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European Energy Policy

11 am

Mark Lazarowicz (Edinburgh, North and Leith) (Lab/Co-op): I begin by declaring as an interest the support that I have received from the Sustainable Energy Partnership in connection with the development of my private Member's Bill, about which I shall say something later.

I am glad that my name came out of the hat to allow me to hold this debate today. I want to speak on this subject because of a number of key decisions and choices that will have to be made at European level over the next few weeks and months about renewable energy and energy efficiency. First, there will no doubt be a discussion at the Energy Council meeting on 1 December about the proposed directive on energy end-use efficiency and energy services. I presume that my hon. Friend the Minister for Energy will lead for the UK and will chair the Council, in his role during the UK presidency. Secondly, we are at a key stage in the consultation on the European Union's Green Paper on energy efficiency.

Finally, I thought that it would be useful to say something about the recent meeting in Edinburgh of parliamentarians from across Europe—both from member states and from the European Parliament. They met under the auspices of the European Forum for Renewable Energy Sources. My hon. Friend the Member for Morley and Rothwell (Colin Challen) and I were among the Members of Parliament who attended that meeting. There were a number of points that I thought it would be useful to bring from that meeting to this debate. There are also one or two other matters that have a bearing on the subject that I hope to raise if there is time.

The background to the debate is that Europe is strongly dependent on imported fossil fuels, and that dependency is increasing. The European Commission estimates that, by 2030, 90 per cent. of our oil and 80 per cent. of our gas will be imported from outside Europe, at increasingly high prices. There are immense opportunities in Europe for renewable energy and greater energy efficiency. Among other things, our geographical position means that we can utilise extensive wind and wave resources. That is particularly true of those of us in the north-west of Europe—particularly those who represent constituencies in the north of the United Kingdom.

Wave power has a particular advantage in that it can provide a relatively constant source of energy. However, the apparent disadvantage of wind power in that respect should not be over-emphasised. The more widespread throughout Europe wind power devices become, the more possible it is for wind power to provide a more constant source of energy at European level. To put it simply, if the wind stops blowing in one part of Europe, it is likely that it will start blowing elsewhere. If more wind power devices are installed at European level, and there are proper grid connections and interconnectors, some of the local peaks and troughs can be evened out. Europe also has the potential for big increases in biofuels and biomass power, and, like the rest of the world, we have the opportunity to draw on solar resources.
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We also have the potential to make big savings in energy use by increasing energy efficiency. The Commission's Green Paper suggests that Europe could save up to €60 billion a year by tapping into our existing energy efficiency potential. Although European countries are relatively energy efficient compared with many other industrialised countries, it is worth bearing it in mind that Japan is already twice as energy efficient as the European Union. There are examples elsewhere in the world that can encourage us to do more. The European Union is falling short of its existing targets for renewables. It is appropriate, in light of today's debate, that yesterday the Minister for Climate Change and the Environment launched the second European climate change programme and accepted that more had to be done to ensure that we reach energy efficiency and other European targets.

For the sake of convenience, I shall refer simply to the draft directive as the energy services directive. A debate has been taking place among the institutions of the European Union—the Parliament, the Commission and member states in the Council—about whether there should be mandatory, measurable energy savings targets. The subject will be discussed at the Energy Council in a few weeks' time, and the hope is that the debate will lead to agreement between the various institutions on a suitable directive.

There is a strong case for mandatory, measurable energy efficiency targets. I am sure that the Minister for Energy has discovered since his appointment that much of the debate about energy and environmental policy seems to rotate around targets, whether national, European or international. The debate is between those who want as many compulsory targets as possible, and those who fear that the adoption of targets could be a substitution for policy rather than a means of achieving results.

I accept that targets are not the be all and end all of policy, and that there is no point in adopting targets just for the sake of it, but we should bear in mind that the adoption of targets in energy and environmental policy has been effective in driving policy nationally and internationally. The binding targets of Kyoto, and the targets adopted by national Governments such as our own, have ensured the political momentum to bring about the national policy changes required to reach them. In our own country, the apparent falling back from previous good progress on our Kyoto and domestic targets has caused some embarrassment and will create pressure for further policy changes to put us back on track. There is a strong case for mandatory targets as part of energy efficiency policy. It should also be borne in mind that many member states fail to reach non-binding target, for example, in the promotion of biofuels.

Setting mandatory targets for energy efficiency would not centralise policy in the hands of what the Eurosceptics would call Brussels bureaucrats but is, in fact, a necessary counterpart to giving member states an opportunity to choose how they will achieve energy efficiency. If we accept that Europe should not impose in detail the method by which each member state achieves the targets, the corollary surely must be that we at least set targets to which we contribute through the policies that we regard as appropriate in our own member state.
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Can the Minister tell us what progress is being made in reaching agreement on the energy services directive? What is the position on mandatory energy efficiency targets, and what position are the Government advancing on them? I also ask him to consider the case for mandatory targets. If we do not adopt such targets, what other measures has he in mind to achieve the objectives of the energy services directive?

