My Lords, I draw attention to my entries in the register of interests. I thank all those Members of your Lordships’ House who have agreed to speak today; I am very grateful to them all.
With COP 29 well under way in Baku, it is a timely moment to have this debate, even if that conference is perhaps attracting rather less interest than in previous years. That is certainly not because of lack of interest in the climate and energy issue. President Trump’s election is likely to open up debate once again at a global level. In the EU, we see increasing levels of doubt about the policy consequences of the climate commitments already made. Here in the UK, we have the new Government’s plan to decarbonise the energy grid by 2030, with the report last week from NESO, the newly formed National Energy System Operator, constituting the first detailed commentary on that plan.
Central to that plan is delivery of large-scale renewable capacity for our energy grid, both wind—onshore and offshore—and solar, together with a revamp of the transmission system to handle that. The NESO report provides us with costings for all this and much else besides. Like most other official and quasi-official studies on the costs of net zero, the NESO report uses figures already produced by the Government for this purpose. That is why it is such a matter of regret that there appears to be a large measure of disagreement about many of those underlying figures. We would have a much higher quality debate about the costs of net zero overall if there were at least consensus on the underlying figures. There is not, and that is why I felt it right to try to secure today’s debate on this matter. I do not expect we will find consensus today either, I fear, but perhaps we can hope to shed some light on why the differences exist.
The difficulty arises for two broad reasons. First, there are starkly different views of the levelised costs of renewables, particularly onshore and offshore wind, and these are relevant to the closely connected question of subsidies to this sector. Secondly, it is an inevitable consequence of the intermittent nature of renewables that this imposes costs elsewhere on the energy system: back-up, interconnectors, other non-renewable generation, and measures to ensure grid stability, together with the costs of rebuilding and reconfiguring the transmission system—and all this seemingly on a highly ambitious scale. I want to look at these areas in turn.
First, on the levelised costs of renewables—that is, the cost of building and operating wind and solar, discounted over time—the latest figures were published in 2023 by the Department for Energy Security and Net Zero and, as I said, the NESO report is based on them. Those figures claim that offshore wind can generate power at £44 per megawatt hour in current prices. Yet AR6, the recent round of capacity auctions, awarded contracts for offshore wind at £82 per megawatt hour in current prices. It is difficult to understand why there should be such a significant difference between these figures, if the £44 figure is in any way correct. One becomes even more baffled if one looks at the actual accounts of recently commissioned offshore wind farms, which suggest a production cost of around £100 per megawatt hour, or, indeed, if one looks at the recent payments, published yesterday, to offshore wind farms under contracts for difference, which suggest a production cost of around £150 per megawatt hour.
My Lords, I appreciate the noble Lord, Lord Frost, starting this debate. He did so in the way I anticipated he would, repeating what was said in the debate a couple of weeks ago. Rather than following him into his arguments, the House needs to recognise that even if the costs of renewables, including of construction, carbon capture and storage and so forth, prove to be double the estimates made under the previous Government—and which are still supported by the Conservatives and by the new systems operator—they would still be substantially cheaper than the estimated cost of gas.
Of course, the electricity price in this country, contrary to what the noble Lord has said and to what the noble Lord, Lord Lilley, said the other week, is higher than in other countries at various points because it is based on the price of gas. We have to pay the world price for gas, which went up considerably. It does not matter whether the gas is from the North Sea or from overseas: that gas price determines our electricity supply. The mechanism is explicit and implicit.
The real problem with our attempt to move to net zero is that we have failed to do certain complementary things, and on that I would largely agree with the noble Lord. We have failed to develop storage, switching capacity and aspects of the grid. We have failed to provide an offshore grid so that different arrays and wind farms can land at one place, rather than creating a planning problem in different parts of the country. On the other hand, we have failed to develop nuclear power or to return to nuclear power early enough. We have also failed to develop the long-term investment in tidal and wind power, which we have plenty of around our coast and which would not be intermittent. But that is very different from denying the whole ability to provide at relatively cheap cost predominantly renewable energy and to get back on to the trajectory, around which there was a degree of political consensus a year or two ago.
My Lords, it is a pleasure to follow the noble Lord, Lord Whitty, and to agree with him particularly on the last point that he made. There are difficult decisions to be made; we need transparency and we need critical analysis of individual projects and policy decisions that will influence how we go forward. But we had the advantage in this country, and it is one reason why we became such a leader, of basing those decisions on a fundamental agreement across parties of the huge significance of the issues relating to climate change and the opportunities that there were both to save the world—that sounds very dramatic, but it is not necessarily incorrect—and to hold back and stem the potentially disastrous consequences of global warming by taking action now.
