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Dr. Alan Whitehead (Southampton, Test) (Lab): The hon. Gentleman may wish to visit Southampton and see the geothermal energy project at work.
Mr. Key: I am delighted to hear that that is happening in Southampton, which is just down the road from Salisbury. Such technology, however, is having a minimal impact, and not many people know about it.
Unlike, for example, direct solar panels on roofs, ground source energy is already there. As we have seen in Canada, heat can be extracted from soil whose temperature is below freezing. It is a remarkable technology, and we should take it more seriously. Long-term investment is required, but it is certainly a possibility. We need this enabling legislation, which is supported in recent reports including one from the Royal Commission on Environmental Pollution. Page 39 of "Biomass as a Renewable Energy Source", published in May, states:
"It has become clear to us that the most obvious gap in current support schemes is the lack of any mechanism for supporting the generation of renewable heat energy, comparable for example to the Renewables Obligation scheme for renewable electricity. We recommend that the government introduce such a support mechanism."
The Department for Environment, Food and Rural Affairs commissioned a report from Ilex Energy Consulting in December 2003. That report, entitled "Policy Mechanisms to Support Biomass-Generated Heat", states:
"Ilex recommends that the government focus on the option that appears to be the most effective in terms of delivering significant quantities of renewable energy at least cost. In Ilex's view this would be some form of obligation mechanism with tradable certificates similar to the existing Renewables Obligation."
Those strike me as pretty good reasons for supporting new clause 19.
In the spirit of the national interest rather than party policy, I am prepared to support new clause 19, which I find interesting. Above all, however, I hope that the message sent during the closing stages of the Bill's progress will be that we must all get real, and stop sniping at each other about whether we are greener than the next man or woman. That is not really relevant. We need to get together, and conclude that of equal value in tackling the problems of global warming are nuclear energy and renewables of all kinds, including tidal movements. If we could make some progress, even at this late stage, it would be very welcome to our constituents.
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Dr. Desmond Turner (Brighton, Kemptown) (Lab): I thank my hon. Friend the Minister for accepting the principle of my amendment in Committee and incorporating the progress on deployment of renewable energy in his reports relating to the Sustainable Energy Act 2003.
There is no disagreement between the Government and me—and, probably, many other Members—on what we want done to encourage the use of renewable energy. We want to ensure that there is a stable, friendly environment in which investment in renewable energy can take place and that investors can feel confident that that environment will continue for some time. We are talking about long-term investments that carry high risks, apart from regulation. We want that to be absolutely clear.
It is one thing to have an environment that is suitable for investment in wind power, as we currently have, but if we are to achieve our renewable energy targets we desperately need to use other technologies, notably our marine technologies, the risks of whose initial deployment will be very much higher, and hence the challenges to investors will be very much higher as well.
The message that I receive from serious players in the energy market—not just people in sandals—is that investors regard Britain as a difficult market for investment in renewable energy. Their greatest concern is a political one, involving the regulator. That is probably very much coloured by the history of the regulator. I am glad to note that, since Ofgem's reconstitution last autumn, it has been an entirely different animal, behaving in an entirely different way. It has been taking serious note of the guidance issued by the Minister. A disjunction still exists between what the legislation states is required from the regulator, what the Government are asking the regulator to do and what the regulator currently does. That is fine, so long as the relationship between the Government and the regulator is good, and that they both agree and work to the same agenda. Sadly, such a relationship cannot be agreed for all eternity. In my view, it is common sense to bring the statutory duties of the regulator—clause 81 couples the regulator with the Secretary of State, so the regulator would not act on its own—into line with future objectives.
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I freely admit that clause 81's drafting goes too far, because it makes renewable energy the sole primary purpose. The regulator responded to clause 81 by saying, "Ah, if you are going to make that my prime duty, I will do nothing else and the market will pay", despite the fact that clause 81 states that the change should occur with due regard to other factors such as competition, consumer protection and security of supply, which are also part of the regulator's duties. The primary duties stated on the face of the Bill are important and the regulator cannot get away from them. Amendment No. 20 attempts to get round that problem by maintaining the current primary duty of the regulator and associating it with security of supply and the protection of sustainable energy, which it makes primary duties too.
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The DTI helpfully provided me with its technical analysis of my amendment, which it does not agree with, although one would not expect it to. It points out that the amendment relegates consumer protection from being the principal duty to being one of a number of duties, but I think that that is sensible. What do we mean by consumer protection? We are all consumers and, as a consumer, I want not only the cheapest possible unit of electricity, but to be sure that the lights will not go out, so I am concerned about the security of supply, which is also a matter of consumer protection. I also want protection from climate change, which is a long-term consideration and the ultimate in consumer protection.
Brian White: Does my hon. Friend know that the Communications Act 2003 recognises the difference between a consumer and a citizen and that the Water Act 2003 recognises the role of sustainable development as distinct from consumer protection?
Dr. Turner: I was not aware of that detail, but I am grateful to my hon. Friend for pointing it out, because it makes sense and provides a precedent for amendment No. 20.
I am happy for clause 81, in its current form, to go—I will not oppose the Government amendment to delete it—but I hope that the Government will think seriously about the principles behind amendment No. 20. As it happens, DTI officials also pointed out that having a number of similarly weighted duties would make it difficult for the regulator to balance priorities, but the Government and the regulator must balance priorities anyway—if they did not do so, we would return to the situation under the previous regulator, when market prices dominated everything to the detriment of renewable energy and combined heat and power. The balancing act is inevitable and we cannot get away from it. We must get the semantics right and the Electricity Act 1989 must be amended.
