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Renewable Energy
4. Mr. David Kidney (Stafford): Which of his Department's funds support the creation of new businesses in the renewable energy sector. [149003]
The Minister for Small Business and E-Commerce (Ms Patricia Hewitt): New businesses in the renewables energy sector, as in other sectors, may be eligible to apply for enterprise grants, regional selective assistance, smart awards, help from the small firms loan guarantee scheme and so on. However, businesses in renewable energy are also directly supported by the non-fossil fuel obligation, the proposed renewables obligation, capital grants and an increasing research and development budget.
Mr. Kidney: I thank the Minister for that answer. Does she share my belief, and that of my ever-enthusiastic constituent, Mr. Bob Talbott of Talbott Heating Ltd.,
that the growing demand for renewable energy sources in this country and around the world genuinely offers the prospect of a new generation--excuse the pun--of manufacturing jobs, making the things that generate the energy? Will the Minister and the Government be alert to opportunities to promote United Kingdom manufacturing jobs in those new industries?
Ms Hewitt: I entirely agree with my hon. Friend and with his constituent. The renewable energy sector already employs some 4,000 people in about 800 companies across the United Kingdom. We have set a target that 10 per cent. of overall generation will come from renewable energy in the next 10 years, which will require a threefold expansion in generation from renewable energy. We want to ensure that that benefits British high-tech manufacturing industry and creates more jobs in Britain.
Mr. Brian Cotter (Weston-super-Mare): The Minister's comments on renewable energy firms are very encouraging, but will she recognise the fact that 4,000 new firms start every year and that such a big sector needs support? The incubator scheme proposed in the White Paper, which has just been announced, is designed to assist 2,500 firms. and another scheme is designed to help 1,000 firms over three years, but many other firms will clearly need support and new firms are coming through. Does the hon. Lady believe that it is also important to offer continuity of support to firms, as nearly 50 per cent. of them fail within two years?
Ms Hewitt: The Small Business Service that we have created and the new business links network throughout the country are designed to provide exactly that high-class support to businesses at every stage of their life cycle, including pre-start-up and growth. We are also making available in the renewable energy sector £89 million in capital grants, introducing a new renewables obligation and providing additional help for R and D, all of which will help to create more businesses specifically in that sector.
Mr. Bob Blizzard (Waveney): Does my hon. Friend share my view about the enormous potential that lies in the development of offshore wind energy? As well as providing a supply of renewable energy free of some of the obstacles of the planning system, it offers firms in the offshore oil and gas sector, which is declining at the moment, opportunities to diversify. Will she join me in welcoming the proposal by SLP, a firm in my constituency, to build a wind turbine and a renewable energy centre at Britain's most easterly point, Lowestoft?
Ms Hewitt: I certainly welcome that and I congratulate SLP on its initiative. The £89 million of capital grants to which I referred are available specifically for offshore wind energy projects, which have enormous potential. We are also supporting demonstration wave energy projects, which can help to stimulate the growth of the offshore energy market.
Mr. Roy Beggs (East Antrim): Will the Minister seek to ensure that relevant Departments and planning authorities are fully aware of Government policy on, and support for, renewable energy? Does she agree that
consultation between promoters of renewable energy projects, planners and environmentalists is a better way of resolving disputed planning applications than expensive public inquiries and appeals procedures?
Ms Hewitt: The hon. Gentleman is absolutely right. Planning concerns are expressed about many proposed renewable energy projects, and his suggestion that these matters are best resolved through sensible dialogue within local communities is exactly right.
Mr. David Chaytor (Bury, North): In view of the record profits announced this week and in recent weeks by some of the world's leading non-renewable energy companies, does my hon. Friend think that if the Chancellor could be persuaded of the merits of a windfall tax on oil companies it would provide a revenue stream for investment in the development of renewables that would enable the United Kingdom to be a global leader in renewable energy technologies, exactly as it is in the climate change strategy?
Ms Hewitt: Oil companies are making substantially increased investment in the North sea fields. They are also investing in new sources of renewable energy. Any other issues to which my hon. Friend referred are of course a matter for my right hon. Friend the Chancellor.
Mr. Nick Gibb (Bognor Regis and Littlehampton): It is interesting to note that the hon. Lady has taken over responsibility for renewable energy from the new Minister for Energy and Competitiveness in Europe. However, she shares with the hon. Gentleman an important task in trying to put together a coherent energy policy, which both their predecessors spectacularly failed to deliver over the past four years, particularly on the issue of rising CO 2 emissions as Magnox stations are decommissioned.
At the moment, only 2.8 per cent. of electricity generation is from renewable sources, so the general view in the industry is that the Government's target of 5 per cent. from renewables by 2003 is completely unrealistic. How confident is the Minister that the target will be met? If it is not met, what will be the consequences for the CO 2 emission figures and energy policy generally, which are both based on the assumption that it will be met?
Ms Hewitt: We are working actively with the sector to achieve that target, which is more than the previous Administration did. The non-fossil fuel obligation-- the existing obligation--and the proposed renewables obligation have led to an increased demand from energy users for energy that is generated from renewable sources. The fact that the climate change levy has been carefully designed to give an exemption for energy that is generated from new renewable sources is further stimulating that demand. I am confident that we will work successfully with the industry to achieve our targets.
