forthcoming recess, with a view to perhaps introducing something on Report. On the basis of those sympathetic remarks, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 1 disagreed to.

Clause 2 - Annual reports under section 1 of the Sustainable Energy Act 2003

Desmond Turner (Labour, Brighton, Kemptown)

I beg to move amendment No. 8, in

clause 2, page 2, line 7, leave out 'and demonstration' and insert 'demonstration and deployment'.

Jonathan Sayeed (Conservative, Mid Bedfordshire)

With this it will be convenient to discuss the following:

Clause 2 stand part.

Clause 3 stand part.

Amendment No. 39, in

clause 194, page 149, line 41, after 'section', insert

'and section [amendment of Sustainable Energy Act 2003]'.

Government new clause 7—Reports under section 1 of Sustainable Energy Act 2003—and amendment (a) thereto:

after ''clean coal technology;'' insert '(aa) coal mine methane;'.

New clause 8—Environmental targets—

'(1) The Secretary of State shall within six months of this Act receiving Royal Assent lay before each House of Parliament a report, prepared in consultation with the devolved administrations, on renewable energy and that report shall include—

(a) a set target for the reduction of greenhouse gas emissions, with individual targets for each area covered by devolved administrations as agreed between the Secretary of State and the relevant devolved administrations for the following ten year period,

(b) a set target for the percentage of electricity to be generated by renewable energy sources, with individual targets for each area covered by devolved administrations as agreed between the Secretary of State and the relevant devolved administrations for the following ten year period,

(c) the amount of electricity being generated by each method of renewable energy, and

(d) a strategy for meeting the targets set out in paragraphs (a) and (b).

(2) In each year thereafter the Secretary of State shall lay before each House of Parliament a report setting out—

(a) progress made towards the greenhouse gas emissions reduction target,

(b) progress made towards the renewable energy target,

(c) the amount of electricity being generated by each method of renewable energy, and

(d) strategy for meeting the continuing targets for both greenhouse gas emissions and renewable energy with proposals for any changes necessary for meeting the targets set in subsection (1)(a) and (b).

(3) At the end of the initial ten year period, and every ten years thereafter, the Secretary of State shall lay before each House of Parliament a report setting out the measures specified in subsection (1) for the following ten year period and in every year thereafter lay before each House of Parliament the report specified in subsection (2).'.

New clause 9—Report on sustainable energy policy commitments—

'(1) It shall be the duty of the Secretary of State to publish in such form as he sees fit an annual report on all the Government's energy policy commitments.

(2) In this section the term ''energy policy commitments'' means all those commitments so specified on the Government sustainable energy policy network website for the time being.'.

New clause 10—Amendment of Sustainable Energy Act 2003—

After section 2 of the Sustainable Energy Act 2003 there is inserted—

''2A Energy efficiency of business and public sector buildings: Secretary of State

(1) The Secretary of State must within one week beginning with the coming into force of this section designate under this subsection at least one energy efficiency aim.

(2) For the purposes of this section an ''energy efficiency aim'' is an aim which—

(a) is contained in a published document;

(b) relates to the energy efficiency of business and public sector buildings;

(c) specifies the amount of carbon dioxide to be saved from business and public sector buildings; and

(d) is compatible with European Union obligations and any other international obligations of the United Kingdom.

(3) The Secretary of State may, at any time after designation under subsection (1), designate under this subsection a further energy efficiency aim or aims.

(4) Where an energy efficiency aim is for the time being designated under this section, the Secretary of State must take reasonable steps to achieve the aim.

(5) In deciding which steps to take for the purposes of subsection (4), the Secretary of State must consider steps relating to the heating, cooling, ventilation, lighting and insulation of business and public sector buildings.

(6) A designation under this section may be withdrawn, but not if its withdrawal would result in there being no energy efficiency aim designated under this section.

(7) If an energy efficiency aim designated under this section ceases to meet the condition in subsection (2)(d) it ceases to be designated under this section, but if this results in there being no energy efficiency aim so designated the Secretary of State must without delay designate a new energy efficiency aim.

(8) A designation of an aim under this section, or a withdrawal or cessation of such a designation, must be published in such a way as the Secretary of State considers appropriate.

(9) A designation may be contained in the same published document as the aim itself.

(10) In this section ''business and public sector buildings'' means buildings specified under any enactments or otherwise as business or public sector buildings.

(11) This section shall come into force on 1st January 2005.''.'.

New clause 12—Duty relating to energy provision and use—

'The Secretary of State shall have a duty to promote the efficient provision and use of energy [gas and electricity], and to reduce the emissions of greenhouse gases.'.

Desmond Turner (Labour, Brighton, Kemptown)

May I say what a pleasure it is to serve under you as Chairman for the first time, Mr. Sayeed? Putting you in the Chair is obviously a way of keeping you out of the discussion. I hope that you do not find it too frustrating an experience.

Once again, the amendment will be redundant in practice because the clause will go, and I apologise to the Committee that I was not as sharp as my hon. Friend the Member for Sherwood (Paddy Tipping) in spotting that and tabling an amendment to the new clause in time for today's debate. I will endeavour to do that on Report instead.

Amendment No. 8 looks as if it may be just a piece of semantics, but it is not. There is a clear distinction between the research and development of a technology and its deployment. It is vital that we do not do the research and development only. We have a long and honourable history in research and development in this country, but a less successful history of deployment. It is a constant criticism of the Department of Trade and Industry that it is good at supporting research and development only until the work gets anywhere near commercial exploitation. I mean no disrespect to the Minister, but that is what people in various industries have told us.

The difference is illustrated by what is happening with offshore wind power. The technology has already been researched and developed; one can buy a turbine off the shelf. If a turbine is going to be installed onshore, there is no need for any further Government help. For offshore installation, however, the Government have recognised that further help is needed to deploy the technology and are providing that through capital grants.

Under the amendment, such deployment would form part of the report. What matters is not just that we have a technology; we want to know how many megawatts of it are in place and how much progress has been made towards meeting the renewables target through its use. That is why I specifically want to insert the word ''deployment''. I want to make it clear that the Government will—as I believe they intend to—give whatever assistance is necessary. There may be means other than simple capital grants. The Government can help the deployment of technologies in all sorts of ways. We could expand on that all afternoon, but the Committee would not thank me for doing so, so I will not.

I want to make it clear in the Bill that the Government will assist the deployment of new technologies in any of the fields listed in clause 2 and new clause 7, and that that will be reported on, so that Parliament can note the progress that the Government are making and, if it is not satisfied with that progress, tell the Government to do better, if that is required.

Paddy Tipping (Labour, Sherwood)

Will my hon. Friend use his amendment to talk about clean coal technology? He will know that there is a process called—

Jonathan Sayeed (Conservative, Mid Bedfordshire)

Order. Can the hon. Gentleman speak up for the assistance of Hansard ?

Paddy Tipping (Labour, Sherwood)

I will start again. I am glad that you have called me to order already, Mr. Sayeed. Could my hon. Friend relate the amendment to clean coal technology? Coal burns more cleanly if gasified. The research has been done, but we need to move from research to demonstration to deployment. Is he making the point that we need to do more than just the science; we need to put the science into practice?

Desmond Turner (Labour, Brighton, Kemptown)

My hon. Friend is right; that is exactly what I mean. I am talking about the move from creating the technology to using it, whatever the technology is. The only criterion is that it should contribute towards our aim of reducing carbon in energy use. That is the big criterion. I anticipate that the Government will support anything that will do that on a sustainable and potentially commercially viable basis. That is the purpose of the amendment, which is simple but vital. I hope that my hon. Friend the Minister will not oppose the amendment. There is not much point in his accepting it, of course, because he is going to propose that the clause be withdrawn and replaced with a new clause. However, I hope that he will indicate that he will be receptive on Report to an amendment to new clause 7 that is similar to amendment No. 8.

Laurence Robertson (Conservative, Tewkesbury)

I shall speak more widely on the clause as it exists, which was inserted by the Lords. Indeed, discussing Lords amendments is becoming a habit. Will the Minister explain why he cannot run with the Lords amendment as it stands and why he feels the need to expand it? I am sure that there are good reasons for that.

The list of fuels and energy sources in the Bill is impressive. There is a need to explain what is going on with regard to the development and the deployment of each different technology. We have clean coal technology, which we heard quite a bit about this morning. It is important to explore the possibilities of clean coal technology. I am not too technical a person, but I understand that such technologies exist. I also understand that they are, unfortunately, rather expensive. As we were saying this morning, the issue concerns how to obtain investment in the generating industry to ensure that coal-fired power stations can survive.

While we are at it, we might want to explore how the mining industry can survive, too. Clean coal technology provides a cost-effective and flexible means of generating electricity. We heard a lot about wind this morning—no doubt we shall hear a lot more about it before we have finished with the Bill—but the problem with it is that it is very intermittent and requires back-up from another traditional source of electricity. Coal is that traditional source. Back-up is not possible using nuclear power, although it is by gas and coal. If we are to meet the CO2 and other targets that are set by various EU directives, we must establish clean coal technology.

We discussed biomass in a recent statutory instrument Committee, and it presents obvious opportunities. A Government amendment later in the Bill addresses biofuel, and that will certainly be an

interesting discussion when we reach it. I do not intend to go through in detail the other amendments but as a result of parliamentary questions that I have asked, I have been concerned about the relatively low level of investment in research and development of those energy sources for the future. However, I hope that they are not too far in the future; there is the renewables obligation and the need to produce electricity cleanly, so I hope that we can develop such sources of power rather quicker than we appear to be doing. We do not hear an awful lot about what is being done; that is not to suggest than nothing is being done, but we do not hear a lot about, for example, how we are developing geothermal sources. The point of the original amendment was to enable us to hear more about how

''the reports shall contain information on the development of new energy sources'',

which is good. If nothing is going on, we must be aware of that, and address it.

I do not want to say much more at this stage, except to repeat that I should like the Minister to explain what the principal difference is between clause 2 and new clause 7, which he has tabled.

Brian White (Labour, North East Milton Keynes)

May I start by quoting something that is currently happening in the United States? Two large American power companies—American Electric Power and Synergy—have been forced by their shareholders, against the wishes of their directors, to start to include assessments of climate risk in their annual reports. Shareholders have told the company that they recognise that climate change is happening, so they expect it to assess that and report on it annually. The shareholder who put the resolution to the board said:

''The consequences for the companies that do not act responsibly and take steps to assess and mitigate risk posed by climate change can be just as devastating to shareholders as the recent corporate scandals.''