I am getting ahead of my speech and I have not declared my interest, which I do now. I also congratulate the noble Lord, Lord Frost, on again directing the House’s attention to these issues. However, I fear that today he has asked us to take a very narrow focus on the cost of renewable energy and the effect on energy costs in the UK. I do not dispute that these are important issues, but I will not spend my precious four minutes going into the arcane debate about the latest LCOE figures from DESNZ or the implications of the latest strike price from AR6 CfD.
I simply say to the noble Lord that he puts a very gloomy interpretation on these figures, and he says that they are disputed. I do not dispute that he disputes them. However, there is a weight of opinion—academic, scientific and international—that suggests that his interpretation is wrong. If we look at the latest reports of the NESO, which he referred to, the CCC, the IEA and the International Renewable Energy Agency, and the excellent briefings we got from the Grantham Institute, the ECIU and the UK Sustainable Investment and Finance Association, they do not take the same view of the costs as he does.
My Lords, I am grateful to the noble Lord, Lord Frost, for securing this debate at the time of COP 29. It is a pleasure as always to follow on from the wise words of the noble Baroness, Lady Hayman. I speak as the lead Bishop for the environment and as a member of Peers for the Planet.
I would like to ensure that there is reflection in this debate on the cost of not embracing renewable energy, especially as a global neighbour. Under even the most optimistic scenarios, the planet will experience warming above 1.5 degrees. The predictions for people and planet are stark. Ours is the generation that simply must move off our reliance on fossil fuels and embrace a new, cleaner, more resilient energy future.
We know the data. We know that climate change knows no international borders. We know that those being most impacted by adverse weather events are the poorest in the world. We know that those nations are least resilient as they are least able to afford mitigation and adaptation to protect their populations. We know that climate change is leading to more health problems, more migration, more conflict and more war. The cost of this is in the trillions—as well as the huge human misery that results. The UN has estimated that moving to renewables could save the world up to $4.2 trillion per year by 2030 as we reduce pollution and climate impacts. By the UK investing in renewables, we are investing in the technological development that will see costs decline over time. That is ultimately good for us, the consumers of electricity. It also contributes to the technological development that is needed across the world as it becomes more affordable.
We have made international commitments about our carbon emissions, and I welcome the recent announcement by the Prime Minister at COP 29 that we will reduce them by 81% by 2035. Let us not underestimate the importance of having international leadership in this area. We make these commitments because we know that it will contribute to the well-being of the planet, but it is also in our domestic interest. The lesser the impact of climate change, the less our national security risks, the better our public health, the more secure our food supplies and the more progress we can make restoring our native biodiversity.
My Lords, I declare interests, both for past energy issues—I was at one stage the Secretary of State—and as an adviser to Mitsubishi Electric, which is one of the biggest producers of equipment and kit related to moving to a clean energy world. I congratulate my noble friend Lord Frost on securing this debate, which is very well timed. It comes not only during COP 29 but after a very good debate last week, promoted by my noble friend Lord Lilley. It also comes before we debate, on Monday, the Great British Energy Bill, which, as far as I can understand it, is going to confuse things even more among many agencies. Still, we will have to live with that for the moment.
This is of course a question of pace and process. It is an honour to come after the right reverend Prelate but, with respect, the issue is not really whether there is a problem and we address it. The issue is whether we address it in a way which slows it down and creates a pushback, diverting us from the real task, or whether we focus on what we are trying to do, which is to reduce or slow down the rise in methane and CO2 emissions, which are going to lead to a very great world disaster. At the moment, methane emissions are rising faster than ever; CO2 worldwide is rising faster than ever. That at least raises the question of whether we are doing the right thing now, when clearly some action is needed.
We also need to create a rendezvous with reality, of which there is little sense in this debate, and counter a tide of misinformation—some of it unconscious and some of it conscious disinformation—about what should be done now and which way we should go. There are also some rather cuckoo recommendations from really quite senior bodies about flying more slowly, which sounds extremely dangerous to me, or eating less beefsteak. For some people, that may be necessary, but generally that seems a rather bad addition to the nation’s health.