Officials also pointed out a technical drafting flaw in my amendment, and they are right, which is a slight problem, so I will not take up the invitation of the hon. Member for Tewkesbury (Mr. Robertson) to set off a rebellion. However, I know that my hon. Friend the Minister agrees with me on the intentions behind regulation and I earnestly hope that he will undertake to re-examine the regulator's current statutory duties and make it clear to market investors that they can invest with confidence in the regulator. Investors will have enough problems in financing the development of new technologies to a commercial level and in moving the technology into the harsh marine environment, so let us make sure that neither Government policy nor the regulator's interpretation of Government policy is ever allowed to form a barrier to them.
Mr. Richard Page (South-West Hertfordshire) (Con):
I shall start by taking up the point made by the hon. Member for Banff and Buchan (Mr. Salmond), who spoke about the time available on Report. The 11 Government new clauses, plus two Government amendments that are long enough to be clauses, are unacceptable and should be considered in Committee. This important Bill has been through a gestation process in a Department, a Green Paper, the other place and here, so the amount of material in front of us today is
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not right. However, given the Government's power and huge majority, I shall get on with the few points that I intended to make in the first place and not delay the House long, otherwise the fears of the hon. Gentleman will be realised.
I welcome new clause 4, which clarifies the purpose of a microgeneration strategy and provides a clear definition. I want to discuss the removal of the duty on the Secretary of State to impose targets. In a letter to members of the Committee on 28 June, the Minister for Energy, E-Commerce and Postal Services stated that the removal of targets constituted
"the only fundamental difference from the original clause"—
clause 120. I must delicately point out that one or two more fundamental changes have also occurred. Why has the time scale for the publication of a strategy been extended to 18 months? Surely the Government have had long enough—I mentioned the process earlier—to implement the strategy. Why can the strategy not be published in one year rather than 18 months? It is up to the Government to explain why a longer period is needed.
The definition of "micro-generation" in clause 129 applied to the generation of energy by means of equipment installed in or for use by a single unit or a small number of units of office or residential accommodation. To judge by the comments already made today, it seems that such a provision is basically welcomed and encouraged. The new definition in new clause 4 relies on the definition of specific sources or technologies of a set capacity, as set out in subsections (7) and (8).
Such an approach is much wider, and it might apply, or come to apply, to units of office or residential accommodation that are well above the size envisaged in the original clause. Is that a deliberate or accidental move? The Government have changed so much of the Bill that it would not surprise me if they wanted to make further changes. Either way, is the consequence that might flow from that approach desirable?
My hon. Friend the Member for Tewkesbury (Mr. Robertson) and the hon. Member for Milton Keynes, North-East (Brian White) touched on targets. All of us in Committee, excluding, of course, the Minister and his loyal Parliamentary Private Secretary—and perhaps the hon. Member for Milton Keynes, North-East, who might want to be a PPS one day—felt that we should have targets and milestones through which we can measure how we are getting on. I understand the Government's worry. The House will remember that, when they took office, they produced targets as if they were going out of style. There were targets for this, that and the other; indeed, every single Department had them. Most were missed, leading to subsequent embarrassment, so I can understand why the Government are running away from the idea of ever having a target again.
I shall not transgress into the territory of the short debate that will take place on new clause 5 and security of supply, but if we do not get that issue right, we could face blackouts or brownouts. My hon. Friend the Member for Salisbury (Mr. Key) said that we have got to get together and look at all possible sources of energy,
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so that we can supply the needs of this nation and he is absolutely right. I hesitate to say that I am as enthusiastic a supporter of nuclear energy as he is—I am more of a political coward than him. He is bigger than me, so he can batter his way through; I might get bounced around a little. That said, I am with him, in that this Government are displaying enormous cowardice by not coming forward with a nuclear strategy.
As night follows day, I cannot see how this country can get by and meet its energy demands without having a nuclear strategy at some point. I wish that we did not need one, but the reality is that we do. If someone asked me whether I would rather have a power station belching out smoke or a nuclear power station, I know which I would choose and I know which is more detrimental to our health. Some of the environmental groups that have been mentioned are being less than honest in their proposals. They simply are not recognising the realities.
I want to finish by touching on combined heat and power plants, which have already been mentioned. As this House learned when the Utilities Act 2000 went through, for some reason, the exports of electricity from CHP plants were included in the renewables obligation structure. I do not know whether that was deliberate or an oversight, but it has had a hugely detrimental effect on CHP plants. In effect, one low-carbon technology—CHP—is facing an additional cost burden to support another low-carbon technology, which is predominantly wind power. As we all know, an amendment was introduced in the House of Lords that the Minister then wiped out with a cavalier flick of his hand in Committee. As a result, we are now without any form of support for CHP.
The CHP industry has advised the Government that, in the past couple of years, we have fallen some 2,000 MWe short of the target of 10,000 MWe. The Government do not want targets, and if such shortfalls are going to happen in other fields of energy generation, I can understand why, because they would be hugely embarrassing. We are talking about a 20 per cent. drop compared with the original figure. That decline has led to an extremely difficult period for the industry. Even the DTI's own statistics show that CHP capacity and output have fallen.
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I shall not go through all the reasons why CHP is a good thing, because other Members have done so. The Government's own drive to install CHP has stalled, and action is needed now to rebuild confidence and to get things going again. I welcome new clause 4 and the consequences flowing from it, but I am sorry to learn that the Minister is running away from targets. We need targets to know where we are and to measure what we have to do if we do not meet them. When the right hon. Member for Cunninghame, North (Mr. Wilson) was a Minister, he was an enthusiastic advocate of a target of 10 per cent. renewables by 2010, but he always fell a little short in terms of how that would be achieved. We have taken a small step—and I mean a small one—towards achieving that target, but I am desperately worried that there will be a shortfall. I do not want the people of this country to experience blackouts or to run short of
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power. It is up to the Government to ensure that they have targets, so that we know where we are, where we are going and what we need to put right.
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