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Sir Robert Smith (West Aberdeenshire and Kincardine) (LD): The hon. Member for Morley and Rothwell (Mr. Challen) will be very popular in Aberdeen city. He recognised that it is an energy city, and not just an oil and gas city. Aberdeen has been trying to rebrand itself and move away from the traditional industries that grew up there because of the resources in the North sea. As the hon. Gentleman said, the aim is to get the skills available in the energy industry transferred into the new and growing renewables sector, and to build a manufacturing base that will support that sector.
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I want to speak in support of new clause 19. I shall be brief: the final group of amendments to be considered today also significantly affects Scotland, and I want to make sure that there is time to discuss those proposals.

In his introductory remarks, the Minister mentioned the Government's clear skies initiative. I wrote to the Secretary of State to pass on concerns expressed by a constituent of mine about the problems of accreditation for that scheme. That letter was passed to the Minister by the Secretary of State, so I hope that he will make sure that the problems are dealt with.

New clause 19 is important to my constituency. I represent a large, rural area, in which few communities are on the gas main. The heating alternatives for domestic dwellings and businesses rely on carbon-emitting fuels such as oil, coal and liquefied petroleum gas. The Government should welcome any move to replace those direct heat sources with renewable sources as a way to achieve their Kyoto commitments, and to reduce this country's carbon emissions.

In my constituency, one possible renewable source of heat comes from the rural community—the farming industry or, as the hon. Member for Angus (Mr. Weir) said, the forestry industry. Managed forests lock up carbon during the growing cycle, which is then used as fuel during the harvesting cycle. The process then repeats itself over the generations. However, many of our forests are reaching a point of maturity where they desperately need to be thinned. The problem is that there is no economic outlet for the wood taken during thinning. If we do not thin the forests now, we will not be thanked by later generations, as the forests that we leave to them for harvesting will be of much lower quality. Any measure that underpins the market for thinnings will help to boost the forestry industry. Obviously, those thinnings could be an ideal fuel for a biomass plant providing heating for a district or for industry.

Aberdeenshire council has been working hard to promote in the community the use of biomass as a renewable fuel and has come up against the argument from potential users that a renewable obligation might well be the tipping point that would make them take up that energy. It is important for the Minister to say how he plans to take forward what is in new clause 19, which seems to be the best way to encourage that form of substitution of carbon and advance that policy. District heating schemes are being considered for communities. As other hon. Members have said, the technology exists to use the fuel; it is not an unproven technology. It is simply a question of stacking up the economics properly. A level playing field needs to be created with other forms of renewable energy. If the fuel is used to generate electricity, it gets some element of renewable recognition, but where it is used just to produce heat there is no recognition of the valuable contribution that it can make to reducing our carbon dioxide emissions.

Mr. Timms: We have had a good debate on this series of amendments and new clauses. I welcome the support expressed for new clause 4 by a number of hon. Members, including my predecessor, my right hon. Friend the Member for Cunninghame, North (Mr. Wilson), who made an important point about addressing planning issues for microgeneration within
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the strategy. He will know that the updated renewables planning policy statement, PPS22, is due to be published by my right hon. Friend the Deputy Prime Minister shortly, but microgeneration will raise some new planning issues that we will need to consider in the context of that work.

Mr. Wilson: I am grateful for my hon. Friend's comments. Does he think that it will be possible within the time scale to incorporate the microgeneration issues into the report from the ODPM? I am slightly alarmed at the thought that it will take 18 months to get around to those issues. Surely if there is a sense of national urgency about all this, we could make rapid progress on microgeneration planning issues as well as on those that are more familiar.

Mr. Timms: I cannot give my right hon. Friend an assurance that those issues will be fully addressed in the imminent document from the Deputy Prime Minister, but he is right to say that we will need to address them in the context of the strategy. If we can make progress more quickly on that part of the work, we will certainly do so. I take on board his point about the urgency of making headway.

New clauses 2, 3 and 6 relate to energy efficiency. I recognise that there has been some disappointment that the Government's published aim of delivering annual savings of 4.2 million tonnes of carbon from households by 2010 is at the low end of what was indicated in the White Paper. I use that form of words because it has been said that the target has been reduced, and that is not the case. There was no target in the White Paper, but an indication that we thought that around 5 million tonnes—that was the expression used—of carbon could be saved from households. As I said in Committee, in my book "around five" means somewhere between four and six and the figure has come out at 4.2. The overall saving from energy efficiency was set out in the White Paper as 10 million tonnes—5 million from households and 5 million from industry. We are confident that we can deliver 12 million tonnes, with a substantially greater contribution from industry and 4.2 million tonnes from households. I have had the opportunity to meet the Association for the Conservation of Energy to discuss the issues, as I said in Committee that I would.