Our equivalent is clauses 2 and 3. I start by welcoming the Minister's new clause 7. As I sponsored the Sustainable Energy Act 2003, which it seeks to amend, I am pleased to welcome it. Together with new clause 9, to which I shall speak, it will institute a much fuller reporting regime than currently exists under that Act. When I speak to new clause 9, I shall outline in more detail why the reporting needs to be buttressed.

The original draft of the Sustainable Energy Bill contained a clause that was not unlike new clause 7. It provided that the Government should produce an annual report on the development of various renewable and low-carbon technologies. In Committee, the then Minister said that the clause was a step too far, and that it was too prescriptive to itemise the various energy sources and technologies on which there were to be annual reporting.

I very much agree with the thrust of new clause 7 even though I was persuaded not to push such a proposal to a vote last year on the words of the then Minister, my right hon. Friend the Member for Cunninghame, North (Mr. Wilson), who said:

''As part of the overall reporting progress, we shall report on the 135 specific commitments in the White Paper. We have already created a sustainable energy policy network, and we have published on its website the 10 work streams that will deliver those commitments''. —[Official Report, Standing Committee C, 11 June 2003; c. 7.]

The Opposition spokesmen changed every time, but halfway through the passage of that Bill, my hon. Friend became Energy Minister. I am pleased that he is still in that post. My right hon. Friend reiterated the commitment later when he said that

''first, the White Paper is unambiguous in its targets; secondly, no one is reneging on them. I reaffirm all the targets, goals and aspirations set out in the White Paper; the Government are firmly and publicly wedded to them . . . we have an obligation to report on many fronts, and that is now to be enshrined in the Bill.''—[Official Report, Standing Committee C, 11 June 2003; c. 22.]

I welcome the fact that the Government took that on board and introduced new clause 7.

The report to which my hon. Friend the Minister referred was published for the first time last month and, disappointingly, it did not come up to my expectations in respect of the scope of the annual report. I therefore tabled new clause 9, which commits the Government to reporting on the 135 commitments, but I welcome new clause 7 as a way forward and a major step towards my objectives.

If the targets are to be achieved, and the aspirations set out in the White Paper are to be fulfilled, it is vital to keep an eye on the development of new technologies. I endorse the comments made by my hon. Friend the Member for Brighton, Kemptown (Dr. Turner) about how the various technologies should be deployed.

I wanted to consult the annual report and I asked the Vote Office and the Library for a copy, but neither could find it, so I thought I would look on the internet. I am used to looking for items on web pages, but I challenge the Minister to find the annual report easily on the Department of Trade and Industry website. It is there—I have a copy—because I finally came across it, but it was not easy to find. That is why last year many people were sceptical about how the Government were reacting. A search on the website takes us to a speech by the previous Secretary of State, my right hon. Friend the Member for Tyneside, North (Mr. Byers).

New clauses 7 and 9 are both necessary. Without them, it will become more difficult to monitor the impact of the Government's energy policy, especially on fuel poverty and the low-income sector. It was said on Second Reading, and in this morning's sitting, that energy prices are starting to rise and the issues that were appropriate when fuel prices were falling are no longer apposite. The DTI must be required to assess the overall cost, and how low-income consumers can be compensated to avoid further increases and fuel poverty. New clause 7 goes some way to meeting those objectives, but new clause 9 would go even further.

I shall now explain why I believe it to be important to retain clause 3. Although that clause was inserted by the Opposition in the Lords, its provisions are of crucial concern to the industry, environmental campaigners and the fuel poverty movement. It places

a duty on the Government to publish an annual report and to indicate the steps that they have taken and propose to take

''to secure carbon savings from domestic energy efficiency of 5MtC per annum by 2010.''

The 5 megatons per annum was the 20 per cent. referred to in the White Paper; several Ministers have mentioned that.

For a long time, colleagues—not just those in the Committee—and I have been calling for that statutory target of 5 megatons of annual carbon savings from domestic energy efficiency to be achieved by 2010. That target was identified in the White Paper, and was discussed when the Sustainable Energy Act was passed last year, but when the energy efficiency aim was published earlier this year, the figure given was 4.2 megatons of savings, which is 80 per cent. of the original target. That was despite a number of assurances given by Ministers. Last May, before the change of Minister, the then Minister, my right hon. Friend the Member for Cunninghame, North said to an industry group that the Government had clear objectives, as outlined in paragraphs 3.5 and 3.6 of the White Paper, which referred to the 5 megatons of carbon, and that the group's members should take those paragraphs as read, and invest accordingly.

The hon. Member for Lewes spoke earlier about economic instruments. In July last year, the Treasury expressly stated, on page 5 of a consultation paper on economic instruments to improve household energy efficiency, that it was the Government's aim to save 5 megatons of carbon from domestic energy efficiency.

The permanent secretary at the Department of Trade and Industry, Sir Robin Young, in a letter on 22 August 2003 said that he could

''confirm that the government remains committed to the White paper figures for around 5MtC by 2010.''

In September 2003, Sir Robin took the extraordinary step of asking for Hansard to be changed in order to clarify the matter, and sought confirmation that that clarification would be made in the bound volume. Six assurances were therefore given about the 5 megaton figure—four by Ministers, one by the permanent secretary at the Department of Trade and Industry, and one in the Treasury document.

When Lord Whitty argued against the clause in the House of Lords, he said that it was superfluous because the Government were about to announce their energy efficiency aim, which would address the matter. I have no doubt that he meant what he said, but when the energy efficiency aim was announced, there was widespread disappointment.

Andrew Stunell (Liberal Democrat, Hazel Grove)

Does the hon. Gentleman agree that it is all the more disappointing that that reduction is in the domestic sector, which is the most profligate and uses more than a quarter of all the energy? Reduction of the target from 5 to 4.2 megatons seems to be another case of following rather than setting the trend.

Brian White (Labour, North East Milton Keynes)

The hon. Gentleman makes a strong point, with which I entirely agree. The Government need to take a key lead on that sector. In the past,

assurances were given to industry as signals to invest, and industry responded to those signals. What has caused a major crisis of confidence in the industry is the fact that those signals were strong, but when the energy efficiency aim was published, it did not confirm what had been said before.

The Minister will have noticed that I was referring to a leaflet, which has been drafted by the Association for the Conservation of Energy, and which is about to be distributed to 100,000 of its members, who are employees of energy efficiency companies, local councils, and campaigning groups. Being a loyal Back Bencher, I tried to persuade the ACE not to print the leaflet, and it has so far agreed not to distribute it. However, frustrations are being expressed because commitments are being given through ministerial statements rather than in statute. If this commitment had been statutory, the civil servants who wish to frustrate the policy would not have been able to get away with it. There are major discussions in Government about what is the right level of carbon saving. I have no doubt that the Minister will say that other energy efficiency measures will ensure that the saving is more than 4.2 megatons.

As part of the pre-legislative scrutiny for the Communications Bill, the Puttnam Committee heard evidence from Sir Bryan Carsberg, the first telecommunications regulator. He said something that has struck home with me ever since. He said that if something is not on the face of a Bill or an Act of Parliament, regulators do not take notice of it—it may as well not exist. Ministers' statements and policy documents can as strong possible, but if something is not on the face of a Bill, regulators will not take notice of it.

Other people say that the courts can take account of what Ministers say in Committee. However, they do that only if there is an ambiguity. If it is clear that if there is a decision to remove clause 3, courts can clearly interpret that Parliament did not intend for there to be a 5 megaton carbon saving. That is my fear, and that is why I am urging the Minister as strongly as I can to reconsider his stance towards clause 3.

The Minister will say that there are other measures. However, paragraph 2.29 of the regulatory impact assessment, which we received just before the start of this morning's sitting, states:

''A new aim of 5 MtC carbon savings in households by 2010 would require substantial new measures. Carbon savings of this magnitude could only be delivered by increasing the rate of installation of cavity wall insulations. The estimated costs of delivering these measures would be of the order of £1.5-2.0 Bn. If the additional activity cannot be added to the existing Energy Efficiency Commitment, these costs would have to be met by the exchequer.''

That gives it away. Strong Government measures, as were initially put forward, backed up by the energy efficiency aim and statute would have the added benefit of ensuring that the Government deliver, because civil servants would not be able to wriggle out of the commitments as they have recently.

A lot of disappointment has been expressed. I urge the Minister to reconsider the issue and not to push for the removal of the clause because of the negatives that

he set out. If he is determined to seek its removal, I am concerned that the argument will not go away. The Government have a good story to tell about the measures that they are taking. As my hon. Friend the Member for Sherwood said this morning, the White Paper takes us down a carbon-free route for the first time. A positive Government story could become a negative story simply because we have not listened to the concerns of industry.

We are in danger of turning a win-win situation into a problem for the Government's credibility on energy commitment. Since more than half of MPs signed early-day motion 96, I hope that I have demonstrated that ministerial assurances, however well meant, are not enough. We need a statutory requirement for 5 megatons of carbon savings.

I am sure that the Minister would agree to meet us on this issue. I urge him not to push amendment No. 13 to a vote and to leave clause 3 in the Bill. He was very amenable in the earlier discussions. I hope that he can find a similar way forward here. If he does persist in removing clause 3, I am sure that there will be an amendment on Report. The arguments will not go away. Why are we so intent on scoring an own goal by removing the clause?

Michael Weir (Scottish National Party, Angus)

All hon. Members who have spoken so far seem to be aiming for the same sort of targets, albeit by different routes. I reiterate what the hon. Member for Brighton, Kemptown said about deployment. It has long been a concern of mine that much of the talk about renewables has been purely theoretical. Offshore wind farms and wave or tidal power have not been deployed to any large extent to find out how much electricity they can generate. I would support the hon. Gentleman's amendment.

I tabled new clause 8, which addresses many of the issues that have been raised by the hon. Member for Brighton, Kemptown and by the hon. Member for Milton Keynes, North-East (Brian White). There were several calls this morning for reports on various aspects of energy policy on environmental matters. At times it seemed that Parliament might be in danger of report fatigue. New clause 8 proposes another annual report to Parliament on the subject, but one that will try to bring together related subjects. Much of this is covered by section 1 of the Sustainable Energy Act 2003, but a bit of joined-up government seems to be required here to bring together two aspects of emissions and energy.

The present Environment Minister at the Department for Environment, Food and Rural Affairs would have ultimate responsibility for emissions and would also have responsibility for renewable and other energies. New clause 8 attempts to provide Parliament with an annual overall report on both those related matters, allied to specific targets. That is important, especially if clause 3 is removed from the Bill. As the hon. Member for Milton Keynes, North-East said, without these specific statutory targets, the matter will

undoubtedly slip. We need to know what the targets are and what progress is being made throughout the whole of the UK towards meeting them.

