Sustainable Energy Bill

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Brian White: Those of us who discussed the Utilities Act 2000 made that point a long time ago in Committee. My understanding was that it was not the Government's intention at that time to include CHP under the renewables obligation. It happened by accident, rather than by design. At the time, that was not the intention.

Mr. Robathan: Does the hon. Gentleman mean that it was not the intention to include CHP?

Brian White: It was not the intention to have CHP as part of the renewables obligation; it was separate.

Mr. Robathan: The hon. Gentleman's intervention, with which I agree, has thrown light on the confusion about whether the climate change levy and the renewables obligation should apply in relation to CHP, and whether CHP is desirable.

I will share a briefing that I received about CHP. It states that, although it understands the renewables obligation, there are times during a CHP plant's operation when excess electricity is generated in relation to the site's requirement. That excess electricity can be sold on, and if it exceeds 5 MW, the CHP operator must hold an electricity supply licence. That is when the CHP operator will become subject to the renewables obligation. The industry has estimated that, if CHP were exempted from the renewables obligation, it could result in an investment of between 500 and 1,200 MW of new CHP capacity and dramatically improve the output of low carbon electricity from existing CHP plants.

Of course, it is a difficult one. The Government have shown confusion over whether they want to meet the targets for CHP production that were named earlier. We would say that meeting them is sensible. I have form: I am a vice-president of the CHPA, as is the hon. Member for Gordon (Malcolm Bruce), although I am not its most industrious vice-president.

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If the country wants the most efficient electricity generation, with the least carbon emission per unit generated, it must encourage CHP. We all agree about that. However, at the moment, the Government are emasculating the Bill. To include the CHP target in new clause 11, which will only apply to the Government estate, is pretty weak and shows confusion on their part.

Dr. Alan Whitehead (Southampton, Test): I want to echo the concern expressed by my hon. Friend the Member for Milton Keynes, North-East about the parlous state of the CHP industry. It is in that state despite the central role that we know CHP could play as a transition technology. It is not a renewable technology in its own right, but it could be renewable. At the moment it captures an immense amount of the real energy that is going up into the atmosphere and could be used to greatly boost the efficiency of the energy system. We ought to count it as a failure of our collective imagination that, because of the way in which we have regulated the industry—in many ways for good reasons—such energy is literally going up into thin air, and the prospect of the transitional technology moving us forward in the way in which it could do is in the balance.

The new clause provides a considerable degree of hope for the CHP industry in that the Government will nail their energy colours to the mast by saying that this is something for which CHP should be considered. However, we should not be under any illusion that that, in itself, resolves the problems that could threaten investment now or the long-term pattern of investment that will move us forward in the way that we want. As my hon. Friend said, the problem is that the investment that is being talked about now is the investment that has been queuing up to go in. It could go in; it could make a difference over a considerable period of time and it could, in this crucial period of change to a renewable energy economy, be lost for ever.

I join my hon. Friend in expressing disappointment that his Bill might not be able to make that key contribution of leverage in the debate. The clause as it stands is a welcome signal. If it is added to by further changes over the months—or one or two years ahead at most—considerable progress will have been made in the right direction. If no other thought goes into how CHP can make the changes stick in terms of its own investment over the next few years, we will lose an important stage in moving our energy economy in the direction in which we want it to go.

Sue Doughty: I shall not rehearse all the problems of the CHP market. They have been put forward forcefully and we all share the concern that an industry that does so much towards carbon reduction seems to have been chopped off at the feet, the knees and higher up every time that we look at it. Year on year, it gets a worse deal. That is why the clause was so welcome: it started to redress the balance. When we consider sustainability as a whole, we see that CHP has a key part to play. We are beginning to use the term ''intelligent energy'', and that perfectly embodies the intelligent energy that will deliver on the sustainability targets that we all seek to achieve.

