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Mr. Stunell: The Minister is expert in giving us calm, warming words on these matters but what is he actually planning to do? He has set out a list of questions that need to be answered, but what does he intend to do and when?
Mr. Timms: I shall attempt to calm and reassure the hon. Gentleman. We shall take forward the analytical work that is needed to address all the questions that I have raised. As I am sure he agrees, those questions are serious, and we need answers before we can make headway. In addition, I shall meet those, such as Friends of the Earth and others, who have drawn particular attention to the importance of the matter. I agree that it is important and that we need to make headway, but we also need to do more analytical work before we can determine precisely the right way forward, or indeed the time scale for making progress. I hope that the hon. Gentleman feels reassured on that point—as on many others—by my answer.
Sir Robert Smith: Will the Minister give way?
Mr. Timms: I really need to make some headway, given the points that have been made, rightly, about other matters on our agenda this afternoon.
On new clauses 20 and 21, I realise the importance of addressing the current problems for combined heat and power, but we need to do so in a way that does not undermine other objectives. As we have said both in the House and in Committee, we must not undermine what we all want to achieve on renewables, and that would be the problem under the new clauses. It is not just I who says so: as I mentioned in Committee, I have received representations from the Renewable Power Association, the British Wind Energy Association and the Association of Electricity Producers expressing their concern. Centrica plans to invest £750 million in renewables projects and sees the proposals in the new clauses as
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"undermining the ROC market which is still in its infancy".
I appreciate that new clause 21 would attempt to make up for the loss on the renewables side, but it would introduce a range of uncertainties that do not exist at present, and that would be unhelpful. There is a real danger of moving the goalposts, thereby undermining the confidence that is so essential for delivering what we want across the range, especially on renewables.
Mr. Laurence Robertson: As I acknowledged earlier, the Minister makes a good point when he suggests that the new clauses are somewhat less than perfect, but will he make some proposals about how we can encourage the CHP industry? Although it is not carbon-free, it is certainly more efficient than many other traditional forms of electricity generation.
Mr. Timms: I agree. Several of my hon. Friends have made the same points about the importance of CHP and its benefits, and the significantly greater potential of its contribution. We set the ambitious target of more than doubling the amount of installed CHP capacity by 2010. Currently, it looks as though we are heading for 8.5 GW capacity rather than the 10 GW that was our target, so I agree that we need to address the shortfall. However, we need to find ways of doing so that do not undermine other objectives so I am especially grateful to my hon. Friend the Member for Southampton, Test (Dr. Whitehead) for his interesting suggestion in Committee that a possible means of providing further support for CHP would be a mechanism that he described as being like a fixed-rate mortgage, whereby the Government would guarantee a certain level of spark spread for CHP. Spark spread, as the House will know, is the difference between the price paid for gas and the price obtained for electricity generated.
Yesterday, my hon. Friend my noble Friend Lord Whitty and I attended a meeting with representatives of the Combined Heat and Power Association and others from the industry, and we had a good discussion of my hon. Friend's idea.Of course, at this stage, we have not been able to undertake any analysis of the practical and cost implications, but those at yesterday's meeting, including the association, agreed that that very interesting idea might give us a way to increase the attractiveness of investing in CHP without putting at risk other energy policy objectives. So we will work with the industry to consider whether we could move in the direction suggested by my hon. Friend. We also need to work with the industry to consider other options in case that one does not work out in the way that is hoped, so that we can produce proposals in support of CHP that are demonstrated to be cost effective and that do not undermine other policy objectives. I hope that that dialogue will be fruitful. My hon. Friend made an appropriate point about the importance of our success.
My hon. Friend the Member for Brighton, Kemptown (Dr. Turner) spoke to amendment No. 20, and I am grateful to him for making a number of points, including his acknowledgement of some technical difficulties with the drafting. By deleting the current principal objective for Ofgem and putting in place a number of similarly weighted duties, the amendment would in practice make it very difficult for the regulator to work out how to prioritise its work and balance its duties. The current set of duties strikes a careful balance
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between a number of different objectives and was arrived at after much consideration and consultation. I certainly would not want to change those duties without, as a minimum, doing a similar amount of work and ensuring that there was a wide understanding and acceptance of the change that was being made. The current principal objective of
"protecting the interests of consumers"
is well understood and welcomed by all stakeholders, and we should not delete it.
In amendment No. 20, there is a particular difficulty with the phrase
"to ensure that there is no detriment to the promotion of".
The strength and inflexibility of that phrase could cause some difficulty in making our energy markets work for the good of consumers and UK competitiveness. However, I hear what hon. Members, including a number of my hon. Friends, have said about the importance of sustainable development to Ofgem's work. Of course, guidance is already in place. I welcome the fact that, for example, my hon. Friend recognises that Ofgem is now seen to deliver effectively on those priorities, but I have noted the strength of feeling that my hon. Friends have expressed on that point.
On the basis of the explanation and assurances that I have given, I hope that the House will feel able to agree to new clause 4 and the associated Government amendments and that hon. Members will not press to a vote the other amendments and new clauses in this group.
Question put and agreed to.
Clause read a Second time, and added to the Bill.
New Clause 5
'(1) The Secretary of State must, in 2005 and in every subsequent calendar year—
(a) publish a report dealing, as regards both the short term and the long term, with the availability of electricity and gas for meeting the reasonable demands of consumers in Great Britain; and
(b) lay that report before Parliament.
(2) The report must include, in particular, overall assessments, as regards both the short term and the long term, of each of the following—
(a) generating capacity in Great Britain and its offshore waters so far as it will be utilised for generating electricity for introduction into transmission systems in Great Britain;
(b) the availability of capacity in those systems and in distribution systems in Great Britain for transmitting and distributing electricity for supply to consumers in Great Britain;
(c) the availability of capacity in infrastructure in Great Britain for use in connection with the introduction of gas into licensed pipe-line systems in Great Britain; and
(d) the availability of capacity in those systems for conveying gas to consumers in Great Britain.
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(3) The report must be prepared jointly by the Secretary of State and GEMA.
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