The Minister and hon. Members will be aware that specific responsibility for some of these matters in Scotland lies with the Scottish Executive and not this House. That is why new clause 8 makes the specific point that such a report must be prepared in consultation with the devolved Administrations. I would obviously love to have an independent Scotland with full responsibility for these matters, but until that glorious day we must work together for the internationally recognised targets for the UK. Even after independence, we will need to share this matter. It affects all of us in these islands.

The purpose of the new clause, which is perhaps worded imperfectly, is to set out clear, statutory targets both for renewable energy and carbon and for other greenhouse gas emissions. We can see how we are meeting these targets and the amount of energy that is being generated by renewable sources of energy. As I mentioned, I am concerned about how much energy is being derived at present from renewables and how realistic some of the targets are. There is undoubtedly a huge potential for renewable energy generation, particularly in Scotland. We have had hydroelectric power for many years. There is a huge potential for onshore and offshore, wave and tidal power, biomass and other sources. In practice at present, the only source of renewable energy apart from hydro that is producing a measurable amount of electricity is onshore wind power. However, that is running into increasing resistance because of the large number of wind farms being proposed across the country.

According to the Library, the contribution of all renewables to total energy consumption between 1990 and 2002 rose by a factor of 2.5. Although that might sound fairly impressive, it still amounts to a paltry 1.39 per cent. of total energy production. Even more revealing is the fact that, although the contribution of wind and wave energy to total energy consumption has risen by a factor of 125 since 1990, again it amounts to a paltry less than 0.5 per cent. of energy consumption. The figure is rising, but clearly there is a long way to go.

We must face the fact that, up to now, the total impact of all forms of renewable energy on our energy generation and consumption has been negligible. We are seeing improvements, because the first offshore wind farms are being built, as we heard this morning. I strongly suspect, however, that it will not be long before offshore wind runs into the same problems as onshore wind, and other interests lodge objections. We shall reach amendments on that later in our deliberations.

Despite the realities of renewables, the UK Government have set the target—or in truth, probably, the aspiration—of producing 20 per cent. of our energy from renewables by 2020. The Scottish Executive have gone much further, setting a target of 40 per cent. in the same time scale. In effect, we seek an

increase from less than 0.5 per cent. now to 20 or 40 per cent. in just 16 years. That is a massive increase, and to have any chance of meeting the target or getting anywhere near it, we will require a massive amount of investment very quickly.

We must be prepared to set those as statutory targets and to put in place a way of monitoring how we are doing in both areas, giving Parliament the chance, on an annual basis, to discuss these matters and consider where we are, our energy strategy and any measures necessary to meet the targets or to allow us to improve on where we are going with them. Otherwise, we have only aspirations. The hon. Member for Milton Keynes, North-East described the report that has been produced so far as disappointing. That is probably an understatement. Unless we are serious about the issue and have statutory targets to work towards and consider these matters annually, I suspect that we have no chance of meeting the targets.

I may sound sceptical about renewable energy, but I am not. I am opposed to nuclear power and believe that we must make real progress on all renewable energy, but there is a caveat to that, to which the hon. Member for Brighton, Kemptown also referred. We need to see that renewable energy works and can deliver the energy that we need. We need to see that, by 2020 or whenever, renewable energy will be onstream and able to replace some of the existing energy generation.

Robert Key (Conservative, Salisbury)

I agree with much of what the hon. Gentleman is saying, although I fundamentally disagree with him about nuclear energy, because I am in favour of it. I agree that it is necessary to pursue renewable energy sources, but will targets be any good? Would it even be any good having wind farms onshore and offshore if we did not get the distribution system right? Currently, the grid cannot cope. Even if we had all the generation—whether it involved wave power, tidal power or whatever—if we did not have the infrastructure to distribute it, we would be spitting in the wind. That is the real problem. How would the hon. Gentleman tackle it? Should we not be tackling the national grid and new distribution systems first?

Michael Weir (Scottish National Party, Angus)

I agree. Indeed, the hon. Gentleman will recall that I made the same point this morning when we were discussing clause 1 and the question of the Minister's overriding duty in respect of security of energy supply. One problem is that much of the potential for offshore wind, wave or tidal power is in areas such as the north-west of Scotland or Wales, where the national grid is at its weakest. We need investment in the national grid. I suspect that we will deviate strongly about where that investment should come from, as I imagine that the current energy companies will not make it by themselves. I have long argued that the Government have to bite the bullet and invest not only in new technologies, but in the national grid, so the energy can be taken from its place of generation to its place of use.

Brian White (Labour, North East Milton Keynes)

Is the hon. Gentleman aware that since the Sustainable Energy Act 2003 was passed, Ofgem has installed new meters and that that now costs a few pounds rather than several hundred pounds? Net metering can be useful for electricity in the grid. Several other changes that Ofgem has made on the demand side also go a long way to tackling and preventing some of long-distance grid problems that he is talking about.

Michael Weir (Scottish National Party, Angus)

With respect, I suggest that the meters will not deal with the specific problem. I accept that they will go some way to deal with the consumption side of the problem, but we still need the volume of electricity for the mass market, and there must be an investment in the grid. We can have as many offshore wind farms or wave or tidal power generators as we like, but unless we can carry the electricity, they will do us no good. We cannot ignore the fact that the place of consumption is often different from the place of generation.

What we need is something that covers all the issues. The hon. Member for Milton Keynes, North-East made good points about energy efficiency and the targets for reduction in CO2. I agree with them, and I hope that clause 3 stays in the Bill because it is important to tackle the problems. New clause 8 is designed to bring the matters together. Having looked at it again, I accept that it has a fundamental flaw, in that it does not deal with energy consumption. That is an inadequacy, and it should also cover energy conservation and efficiency. All the points should be considered together, and I am attempting to bring them together in achievable targets that are reviewed and developed each year.

Joan Walley (Labour, Stoke-on-Trent North)

May I say at the outset how pleased I am to serve under your chairmanship, Mr. Sayeed? I am looking forward to our deliberations and ending up with a better Bill than we have before us at the moment.

I hope that the Committee will forgive me if I repeat some of what my hon. Friend the Member for Milton Keynes, North-East has said, but I make no apology. His points were important and built on so much experience of this place and the subject, and deserve to be fully considered by the Minister at this important stage of the Bill.

Government new clause 7 is admirable, but if the Minister is to avoid the own goal to which my hon. Friend referred, it will be incumbent on him to tell the Committee what is wrong with clause 3. Our debate on these amendments is an opportunity for the Minister and may even strengthen his hand. Before we return on Report, there may be similar discussions on new clause 1 with the energy efficiency industry, non-governmental organisations and Back Benchers on the Committee. We have a wealth of experience of this important subject, and there is time for the Minister to enter into a constructive dialogue.

At the heart of the debate on these amendments is a simple question; should the Bill include carbon savings amounting to 4.2 megatons or 5 megatons? That might seem a small difference, but it is very important,

because other issues that have to do with leadership, and trust in the Government, arise from it. Their response—if not in today's proceedings, then on Report—will be to send out a strong message to the country about whether we truly mean what we said in the energy White Paper, which suggested 5 megatons of carbon savings or whether we can say something one day and downgrade it the next. If there are good reasons for downgrading the 5 megatons of carbon savings to 4.2 megatons, I shall listen to them carefully; I am prepared to be convinced by the Minister.

If there are good reasons for retaining the original Government target, including the 14 assurances that have been catalogued by my hon. Friend the Member for Milton Keynes, North-East, we should know what has changed since the publication of the energy White Paper. Successive Energy Ministers have stated that it is important to retain the 5 megatons target, and that message has been sent out to the industry. There is still time for the Minister carefully to consider the signals that arise from this debate, which will go out to the industry and to the country.

Norman Baker (Liberal Democrat, Lewes)

Does the hon. Lady agree that the fact that business might be performing better than anticipated is not a good reason to downgrade the domestic target?

Joan Walley (Labour, Stoke-on-Trent North)

It is always important that business performs as well as it can—not only in competitiveness and profitability, but in terms of Government targets. We heard from the hon. Member for Angus (Mr. Weir) that everything raised in the debate is connected to everything else. That point is well made: we should look not always to see where we are on the ladder, but two rungs up. We should set targets and a route map to take us from where we set out with the energy White Paper to where we must be to meet our international Kyoto commitments and to take a lead on the international stage.

I noted carefully the DTI report on energy efficiency and the Government's plan for action, published in April, which is relevant to the amendment. It indicates that the Government welcome views being given. Indeed, it prints reading lists and refers to the DTI web page as well as details of how to contact the Government for further consultation. I am clear in my mind that there is every opportunity for the Government to take account of our proceedings this afternoon. The fact that the next phase of the energy efficiency commitment is subject to public consultation is integral to our debate.

The Sustainable Energy Act 2003, which was so competently taken through Parliament by my hon. Friend the Member for Milton Keynes, North-East, requires the Secretary of State to designate an energy efficiency aim for residential accommodation. As was pointed out by the hon. Member for Angus, that requirement relates to Scotland and to Wales. It is more important than ever that we concentrate on the 5 megatons commitment and do what we can to keep it in the Bill.

As an aside, the Environmental Audit Committee—I am Vice-Chair and members of this Committee sit on it—took evidence only yesterday from the Energy Saving Trust and the Carbon Trust, and it became clear that meeting our energy efficiency targets includes not only England, but Scotland and Wales. I say to the hon. Member for Lewes that the targets we set must be reached through what is done not only in the domestic, public and business sectors, but in Wales and Scotland. Perhaps in the deliberations that the Minister may have with his civil servants as to how we can move back to leasing these 5 megatons of carbon savings, he might wish to look carefully at the contribution that Scotland and Wales could make.

The question I ask myself is, why have the Government come so far and promised so much, and why is there is a danger that they will falter slightly at this last hurdle in respect of the energy efficiency commitment? I refer the Minister to research undertaken by the Carbon Trust right across the public and private sectors. It has highlighted barriers to energy efficiency relating to just about every organisation it considered. Indeed, when he thinks about whether we should keep clause 3 as it stands, or modify it as is suggested in new clause 7, I ask him to look at those findings and to ask himself whether they might not apply equally to the DTI. It is important to consider the accuracy of the figures and the information put forward by the civil servants that will be used in the debate, which will define whether the targets are reachable. I want him to show strong leadership. I want him to be helped by our deliberations this afternoon so that we can make consideration on Report something we can be proud of.

I believe that the Government have already said that there will be a review in 2007, but I do not feel that we should wait until then. We should suggest now that 5 megatons is exactly what is needed, as the White Paper envisaged.