Mr. Bernard Jenkin (North Essex) (Con): We are grateful to the hon. Gentleman for applying for this debate and I congratulate him on obtaining it. How does he think mandatory targets should be enforced, and what penalties should be used against members states that fail to meet those targets?

Mark Lazarowicz : Ultimately, as with any mandatory European provision, the offending state can be brought before the European Court of Justice and required to take measures to ensure implementation. If necessary, it can be penalised for not complying with those mandatory requirements. The normal result, as the hon. Gentleman is aware, is that members states eventually comply with mandatory requirements. It is important not so much to concentrate on what happens at the end of the day if member states do not comply with their requirements, but to ensure proper monitoring of their compliance with requirements. That is the area on which we should concentrate our minds.

Colin Challen (Morley and Rothwell) (Lab): Might not the proper enforcement of emissions trading schemes be a way of helping nations to achieve mandatory targets? If they did not achieve their targets, they would have to pay a financial penalty.

Mark Lazarowicz : That could well be one way of enforcing targets, and it emphasises that we are discussing not just one set of measures, but a whole portfolio of measures, all of which must be put into operation to allow us to reach European targets. Those are ambitious, but we all want to reach them.

On the energy services directive, a specific point has been drawn to my attention by the consumer organisation Energywatch. It has pointed out at a number of forums the advantage of smart meters both to consumers and for energy efficiency. They show clearly the amount of energy being consumed and thereby encourage consumers to use energy in the most efficient way. Plenty of research has been carried out, which I cannot go into today, on the savings that such meters can bring consumers and the energy savings that can be made. Energywatch pointed out that the current draft directive on energy services includes a provision to ensure that consumers are given information on their energy consumption regularly enough to allow it to influence their energy use. Such a provision will encourage smart metering and that, in itself, will be a worthwhile outcome of the directive when it finally goes through the European process.

The second debate taking place on European energy issues is on the Green Paper on energy efficiency, which was launched by the Commission just before the summer. It is an excellent document, which makes
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pointed observations on the opportunity for Europe if we make use of energy efficiency. In his introduction, the commissioner said that Europe could, relatively easily, save 20 per cent. of energy consumption by 2020. Half of that could be saved simply by member states effectively implementing current European measures on energy efficiency. Although making an additional 10 per cent. of energy savings is a challenging task, it is certainly by no means impossible. It is to be welcomed that the Commission recognises the importance of energy efficiency throughout the European Union.

I urge the Government to be proactive in support of the Commission's proposals. I would be interested to hear the Minister say how the Government intend to respond to the Green Paper, and how they will ensure that Departments, local government, businesses, trade unions and NGOs are involved in the debate. The Commission has rightly said that such a debate is essential to ensure that, if we adopt such a programme, it is effective and reaches what are undoubtedly ambitious but necessary targets. Given the time left to me, I shall say no more on that now, but I would be interested to hear the Minister's comments on how the debate on the Green Paper can be taken further.

I referred to the meeting that took place in Edinburgh a few weeks ago. I understand that other hon. Members may make reference to it later. I simply want to highlight a number of the points made at that meeting, and I would be interested to hear from the Minister an indication of the Government's position on the important matters discussed.

The meeting of parliamentarians pointed out that the fossil fuels on which we rely—oil, gas, coal—will all run out sooner or later. Uranium will also eventually run out. That emphasises the importance of adopting policies that promote renewable energy and energy efficiency. The conference pointed out that more than 300,000 people work in the renewable energy sector in the European Union. That industry has an annual turnover of more than €15 billion, so it is already big business in Europe. It is important that we take further the opportunity of developing that business, and to make sure that we in the UK get the maximum potential from it.

The parliamentarians in Edinburgh also called for a mandatory target of 25 per cent. renewable energy consumption by 2020 in the European Union. I would be interested to know the Minister's views on mandatory targets for renewable energy. I can see arguments for and against them, but if we are not to have mandatory targets, we certainly need a suggestion of how Europe can get together to ensure that we reach our full potential in the field of renewable energy.

