| Previous Section | Index | Home Page |
Norman Baker (Lewes) (LD): I acknowledge that the Bill is a better measure than some of us might have dared to hope. That is partly because it was well scrutinised in Committee by members of all parties, including Labour Back-Bench Members, such as the hon. Member for Milton Keynes, North-East (Brian White). In addition, the Government have listened to several points, and some Government amendments reflect our discussions in Committee. Those of us who are ready to criticise the Government regularly for failing to listen should give credit when there is evidence that they have listened. That is not to say that the Government amendments are perfect, that everything will be hunky dory or that energy efficiency, combined heat and power and renewables will take off like a jet liner, but it is to say that the Minister and his colleagues are willing to understand the arguments. I want to put that on the record.
Government new clause 4 on microgeneration is welcome. Although it does not go as far as some of us would like, it is a step in the right direction. I am worried that we are not maximising opportunities for microgeneration. For example, we have not yet found a method of ensuring that the million meters that are replaced each year are two-way meters so that net metering is maximised. The Minister knows that British Gas has mothballed micro CHP design because it cannot envisage a market for the project. There are problems with microgeneration but we are making some progress.
We have not made sufficient progress on energy efficiency. Hon. Members of all parties are disappointed by the downgrading of targets. The Minister was prepared to endorse in Committee the reduction in expected energy efficiency savings from the domestic sector. When he was challenged, he said that the industrial sector was run rather better and that the Government did not worry too much about the matter. That response was complacent and inappropriate because his point should be perceived as an extra gain rather than a substitute. I fear that he is getting into the position of identifying what is happening in the market and subsequently setting a target to reflect reality rather than setting a target that requires a change of policy. That is a fundamental mistake when it comes to something as powerful and important as energy efficiency. After all, there is a drastic need to reduce carbon emissions in this country as well as globally.
13 Jul 2004 : Column 1298
The 20 per cent. target for carbon emissions to which the Government are adhering is very challenging, and I regret that we do not appear to be able to meet it. The Minister will be aware that, in the six years since his Government came to power, we have seen a net reduction in carbon emissions of only 0.2 per cent., so it is difficult to imagine that we can achieve 20 per cent. from such a low base. One way for the Minister to get there, if he tries hard, is to use energy efficiency to its maximum capacity. To do that, we need to set challenging targets.
2.30 pm
Energy efficiency is the best of the options. It is clearly better than fossil fuel burning. It is also better than nuclear power, which the hon. Member for Salisbury (Mr. Key) promotes so assiduously. Nuclear power has a number of downsides, which we might discuss later. Energy efficiency is even better than renewable generation, because that, too, has downsides, as Conservative Members in particular are keen to point out whenever the opportunity presents itself. Energy efficiency and conservation seem to offer a wonderful solution, because they reduce the amount of energy consumed. The Minister ought to be championing those causes, but I do not think that he is.
I am disappointed that the target has been downgraded, and if the House votes today on any of the amendments that seek to reinstate a higher one, my colleagues and I will be happy to support them. I would say to the hon. Member for Milton Keynes, North-East that we would do that on the basis of sensible policy rather than on the basis of point scoring. He would acknowledge that that is where we are coming from, at least on this issue. I would like to put it on the record, by the way, that I have signed his new clause and the one tabled by the Conservatives, both of which point in the same direction. We are happy to secure energy efficiency gains, wherever they come from, and we are prepared to have some very odd bedfellows in order to achieve the target that we want.
New clause 19 appears, mistakenly, in the amendment paper to have been tabled by the hon. Member for Angus (Mr. Weir). It was in fact tabled only by my hon. Friend the Member for Hazel Grove (Mr. Stunell) and me, although I am delighted that the hon. Gentleman has joined us. I do not really mind whose name the new clause is in, provided that the Government accept it. It is our proposal for a renewable heat obligation, which is a serious matter. The Minister will know that energy for heat makes up approximately one third of the UK's demand for energy. The Government recognise the contribution of renewable heating systems to the UK's climate change programme but having recognised it, they have not introduced a dedicated policy to support the low-cost, proven carbon abatement option. That shows a gap in their energy strategy.