Like my hon. Friend the Member for Milton Keynes, North-East, I have met with various people on the issue, including the Association for the Conservation of Energy. Like him, I am fully aware of a draft newsletter that is being distributed around the country. It sets out the facts, without criticising the Government in any way, and shows how what was originally envisaged has been changed. There has been a step change down rather than a step change up. The Minister should take that into account, simply because we want the best possible outcome in terms of keeping the original objectives of clause 3.

Like my hon. Friend, I have looked at the regulatory impact assessment that we all received in sealed envelopes this morning. Paragraph 2.29 does indeed hint that one reason why the Government have decided to abandon the aspirations set out in the White Paper is the cost:

''A new aim of 5MtC carbon savings in households by 2010 would require substantial new measures. Carbon savings of this magnitude could only be delivered by increasing the rate of installation of cavity wall insulation. The estimated costs of

delivering these measures would be of the order of £1.5-2.0 Bn. If the additional activity cannot be added to the existing Energy Efficiency Commitment, these costs would have to be met by the Exchequer.''

The members of the Environmental Audit Committee have the benefit of evidence given by the Energy Saving Trust and the Carbon Trust only yesterday. I strongly urge the Minister to read it. There is a problem with the implementation plan, as the projections that the DTI promised have not yet been issued. That will determine how successful we are likely to be in delivering that commitment.

Just as importantly, it was suggested to us that there is a serious underestimate of what the savings to be made from appliances and white goods can deliver. The message that came across to our Committee yesterday is that the Government will achieve carbon savings that will not be counted because some measures still have not been factored into the plan. Why, then, will it be so difficult for us to reach the target of 5 megatons rather than 4.2 megatons? Is the Minister satisfied that the premise on which his civil servants have recommended that we cannot achieve 5 megatons has been fully explored? Should we not include the Carbon Trust and Energy Saving Trust in further discussions that will, I hope, take place before consideration on Report?

The regulatory impact assessment refers to what can be delivered through the installation of cavity wall insulation. Surely, measures other than the installation of cavity walls, such as the home condition report and the energy rating for every house, will also make a difference. Policy measures already in place could deliver the carbon saving that we seek. That might be a challenge, but it is certainly achievable. Should we not be working with the energy efficiency industry to secure a win-win situation? Should we not be working to ensure that Lord Whitty and previous Ministers who have given commitments on this are backed up by the action that we are going to implement?

Many people become MPs to make a difference and to change the world; I have been a Member for 17 years. In all seriousness, this is possibly the most pressing issue facing not only our country, but the international community. We have a group of Back Benchers who care passionately about the issue, and people across the country want clear signals from the Government that they can go full speed ahead for more exacting targets and standards. The Minister has an opportunity to send those signals and we look forward to hearing whether there is scope for further debate.

Andrew Stunell (Liberal Democrat, Hazel Grove)

It is a pleasure to serve under your chairmanship, Mr. Sayeed, and to follow the hon. Member for Stoke-on-Trent, North (Ms Walley). In a moment, I shall speak to new clause 12, which stands in my name and that of my hon. Friend the Member for Lewes, but other matters are of great importance and the Minister must understand that the points made by hon. Members are shared across the Committee. We certainly support new clause 9, which

has been tabled by the hon. Member for Milton Keynes, North-East. It would be a useful and important part of the Bill.

We are very disappointed that the Minister intends to oppose existing clauses 2 and 3 and, in his own words, table amendments to replace them with a single new clause that retains their basic principles. I found that sentence difficult to stomach. That new clause far from retains the basic principles of clause 3 in two main respects. First, as the last two contributors have mentioned, the new clause does not maintain the target of 5 megatons; in fact, it is devoid of targets. Secondly, it requires reporting only of what has been done, not of what is proposed. Furthermore, it requires reporting only of things that the Secretary of State considers appropriate. Basically, it takes the guts out of clauses 2 and 3 and it is a long way from being satisfactory. It is more of a wrecking clause than a proposal that ''retains the basic principles'' of those two clauses.

I hope that the Minister will acknowledge that whatever the merits of the new clause, it cannot honestly be said to do what his letter to Members purports. The proposal is future-proofed in the sense that clothes are waterproofed: it does not let the future in at all. There is no report on what might be proposed in the future, and no future targets, only an historical document containing only the information that the Secretary of State considers might be beneficial. So, you will not be surprised to hear, Mr. Sayeed, that we support the retention of clauses 2 and 3 and oppose new clause 7. If the hon. Member for Sherwood were to press his amendment on coal mine methane to a Division, I would support it. I hope the Minister, too, would support that worthy proposal. We also support new clause 10.

The problems in all these matters is that Minister never has any difficulty in replying with calming, sympathetic words, but, almost inevitably, after two or three sentences he refers back to the ambitions set out in the White Paper, which, as I have said before, was a step down from the performance and innovation unit ambition. That was itself a step down from the royal commission report. Nevertheless, the White Paper is presented as something like the gold standard by which Government energy policy should be judged.

The problem is that a White Paper is not Government policy; it is not law, and it imposes no obligations on anyone—not even on the Minister, but certainly not on his successors. If there were a change of Government or even a change of Prime Minister, that White Paper could be put on the back shelf and forgotten. It would no longer be applicable and would have no force, moral or otherwise.

As the hon. Member for Milton Keynes, North-East said, the regulator does not act on the basis of what is in the White Paper, and the long history of issuing social and environmental guidelines to Ofgem is a wonderful illustration of that. For years, while those guidelines were awaited or were in draft, I repeatedly asked Ofgem what it was doing about them. I was told that it was not going to do anything because they were

not yet published and in force. I approached Ofgem on the day that they came into force, only to be told, ''It will not change what we do because we have already been operating the guidelines in their draft form.''

Ofgem operates only when it has clear, statutory obligations on it. For example, in relation to efficiency and conservation, if there are no obligations in the Bill, we can be pretty certain that no obligations will be put in place through the regulatory system.

The Committee is aware that the domestic sector is responsible for about 27 per cent. of this country's carbon emissions—more than those from the transport sector or any other single sector of energy consumption. It is well established that it is one of the least efficient and profligate users of energy. Through even the simple application of current best-practice technologies and of current standards to all housing stock, we could save at least 30 per cent.—some estimates suggest 50 per cent.—of the carbon emissions from our homes.

Paragraph 2.29 of the regulatory impact assessment, which has been referred to, somewhat misses the point. It says that carbon savings

''could only be delivered by increasing the rate of installation of cavity wall insulation.''

Hon. Members might think that that is a good in its own right, but the paragraph then mentions the cost of doing that, although it is silent on the savings. The 800,000 tonnes of carbon emissions that will be foregone by lowering the target represent a massive burning of fossil fuel. If we did not burn that fossil fuel, we would not have to buy or import it. Cavity wall insulation would not simply cost something; it would save something. It would have been good to see a regulatory impact assessment that netted off costs against savings.

Brian White (Labour, North East Milton Keynes)

The hon. Gentleman will know from work on his private Member's Sustainable and Secure Buildings Bill that building new buildings that are zero carbon produces a net gain to start with. Is that not a much better way to make progress? Would it not have been part of any regulatory impact assessment looking at 5 megatons of savings?

Andrew Stunell (Liberal Democrat, Hazel Grove)

I agree with the hon. Gentleman. This morning he referred to the 70,000 houses to be built in Milton Keynes, and I am sure that he has on the tip of his tongue how many tonnes of carbon they would save if they were zero energy. One has only to look at the opportunities, even in the limited slice of the sector that is new build, to see how we could be moving towards carbon reduction targets much more rapidly.

The regulatory impact assessment refers only to cavity wall insulation installation, as the hon. Member for Stoke-on-Trent, North pointed out. It is silent, for instance, on the possibility of installing micro-CHP units in homes. About 1 million domestic heating boilers are replaced each year, so a regulatory requirement on boosting them with a micro-CHP unit would have a significant impact by 2010 and clearly take a big bite out of the carbon tonnage reductions that we seek.

What disappoints me about the energy efficiency report, which the Minister referred me to this morning, is that it is described as announcing a new aim. It does not say that the Government are cutting the 5-megaton target to which they have been committed by four or five Ministers over two years. Having been repeatedly challenged on that, they have always reinforced it. The report says, quite blandly, that the Government have announced a new aim.

When I made a similar point on Second Reading, the Minister seemed to say that the Government's assessment is that the savings will be lower than they first thought. I am sorry, but that is not how to set aims or targets, and it certainly is not how to prevent global climate change. We should spot where the trend is going and then introduce policies to make it go in the direction we want. However, rather than setting trends, the Government are simply following one. We sense that if in 18 months they decide that they will save only 3.8 megatons, we will have another energy efficiency report announcing a new aim to save 3.8 megatons, without conceding that the Government have given up on their original intention.

The Minister's defence relies on the fact that there have been big savings in the commercial and industrial sector and that even bigger savings are expected. That slightly skates over the point. As a DTI Minister, he is well aware that the basic reason for that is that the industrial and manufacturing sector is shrinking quickly. There is a lot of substitution with the commercial and service sector, and the lines could have crossed over by 2010, with the manufacturing sector having been reduced to such a small level that it can no longer make carbon emission savings to the budget while the commercial sector, racing uphill at the moment, positively contributes to that. I suspect that his solution to the problem—that the savings are happening somewhere else—will turn out to be unsustainable.

There are many easy gains in carbon reduction to be had at low or nil cost, particularly in the domestic sector. Investment in energy efficiency in the home will produce more carbon emission savings per £100 invested than investment in either wind turbines or nuclear power. Incidentally, investment in energy efficiency in the home is also a good deal less hassle, in the political sense, than installing either of the other two technologies. I therefore urge the Minister to remain robust about the targets for the carbon reduction that he hopes to see in the private sector and to ensure that this legislation builds that in, because if it is not in the Bill it sure as heck will not be anywhere else.

I could say a great deal more, but I gave an undertaking to the Government Whip that I would not deliberately hold things up. I want the Bill to go through and lots of things to happen. Please will the Minister reciprocate by leaving in clause 3? I hope that he will also support our new clause 12, which simply says that the Secretary of State shall have an obligation

''to promote the efficient provision and use of energy . . . and to reduce the emissions of greenhouse gases.''

That, surely, is not exactly pushing the boat out. I urge him to listen to what is being said in Committee, to retain clause 3 and to support new clause 12.

Colin Challen (Labour, Morley and Rothwell)

Knowing your commitment to these matters, Mr. Sayeed, it is a pleasure to serve under your chairmanship.

I have a growing sense of foreboding that I am joining a group of usual suspects, although I am encouraged, at least in my attitude, by this morning's contribution from my hon. Friend the Member for Waveney (Mr. Blizzard), who fears the inundation of his constituency under the waves. I think it is the Committee's duty to prevent that from happening, at the very least.