The European parliamentarians also drew attention to the need to promote renewable heating and cooling in Europe. Renewable sources have an immense potential to provide for our needs for heating and, increasingly, for cooling. With climate change, there is a need for cooling in ever greater parts of Europe. I urge the Government to consider the advantages of a European directive to promote renewable heating and cooling. I know that before the Minister came to this Chamber today he was involved in responding on initiatives that the Government are taking in that field. Perhaps that is a point to which he can refer, as he is fresh from his earlier meetings.
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My final point relates to a particular constituency interest, but it has much wider implications for renewable energy policy, both in the UK and at European level. In my constituency are the headquarters of a company called Ocean Power Delivery Ltd. It is at the forefront of the development of wave power in the UK and Europe, and it recently won a contract to supply, in Portugal, what will form the heart of the world's first commercial wave energy farm. It has had considerable support from the Department of Trade and Industry in developing its technology.

I know that the company is very grateful for that support, but it is now waiting for a decision on support for the next stage in the development of its technology. The decision making has been fairly slow. That company, along with others involved in the sector, is still awaiting the announcement of a decision on how the marine deployment fund, which was announced by the Government last year, will be allocated.

I understand that decisions on the applications to a fund are currently delayed as a result of the European Commission's state aid approval process. It is certainly not a good example for European policy in practice if Europe adopts bold policies on renewable energy but individual companies find that there is a lengthy process for getting approval to take their technology projects forward.

I make that point because the fear is that if we in the UK do not take the opportunities to support the growing wave power technologies that are now being developed on a commercial basis, those technologies and the companies will move elsewhere. They will move to countries such as Portugal, which will get the benefit of technology that we have developed in the UK.

We must bear in mind what happened with wind power. Britain was at the forefront of technology in the 1970s, but we lost our opportunities, and countries such as Denmark developed multibillion-pound industries with many thousands of employees because they seized the opportunities that we did not. We must ensure that we do not make a similar mistake with wave power, where we have particular advantages because of our geographic situation.

I know that what we are doing in the UK is widely respected throughout Europe, so I hope that the Minister will give some indication—it might not be today—about what is happening on the decisions on the marine deployment fund. I urge him, in his role in the Energy Council, to ensure that European approval processes do not unduly delay decisions on applications by OPD and other companies, so that the technology can be taken up by the industry in the UK and elsewhere.

Europe is at the forefront of both renewable energy and energy efficiency, but we should not be complacent. Some countries are doing better than we are at energy efficiency. Although we can currently point to some of the growing economies such as China and India—in due course, we may be able to point to Russia—that appear to be behind us on energy efficiency and renewable energy, we know that those countries are increasingly aware that they cannot go on with their current high energy consumption policies. If they intend to continue their economic growth, they will have to turn increasingly to renewable energy and energy efficiency.
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There is an immense opportunity for us to take advantage of our lead in these fields in Europe and provide long-term employment for hundreds of thousands of people in the European Union. However, we must take the decisions soon, if not now, to ensure that we do not lose the opportunities that exist for our industry. If we do not take the right decisions quickly, we could end up making the same mistake at European level that I would argue we made at British level in the 1970s. It would be a tragedy if we did so, and I urge the Minister to ensure that we do not.

11.24 am

Mr. Dan Rogerson (North Cornwall) (LD): I start by echoing the hon. Member for North Essex (Mr. Jenkin) in welcoming this debate and congratulating the hon. Member for Edinburgh, North and Leith (Mark Lazarowicz) on securing it. For the reasons that he has given, it is an important and timely debate. I agree with a great deal of what he said, particularly on how mandatory targets can help to move things forward; I will return to that.

I welcome the discussions around the energy end-use efficiency and energy services directive. From my party's point of view it is crucial that, in their discussions about the directive and their input into it, the Government do not seek in any way to water down what is being discussed in the hope that mandatory targets can be brought in. Mandatory targets should be set at a reasonable level to encourage progress on these issues, rather than being over-draconian. They certainly have a role to play in encouraging member states to move forward.

The Prime Minister has made action on climate change a key element of the UK presidency of the European Union; he has raised it on a number of occasions, but the UK presidency is passing at an alarming rate. The Government have an opportunity to address that agenda and to claim to have taken some action on it during their presidency. I understand that there may be an opportunity to get this directive passed during the plenary session in December; that would be a great step forward. That breakthrough would give a clear signal that the UK Government have taken some significant action in their presidency.

The hon. Member for Edinburgh, North and Leith referred to the Edinburgh declaration, which represents a step forward in promoting the comprehensive and coherent European renewable energy and energy efficiency strategy that is needed. There are challenges involved in securing a strategy that is comprehensive and coherent when the inevitable negotiations have to take place at European level, and then in securing those benefits and making sure that they are applied in the member states.

The aim of achieving 25 per cent. renewable energy by 2020 is one of the mandatory targets discussed in the Edinburgh declaration. That would set a clear target for states, and if the Government were minded to accept it, it would move the debate forward considerably.