Perhaps the Minister will have recognised by now that we are collectively trying to turn the Bill—which is actually a nuclear bail-out Bill with some wind energy tacked on—into a proper, sustainable, comprehensive energy Bill. We have made some progress on that, and new clause 19 would go further. The Minister will be aware that the case for extending the concept of the renewable obligation to include renewable heat and
13 Jul 2004 : Column 1299
creating similar incentives for industry to those operating in the electricity industry was put forward by the Royal Commission on Environmental Pollution, in its May 2004 report on biomass as a renewable energy source. Page 39 of that report states:
"It has become clear to us that the most obvious gap in the current support schemes is the lack of any mechanism for supporting the generation of renewable heat energy comparable, for example, to the renewable obligation scheme for renewable electricity. We recommend that the Government introduce such a support mechanism."
The new clause gives voice to the commission's recommendation, and I hope that the Government will therefore be minded to support it, or at least to tell us how they intend to take forward that proposition.
It is not enough to allow the market to fill the gap. There is a proper role for markets. Indeed, these days, there is considerable consensus across all three parties—or perhaps all four or five—on the role of the market in energy. That debate, which was quite lively 10 or 15 years ago, has largely dissipated. However, there is an issue over the extent to which Government policy should drive markets or set down the railway lines along which they travel. There was some discussion about that in Committee between the hon. Members for Southampton, Test (Dr. Whitehead) and for Milton Keynes, North-East, myself and others.
If the Minister wants renewable heat to play a significant role in the Government's energy policy, which I suspect he does, he will have to do rather more than he has done so far, because it is not happening in any meaningful way. The Government need to intervene, at least to set the framework in which things can happen. In regard to the operation of CHP plant, the year after the new electricity trading arrangements—NETA—were introduced, CHP output fell by 15 per cent., and 2002 saw the first fall in CHP capacity since the electricity sector was privatised. Indeed, many people believe that NETA continues adversely to affect the operation of CHP plant, and little has been done to overcome that. That is a serious issue, and I hope that the Government will address it.
The Minister referred earlier to Ofgem's duties and responsibilities—they are two different things. He picked up a point made by the hon. Member for Milton Keynes, North-East about what the duties should be, and whether they should be put into legislation. I concur with the view that something set down in legislation does not carry the same weight as guidance, speeches by Ministers or comments on television and radio programmes. We need something about this issue in the legislation. If some provisions are included in the legislation and others are not, it will be natural for Ofgem, or any regulator, to interpret those two kinds of provisions in different ways.
In the electricity legislation, there is a duty on Ofgem to look after consumers. Indeed, in its whole history, Ofgem has operated in the way the legislation established it to do. I am not criticising that in any way. Ofgem was established to liberalise markets and to drive down the price of electricity. That is what it was set up to do and, by and large, that is what it has done. While those outcomes are not undesirable, however, it has never had a primary duty to act in a sustainable way.
13 Jul 2004 : Column 1300
There has been so much criticism of Ofgem from so many quarters for failing to act in a sustainable way that it is now, belatedly, identifying ways of doing so. It has moved in that regard, and I do not wish to pretend that it has not. However, unless the legislation contains a primary duty to take sustainability into account that is of equal weight to Ofgem's requirement to act in the interests of consumers, it will not give the same weight to that duty. I believe that hon. Members would like it to accept such a primary duty and, frankly, it should be required of it if we are to have an energy policy based on sustainable outcomes that optimises energy efficiency and seeks to reduce consumption in a sustainable way, and to drive forms of energy that are less polluting and environmentally damaging than those on which we currently rely for the majority of our energy needs. Will the Minister think again about how we can get Ofgem not only to recognise this issue but to put it on the same level as some of the other activities with which it has been charged by existing Acts of Parliament?
I welcome the fact that the Government have listened to some of the points raised in Committee. I believe that they did so partly because those points were well put, and also—I hope that I can say this without sounding patronising—because Labour MPs were able to articulate sensible policy points without being disloyal to their Government. I think that that sharpened minds at the Department of Trade and Industry. We have a better Bill as a consequence, and better amendments before us today, but there are still gaps. More work is needed on energy efficiency, and I hope that the Minister will return to the Ofgem issue in some form.
| Next Section | Index | Home Page |