Manufacturing Industry (Gas Prices)
5. Mr. John Grogan (Selby): What assessment he has made of the impact on manufacturing industry of the rise in the price of gas. [149004]
The Secretary of State for Trade and Industry (Mr. Stephen Byers): The Government are very much aware of the impact that the rise has had on manufacturing. We are addressing that by pressing for greater liberalisation in Europe and working for improvements in the United Kingdom market. We shall also refer any evidence of anti-competitive behaviour to the appropriate competition authorities. I particularly welcome the Commission's announcement on 1 February that it has agreed to my request for a Commission competition inquiry into the operation of the interconnector.
Mr. Grogan: I thank my right hon. Friend for that reply. Given that the price of industrial gas has doubled in the past year, does he agree that there is a strong case for encouraging the Office of Fair Trading to take a look at the gas industry, especially as the interconnector, which is often blamed for the rise, accounts for less than 6 per cent. of total consumption by British industry?
Mr. Byers: The Government are doing three things. First, we are tying to make a reality of the single market in Europe with regard to energy. Secondly, we are trying to ensure that the UK market functions properly. One way to achieve that is by securing greater price transparency, and I hope that the industry will agree to that. Thirdly, to reinforce the point made by my hon. Friend, we have to ensure that competition works effectively. If there are examples of anti-competitive behaviour in the sector, we will move quickly and refer them to the relevant competition authorities.
Mr. Geoffrey Clifton-Brown (Cotswold): The Secretary of State says that if the European Union is to mean anything, the single market must work properly. The fact that energy is not fully liberalised within the EU, but is generally liberalised within the UK, is putting us at a considerable competitive disadvantage. What is he doing to press the commissioner to complete his inquiry? Is it not wrong that a fully French-owned company should be able to take over London Electricity when British companies cannot take over French energy companies?
Mr. Byers: Electricite de France's takeover of London Electricity did not raise any competition concerns, but we do need to make a reality of the single market in energy. I agree with the hon. Gentleman that that is an important prize. We are pushing that agenda forward, have secured a commitment in Lisbon for a timetable on it and will raise that important item at the Stockholm Council in a couple of months.
There is no doubt that we stand to gain enormously if we make a reality of the single market. At the moment, it is not acting in the interests of the UK, which is why the interconnector and the way in which it operates are particularly significant and why I am pleased that the Commission has agreed to open the inquiry to ensure that it is operating competitively.
Mr. Michael Clapham (Barnsley, West and Penistone): Does my right hon. Friend agree that a major cause of the increase in gas prices is the fact that gas suppliers are pushing more gas down the interconnector to chase higher prices on the continent, which has pulled UK prices into line and squeezed our market? If he agrees
with that analysis, does he also agree that it is time to consider putting more resources into the research and development of clean coal technology?
Mr. Byers: I was waiting for that final question. My hon. Friend makes a good point, which I shall address. As for the reasons for the price increase, there is often a tie between the price of oil and the price of gas. Contracts, especially in continental Europe, are related to the two prices. As a result, when contracts were renegotiated last autumn, the very high oil prices at that time led to a significant spike in gas prices. That should not necessarily affect the United Kingdom, but the way in which the interconnector has operated gives cause for concern. As my hon. Friend said, UK gas now chases higher prices in continental Europe, even when demand in the UK is very strong.
If hon. Members have time, I invite them to consider how the interconnector operated on 15 January. When the market was tight in the UK and a good price was being paid, the interconnector suddenly switched from import mode to exporting. That is one of the issues that the Commission will investigate, because it appears that the operation of the interconnector is not truly competitive.
On my hon. Friend's final point, we are interested in considering clean coal technology. He will be aware that we are discussing with the sector how we can develop pilot projects in this area.
Mr. David Heathcoat-Amory (Wells): Will the Secretary of State confirm that wholesale gas prices have doubled over the past year and that they will go up again from April as a result of the new energy tax? Will he also confirm that retail prices are starting to be affected? They are due to go up by nearly 5 per cent. shortly, with more rises in the pipeline. Why is the Department's only response to blame the increases on the interconnector and the lack of liberalisation in the European energy market? The Government say that they have much influence in Europe, so why have they done nothing about the problem for the past four years?
Why do we have a Secretary of State who does not know what the problem is? He will not do anything about it and he is simply reduced to the role of spectator while the damage is done. As a spectator, he makes a stopped clock--as mentioned by the Minister for Competitiveness--look like a positive model of energy, activity and accuracy.
Mr. Byers: That sounded very much like a Tory demand for renationalisation of the gas and electricity industries, and that may well be supported by some of my hon. Friends. The right hon. Gentleman clearly was not listening, but we must make sure that the market works effectively. He has considered the issues, so he will know that we inherited from the Conservative Administration a market that was not working effectively.
The right hon. Gentleman mentioned the figures for gas and electricity prices, so let us consider what we have been able to do. Industrial consumers pay 4 per cent. more for gas than they did in 1997, but they pay 12 per cent. less for electricity. According to the latest figures, domestic consumers pay 14 per cent. less for electricity and 12 per cent. less for gas. [Interruption.]
Mr. Speaker: Order. When the right hon. Member for Wells (Mr. Heathcoat-Amory) asks a question, I expect him to allow an answer.
Mr. Byers: The difficulty, Mr. Speaker, is that the right hon. Gentleman does not like the facts getting in the way of his own prejudice. However, the facts for domestic customers are clear. The latest figures show that they pay 14 per cent. less for electricity and 12 per cent. less for gas. That is what we have done. The right hon. Gentleman needs to reflect on those figures. He asked what the Government had done, and I have told him what we have achieved--we have taken the prices down.
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