Paddy Tipping (Labour, Sherwood)

I thought that our hon. Friend could walk on water.

Colin Challen (Labour, Morley and Rothwell)

That is probably true. Indeed, it is probably true of most Labour Members.

I want to comment on the potential removal of clause 3; I oppose the removal of the target of 5 megatons of carbon savings. How that target is given by the Government is another matter and we should consider it, at least by the time of proceedings on Report. Yesterday, along with my hon. Friend the Member for Stoke-on-Trent, North, I had the pleasure of speaking to senior representatives of the Energy Saving Trust. We asked them questions, including why the Government have revised their forecast of energy efficiency savings in the domestic sector by 2010 down from 5 megatons of carbon to 4.

Those representatives had no idea why the Government have taken that approach. I thought that the Government would have consulted them in depth in relation to changing the target. Indeed, given that they will be responsible for delivering on a good part of it, one would have thought that they would have been in at the ground floor arguing for change if they thought that necessary. As it was, they did not think that any change was necessary. They thought that 4.2 megatons was relatively easy to deliver. One suspects that we shall end up delivering a bit more than 4.2 megatons and congratulating ourselves on exceeding our targets. If those representatives say that 5 megatons is an adequate target, we should stick with it, because they are the people who will have to deliver it.

One important reason for trying to deliver that target is to try to change consumer behaviour. We seem to have found new ways to get the private and public sectors to increase their target. That is probably easier done, because we can tell the private and public sectors what to do, but it is often more difficult to tell consumers—shall we say the electorate—what to do. We should not continue to shy away from the challenge. We should say to consumers what we think is necessary and how it should be achieved. I am sorry that the target has been reduced. Perhaps this matter will have to be dealt with again on Report, depending on what happens in Committee.

I reinforce the point made by my hon. Friend the Member for Stoke-on-Trent, North about what we heard in the Environmental Audit Committee yesterday, when we found that the review of the projections in the Department of Trade and Industry's ''Energy Paper 68'' is something like six months late. I wonder how we are supposed to project energy savings, when we cannot even produce our projections for energy use. Is that not putting the cart before the horse?

I want to comment further on new clause 7. I notice that in new subsection (1A)(b) ''sources of nuclear energy'' are included as one of the areas that should be kept an eye on. The original clause 2, put forward by the Opposition, included a similar reference.

I confirmed with my hon. Friend the Member for Milton Keynes, North-East, who initiated the Sustainable Energy Act 2003, that that Act contains no reference to nuclear energy. I should like to know why there is now agreement between the Opposition and the Government on including, in the Energy Bill, a reference to nuclear energy, a form of energy that I do not consider to be sustainable. We need to consider that carefully when we examine other clauses in the Bill, with particular reference to clause 13(2)(a), and clause 6(1)(a) and (d). If we consider those aspects in combination, it seems that we are leaving open a possibility—albeit only a possibility—of new nuclear build.

I heard the Minister say this morning that the Nuclear Decommissioning Authority would have responsibilities only for ownership and finance for decommissioning Magnox stations, but it seems to me that the Bill could open the door to new nuclear build. Will the Minister confirm that the aim of the Energy Bill is to look to what sources of energy we should be encouraging in the future? Does he agree that to include the word ''nuclear'' in the Bill might suggest that we should also encourage new nuclear research, development and, possibly, build?

I should like to support the proposition made by my hon. Friend the Member for Sherwood that clean coal technology should be pursued more vigorously. We often praise Germany for its commitment to wind energy, but we should recognise that it still relies heavily on coal for about 90 per cent. of its energy needs. We should be selling the Germans new technology, as we should have been selling the Danes new technology in wind energy. We should see this Bill as containing not only an environmental policy but an industrial strategy. I hope that the Minister will note that point.

Finally, I seek clarification on a smaller issue in new clause 7. New subsection (1B)(j) refers to

''other sources of energy, and technologies for the production of energy.''

Does that include solar power? To my knowledge, passive solar power does not generate electricity, although it serves as a source of energy. I do not consider it to be energy efficiency per se. Will the

Minister clarify whether that would be considered as an ''other source of energy'' within the terms of the new clause?

Richard Page (Conservative, South West Hertfordshire)

I am always delighted to be further down the speakers' list; most of the arguments have already been made, so I do not have to cover the ground at great length. The days of long speeches in Standing Committee have gone, to my regret.

I am looking forward to seeing how the Minister will justify the replacement of clauses 2 and 3 with new clause 7. Clause 2 of the Bill as it came from the House of Lords needed strengthening rather than weakening by new clause 7, and there is no justification for the wiping out of clause 3.

I shall not repeat what was said by the hon. Member for Milton Keynes, North-East. I think he has ministerial ambitions, because he put it so delicately. The underlying question was why the Government have taken away a target; something to aim for. The targets in clause 3 are utterly justifiable, but I wonder how the Government can square this argument; they support the Kyoto protocol but as soon as we have a target to aim for, they wipe it out. I shall be interested to see how the Minister will encourage everyone who has spoken in this Committee that we are going to have targets to tackle the ever-increasing CO2 that is being produced.

Laurence Robertson (Conservative, Tewkesbury)

My hon. Friend asks why attempts are being made to remove the targets, but the Sustainable Energy Act 2003 was also weakened by having its targets removed when it was a Bill.

Richard Page (Conservative, South West Hertfordshire)

I am glad to hear that the Government are consistent in their position, from which, I suppose, we can take encouragement. The hon. Member for Milton Keynes, North-East obviously will be disappointed, as that means that he will have no chance of putting CO2 targets into the Bill. He will not have to protest too strongly—[Interruption.] The hon. Gentleman has been deposed from his position already and is back to the Back Benches. I apologise to him for dashing his promotional chances so quickly in the game.

New clause 7 is a follow-on from the removal of new clause 1, because it removes from Government a responsibility that should be there. I do not believe, of course, that the Secretary of State should have responsibility for acts of God affecting the supply of energy. However, if he does not put in place the capacity to generate the electricity that the nation needs, he has a responsibility that touches on clause 2. The Minister has already been described as a friendly and emollient person whom one can trust, but clause 2 does not seem to have any commitment to specific energy percentage increase.

There is an encouraging list of energy sources—I shall not read it out—but we do not know what is expected of each of them. There is a national figure for the percentage of energy in the grid obtained from renewables, starting encouragingly at 4.3 in 2003, rising all the way up to 10.4, but will we get there? How will the components be made up? The hon. Member

for Angus made the point about the targets well—I shall not repeat what he said—but I should like to see us go further. We must know where we are, and where we are going.

Some are sceptical about these figures. I want to be wrong and I should be delighted if we achieved the percentage targets, but if there is a shortfall, any year, we want to know early on in the game where we are failing and whether we are going to get anywhere near the target at all. Some of us—including perhaps my hon. Friend the Member for Salisbury (Mr. Key)—are desperately worried, with the run-down of the nuclear industry, that production of renewable energy will not be enough to fill the gap.

Robert Key (Conservative, Salisbury)

Quite right.

Richard Page (Conservative, South West Hertfordshire)

It is nice to know that at least one person in this Room agrees with me. The truth of the matter is that we all want renewables to be successful and we all want a reduction of CO2, but new clause 7 is a weakening measure, not a strengthening one. We must have a strengthening if we are to meet those targets.

I should like to put a couple of points to the Minister. They are not special pleadings, but suggestions on how to help him reach his 10 per cent. target, which I believe is a target too far. We should re-examine waste incineration towards these renewable obligations. Hon. Members will say that that will produce CO2. Yes, that is right but a lot of countries burn. If we had a good and sensible incineration policy, we would reduce the amount of oil and gas that we burn for energy production. I believe that in 50 years' time people will say, ''Do you realise that those fools in 2004 were advocating burning oil and gas to generate electricity? Look what they have done to our chemical feedstocks. Look what they have done to our national economy.'' That is why I want anything and everything to be done to reduce the use of coal and gas.

Finally, I should like to talk about the electricity generated from biodegradable waste. Pyrolysis and gasification are being used. So if we grow a coppice of trees and put them through the system we can get support. But if I take a wooden pallet that is broken and put it through exactly the same system, I do not get any support. I cannot quite follow the logic behind that support. I should have thought that we wanted to go through our waste and wherever possible use these specialised methods of producing electricity. We would then be much better off.

Government new clause 7 reduces Government responsibility; it takes away from the Minister the requirement to answer for any failures. I believe that the British public want to know that they will have a security of supply and there is a grave doubt about that security. Unless the Minister can provide satisfactory answers, I for one, and possibly some other hon. Members, may wish to raise the matter on Report.

Paddy Tipping (Labour, Sherwood)

One of the criticisms of the White Paper and, by implication, the Bill is that it is strong on vision, but short on delivery. That is perhaps an unfair criticism. The Bill and the White Paper lay out a

number of signposts about where we want to go. That is broadly supported across the Commons. What is interesting about clause 2 and its potential replacement, Government new clause 7, is that they back up those signposts with a series of milestones; the notion of annual reviews.

Annual reports can be extremely helpful. We have had the first annual report on the White Paper itself. It has given us an opportunity to take stock of how far the aspirations in the White Paper are being met and what more needs to be done. Much more needs to be done. I am comfortable with the notion behind clause 2 and the replacement in Government new clause 7 about annual reports. Both provide that the Secretary of State must produce reports on what been done.

I ask my colleagues to look closely at new clause 7 because it has an element in it about energy efficiency. I take my rubric from the hon. Member for South-West Hertfordshire (Mr. Page). I draw the Minister's attention to my amendment (a) to new clause 7 on coal mine methane. The Minister is familiar with the topic, from his present role and his previous position at the Treasury; he helped the coal mine methane industry by making changes in the climate change levy. If the amendment were accepted, progress on coal mine methane would be included in the annual report.

I should be particularly interested to compare the coal mine methane industry in Germany and France, where generation from coal mine methane—taking a noxious, polluting substance and turning it into energy—is happening on a large scale, with the industry in the UK. The annual report will show that progress in the UK in the past year has not been as good in that respect as in Germany and France, and I suspect that it will be the same next year. For example, Alkane Energy, based in north Nottinghamshire, is moving its activities from the UK to Germany, and Stratagas, which uses coal bed methane, has gone into liquidation. I want the annual report on coal mine methane to emphasise that methane is a really polluting emission; it is 10 times more of a pollutant than carbon dioxide, and we should take steps to use it more positively. We have the technology to do what they are doing in Germany and France, but there are problems in the UK.

Colin Challen (Labour, Morley and Rothwell)

The evidence that I have read shows that methane is 60 to 100 times more of a warming gas than carbon.

Paddy Tipping (Labour, Sherwood)

That may well be the case, and if we had annual reports, we would be able to discuss it. I am happy to stand corrected.