Returning to the directive, one of the targets discussed is an energy saving of 1 per cent. a year in each member state. That would lead to a 6 per cent. overall reduction by 2012; that is significant, and would help to move things in the right direction.
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We are also very supportive of the idea of a demand-side public sector target, because the public sector has a great role to play in showing how energy efficiency measures can be taken. My hon. Friend the Member for West Aberdeenshire and Kincardine (Sir Robert Smith) recently asked the Office of the Deputy Prime Minister a parliamentary question about building regulations. We had hoped that the Government would take a slightly more forward-looking view on that, although we are grateful that the regulations are, at least in part, being introduced.

We need to note the benefits of energy efficiency measures in terms not only of climate change and the cost savings from which we can all benefit, but of the job creation potential of exploiting the new technologies. As the hon. Member for Edinburgh, North and Leith said, in the past we have missed out on opportunities to put our country at the forefront of technologies for renewable energy and energy efficiency. There is now a great opportunity; ideas exist in our country which can be exploited. As a Member representing a Cornish constituency, I am well aware of the potential of wave power. Seeing the opportunities for that technology to be brought into play, I am particularly excited to be involved in this debate.

I also note that the European Parliament's Committee on Industry, Research and Energy has reported on renewable energy. The report unfortunately identifies certain obstacles to the exploitation and development of renewable energy. It suggests ways in which member states' Governments could do more to encourage energy efficiency. The report says that the

It insists that the Commission tackle those issues in its report on internal electricity and gas markets at the end of the year. We are seeing several different initiatives. With the UK presidency proceeding to its close, it is a crucial time for the Government to take advantage of those initiatives and stamp their seal of approval on such moves.

We should call on the Commission to reform the market. We need to encourage smaller energy producers and ensure that they have access to the grid. People have contacted me saying that they are interested in microgeneration and the installation of machines in their homes to generate power, but when they investigated they discovered that they get far less for any electricity that they produce than they pay for energy that they take in. We must correct such measures to encourage everybody at every level to take advantage of renewable technology.

Some people in my constituency do not have access to the grid at all. I am sure that several other Members are in that position. Some in more urban constituencies are surprised to hear that, but I have people who are still reliant on their own generator. With the increase in fuel costs and so on, they will face a great increase in costs.
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We hope that the Commission will consider ways to avoid monopolies being formed and set in stone, and ways in which financial instruments could be used to encourage the use of energy efficient technology. Several other states in the European Union have introduced measures designed to increase the take-up of energy efficient technology. In Italy, for example, electricity regulators set tariffs to promote energy end-use efficiency. In Denmark, energy distributors are obliged to grant energy counselling free of charge, and there are several other initiatives in Luxembourg, Germany and elsewhere.

There is an opportunity for the United Kingdom to take on some of those ideas and, I hope, to move forward. There is a role for some form of mandatory target, and I look forward to the directive being passed later this year, to its coming into effect and to its successful implementation.

11.33 am

Mr. Bernard Jenkin (North Essex) (Con): I am grateful for the opportunity to speak in this debate. It is welcome that we are debating this matter during the British presidency of the EU, because we must hold the Government to account for what they are or are not doing during their presidency. They said that early settlement of the energy services directive would be "a priority". I ask the Minister, what evidence is there that any significant priority has been attached to the directive?

I hope that the Government will respond to the point I made to the hon. Member for Edinburgh, North and Leith (Mark Lazarowicz) that an energy services directive with mandatory targets would require enforcement and that enforcing targets on countries that would be unable to achieve them might be difficult and pointless. We are all in favour of improving access to economically efficient renewable electricity generation at both micro and macro level.

As an aside, Miss Widdecombe, may I declare that my wife may be applying for a clear skies grant to install renewable energy in a holiday home? I was disappointed to learn that the closing date for applications under the clear skies initiative is 4 November, which is next week. There will then be a seven-month delay before the Government approve the replacement for the clear skies initiative. Here we are, talking about renewable energy and dealing with hundreds of small, even minute, businesses involved in the programme of installing renewable energy devices in people's homes and businesses, but if the Government's funding is left off the list and abolished for months on end it will hardly add to the viability of the industry and bring down the cost of equipment and installation, which is presumably what the Government want to achieve.

The Minister for Energy (Malcolm Wicks) : May I briefly congratulate the hon. Gentleman's wife on her eco-awareness and suggest, without doing the means test, that perhaps the hon. Gentleman could give his wife an early birthday present and should not get too much into the grants culture?

Mr. Jenkin : That question must have been a tease. I did not think that the grants were means-tested; perhaps
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the Minister will correct me if I am wrong. If grants are available, presumably, the Government want people to take them up. Renewable energy is still expensive and presumably the purpose of the grants is to pump-prime the industry, so that volumes rise and costs fall. As a UK taxpayer and citizen, my wife is just as entitled to apply for a grant as any other UK taxpayer and citizen. I am interested in the notion that the Government's policy may be discriminatory. It is an interesting philosophical point. If someone is politically indisposed to Government money being spent on uneconomic activities such as grants for this or that, is it then morally wrong to apply for them? I submit that it is not, but that is a matter for my wife and not me. I merely wanted to put the interest on the record. Although it is not declarable in the Register of Members' Interests, I am not ashamed to draw the Houses's attention to it.

