Lord Lilley (Con)

My Lords, it is a great and somewhat unexpected privilege to open this debate. I particularly look forward to the maiden speech of my noble friend Lady May of Maidenhead. It is fitting that her first contribution should be to this debate, since the net-zero commitment is very much her personal legacy. It also gives me a chance to thank her for what she and your Lordships may feel was a less wise part of her legacy, which was nominating me to this House. It is hard to overstate how crucial cheap energy is for economic growth and prosperity. The quadrupling of oil prices in 1974 ended three decades of rapid growth in western economies. Energy price rises have invariably been followed by a slowdown in growth. On the other hand, thanks to shale oil and gas in America, that country has had cheaper energy and grown faster than other western economies, and China’s extraordinary growth has been fuelled by cheap coal. Let me start with a few facts about climate change and the climate agenda impacts. First, Britain has reduced its territorial emissions of CO₂ more than any other major economy and they are now back to the level they were in 1879. Secondly, Britain has more offshore wind power than any other country bar China, not to mention its onshore wind, solar and bio energy. Thirdly, despite or because of this, British industry pays the highest electricity prices in Europe. They doubled in real terms over the two decades up to the start of the Ukraine war, even though real gas prices remained largely unchanged over that period. Fourthly, we have already lost most of our aluminium industry and are losing our primary steel-making capacity and, with it, thousands of jobs. We are seeing the Grangemouth refinery turning into an import terminal and other British refineries under threat. We import an increasing proportion of energy-intensive goods, such as cement and bricks. Fifthly, when our manufacturing industry moves abroad, it does not reduce global emissions at all—far from it. We now import many carbon-intensive products, so the reduction in Britain’s carbon footprint is only 36%, much less than the near halving of our reported territorial emissions. Finally, the Government propose to accelerate the move to net zero regardless of cost, to prevent new North Sea exploration and instead import oil and gas, and to ignore or deny the impact this will have on our energy costs, growth and jobs. This is an unusually significant debate because, as far as I can tell, it is the first time that Parliament has formally debated the impact on jobs, growth and prosperity of our decision to decarbonise our economy. Our failure to do so has been part of a collective institutional failure by Governments of all parties, both Houses of Parliament, the BBC, the Climate Change Committee and other public bodies to permit or promote an informed debate on the economic costs and benefits of net zero. Costs were never discussed during the passage of the Climate Change Act in 2008, nor during the 90-minute debate committing us to net zero in 2019. It is extraordinary that we still have no official cost-benefit analysis of net zero, five years after embarking on the project. Long ago, our national broadcaster formally decided not to give airtime to any views that might undermine public support for net zero. I discovered this when expressing doubts not about the science of global warming, which is rock solid, but about its scale and impact. The BBC published an apology “for giving voice to Peter Lilley”, removed the offending programme from the BBC iPlayer lest other people hear my voice, sent the producers on a re-education course and banished me from their studios on this issue ever since. Now my absence is no great loss to me or the nation, but our national broadcaster’s refusal to allow serious debate on the costs of the most expensive commitment since the welfare state is a travesty. The most egregious failure has been that of the Climate Change Committee, which should have provided unbiased estimates of costs for public debate. I am glad that my noble friend Lord Deben will be able to explain why it has refused to do so. It even spent large sums of taxpayers’ money resisting a freedom of information request for details of its forecast that net zero would cost the nation 1% to 2% of GDP by 2050. Many assumed that this was the cost of getting to net zero but, actually, this is the cost we will face after 2050 once we have eliminated our emissions. The CCC has not calculated the cost of getting there; maybe its forecasting instrument is like one of those telescopes that can focus with great clarity on distant objects but renders anything near at hand a blurred and fuzzy image. There seems to be no other reason for not giving us the costs of getting to 2050. The CCC’s reluctance to publish its workings was perhaps understandable given that it was so optimistic but, as it turns out, that is true of estimates produced by most public bodies. Sir Chris Llewellyn Smith—the lead author of the Royal Society’s report on the cost of large-scale electricity storage—recently pointed out that all official estimates were grossly optimistic, and he was honest enough to include his own, by the Royal Society. It is sad that we do not have the information on which we can have an honest and informed debate. True believers in net zero are reluctant to discuss its costs because they have convinced themselves that there are none. It will give us cheap energy and boost growth by creating new jobs in new industries, exporting clean technologies worldwide, making the world greener and ourselves richer. How wonderful if that were true. There is an old saying that if something seems too good to be true, it probably is not true. I hope that wind power, in particular, because we have lots of it, will