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DERMOT MURNAGHAN: Now then, the green agenda was at the heart of David Cameron’s attempt to detoxify the Conservative party brand, well not so much now. The upcoming Energy Bill is not nearly as green as many had hoped and now one of David Cameron’s MPs wants to put climate change back at the heart of energy policy. In a moment I’ll speak to the Conservative MP and Chair of the Energy Select Committee, Tim Yeo and we’ll also be hearing from the former Cabinet Minister Peter Lilley in a moment Let’s say a very good morning then to the Conservative MP and Chair of the Energy Select Committee, Tim Yeo, very good to see you Mr Yeo. The Energy Bill, an amendment approaching which is going to make us fossil fuel free by 2030, isn’t that going to be at enormous cost to consumers?

TIM YEO: It is quite a challenge but of course it is really the government’s policy already. It did accept two years ago the Fourth Carbon Budget, on the advice of its statutory advisor, the Climate Change Committee, which set out a total for greenhouse gas emissions between the period 2023 and 2027 and to achieve that budget does require essential decarbonisation of the electricity generation industry. That budget is going to be reviewed again next year but at the moment the government is on course to do what the amendment that I’ve tabled for this Bill would just reinforce.

DM: But you left out the bit about the cost to consumers. A lot of fossil fuels are getting a lot cheaper in actual fact at the moment, I notice that coal is very cheap indeed and we are burning more of it than we have for a very long time. That has to stop, you’re saying?

TY: Well it is absolutely true that the price of coal that we import from America in particular is now quite low and so coal fired power stations are operating flat out. They will be required, most of them, to close down quite soon under the European Directives because they cannot meet the pollution regulations and I believe most people support those regulations, it’s not just about climate change but it’s about air quality and other things as well. What we have to do is to find alternatives and I believe that there are. We are going to need some gas undoubtedly, we also need to have some nuclear and we need to go on investing in low carbon renewables.

DM: Until 2030 and then the gas has to stop as well.

TY: Well there will still be some gas on the system as back up, I don’t think we’re going to eliminate gas altogether, there should be a role for gas and hopefully if we do what my committee has been recommending and start to explore for our own shale gas, we’ll be less dependent on imports and we might even have some protection against price rises. But coming back to the question of cost which is absolutely at the heart of this, the first thing we should do is be much cleverer about how we use energy, we could go much further and encourage people to be more energy efficient, that’s the most important thing to do. Secondly, it is very hard to predict the fossil fuel price movements 15, 20 years ahead. Most of the reason why energy prices are much higher in Britain today than they were ten years ago is because of a rise in the price of gas, the main fossil fuel. We don’t know how that price will move in the 2020s but I wouldn’t want to bet the whole farm on the assumption that it’s going to go on staying low. I think it might equally go up.

DM: Okay, but at the heart of this policy is that we have to act because of climate change. Some consumers will say I’m not necessarily sure that it is man-made and that we are actually causing it and look at the immediate future, which is what people look at when they get their bills. As I mentioned, coal is very cheap and we might even have our own shale gas, are we going to have to ignore all of that in the future?

TY: On the contrary, I very much hope we will exploit our shale gas though if you ask the people of Sussex where they are trying to get permission to explore now, I’m not sure how enthusiastic they are but the government has already set a limit on the amount of subsidy that can go to low carbon energy, that was announced last year in December, it’s called the Levy Control Framework and that puts a cap on how much, so by which the amount that prices can go up because of what’s been done in the Energy Bill has already been limited.

DM: Okay but you yourself, I mean on the issue of climate change, you want to clarify this, you questioned it seems last week it seems when you referred to climate change perhaps being a result of natural phases and therefore taking out the human element.

TY: Of course in the four billion year history of this planet, most of which was without any human beings on the planet, there have been huge changes in the climate as a result of natural variations. Now the conditions under which humans have been very successful in the last two or three hundred years has been climate stability. My fear is that the 50% rise in the concentration of greenhouse gases in the atmosphere since the industrial revolution is what is now causing the observed changes in the climate which are taking place, it is too big a probability to ignore so it is absolutely right, as I’ve been saying for 20 years, that we should actually get on and try and move away from our dependence on fossil fuels, not just in this country or Western Europe but in America, in Asia and across the world. We are consuming fossil fuels at a rate which is unsustainable and which is almost certainly causing short-term changes in the climate.