The French and German Governments have introduced incentives and regulations to allow coal mine methane to be burnt. In Germany, especially, it is classed as a renewable. I accept that there are anxieties about that, but my simple point is that we have a serious pollutant and the technology to turn it into energy, but we are selling that technology to Germany. The industry in the UK is not taking off. We need to do more.

The energy White Paper accepts that there is a problem. It states that a solution will be found, but that it has not yet been found. The Minister and the Department have commissioned a lot of work, and the solution on the table is that the Coal Authority will commission work in respect of safety problems and put projects out to tender for companies to deal with the problem of coal mine methane. Arkwright village had to be moved because of those problems, and a terrace in Barnsley is still boarded up.

I am not against the Coal Authority being involved, but I am concerned that it will put work out to tender and the contractor will produce schemes either to generate electricity, which I support and applaud, or to flare and burn the coal mine methane. If ever there was a missed opportunity, this could be it. I hope that the Minister will carefully consider this small amendment and add coal mine methane to the growing list, so that we can keep an annual check of what is happening to it. There is a problem, but technology is available to resolve it. Although we are working hard to resolve the problem, more needs to be done.

A number of hon. Members on both sides of the Committee have talked about clause 3. I should make a confession: I do not understand the plethora of energy efficiency and conservation schemes. However, I am confident that if we were to pull them together and set ambitious targets, we could make major changes. It is disappointing that the targets have been changed in the recently produced report on energy efficiency and conservation. It is not a difficult issue conceptually. We ought to bring forward simple schemes. It is easy to measure whether conservation and energy efficiency schemes can make carbon savings, and we ought to invest in them depending on their results.

Like many colleagues, I am anxious that clause 3 is being deleted from the Bill. I am satisfied that Government new clause 7 covers energy efficiency measures, but we may want to discuss the issue again on Report. If we are to meet the ambitious targets of a 60 per cent. reduction in carbon savings by 2050, it is clear that we must set ambitious annual targets for energy efficiency, conservation and the domestic sector.

Anne McIntosh (Conservative, Vale of York)

I warmly welcome you to the Chair, Mr. Sayeed. It is a great pleasure to serve under your chairmanship. We have had an interesting debate, but I would like to make points that have not already been made.

I am grateful to the Minister for alerting us to the fact that the Government intend to delete clauses 2 and 3, but I press him on that decision. I have carefully read the notes on the regulatory impact assessment. As the hon. Member for Hazel Grove (Mr. Stunell) hinted, the Committee has not yet been persuaded that the Government's proposal is an improvement on the two existing clauses.

It is a matter of regret that the Government have announced that the carbon dioxide and greenhouse gas emissions levels were as high as they were in 2003. I am disappointed that carbon emissions have increased by 1.5 per cent. since 2002. In 1997, 152.9

megatons of carbon were emitted, and in 2003 the figure was similar—152.5 megatons. The Government often make verbal commitments to reducing emissions, but we have not yet seen them converted into firm commitments and a real reduction.

Those of us that were in the Chamber for Question Time this afternoon were fortunate to hear the hon. Member for Sherwood. Both he and I would have been surprised to hear an announcement from the Minister for the Environment that there will be a delay in implementation of the large combustion plant directive. We learn from the Department for Environment, Food and Rural Affairs document ''EU Emissions Trading Scheme'' that it is relying heavily on a reduction in flue gas desulphurisation to reduce emissions. I quote from page 71:

''It is expected that limits on SO2 emissions from all sectors, and the power sector in particular, will progressively tighten over the years ahead due to both UK and European regulations''.

It goes on to list directive numbers; for example, 1999/30.

In the interests of joined-up government, was the Minister aware that that announcement would be made? Where does it leave the Government's commitment to reducing emissions, particularly sulphur dioxide? I was taken by the decision to delay implementation. Can the Minister tell us what assessment the Government have made of the impact of that delay on their programme to reduce emissions, what the cost to industry will be—obviously, the regulatory impact assessment of clauses 2 and 3 does not go into that detail—and what the damage to the environment will be as a result?

I am mindful of the fact that several Labour Members represent constituencies that are heavily dependent on coal production. At present, 12 privately owned pits produce around 20 million tonnes of coal a year. In North Yorkshire, we are aware of the sad closure of pits in the neighbouring constituency of Selby. I wish to pay tribute to the work of the hon. Member for Selby (Mr. Grogan), Yorkshire Forward and North Yorkshire county council in trying to assist the substantial number of people who will lose their jobs when the three pits close in July as a result of exhaustion of the large Selby coal complex. The Minister may like to take this opportunity to tell us where exactly in the scheme of either the original clause 2 or the Government's new clause 7 he puts coal and the new clean coal technology.

Denis Murphy (Labour, Wansbeck)

On a point of information, the Selby coal complex is not exhausted. More than 200 million tonnes of coal are available, but UK Coal decided that it could not economically extract the remaining reserves.

Anne McIntosh (Conservative, Vale of York)

I am most grateful to the hon. Gentleman for that helpful intervention; obviously, I do not directly represent that area.

Against that background, it is interesting that, until recently, a biofuels plant was taking willow coppice from the vale of York in the Selby constituency and converting it to biofuel. Regrettably, it closed due to

lack of funds. We have made representations to the Government to see whether they would provide a grant, and the Minister has been helpful in that regard.

My hon. Friend the Member for South-West Hertfordshire alluded to the fact that my hon. Friend the Member for Salisbury is more committed to nuclear power than others and has a strong view on it, which many of us respect. However, the Government's commitment to the ageing nuclear plants is unclear. At the moment, 25 per cent. of the UK's electricity is generated by 15 nuclear stations. We will obviously consider the issue later, but it is interesting that clause 2 and new clause 7 make no reference to the position of nuclear power.

I am mindful of the comments from the hon. Member for Angus, who spoke of the contribution that renewables will make. This morning—it may have been at Question Time rather than in Committee—he said that the Government had set a target of 20 per cent. renewables by 2020 and that the Scottish Parliament had set an even higher target. However, the fact that 80 per cent. of renewables are to come from wind farms suggests that there is a huge imbalance. In my humble submission, that is not a balanced renewables policy.

Laurence Robertson (Conservative, Tewkesbury)

An obsession.

Anne McIntosh (Conservative, Vale of York)

My hon. Friend says that it verges on an obsession, but the Minister has the opportunity to put the record straight. Why should 80 per cent. of all renewables come from just one source? Why is that a balanced policy? I am open to being convinced.

As other hon. Members have explained, some important items in clauses 2 and 3 are simply not carried forward into new clause 7, or indeed the Liberal Democrat version, new clause 12. Clause 2(3) refers specifically to annual reports setting out

''what is being done by the Government, by government agencies, by UK research establishments, by UK universities''

and so on. I submit to the Minister that such an extensive annual report would, in effect, enable us to take an audit of the work being done on all energy policy.

Brian White (Labour, North East Milton Keynes)

Is the hon. Lady aware that there is, among other things, a requirement in place under the Sustainable Energy Act 2003 to produce an annual report? The production of that report has allowed us to make many of our comments to the Government today and to express so much disappointment.

Anne McIntosh (Conservative, Vale of York)

I am most grateful to the hon. Gentleman, and I would not disagree with what he says. I was going to refer to the submission by the hon. Member for Brighton, Kemptown.

Richard Page (Conservative, South West Hertfordshire)

Does my hon. Friend agree that one purpose of Committees is to draw commitments from Ministers on issues such as what will appear in annual reports? That makes us all clear about what will emerge and there will be no backsliding by the

Government of the day. I hope that the hon. Member for Milton Keynes, North-East appreciates and understands that point.

Anne McIntosh (Conservative, Vale of York)

Indeed. I think we are all rowing in the same direction and we are all trying to move away from the red lines in the sand, which we had this morning, Mr. Sayeed, when you were not with us.

I pay tribute to the work that the hon. Member for Milton Keynes, North-East has done on this issue, which is reflected in the 2003 Act. I hope that I am endorsing that work. I hope also that he agrees that it would be a pity to lose the audit to which I referred.

In tabling his proposal, the hon. Member for Brighton, Kemptown was trying to strengthen the existing clause, and I wait to see whether the Minister supports him. The references to carbon savings in clause 3 are quite specific, and I will take issue with the Government to put a bit of pressure on him. The report would involve only small additional costs—one person would be working on it for a month—so why does he want to remove the reference?

In summing up, I would argue that there is much to commend clauses 2 and 3 to the Committee. I particularly want to press the Minister as to where the clean coal technology will be in terms of the national allocation plan and, in particular, the delay in implementation of the large combustion plants directive. What are his plans for nuclear energy? Why is there no reference to nuclear energy in Government new clause 7? How can he claim that 80 per cent. of renewables from wind farms is a balanced renewables policy?

Denis Murphy (Labour, Wansbeck)

It is a pleasure to serve under your chairmanship, Mr. Sayeed.

The region that I come from, the north-east of England, is well placed to take advantage of many of the technologies outlined in new clause 7. My constituency has the first offshore wind farm in the UK, which has been there for nearly two years. In addition, there is an onshore wind farm at Blyth harbour and Newcastle university is a world leader in photovoltaics.

For almost 20 years, I have advocated the development of a clean energy centre based on clean coal technology. Although the rest of the units are in place, the one that is really lacking is, unfortunately, the investment in clean coal technology. We have the last remaining deep coal mine at Ellington—the last mine in the great northern coalfield—which has the potential to continue producing coal for another 50 years if we can overcome the environmental problems and challenges that coal faces.

For coal to remain an option, it must meet its environmental obligations. In my view, the only way to do that is for the Government to invest in clean coal technology. A policy framework should be implemented that encourages the generators to invest in new, more efficient, cleaner power plant. The UK used to be a world leader in developing clean coal technology, but that position was relinquished many years ago, as an anti-coal mindset swept all Departments.

Today, the Government's commitment to clean coal technology, although welcome, is confined to small research and development. In energy paper 67, the Department of Trade and Industry outlined future plans for research and development, technology transfer and export promotion. The budget was then £12 million per annum. A further £17 million was allocated for bids from the cleaner coal technology programme between 2002 and 2005.

If the UK wants to make a significant contribution to cutting greenhouse gases, we need to build clean coal plant in the UK and sell the technology to coal users such as China and India. Research and development alone do not meet the challenge, welcome though they are. The DTI estimates that the UK's share of the world power equipment market could be some £30 billion over the next 10 years.

Coal will be increasingly used across the world for at least the next 50 years. Consequently, the main reason to invest in clean coal technology is not simply commercial, but the fact that it is the most effective way to tackle emissions from power stations.