one day be cheaper than fossil fuels, but it patently is not yet. If wind and solar are cheaper, why have our electricity prices doubled as they have replaced fossil fuels? If renewables are cheaper, why is our electricity more expensive than in other European countries, which have less than us? If renewables are cheaper, why do they need subsidy? Apologists say that those are the costs of old technologies and that the costs are coming down. The first part is true, although it is a shame they did not tell us at the time. Dieter Helm has calculated that Britain wasted up to £100 billion by investing prematurely in immature technology, rather than waiting until it was cost effective. The Secretary of State assured us last month that, on the basis of recent auctions, renewables are the cheapest form of power to build and operate. Unfortunately, that is simply not true. The latest auction price for offshore wind was £82 per megawatt hour in today’s money, whereas his own department’s figures—for reference, on page 24 of the Electricity Generation Costs 2023 document—put the cost to build and operate a new gas plant at less than £60 per megawatt hour. Does the Secretary of State repudiate his own departmental figures? Moreover, this is only half the story, because the comparison is not like for like. Wind is intermittent, and Dieter Helm advised the Government that, to make a true comparison, the costs of wind should include the cost of back-up generators or storage. Electricity that is not there when you want it is less valuable than electricity that is. My economics lecturer taught us this by the old fable of the two New York bakers. One advertised bagels at 50 cents each, the other opposite at a dollar. A customer went to the cheaper baker and asked for a bagel. “Sorry, we’re out of bagels”, he was told. So he went to the other store and asked if they had any bagels. When the shopkeeper gave him one and charged him a dollar, he protested, “But the shop opposite only charges 50 cents a bagel”. “Well, why didn’t you go there?” “I did, but he’s out of bagels just now”. To which the other shopkeeper replied, “When I’m out of bagels, I only charge 50 cents”. Wind may be as cheap as other things when it is available, but it is a lot more expensive when it is not. Electricity when it is not there when you want it is less valuable electricity, so you need back-up gas plants or storage. Back-up gas plants are doubly expensive because they can operate only when the wind is not blowing and they in turn need carbon capture and storage, which, even if it can be made to work with gas-fired stations, which it has not yet, will add further costs—again doubly so, because it will operate only part-time. The second leg of the too good to be true story is that if we plough ahead with decarbonising our economy supply, we will enrich ourselves by generating new export industries. The Industry Minister, the noble Lord, Lord Vallance, who pursued the Sue Gray route to the upper echelons of the Labour Party, was given a little section of his own in the Labour manifesto, in which he said that “by accelerating the transition to clean, homegrown energy” we will not only “end the era of high energy bills” but be “helping ourselves and exporting our solutions worldwide. But if we choose to go slowly, others will provide the answers, and ultimately we’ll end up buying these solutions rather than selling them”. Where has he been for the past 20 years? Far from choosing to go slowly, we have outpaced other countries, but we have had to buy the solutions from abroad. Imports of renewable technologies vastly exceed our exports. Foreign suppliers have finally begun to make wind vanes in this country and assemble generators here, which is welcome, but they are largely for our fields, and those companies are not going to make us an exporter. The only turbines we export are gas turbines, which we are phasing out and urging others to do likewise. The only area where we might take the lead in developing a new industry is small nuclear, which I persuaded the Energy and Climate Change Committee to back a decade ago. I hope this Government will give that project more welly than my Government did. An honest appraisal of the cost of net zero will conclude that it is bound to be costly. That does not necessarily mean that we should abandon it. If the costs are less than the likely benefits to the world in reducing the impact of global warming, it is worth the world bearing those costs. Of course, Britain’s contribution to global emissions is very small—less than 1%—so our impact alone is negligible. I accept that we must be prepared to make our proportionate contribution to that collective effort. I know that many noble Lords believe that we should lead the world by going further and faster in that direction. I confess that I have always found the idea that we can lead the world somewhat hubristic—a hangover from our imperial past. So far, the big emitters —China, India and, in future, Africa and Latin America —have made it clear that they do not give a damn what we do. The one thing that we can be sure of is that if we impose such costs on our economy that we self-harm and reduce our emissions by exporting our industry abroad, other countries will take note, learn the lessons from our folly and make sure that they do not follow our lead. I hope that we can now have an honest, frank, well-informed debate comparing the costs of action with the benefits of action. I am sure that will be a point that my bishop, the right reverend Prelate the Bishop of St Albans, will make in due course since, although we may not agree on this issue, we agree on the importance of honesty. We can have an honest debate only if it is well informed and if we stop trying to convince ourselves that fairy tales are true. I beg to move.