What is the point of including mandatory targets in the energy services directive if they cannot be achieved? There is a great danger of believing that, if we are legislating for something good, we are definitely doing something good. In fact, the European Union is littered with evidence of legislation to achieve good things which has had adverse consequences that were not foreseen by the authors of the legislation.

Mark Lazarowicz : Although I found the discussion about the clear skies grant for the hon. Gentleman's wife's interesting, I am glad that we are back on the European energy services directive.

I accept the value of some of what the hon. Gentleman said about mandatory targets. It would be wrong to set mandatory targets that no one had a hope of achieving, but I notice that his party had a debate in the main Chamber last week to criticise the Government for allegedly not reaching their Kyoto targets. Therefore, I take it that the Conservative party does not in principle oppose binding targets, so I wonder why he believes that at some level mandatory targets do not have a role to play in energy efficiency or renewable energy.

Mr. Jenkin : The hon. Gentleman makes a perfectly valid and interesting point, but it is the Prime Minister who is now questioning the efficacy of the Kyoto treaty and its mandatory targets. The Kyoto targets are not binding in UK law. Breaching those obligations would not have the same consequence as breaching a mandatory target set under European Community law, which, as the hon. Gentleman said, could result in infraction proceedings being taken against the UK in the European Parliament.

The hon. Member for Morley and Rothwell (Colin Challen) discussed the emissions trading scheme, which is a market system for creating an incentive against carbon dioxide production by member states. It is an example of where we could have some difficulties. Up to 2012, the scheme is clear enough, but what happens then? Some countries will be hugely over-producing carbon dioxide and exceeding their allocated allowance under the scheme. It is difficult to understand how the scheme would continue on that basis—if, in fact, it does not fall to pieces before then. I could ask why we do not set mandatory targets for reducing unemployment. The answer is that some things simply do not respond to that kind of invocation.
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Let me be clear. I support the objective of the energy efficiency directive. However, we must carefully consider the means of achieving it. I support the Government's opposition to mandatory targets and would be interested in hearing where they are on that issue at present.

What is the Government's response to the Green Paper, which has been out for consultation for some time? They have issued no concrete response. As the Association for the Conservation of Energy pointed out, the Minister for Climate Change and the Environment stated at the beginning of the presidency:

Where is the great wider public debate that the Government said they would promote during the presidency? I see no sign of it.

Lack of such a debate is yet more evidence of the Government's invisible presidency, which is how it should become known. After the fanfare of the Prime Minister's speech to the European Parliament, in which he said that he would scrap agricultural support and completely change the whole architecture of the European Union because that was the message, which he initially opposed, from the two referendums, we have heard virtually nothing from the Government about the presidency. It is likely to turn out to be the least productive British presidency in the history of our membership of the European Union.

I have several points to make about the Edinburgh declaration, to which the hon. Member for Edinburgh, North and Leith referred. I would be grateful if the Minister responded to them. First, the assumptions in the declaration are deeply flawed. Oil, gas, coal and uranium will eventually run out, but there are enough coal stocks in the world to last for more than 200 years, and more than 40 per cent. of them are in stable Organisation for Economic Co-operation and Development countries. Simply to discount fossil fuels overlooks the contribution of technologies such as carbon capture and storage. In this Chamber last week, distinguished Labour Members argued for a greater role for coal in UK electricity generation, based on the emerging carbon capture and storage technologies.

As for uranium running out, has the Minister studied the third report of the Select Committee on Science and Technology covering the period from 1988 to 1999, which was published on 10 March 1999? It refers to the mixed oxide fuel stocks in this country, and I recommend it to him. We have substantial stocks, which would, I am told, fund a nuclear electricity generation programme easily for 30 years.

If we could provide 35 per cent. of our electricity from nuclear sources for 30 years to make a substantial contribution to a reduction in our use of fossil fuels, that would seem a practical way forward; the Government chief scientist has hinted that that would be his desire. The declaration's assumption that stocks of nuclear fuels are somehow finite and low misunderstands the United Kingdom's situation.

Mark Lazarowicz : This may, if the hon. Gentleman wishes, help him to avoid going down a road that he
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need not go down. I am not suggesting that fossil fuels have no important role to play for many years to come. I recognise the opportunities for more efficient use of coal and carbon capture in relation to coal emissions. Equally, I recognise that the limited supplies of uranium do not mean that nuclear power does not have technical potential. My point is simply that we have to do more to promote renewable energy and energy efficiency, and that is where greater emphasis needs to be given at European level.