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Again, intentions have been expressed, but there is not necessarily explicit provision made for them in the Bill. I shall not pursue that point particularly strongly, but I should like to make another one. The Government are setting targets for using CHP on their own estate. I support that wholeheartedly, but given the Government's record on delivering sustainability on their estate, I fear that those targets may never be met. The Select Committee on Environmental Audit, of which I and the hon. Members for Bury, North and for Bexhill and Battle are members, has to reopen its investigation into sustainable timber, because the Home Office, yet again, is using timber from a non-sustainable source. For heaven's sake, it is being used on a fence that will be thrown away after six months, which is even more disgraceful. I understand that the massive new Home Office building has no plans for CHP. The Government certainly appear unable to deliver—Department by Department—on the sustainability objectives that they claim to have. The Home Office is an example of that.

If we support the new clause, I hope that the Minister will comment on whether the desired result is deliverable by the Government as they currently operate.

The Chairman: I appreciate that these are issues of great interest and considerable matters for debate, but the Committee has only until 11.25 am for further consideration of the Bill.

Mr. Robathan: On a point of order, Mr. Illsley. I just want to confirm with you that we can return to this issue at a later date.

The Chairman: Of course.

Mr. Timms: I shall be brief. I accept what has been said about the importance of the contribution that CHP will make to our sustainability objectives. Equally, I recognise the difficult circumstances that the CHP industry faces. However, I do not agree with the proposal in clause 3(3) and (4) to define CHP as a renewable energy source. Clearly, that would be a bit of a fiction and would not be right. The Renewable Power Association wrote to the Committee to make the point that

    ''the Renewables Obligation would be completely undermined, and all further deployment of renewables would cease''.

The other element in clause 3 is interesting. It relates to whether CHP should count towards the calculation of how much renewable electricity each supplier must supply. We have said that we will not make such a change without consulting on it, but we are willing to consider proposals for an appropriate means of promoting CHP in line with our commitments in the energy White Paper. There may be more to be said about that in due course.

I welcome the new clause to which my hon. Friend the Member for Southampton, Test (Dr. Whitehead) spoke. I accept that its impact will be limited, but it is potentially significant. As he said, it nails the Government's colours to the mast. I hope that the Committee will agree on that way forward.

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Question put, That the clause stand part of the Bill:—

The Committee divided: Ayes 3, Noes 5.

Division No. 3]

Barker, Gregory Doughty, Sue
Robathan, Mr. Andrew

Chaytor, Mr. David Edwards, Mr. Huw Timms, Mr. Stephen
White, Brian Whitehead, Dr. Alan

Question accordingly negatived.

Clause 3 disagreed to.

New clause 11

Chp targets

    '(1) Before the end of 2003, the Secretary of State must make a statement—

    (a) specifying one or more CHP targets; and

    (b) specifying the period that each CHP target is for.

    (2) At any time after making the statement mentioned in subsection (1), the Secretary of State may make a further statement doing either or both of the following—

    (a) specifying as mentioned in that subsection;

    (b) revoking a CHP target contained in an earlier statement under this section.

    (3) A CHP target is the percentage of the amount of electricity for government use in the period the target is for that the Secretary of State considers will be capable, at a reasonable cost to the government, of being supplied from CHP electricity.

    (4) For the purposes of this section—

    ''amount of electricity for government use in the period the target is for'' means the amount of electricity that the Secretary of State estimates that the government will use in that period;

    ''CHP electricity'' means electricity that—

    (a) is generated by a generating station which is operated for the purposes of producing heat, or a cooling effect, in association with electricity; and

    (b) satisfies any other requirements specified in an order made by the Secretary of State.

    (5) The Secretary of State may by order—

    (a) specify the departments and other bodies which (taken together) are to constitute ''the government'' for the purposes of this section;

    (b) provide for the exclusion from any estimation of the amount of electricity that the government will use in a period of—

    (i) the use of electricity for purposes specified in the order or in circumstances so specified;

    (ii) the use of electricity by any part of the government specified in the order.

    (6) One of the periods specified under subsection (1)(b) must—

    (a) begin with 1 January 2010; and

    (b) end with 31st December 2010.

    (7) The Secretary of State must lay any statement made under this section before Parliament.

    (8) Any power to make an order under this section is exercisable by statutory instrument which shall be subject to annulment in pursuance of a resolution of either House of Parliament.

    (9) No proceedings may be brought to enforce any CHP target contained in a statement made under this section or otherwise to review any act done, or any failure to act, in relation to any such CHP target.'.—[Brian White.]

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Brought up, read the First and Second time, and added to the Bill.

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