My Lords, in October 2006 Professor Nicholas Stern, a former chief economist at the World Bank, later introduced as the noble Lord, Lord Stern, vividly briefed the Cabinet on the looming climate crisis. His central message was that the costs of combating it will be high, but the costs of not doing so will be immeasurably higher. How right he was and how wrong the noble Lord, Lord Frost, is. As the right reverend Prelate the Bishop of Norwich said so eloquently, the science and the devastating effects of global heating are indisputable, as extreme weather—chaos, droughts and mega-floods—batters the planet, most recently in Spain.
Renewables are getting much cheaper, gas more expensive and nuclear power incredibly more expensive, especially with its decommissioning and waste storage costs. The Nuclear Decommissioning Authority has estimated the future costs of the nuclear decommissioning mission at a colossal £105.3 billion, significantly taxpayer funded. Offshore Energies UK also reports spiralling costs and a dramatic hike in the decommissioning costs for oil and gas platforms and plugging oil and gas wells, costing taxpayers over £16 billion from a 2021 Tory-funded deal. In March 2023, independent research showed that, since 2015, the last Conservative Government gave £20 billion more in support to fossil fuel producers than to renewables.
There is no doubt that generating electricity from nuclear power costs significantly more than generating it from solar and wind. Then there is the enormous untapped potential of marine energy: notably, the very low-cost tidal power from the Severn estuary, with the second highest tidal rise and fall in the world, which has never been harnessed and surely must now be.
Britain’s dependence on fossil fuel markets controlled by autocrats such as Vladimir Putin has left us vulnerable to energy price spikes, as well as the escalating costs of the climate emergency. That is why our Labour Government have committed to delivering clean, homegrown energy by 2030, meaning electricity based on renewables, nuclear and clean energy technologies that we control at home, rather than fossil fuels sold on volatile international markets. Last week, the National Energy System Operator—NESO, referred to by the noble Lord, Lord Frost—published an independent, expert analysis showing that clean power can lead to cheaper and more secure electricity for households. A wide range of groups from business leaders to trade union leaders, the International Energy Agency and leading UK and international companies, such as National Grid, Scottish Power and SSE, have backed this.
My Lords, I declare an interest as chair of Acteon, which operates across global marine energy and offshore infrastructure services. Central to this debate is a clear understanding of the significant distinction between the availability of renewables and hydrocarbons. One leads to the generation of intermittent power; the other to much-needed baseload. While moving to an increasing share of renewables, we always require the availability of baseload.
I had the good fortune, as Energy Minister back in 1990, to introduce the first competitive framework for renewables: the non-fossil fuel obligation, which morphed into the contracts for difference that we have in place today. What it has not led to is a simple trade-off between gas-fired power generation and renewables. Even as we debate today, at this hour—not just last week—our grid status shows that 53% of our power generation is from gas, with wind at 18%. Nuclear at 13% is far too low; the late delivery of SMRs is due to their being stifled by bureaucracy. While gas plants account for about one-third of Britain’s power requirements and are destined to fall to an average of 5% in about 10 years, we still have to retain the capacity of these gas-fired plants as a strategic reserve for windless days like today.
It is worth pointing out that we will not achieve that switch without substantial investment and private sector creativity. The recent NESO report, referred to by my noble friend Lord Frost, finds that the shift to renewables necessary for the Government to reach their flagship manifesto pledge of a clean power system in 2030 will require annual investment of more than £40 billion, with nearly 2,700 miles of offshore electric cables and 620 miles of new onshore cabling.
The alternative to this scenario necessitates storage solutions, and while I agree with the noble Lord, Lord Whitty, that storage technology is improving, there is a long road to travel to reach scalability and affordability. The capex has to be found by the Government if they want to keep the promise made by the Secretary of State Ed Miliband that household bills will fall. Given this reality, it would be irresponsible to turn our back on maximising domestic gas production in the UKCS. A stable fiscal regime for gas production is essential in a highly competitive global market for investment dollars. Norway has a consistent 78% tax rate. If the Government are to follow the Norwegian model, which they began to do in the Budget, the next steps must include further investment allowances. Without them, we face—as we do today—a premature wind-up of the UKCS, leaving gas stranded and substituted not by renewables but by expensive, more polluting, imported LNG, which makes neither economic nor environmental sense.
My Lords, it is an education to follow the noble Lord, Lord Moynihan. It is an obvious truth that we should note the costs of any national policy and we are grateful to the noble Lord, Lord Frost, for giving us the opportunity to debate it. I congratulate him on his timing. COP 29 provides an international context for what is manifestly an international problem: the climate change emergency.