I cannot recognise the point that my hon. Friend the Member for Milton Keynes, North-East (Brian White) made about the crisis of confidence in the industry. We propose a doubling of the market for domestic insulation—cavity wall insulation. That is a huge boost to the industry; it can plan with great confidence for a big expansion. I accept that it is not quite such an enormous expansion as might once have been thought, but it is big, and the industry can be confident about its prospects.

We will review our energy efficiency aims in the household sector both, as my hon. Friend the Member for Morley and Rothwell (Mr. Challen) said, through the review of the climate change programme commencing later this year and through the 2007 review of the aim that was announced in the action plan. We will also look to maximise the cost-effective contribution from energy efficiency. I agree with my
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hon. Friend the Member for Milton Keynes, North-East who expressed the hope that we can go further than we have committed ourselves to doing at this stage. However, until those reviews take place, it would not be right to change the present aims.

3.45 pm

Miss Anne McIntosh (Vale of York) (Con): Does the Minister accept that the residential efficiency aims were changed not by his Department but by the Department for Environment, Food and Rural Affairs in the energy efficiency implementation plan? I do not know whether the two Departments have some history on that issue that the Minister might like to share with us. When does he intend to introduce the statutory requirement in the commercial sector?

Mr. Timms: The hon. Lady is right to say that DEFRA takes the lead on energy efficiency. However, as I am sure she has noticed, the two Departments work closely, and there is no difference between us on the issue. I do not agree that the figure of 4.2 tonnes is a change from "around 5 tonnes". It is simply a clarification of what the White Paper said.

The hon. Member for Lewes (Norman Baker) made a point about the importance of consumer behaviour, and I agree. We are working through the Energy Saving Trust to address the question of consumer behaviour. With marketing and communication specialists, we are considering how to take forward a new climate communications programme to draw to people's attention how significant a contribution they can make to achieving the objectives that are important to all of us. Our aims are challenging and will require concerted effort from all involved, and if we can increase them at a later stage, we will use our planned reviews to do so.

I wish to make the point to the hon. Member for Lewes that the Government remain firmly committed to our domestic target of a 20 per cent. reduction in carbon dioxide emissions by 2010. He suggested that that was not the case, but it certainly is. Clause 82 already imposes a requirement to report on "things done" for the purpose of achieving the energy efficiency aims designated under the Sustainable Energy Act 2003. That removes the need to have a separate report, as the amendment suggests.

New clause 19 addresses the issue of a renewable heat obligation, and we have had some interesting discussion of that point. It is an interesting idea and an important issue that we also discussed in Committee. Introducing such a measure, even in the permissive way in which new clause 19 is helpfully drafted, would be rash, given the little time that we have had to give it the serious consideration it deserves. We first need to do some serious analytical work, and we will. I shall meet representatives of several interested parties, including Friends of the Earth, which has rightly been mentioned, to hear how their ideas for renewable heat are evolving.

An obligation approach, as proposed by the hon. Member for Hazel Grove (Mr. Stunell)—I am pleased to see that he is in his place—may prove to be the best way forward. The Royal Commission on Environmental Pollution has referred to that approach, but other options need to be examined, too. We would need to examine the costs of a support scheme to the
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consumer and the impact on other policies to tackle fuel poverty. If we excluded the domestic sector from such a scheme, we would need to consider the administrative costs and whether they would be justified for the limited market that would be left. We would need to consider whether such a scheme would represent good value in terms of the carbon savings; the implications for the heating fuel supply industry; and whether the obligation should be placed on those who sell heat or those who supply fossil fuels for heating. All those issues can be resolved.

The question of renewable heat was also raised last month by the European Commission in its communication to the Council and the European Parliament on the share of renewable energy in the EU. The Commission noted that there is no legislation in place at European level to address renewable heat production at present, and that renewable energy in heating has grown slowly over the last seven years. The Commission has yet to come up with proposals on how that issue can best be tackled.

I very much welcome the fact that we have held discussions and the wide support that has been expressed in the debate, and I am grateful to the hon. Gentleman for airing the matter again today.

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