NL: And if it doesn’t?

OL: I don’t know whether carbon capture and storage will prove to be a relatively cheap and effective technology, but there’s a perfectly good chance that it will. Now I accept that it will cost more to build a coal plant with carbon capture and storage than without — say 10 per cent more. But if one looks at the range of likely increases in cost, it’s likely to be fairly modest in comparison with the volatility of prices of imported gas and oil, which is very considerable — up to 250 per cent. Having spent many years financing power plants, I’m very aware that those volatilities get built into the cost of capital for the plants when constructing, and lead to much greater increases than 10 per cent in the effective capital cost.

The other side of my argument is that energy efficiency tends not only to cost less but ultimately saves money. I accept Nigel’s argument that if energy efficiency is a cost advantage to firms, then in a free market firms will invest in it anyway. But I don’t accept the proposition that governments can’t affect the speed with which such changes occur. A government can affect that.

DJ: Would a Conservative Government try to do that?

OL: Yes. I think it makes sense for government to try to ensure, for example, that people are aware that loft insulation would save money. Many houses don’t have it. Why? Because there is an imperfection in the market, and that’s the sort of thing that governments can cure. And by doing so, nothing but good arises.