We must also factor in to the national calculation the benefits of the policy and the costs of not adopting it, as has been mentioned. We should do this for the long term as well as the short term. I shall focus on the long term, but it is unarguable that there will be short-term costs—whatever they are—in moving to reliance on renewables. A key issue is who is to bear them. We shall need to consider the split between public funds and consumer and upfront private sector expenditure.
Industry thinks long term, and the chief executive of CorPower, which has pioneered the first commercial wave energy device in Portugal, said:
“I believe that there are, today, several key trends in renewable energy which can be considered megatrends. One of them is … cost reduction”.
He describes this trend in solar energy as being
“even in places where the solar irradiation is quite low”.
I think the UK might find itself here, and in wind energy and eventually marine energy.
NESO, referred to by my noble friend Lord Hain, considers that the economies it mentions, after the shift to a clean-power system, come from offsetting benefits from the eventual fall in the price of electricity, the cessation of dependence on volatile international gas prices, and improved efficiency measures. I regret that there simply is not time in four minutes to break down the figures. We should also find a way to include the so far unquantified but clear gains in energy security and health which will come with renewables.
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There are similar huge gaps in other areas of the costings. DESNZ assumes a capital cost for offshore wind of £1.5 million per megawatt of capacity. Yet, once again, looking at the accounts of wind companies, the figure appears to be about £3 million per megawatt, which is twice as much. Indeed, at the end of 2023, the developers of Moray West wind farm were still installing the foundations of the wind farm yet had already, at that point, spent the equivalent of £1.6 million per megawatt hour. It bears noting that if the seemingly correct higher offshore wind capital spending figure were used, the NESO estimate for capex from now to 2030 would go up by about £15 billion every year, taking the total capex from a total of £31 billion to £34 billion to a total of £45 billion to £50 billion annually.
To take just one further difference, the DESNZ figures assume a 61% capacity factor for offshore wind—that is, they assume that over a year, wind farms generate about three-fifths of their notional installed capacity. But once again, recent wind farms are opening at a capacity of 45% when new, and that figure is falling over time. The real capacity factor over the whole of the life of a wind farm may well be under 40%. If that is correct, it means that we will need to build 50% more offshore wind farms to get to the actual power that DESNZ estimates—and, of course, costs will go up by the same amount.
I note that Professor Gordon Hughes from Edinburgh University and Andrew Montford, director of Net Zero Watch, wrote to the Permanent Secretary at DESNZ on 16 September asking for further detail on some of these discrepancies. They have not yet received a reply.
Those figures are just the actual costs of operating offshore wind. The gap between assumptions, auctions and actual real-world costs explains why there has been such a need for subsidies ever since the shift to renewables began in the mid-2000s. The OBR says that “environmental levies”—a catch-all category which covers the renewables obligation, the contracts for difference and the feed-in tariffs—currently stand at about £12 billion a year. That is over £400 for every UK household. Yet one has to ask again: if the real cost of offshore wind really is £44 per megawatt hour, well below current market prices and the prices agreed in auction rounds, why do we need these subsidies at all?
I turn now to my second category: the costs elsewhere in the energy system. I think everybody agrees that there are some such costs; the question is: how high are they and what are the consequentials? The costs are principally those of intermittency, of which there are two kinds. The better-known one is the fact that little power is generated by renewables when the wind does not blow and the sun does not shine—periods like the one we saw in this country for most of last week. This requires back-up, currently mainly gas, and there is obviously a capital cost in maintaining a dual system of any kind. Moreover, the fact that the gas-fired stations cannot be used at close to full capacity but must be turned on and off at short notice brings a cost in reduced efficiency and revenue. The cost of paying operators not to shut their power down as a result of this lack of efficiency—the so-called capacity market—is currently £1 billion a year. The OBR says it will rise to £4 billion in three years’ time.
The other kind of intermittency, which is less well known, is the reverse: what happens when the wind blows and the sun shines when we do not need the power generated. Under current arrangements, that involves us paying the renewables producers not to produce and to turn their kit off to avoid grid instability. That costs £2.5 billion per year, which is expected to rise to £3.5 billion in three years’ time.
It bears noting that the more renewables we produce and build, the bigger these figures will get. The more we rely on renewables, the bigger the problem when we have the wrong kind of weather, and the bigger the concomitant costs are going to be. That is why it is a simple fallacy, though a seemingly widely believed one, that building more renewables reduces costs and brings more security. It is surely clear that the reverse must be true.
Finally, there are the wider knock-on costs, most notably in the plans for what NESO calls “demand management”: rationing of energy if the grid cannot supply enough energy to meet demand. This will come either by compulsion—for example, in plans to reduce supply to industry in such circumstances—or by price rationing to consumers, or both. The NESO plan for demand management is slated to cover, by 2030, five times as much potential demand as now—that is, about 10 gigawatts.