DM: Causing short-term changes in the climate, on that note I want to bring in Peter Lilley, your colleague in the party and Peter Lilley, just on that point, Tim Yeo is convinced that there are short-term changes occurring in the climate because of human activities with fossil fuels. PETER LILLEY: Well it isn’t in dispute that if you double the amount of carbon dioxide in the atmosphere you’ll get a direct effect of an increase of about one degree. It may then have knock on effects, feedbacks some of which are positive, some of which are negative, many of which are known and may increase it a bit. The alarmist view that it’s going to increase by several degrees doesn’t have much scientific backing and all the recent studies have tended to suggest that the climate is less sensitive to carbon dioxide than we previously thought or feared so it would be premature to write into law what must happen twenty odd years hence when at present that is in fact unachievable.

DM: Do you think energy and electricity generation therefore under Tim Yeo’s plans will get an awful lot more expensive then?

PL: It certainly would if we were to go down the path of trying to do without fossil fuels. There simply are no alternatives that we can rely on. Wind and solar don’t work when the wind doesn’t blow and the sun doesn’t shine, which is every night and quite often in between. Nuclear is desirable but is incredibly slow and we haven’t managed to get it off the ground. If we tried to rely on fossils but take the carbon dioxide out of the ensuing combustion mix then that requires carbon capture storage which isn’t yet available and if it isn’t available in 2030 then a recent study shows that the extra cost of trying to do without fossil fuels would add something like £46 billion a year to the fuel bills of this country and I don't think we should impose that burden on British people, by law, now.

DM: How much of this green agenda is about shining up and so-called modernising the Conservative party and of course staying very popular with the Liberal Democrats?

PL: Well that’s not really for me to say. I’ve never been convinced that one ought to adopt policies for public relations reasons, one ought to adopt policies because they are right in themselves. I don't think this policy is right, necessary or feasible and therefore I hope we’ll find a way of escaping our commitment to it before too long.

DM: I mentioned the Liberal Democrats, the Energy Secretary Ed Davey is one, he says the vast majority of companies in the UK want a government set target on decarbonisation, even businesses want it.

PL: Well the companies who are going to rely on subsidies want to be sure that the subsidy will be permanent, high and very profitable for them, that is inevitable, but the consumers don’t want to pay extra in their bills, industry which probably would have to make up two-thirds of the cost of this high-cost energy finds itself uncompetitive with other countries, particularly America, and as a result we’ll lose manufacturing jobs. If by contrast we accelerate the search for shale gas and we are fortunate enough to find lots of it, that could either bring down the cost, certainly reduce the import bill and probably increase substantially the tax revenue to this country enabling us to reduce other costs on industry but sadly Mr Davey and his predecessor have been very sluggish about developing our shale gas potential.

DM: I just want to bring Tim Yeo back, he’s sitting here listening to that. That’s rather a comprehensive demolition of some of your arguments, Tim Yeo.

TY: Well I don't think so. I think the danger of us not taking the challenge of climate change seriously is that if we have to react in 15 or 20 years’ time to a much more serious situation, if the 97% of scientists who have studied this issue are right, then we may find that the world is in a bit of a panic about cutting carbon emissions, that there will be a big carbon price and therefore those countries and those businesses which remain dependent on fossil fuel consumption will be facing huge increases in costs, far greater than the quite modest ones that would result from an accelerated switch to low carbon investments. So I think the risks involved in not doing this are very considerable.

DM: Just lastly then, Peter Lilley, the arguments coming back at you from Tim Yeo, politicians talk an awful lot about future generations, if we don’t act on this they are the ones that will suffer.

PL: Well the forecasts that the government are relying on are those of Lord Stern, he says that the costs of doing anything will exceed the benefits for more than a century so we are talking about helping generations in one or two centuries ahead who by the general operation of economic growth, even if the worst happens with climate change on Lord Stern’s scenarios, will be several times better off than we are. I don't think that we should be subsidising the future rich at the cost of today’s fuel poor.

DM: Last thought from you, I just want to ask you both as senior parliamentarians, another lobbying issue, another scandal seems to be breaking, can the rules ever prevent anything like this Peter Lilley?

PL: You can never absolutely prevent crimes but it is very wrong what appears to have happened and it does reinforce the case for the Prime Minister accelerating the provisions he always wanted to bring in to deal with this sort of scandal which he rightly long foresaw.

DM: He did. Okay, Peter Lilley, thank you very much indeed and Tim Yeo, I suppose you are going to agree with Peter Lilley but it is something the Prime Minister identified before he got into power and doesn’t seem to have solved yet.

TY: Yes, he did face a few other problems before getting to that one but I do entirely agree with Peter Lilley, I would strongly support measures which might tighten up the existing rules. In the end, as we saw with the expenses issue four years ago, the system depends on the integrity of the individuals who operate it.

DM: Okay, Tim Yeo, thank you very much indeed and thanks to Peter Lilley too.