Richard Page (Conservative, South West Hertfordshire)

I am listening with great interest to what the hon. Gentleman has to say and I sincerely hope he is successful. He should bear it in mind that the Labour Government had exactly that policy in 1997, but they never got round to implementing it. What makes him think that he will be lucky this time, some seven years later?

Denis Murphy (Labour, Wansbeck)

The hon. Gentleman raises a valid point. Indeed, this could be the last throw of the dice for clean coal technology. I hope that the Minister gives a positive answer to the points that I raise today, and I am sure the hon. Gentleman does as well.

In 2001, as part of the preparation for the energy White Paper, the DTI reviewed the case for Government support for commercial-scale cleaner coal demonstration plant. The conclusion was, ''Maybe, but not yet.'' There were more discussions about the choice of technologies, but I genuinely take the view that if substantial, long-term improvements have to be made to power generation from coal, it is important to aim high. That means building plant that can take clean coal technology to a higher stage of development in terms of efficiency, emissions control and commercial viability.

A coal gasification process, which may involve IGCC—integrated gasification combined cycle—could provide the biggest step forward. Ideally, such projects should also provide a route to carbon capture or sequestration, to address the fundamental, long-term problem of all fossil fuels.

The value of investment in clean coal technology goes well beyond the interests of the coal sector. Power engineering and ancillary companies would benefit enormously from new contracts, with knock-on effects for employment and a boost to the manufacturing sectors of all local, often struggling, economies. I genuinely hope that the Minister replies positively on the way forward and the role that coal can still play in generating electricity in 20, 30 or 40 years.

Norman Baker (Liberal Democrat, Lewes)

Following on from the hon. Gentleman's point, it is unfashionable to talk about coal these days from an environmental point of view, but there is benefit in doing so. He made a very valid point about the potential for the export of technology and best practice to countries such as China. After all, the carbon emissions that the UK produces are infinitesimally small compared with what China will produce in due course. Our old coal plants have an efficiency rate of 38 per cent., compared with the rate for China's current ones of 20 per cent., so, even now, much could be done to make improvements. Anything that helps such technology continually to improve and that keeps the option open—a long way down the track—for a return to coal for security of supply, coupled with clean coal technology, should be welcomed. We on the Liberal Democrat Benches would certainly do so.

I agree with the point made by the hon. Member for Sherwood about coal mine methane, and, in a way, it is astonishing that we have not yet dealt satisfactorily with that. He is right to raise the issue, and I hope the Minister gives him a fair response, assuming that he heard the point. I hope that he did.

The hon. Member for Sherwood was also right to draw attention to clause 3, although he was slightly generous with the Government. Perhaps he was trying to sweeten the pill by talking about the Bill having directional signposts, but the danger for energy efficiency is that signposts may say, ''Slow down'' or ''Give way''.

Paddy Tipping (Labour, Sherwood)

I was trying to encourage the Minister on amendment (a) to Government new clause 7.

Norman Baker (Liberal Democrat, Lewes)

That may be a sensible tactic. I do not know how such methods work in the Labour party, but I very much support the thrust of the hon. Gentleman's comments.

New clause 12 was referred to by my hon. Friend the Member for Hazel Grove. I remind hon. Members that it would give the Secretary of State

''a duty to promote the efficient provision and use of energy . . . and to reduce the emissions of greenhouse gases.''

That is a terribly important concept, which I think all of us in this Room would support. On Second Reading, the Secretary of State referred within 30 seconds of starting her speech to the problems of climate change. The Government therefore fully recognise that there is an issue with climate change to be dealt with. That thread has run through the Committee's deliberations. When we debated clause 1, the hon. Member for Brighton, Kemptown tabled a proposal involving similar issues. New clause 12 would give the Secretary of State a duty

''to reduce emissions of greenhouse gases.''

That should be central to her work, and I am sure that the Minister will say that it is. I shall not rehearse the arguments on clause 1, but when the discussions take place on the revised version of that clause and what that duty should be, perhaps part of that consideration should concern ensuring the reduction of greenhouse

gases and tackling climate change. I hope that he responds positively on that, either today or in subsequent proceedings.

I turn now to the energy efficiency target, to which other hon. Members have rightly drawn attention. I want to express my disappointment and dismay at the unilateral and almost inexplicable reduction from 5 megatons to 4.2 megatons, which was announced with no preparation and no justification, as far as I can see. We are in danger of having a crystal ball Minister who rather than identifying where he wants to get to and setting policies accordingly, identifies where things are going anyway, predicts it and substitutes that target into the legislation and his forward planning.

On Second Reading, the Minister said in response to a point made by my hon. Friend the Member for Hazel Grove:

''I hope that I was able to make the position clear; we expect carbon savings from energy efficiency overall—household plus business—to be greater than they were in the White Paper because of the greater contribution from businesses.''—[Official Report, 10 May 2004; Vol. 421, c. 124.]

[Interruption.] I wish that the Minister would sometimes listen to what I say, rather than continually talking to the hon. Member for Eccles (Ian Stewart), who is sitting behind him. Perhaps if I wait a minute, he might hear this. [Interruption.] I am grateful to the Minister. On Second Reading, he argued that the Government's overall target on energy efficiency would be met because of the increased contribution from businesses, which somehow justified the reduction in the target for the domestic sector.

There is a fundamental error in that approach, which is that the target set by the Minister is by no means an optimum target in any case. The Government have said that we have to secure at least a 60 per cent. reduction in carbon emissions, but scientists now say that even that projection is inadequate to deal with climate change. Therefore, the fact that we might overshoot the target in one sector—the business sector—does not mean that we can let up on the domestic sector. We should regard that as a beneficial development, but we should not abandon our target for the domestic sector, which the Minister appears only too willing to do.

Will the Minister reflect carefully on that? If he does not want to listen to me or my hon. Friend the Member for Hazel Grove, he can listen to his own colleagues who have expressed dismay and concern and to their constructive comments on how the target can be reached. It can be reached if the Minister is prepared to set in place a structure and a framework to do so. I very much hope that he will. We are not interested in lowest common denominators; we are interested in achieving the best that we can, and I am not convinced that his new clause 7 will in any way do that.

Brian White (Labour, North East Milton Keynes)

Will the hon. Gentleman accept that there is a useful stepping-stone with new clauses 9 and 7 together? It may not be the full shilling, as he puts it, but it is a major step forward.

Norman Baker (Liberal Democrat, Lewes)

I accept that there is a step forward. I would not use the word ''major'', but if that adjective is justified, it is with regard to the hon. Gentleman's new clause 9, rather than Government new clause 7. I am interested in securing the best possible outcome, and I have not yet heard a reason why we should compromise on the 5 megatons target. As the hon. Member for Stoke-on-Trent, North said, if someone can give me a good reason why we cannot meet the target and there is a genuine problem, let us hear it and we will be reasonable about it. But so far all we have heard is that because business is exceeding its target, we can cut the domestic target. That reason is not sufficient in my judgment. It represents an abdication of responsibility by the Department of Trade and Industry;, rather than setting trends, it is following them.

I should like the Government to pursue an energy hierarchy. They have a waste hierarchy, which makes a lot of sense. We need an energy hierarchy, which should have energy efficiency and conservation at the top, as the priority to pursue, followed by renewables, then possibly gas or clean coal and, at the bottom, nuclear. That is my energy hierarchy. The Government should be pursuing energy policies to deliver their hierarchy. If it is the same as mine, great; if it is different, let us hear it. In any case, we would all agree that efficiency and conservation are at the top, so the Government's greatest efforts should be devoted towards those ends. We should not have the dilution of targets for no particular reason, which is what is before us this afternoon.

Notwithstanding the generosity of the hon. Member for Milton Keynes, North-East towards new clause 7—it undoubtedly has some welcome features—I have some problems with it. It is imperfect, for the reasons given by my hon. Friend the Member for Hazel Grove. High up in the new clause is the word ''must'', which suggests an element of compulsion for the Minister. However, that word is qualified a line or two later by the words ''where appropriate'', which tends to suggest that ''must'' is not so strong.

As my hon. Friend said earlier, the reports under new clause 7 would be entirely retrospective and not set the framework for the future, giving us no confidence that problems would be dealt with satisfactorily by the actions proposed by a Minister. The real danger is that a future Secretary of State or relevant Energy Minister could produce a report that looked good but did not address the underlying problems because they could select the information in the report. I am sure that that would not happen with the present Minister, but the possibility exists because of how the new clause is drafted. I am sure that the Minister would want to ensure that that situation could not arise under one of his successors.

Will the Minister clarify his position on nuclear power? It is mentioned in new clause 7, and the hon. Member for Morley and Rothwell (Mr. Challen)

referred to it earlier. It is interesting that the Minister has chosen to include nuclear power in the reports made under section 1 of the Sustainable Energy Act 2003, and I presume that that is because it is a sustainable energy source in the Government's view. Will he clarify whether he believes that nuclear energy should be put on a level playing field with clean coal technology, biomass, biofuels, fuel cells, photovoltaics and the other energy sources referred to in new clause 7? Or is it a drafting error by one of his officials?

That question goes to the heart of the Government's view of nuclear power, and it would help the Committee if we knew about it. We know where the Conservatives stand. They will not say it directly, although all the Members who speak say that they want nuclear power. Indeed, the hon. Member for South-West Hertfordshire advocated an energy policy based on nuclear power and waste incineration, which strikes me as very unpopular in my constituency and others throughout the country.

Anne McIntosh (Conservative, Vale of York)

Will the hon. Gentleman confirm that his party called for and built an incinerator in Sheffield?

Norman Baker (Liberal Democrat, Lewes)

The reality is that the Lib Dem administration in Sheffield inherited the proposal from the previous council, although our colleagues now realise that it was not a sensible policy to be associated with. It is a useful lesson for us all, and I am happy to say that it is not Lib Dem policy to advocate incineration except in specialist cases, such as clinical waste, in which there is no safe alternative. That is different from the Conservative party's policy, but I am digressing, and you will pull me back to the amendment if I do so further, Mr. Sayeed.

I hope that the Minister has listened carefully to the points made by Labour Members in particular. I hope that he has understood that there is a need to maximise, and not minimise, our efforts to achieve energy efficiency and implement conservation measures. I hope that he has understood the warmth felt by Members on both sides towards clause 3 and has recognised that there are deficiencies with new clause 7, which he tabled as a substitute.

The new clause is not an improvement. The Minister said in his letter that he hoped that we would agree that the revision was an improvement. I have yet to hear one Committee member agree with that sentiment, so I hope that he will agree on reflection that clauses 2 and 3 are the preferred route to new clause 7.