Now noble Lords may say, as people do, there have always been differential energy tariffs. Indeed, some of us are old enough to remember things like Economy 7, from the 1980s. But that was differential pricing to stimulate demand in the night-time, when supply was high but demand was low. This is the reverse; this is a plan for us to put up with differential pricing to reduce demand, when it is demand that is high and supply that is low. That is quite different, and it necessarily imposes an economic cost on industry and the consumer, for they cannot use energy when they want to use it and may have no warning of the fact, either. It is hard to quantify that cost, but it is clearly potentially significant. It should be factored in to the cost of running an intermittent renewables system, but it is not.
The only attempt that I am aware of by government to quantify some of those wider costs—though not all of them, for some are still excluded—was made by the then BEIS in 2020, in its document entitled Energy Generation Costs 2020. This showed, even on the imperfect measures being used, that both offshore and onshore wind were on average likely to be more expensive than modern gas power stations, even allowing for some of the implausible assumptions that I discussed earlier.
Let us try to bring all this together. We have a significant discrepancy—disagreement, call it what you will—in assessments of the levelised costs of renewables. In the case of offshore wind, it is a discrepancy amounting, potentially, to up to £100 per megawatt hour. The high levels of subsidy we are paying in various forms suggest that production costs are in fact quite a lot higher than acknowledged. There are also wider costs to the grid—£3 billion to £5 billion in the current year, growing in future—and to the economy, hard to quantify but definitely present in the various kinds of inefficiencies created by an inefficiently working electricity supply system. In short, one side of the argument sees low levelised costs and believes that they will fall further; the other, with which obviously I associate myself, sees costs that are not falling and that require high and growing levels of subsidy and complexity to make the whole system work properly.
This situation is deeply unsatisfactory. The Government are about to embark on a dash to decarbonise the electricity grid according to an assessment that is based on certainly disputable direct costings, and which will be heavily contested and simply fails to take into account many of the wider costs and consequentials. This really is not good enough; the country is owed better.
I recognise, of course, that when the Minister responds he may not have the information he needs to reply fully to some of these detailed points, but I hope he might do so in writing, and perhaps at the same time encourage his Permanent Secretary to reply to Professor Hughes’ letter, which I mentioned earlier.
I say all this not to make a political point. We really need to understand better the real cost of renewables to the consumer, the Government and the economy. If it turns out that I am wrong and the costs really are low and falling, that will be excellent news for us all. I am doubtful about renewables not on some ideological grounds, but because they seem to me extremely expensive in their own right and to come with many additional costs and security risks too. I have not yet seen the evidence that would persuade me otherwise.
I finish on this point. With this in mind—and I am not sure the Minister will leap with alacrity on what I am about to say, but I hope he might respond anyway—the Government should consider establishing some form of expert committee on this subject, made up of officials and experts from the department and bodies such as NESO and the Climate Change Committee, with a red team of outside experts to provide challenge, to look on a totally transparent basis at the evidence and the costings, and to see how close it could get to a common view. This would seem to me the best way of getting at the reality and an assessment that might command a bit more consensus than the current situation does. Whatever this country’s future energy policy may be, we surely all want it to be established on the best possible analysis and the best possible knowledge. I look forward to the debate today and to the Minister’s response.
There are other problems, as well, with the policy so far. Effectively, we have failed to produce a supply chain for renewable energy in this country to any great extent. Most of the blades and paraphernalia for wind farms come from abroad. I applaud the Prime Minister’s announcement a few days ago on investment in manufacturing blades in Hull. I hope that that is only part of a new industrial policy that takes into account the need to provide alternative employment through training, retraining and recruitment of those who hitherto worked in areas that were supportive of North Sea activity, so they have jobs in the new industry. The actual techniques used in the jobs are not that different, so retraining can relatively easily be done; but we also need a new generation who can support the renewable energy sector.
I do not think that the noble Lord makes the case for changing significantly our trajectory, but he does make the case for ensuring that these back-up arrangements are in place and provide jobs and income for this country’s businesses and workforce.
The other reason I put down my name for this debate is my deep anxiety that, while it is obviously right to query costs, particular technologies and their effect on employment and business within Britain, what are essentially queries about particular projects—whether on who pays for it, the environmental impact of, for example, solar farms on agricultural land, or the total cost—have been used by some people to support what appears to be a growing international degree of ending the consensus on climate change. Some of that is reflected in what is going on in Baku now and the near failure of the COP process so far. We need to get back to that consensus, with all-party support for the trajectory that, a few years ago, seemed to be agreed by us all.