Mr. Jenkin : I am perfectly prepared to support that principle, but we are discussing the means of doing so and whether some means are as economically efficient as others at reducing our carbon dependency, which is what we are really talking about. The declaration says that nuclear power has "serious environmental considerations". Well, I do not know of any form of electricity generation that does not have such considerations.

Personally, I do not believe that the nuclear industry has any more serious environmental considerations than any other. Coal has more serious environmental considerations, unless we crack the carbon sequestration and storage problem. Modern nuclear power gets an unfair press because of historical mistakes made with nuclear generation.

We have a stock of nuclear waste and a backlog of nuclear decommissioning to deal with, and we are going to have to deal with that anyway. Even if we had 30 years of nuclear generation in addition to that of our existing plants, we would add only a tiny fraction to the stockpile of nuclear waste that we already have to deal with. The Government will have to confront that problem anyway. I do not regard nuclear waste as an insurmountable obstacle, either technically or economically. Indeed, the problem is only political and it is high time that the Government got on with solving that to allow the market to continue with nuclear power if it so wishes.

The UK energy market is heavily distorted in favour not of nuclear power or coal, but of renewable energy sources. The National Audit Office estimates that that distortion will cost the consumer £1 billion a year by 2010. It also estimates that upgrading the transmission network to allow renewable energy projects to connect will cost between £1.1 billion and £1.3 billion by 2010. Those costs do not have to be carried by the renewable energy generators that invest in a plant; they will be passed on to the consumer one way or another.

The NAO has calculated that the renewables obligation is the most expensive of the Government's policy tools for reducing CO 2 emissions, with an estimated cost of between £70 and £140 per tonne of carbon not emitted. I reckon that that is a serious consideration.

We are in favour of renewable power in principle because it generates electricity from elements in our environment, such as wind, waves, tidal power and solar. However, if the cost is as high as that, we must ask whether there are cheaper ways in which to reduce carbon emissions than by betting the ranch on the dash for wind power that the Government are going for at
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present. Renewable technologies are still uneconomic. The House of Lords Science and Technology Committee report on renewable energy found that

The hon. Members for North Cornwall (Mr.   Rogerson) and for Edinburgh, North and Leith talked enthusiastically about wave power. My researches suggest that wave power is about the least economic of renewable energy sources. We are still a long way from being able to convert wave power into economic quantities of electricity. There might be an inventor with the Midas touch who will invent new technology, but at present we are very much at the Heath Robinson end of the equation. It warms my heart to see money being put into research projects in those areas, but let us be realistic: the idea that wave power will make a measurable contribution to the reduction of carbon dioxide emissions in a short time is moonshine.

Mr. Rogerson : It is strange that the hon. Gentleman mentioned inventors who are interested in wave power because a gentleman in my constituency has been in touch with me about the contribution that he hopes to make to that subject. I am sure that he would welcome the chance to get in touch with the Minister about it.

I was intrigued that the hon. Gentleman referred to renewables and cost-effectiveness, having already moved over the nuclear industry. Is he arguing that the nuclear industry has been cost-effective in its lifetime and has not pulled in huge subsidies?

Mr. Jenkin : That is a pertinent question. It definitely deserves a debate of its own, although perhaps on a different occasion—I look carefully at you, Miss Widdecombe. An increasing number of countries are going down the nuclear route. Our nuclear industry was not particularly efficient. We tended to build a different sort of power station and reactor each time. When we built reactors, each reactor had experimental elements to it; each one had to be certificated separately for safety. Each reactor had its own specifically trained work force. Let us compare that to the French nuclear reactor programme, which standardised early on one form of reactor, so that it had to license only one type. It had a much more efficient planning process. It went for volume, which brought down the costs. Given the Finnish reactor construction programme, Finland seems to have learnt some of those lessons.

The Government must develop a policy framework that is favourable to efficiency in the nuclear industry to avoid the mistakes that we made in our nuclear programmes. The industry has informed me that, given the right stimuli, the right policy framework and the pre-licensing facilities of reactor types and prospective sites, it can be economically viable. Given the substantial increase in electricity, oil and gas prices in recent weeks, months and years, the equation has moved significantly in favour of nuclear.

I commend to the hon. Gentleman a paper by Professor Dieter Helm. It concludes that a new nuclear build programme is on the cusp of viability. If the Government were minded to create the right framework to remove some of the obstacles and uncertainties, the programme would be viable. It is something that the Government should get on with as quickly as possible.
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The targets called for in the Edinburgh declaration are difficult to justify. All countries apart from those that produce a high proportion of electricity from hydro—in Austria, the proportion is 67 per cent., in Sweden 54 per cent., in Portugal 26 per cent. and in Finland 21 per cent.—would have to cope with massive intermittency and grid connection problems to meet a target of 33 per cent. of electricity from renewables by 2020.