Bob Blizzard (Labour, Waveney)

I, too, find it a great pleasure to serve under your chairmanship, Mr. Sayeed.

I rise briefly to support the inclusion of new subsection (1B)(j) in new clause 7. It is not in clause 2, so I regard that as an improvement on the existing provision. The reference in new paragraph (j) to

''technologies for the production of energy, the use of which would, in the opinion of the Secretary of State, cut the United Kingdom's carbon emissions''

would include carbon capture and storage, about which I spoke this morning. Will the Minister confirm that?

However, there should be a similar reference in proposed new subsection (1A)(b). That new paragraph refers to ensuring that we have sufficient

''scientific and engineering expertise available in the United Kingdom . . . for the development of potential energy sources (including sources of nuclear energy)''.

We should also ensure that we have sufficient engineering expertise available to develop technologies such as carbon capture and storage. In the interests of balance, if we give the example of nuclear energy as a possibility, we ought to include technologies and perhaps refer to carbon capture and storage. If we do not, it sends out the signal that we regard nuclear energy as the solution. As I argued this morning, we must have a number of options. Carbon capture and storage is a good option that may make the nuclear option unnecessary. Will the Minister consider that on Report? He may wish to bring forward an amendment to refine and improve new clause 7 further.

I do not wish to repeat all that I said this morning about carbon capture and storage, except to say that it has an enormous contribution to make.

Norman Baker (Liberal Democrat, Lewes)

To security of supply?

Bob Blizzard (Labour, Waveney)

To security of supply, to emissions reduction and to the sustainable future that we want. It will take many years to make the transition to a fully sustainable energy system. During that time, whether we like it or not, we will have to generate energy from fossil fuels; we will be using coal and gas. It would make sense to capture CO2 from that coal and gas using the technology that I have described. Whether we like it or not, we will burn a lot of gas, so gas-fired power stations must be hooked up to the new technology. We have heard good comments about coal technology, but, as my hon. Friend the Member for Wansbeck (Mr. Murphy) said, carbon capture and storage goes beyond that.

How can we possibly reach our target of a 60 per cent. reduction in carbon emissions by 2050 unless we capture the carbon that we will give off in those years of generating electricity? We must capture it, store it and bury it in the depleted oil reservoirs and aquifiers deep beneath the North sea.

Alan Whitehead (Labour, Southampton, Test)

It is incumbent on me, as the only person who has not yet contributed to this afternoon's debate, to welcome you to the Chair, Mr. Sayeed. I look forward to solid deliberations under your chairmanship.

I shall briefly discuss the question raised in proposed new subsection (1A) of new clause 7, which has already been mentioned. It states:

''The report must include, in particular, all such information as the Secretary of State considers appropriate''.

The hon. Member for Lewes made the point that, although the Secretary of State that we are—

Andrew Stunell (Liberal Democrat, Hazel Grove)

Blessed with?

Alan Whitehead (Labour, Southampton, Test)

Blessed is exactly the word that I was about to use. Although the current Secretary of State would include things that are appropriate, would another Secretary of State include things that are

inappropriate? I should be grateful for the thoughts of my hon. Friend the Minister on the matter when he replies to the debate.

When considering what is appropriate, I wonder whether, on a wider scale, we can examine how the various energy sources and technologies relate to the market. That is the unsaid part of our discussions. We have debated what should be in new clause 7, assuming that it replaces the provisions under the Bill. Proposed new subsection (1B)(j) of new clause 7 refers to

''other sources of energy, and technologies for the production of energy''

and, as my hon. Friend the Member for Waveney said, suggests that carbon sequestration and other technologies could join the list.

The difficulty is the provision's description of the process. I, for one, do not entirely share the worries of the hon. Member for Lewes about the potential outcome for shadiness. On occasions, he is a little too suspicious of the Government's intentions, and indeed the intentions of anyone. [Interruption.] Well, sometimes, the hon. Gentleman questions his own motives in a constructive way. The provision largely determines what the Secretary of State will consider appropriate. The various suggestions under the new clause pretty much define an agenda for her to consider.

The new clause does not entirely define the relationship between various energy sources and technologies that are referred to, although proposed new section (1A)(a), (b) and (c) define the agenda that the Secretary of State should consider when she produces the report.

In addition to the agenda, new clause 7 refers to headings of various subjects that we must consider under proposed new section (1A)(a) to (j). However, given the aspirations set out in the energy White Paper, the matter is more complex than that. As has been said, in the immediate future we face a large proportion of our renewable energy being sourced mainly from offshore wind. The hon. Member for Lewes asked whether we are happy with that. The truth is that that may be the position in the immediate future precisely because of the relationship of offshore wind to the various charts that show how closely the current projected view of the pence per kilowatt-hour involved generation is represented by various technologies. Although onshore winds shade towards present competitiveness, offshore winds shade fairly close to it and other technologies shade a little further away.

Let us consider page 55 of the energy White Paper, entitled ''A Renewables Timeline''. It is not only illustrated in interesting colours, but sets out an interesting chart. It shows that we might predict that offshore wind will produce a high proportion of the total that the hon. Gentleman questions. Indeed, the 2010 target, shown in the energy White Paper in a fine salmon-coloured box, states:

''Renewables supply 10 per cent. of UK electricity. Onshore and offshore wind may be the largest contributor to the renewables generation mix in 2010''.

A blue box to the right states:

''Onshore and offshore wind and biomass may be the largest contributors to the renewables generation mix in 2020''.

There are also various predictions. One on the timeline a little after 2010 states:

''Biomass may be economically viable in mid-2010s.''

My hon. Friend the Member for Brighton, Kemptown will be delighted with another box, if he has not seen it already:

''Wave and tidal technologies may become commercially viable.''

Well to the right of that box, it is stated:

''PV may be economically viable post-2020''.

The point about the timelines is that they are predictions, not statements.

Desmond Turner (Labour, Brighton, Kemptown)

Does my hon. Friend agree that the predictions in the White Paper are essentially based on a continuation of present, or immediately past, behaviours and past or present policies? There is every reason to believe that if more determined steps were taken to promote the wave and tidal technologies, and even photovoltaics, those timelines could be drastically shortened.

Alan Whitehead (Labour, Southampton, Test)

My hon. Friend anticipates what I am about to say, and he hits the nail on the head. As the timelines are predictions, not statements of how things are, a number of variables can come into play and change the nature of those timelines. Indeed, rather than a list—which is, as it were, an agenda—one can almost envisage the various items listed as being rather like the old-style horse racing gambling machines in arcades. I am showing my age here. People put their money in and wound the wheel, then the little horses started going towards the finishing line. For inexplicable reasons—usually because the machine was dodgy and bent—a horse, which was not mine, would suddenly shoot towards the line and all the money would be lost.

Andrew Stunell (Liberal Democrat, Hazel Grove)

I am sure the hon. Gentleman is not implying that his Minister's arrangements are dodgy, but the list is not alphabetical or chronological. Would he like to speculate on the basis on which it was drafted?

Alan Whitehead (Labour, Southampton, Test)

I have long since ceased speculating on the reasons for these matters, ever since I looked for the portraits of kings and queens in Central Lobby and could not figure out why they were placed where they were, and why some were above others. The Clerk of Works told me that they were leftovers from portraits of kings and queens that were arranged chronologically around the side of the building, and that Mr. Pugin decided to put them where they were because they were spare. I suspect that a similar arrangement has informed the list in this proposal.

The important point is that because the nature of the preparedness of the different energy sources will change over time according to what happens, the

reporting mechanism set out in new clause 7(2) will also change over time because of that additional dimension.

One element of the reporting process ought to be the progress towards the market of the various technologies. I would be most grateful for clarification as to whether that is what the Minister considers new clause 7 to mean so far as reporting is concerned. It should also cover questions about the maintenance of scientific and engineering expertise, the energy efficiency aims and the development of energy sources. We could have an interesting, useful, important and informative annual report on any development that has occurred and any research that has taken place, as well as on the extent to which such research has been carried out in the UK and how far it might provide for an industry in the UK.

However, reporting progress towards the market in terms of how the technology relates to other technologies might show it to be slipping behind. That would be interesting, but, in terms of the timeline and the imperative, I agree with other hon. Members that to use that variation of renewable supply to create the total percentage in the medium term gives us a much better chance of reaching longer-term targets by the proper implantation within renewable energy supply of a range of technologies that can develop on a wider basis. We should consider having an element of the report that provides the glue between the different agenda item headings and that indicates whether biomass is moving forward along the timeline.

Norman Baker (Liberal Democrat, Lewes)

The hon. Gentleman is making a fair point. Does it not come down to the definition of ''things done''—the peculiar phrase that occurs in proposed new section (1A)(a), (b) and (c)? Will things done relate to what has been done by the Government or what has been done in a wider sense by society at large? Clarification of that might satisfy his point. Does he also agree that things to be done are equally important?

Alan Whitehead (Labour, Southampton, Test)

Yes, I agree that things done and things to be done are important, but I am not as sure that ''things done'' quite covers it. I want to clarify that this is a question not just of things done, but of the

position of the things that there are, relative to the market, after the various things that have been done are actually done. That is a different state of affairs.

I have previously questioned the extent to which an assumption can be made that technology such as that under consideration can be brought to the market by means of the market. That seems to be an additional problem. The assumption is made in the energy White Paper—in most respects, I have nothing but praise for its ambition and its content—that the market will itself bring substantial elements of renewable technology to the market. It is true that there will be substantial Government investment in research and development and in trials, but the emphasis, which informs the timeline, is on the fact that the technologies will be fit for the market and invested in by the market, and will therefore be brought upon the scene to produce energy when the market decides it is appropriate to invest in the development of production facilities.

Brian White (Labour, North East Milton Keynes)

My original sustainable energy Bill mentioned the generation of heat as well as the generation of electricity. Does my hon. Friend think that that is adequately covered in the new clause?

Alan Whitehead (Labour, Southampton, Test)

I am worried about the extent to which hon. Members are anticipating my comments. I was going to give an example of combined heat and power, which is suffering on the market, although it need not do so. In terms of reporting, I wonder whether it is sufficient to say that if prices rise, the market will help CHP and therefore it will develop, or whether one has to say that there are indications that certain agenda items could do with additional support for them to be brought to market in the way that the timeline suggests.

My plea is that the Minister will respond positively to my suggestion that an annual report is a holistic device. It should show us where we are on each agenda item and between agenda items, as well as how the timeline might change over time to reflect our ambitions for security of supply, the development of renewables and the coming to market of a wide range of technologies in the way that we advocate.

Debate adjourned.—[Mr. Nigel Griffiths.]

Adjourned accordingly at one minute past Five o'clock till Tuesday 25 May at five minutes to Nine o'clock.