My fear is not only that the noble Lord, Lord Frost, has got his sums wrong—and possibly, some would say, not for the first time—but that we focus only on the narrow issue of the debate today. We run the risk, as Oscar Wilde told us, of seeing
“the price of everything and the value of nothing”.
There is value in the transition to renewables, beyond the savings to consumers, which I believe are there. There is value in terms of energy security, sustainable jobs for the future, this country’s economic performance and our ability to lead in this area in the future. I hope that other noble Lords will go into more detail about that value later in this debate.
Last year Pope Francis, in Laudate Deum, his short follow-up encyclical to the much-lauded Laudato Si’, wrote:
“We must move beyond the mentality of appearing to be concerned but not having the courage needed to produce substantial changes”.
I urge His Majesty’s Government to consider our global responsibilities as part of the cost-benefit of renewable energy, and I hope that other noble Lords feel able to as well.
I am very pleased that our own Library here in the House of Lords has put forward an excellent briefing, in which it has corrected, rightly, a very important and basic issue about this whole discussion. It is the matter of the confusion, in assessing where we go next, between electricity generated, as at present, and total energy use. Those are very different things. Last year, the former, according to the Office for National Statistics, produced about 19% of total energy use and renewables were about half that. Of that 19%, about 51% was green electricity of all kinds, including nuclear, wind, sun and all the rest. That leaves renewables providing about 9% or 10%—not 50%—of the total energy that we use in this economy at present. It is the remaining 90% that we now have to focus on.
There are a number of reasons why it may not be quite as bad as that and a number of reasons why it might be much greater. Energy efficiency will reduce growth; interconnectors will help us out; local generation and tidal will help us out as well. The prospects are also for a huge increase in energy demand in this country, which we will have to meet by nuclear, when we have made no moves so far beyond Hinkley, which is turning into a pretty bad outfit altogether. There are also the costs of storage and having much more nuclear power at Sizewell, which will be a great mistake. We need six new switching stations, a new grip on pylons and an entire makeover of the National Grid system. None of these things appear to be going forward very fast and we therefore face the fact that we will have huge electrical growth for which someone will have to pay, and it will cost a great deal more.
We need Labour’s pro-energy security, pro-growth, pro-jobs, pro-climate and lower cost policy to tackle the climate emergency with real urgency. Prioritising green, clean renewable energy is about choosing investment over decline, new skilled jobs over low productivity ones, growth over stagnation, and cheaper over more expensive consumer prices—or, as the noble Lord, Lord Stern, might have said to the Cabinet meeting that I attended in 2006, investing in the short term to save over the longer term.
Renewable energy sources come with massive upfront capital investments which cannot be excluded in any cost comparison. Maintenance, decommissioning, grid costs and life-cycle replacement need to be costed. It is true that the marginal cost of producing electricity from wind or solar, once the facilities are operational, is extraordinarily low. In summary, we have to create a resilient, sustainable energy system which has to underpin energy security. The key, as ever, will lie in the strategic investments we make today, in both technology and infrastructure, and in private sector investment to ensure that we are not merely reacting to market forces but proactively shaping the energy landscape for generations to come. This, I would argue, is a future well worth striving for, and I wish the Government well.
If we can ensure that our national strategy invests fairly and equitably in short-term costs, the profits of the companies involved will yield tax, as will the jobs that they provide, together with more consumer spending power. There is already an example in the joint venture project to supply decarbonised heat to buildings across Westminster from the Thames, the Underground and the sewer networks. It will cost £1 billion: an investment that is certainly a significant short-term cost but a measurable long-term significant gain in reducing energy bills.
We must put into our equation the likely costs of unimpeded climate change from the overuse of fossil fuels: extensive floods in the UK, homes abandoned from rising sea levels in the UK, lives lost from extreme heat—probably also in the UK—and the international disruption caused by the effects of climate change on people fleeing ruined habitats.
Finally, I put one request to my noble friend the Minister. Wave energy is the Cinderella of renewable energy, but it has huge potential, especially when combined with offshore wind, not least for reducing battery storage costs. The contracts for difference scheme does not give it a fair chance at present, because it has not yet achieved the scale-up reductions of the more established tidal energy schemes. Will he consider giving it its own ring-fence, so that all the research now producing results can be speeded up?