Such a rapid expansion of renewables would inevitably be focused on wind generation. I hope that the hon. Member for Edinburgh, North and Leith has visited Denmark, which generates more wind power per head of population than any other country. There, the average load factor for wind is just 20 per cent. of capacity. In Germany, E.ON Netz states in its 2005 report that the average feed into the grid from wind was just one fifth of the total installed wind-generating capacity. It reports that in order to maintain grid stability wind can displace conventional generation only to a limited extent. The hon. Gentleman said that the problem should not be overstated, but Denmark and Germany balance their grid by importing what is probably fossil fuel-generated electricity to deal with the intermittency of their domestic wind production.

To give an example, on current trends, the forecast of 48,000 MW of installed wind capacity for 2020 would displace only 2,000 MW of conventionally generated electricity; that is just 4 per cent. That is why we need to ask whether we are spending our money on the most cost-effective way of reducing carbon emissions. In reality, of course, wind generation is not a strictly carbon-free system of generation, because it requires back-up from other forms of generation.

The House of Lords Science and Technology Committee found that

I listen with interest to the suggestion that we can take a pan-European view of the issue. I have not heard that suggestion before. We have to grapple with the concept of line loss. If one transports large amounts of electricity from one side of the continent to the other, because of a lack of wind generation effectiveness at one side and because of wind blowing on the other, line loss is a significant factor. It heats up the atmosphere, which is not a good thing; it wastes a lot of electricity; and it corrupts the frequency—that is another point that must be borne in mind. The longer the transmission lines, the more corrupted the frequency becomes. One finishes with what those in the business call dirty electricity. Dirty electricity is quite difficult to manage.

I am quite technically minded, but I have not got my mind fully around the technology of how to run a national grid. I understand that it is much like that game in which someone tries to balance lots of plates on the end of bamboo poles. The plates must all be kept twirling round, and none must be allowed to fall off, because if one starts to fall off, they all do. As we have seen recently, we only need one bit of the system to shut down for it to trigger the shutdown of other bits of the system. The whole system becomes unbalanced and
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automatically shuts down, and then it is difficult to start up again. It is the problems of intermittency and line loss that we must be wary of as we dash for wind in our enthusiasm for renewable electricity.

Proposals for land use plans that give priority to renewable energy sources risk local objections being overridden simply to meet centrally set targets. The Government are already riding roughshod over popular opinion in their dash for wind. For example, the Department of Trade and Industry planning inspector last week gave the go-ahead to the construction of 26 wind turbines at Romney Marsh in Kent. That was done in the face of opposition from two county councils, two district and 12 parish councils, English Nature, the Royal Society for the Protection of Birds and a host of environmental organisations. The Government have overridden serious environmental considerations in that case. I wonder whether the matter will go to the European Court of Justice if there is a challenge on environmental grounds. The decision does not comply with other European directives on the environment.

Generally, there is no established consensus on the most cost-efficient way to reduce carbon emissions. Energy efficiency has been a goal for the past 30 years, but demand for electricity continues to grow at 1.5 per cent. per year. There is little point in setting new targets at European or national level when the Government are already missing their own targets on climate change, renewables and energy efficiency. For example, they are likely to miss their 2010 renewables target of 10 per cent. of electricity consumption and their 2010 combined heat and power target of 10,000 MW of CHP. Building regulations relating to energy efficiency are being flouted regularly.

In its manifesto for the general election in May, Labour pledged to cut emissions of carbon dioxide by 20 per cent. by 2010, in spite of all the evidence that its policies to cut emissions are failing. Total CO 2 emissions for the UK in 2004 were 6 million tonnes, or 4 per cent. higher than the 2003 figure, which in turn was 1.5 per cent. higher than the figure for emissions in 2002. The chances of meeting the target of a 20 per cent. reduction are nil.

If we are to begin to change people's attitudes to energy use, which is what I think that the hon. Member for Edinburgh, North and Leith is really seeking to achieve, we need to go back to the grass roots and to the clear skies programme. We need to consider the promotion of microgeneration and to combine it with energy efficiency in people's homes and offices. Like energy-saving measures such as solar panels, small wind turbines and the use of rain water, domestic microgeneration is only just beginning to become readily available. Low volumes and the intermittency of grant support mean high prices, and planning departments and building regulations militate against the very things that the Government seek to promote. However, people who implement such measures become more and more aware of their energy usage and often make disproportionate savings as a result. The Government's disjointed approach to the matter militates against that.

I argue for enhancing and encouraging people's natural instinct to conserve—what I call the politics of the compost heap. That should be a major part of the
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energy White Paper that I am urging the Government to pursue. Rather than starting at a European level, let us start at the grass-roots level, with conservation and microgeneration.

Colin Challen (Morley and Rothwell) (Lab) rose—

Mr. Mike Hancock (in the Chair): Before I call you, Mr. Challen, I should say that the previous occupant of the Chair pointed out that she called the Front-Bench spokesmen to reply thinking that no other Member was seeking to catch her eye, but you stood up after that and she did not have you on the list of speakers. It would normally be the Minister's turn to speak and he would have a reasonable amount of time in which to conclude his remarks. I will call you, but I ask you to confine your remarks to about five minutes. The Minister has generously agreed to that. I hope that Members will not intervene, to allow you to say as much as you want in that time.

12.3 pm

Colin Challen : Thank you, Mr. Hancock. I understood that an Opposition Back Bencher would have the first opportunity to speak after a Government Back Bencher, so perhaps I was not quick enough on my feet, although I had written in to say that I wanted to speak in the debate; I thought that would be sufficient.

I congratulate my hon. Friend the Member for Edinburgh, North and Leith (Mark Lazarowicz) on securing the debate and on his private Member's Bill, which, along with that of my hon. Friend the Member for Southampton, Test (Dr. Whitehead), addresses these issues. If those Bills go through Parliament, they will give the Government enormous powers to forge ahead with the debate.

That is extremely important because I feel that, as has been indicated in the debate, Britain has, sadly, slipped behind some of our European competitors on renewable energy. We have not taken it terribly seriously in the past. In that perhaps we are victims of our history, as an island blessed with abundant fossil fuels, but it would be a great mistake to continue down that path. The hon. Member for North Essex (Mr. Jenkin)—I have the unnatural advantage of having heard his speech, for which I apologise—seemed to indicate that the cross-party consensus forged last week might be disassembled in short order. I hope that the hon. Member for Lewes (Norman Baker) will pay great attention to what the hon. Gentleman said this morning.

We have made huge efforts to prop up the nuclear industry. British Energy is still croaking along with all the subventions that the taxpayer has contributed to it. At the European level, too, I am sad to say that there is still evidence of a reluctance to kill off this old dinosaur. For example, five times more research money is spent on looking for the holy grail of nuclear fusion than is spent on renewables, even though we know that renewables can deliver in our lifetime, not in a time frame that "Star Trek" fans would be more familiar with.

It is good to see what is being done with renewable energy in Europe, even if it is not being done on quite the scale it should be. Denmark is often cited as an example
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of a far-sighted country—and it is—that long ago realised it could reduce its carbon emissions, which it has, while becoming more self-reliant; it does not share our level of indigenous energy sources. Denmark developed its policy as an industrial strategy, as did Germany. Wind power has delivered a lot for Denmark, and it is now selling products to us in a fast-growing export market. It has done so with cross-party and public support. That is my major point because I have had to curtail what I wanted to say.

I hope that we can learn some lessons from the Danes because we must convince the public that we are following the right course. We cannot afford to experience any further delays. The Danish Government and opposition parties came to a formal agreement. Under the auspices of the Ministry of Transport and Energy, they have an agreement that seeks to

The agreement supports a draft plan on renewable energy and conservation presented by the Danish Government at the end of last year, which followed cross-party discussions during the previous six months. It contains eight commitments and although I will not go through them all in detail, I hope that the Minister will agree to examine them.

Briefly, the commitments cover measurable energy savings and how they will be delivered and monitored, agreements that will follow with suppliers, the setting up of a co-ordinating committee, effective energy labelling for buildings and so on. The agreement was signed on 10 June this year and the Danish Government are committed to presenting their detailed implementation plan by the end of November. In response to that, we could say, "We are not the Danes. We are not a small country and our histories are quite different. Our culture does not permit any such consensus." I say that we do not have time to turn our backs on good practice elsewhere in Europe and carry on battling in our own discrete little political boxes.

Finland's experience has been mentioned; it is going down the nuclear route. Funnily enough, that decision was also made by all-party consensus, but I do not think such a consensus would be achievable in this country because it is built on a proposition that our nuclear industry will not be prepared to accept. Finland has had to sell to the public the principle of how the industry deals with its waste before doing anything else. I do not think that the nuclear industry in this country is willing to accept such a principle prior to further nuclear new build. I curtail my remarks and thank you, Mr. Hancock, for giving me the opportunity to contribute to the debate.

12.8 pm

The Minister for Energy (Malcolm Wicks) : Welcome to our debate, Mr. Hancock, which has been useful. I congratulate my hon. Friend the Member for Edinburgh, North and Leith (Mark Lazarowicz) on introducing this debate, and I thank my hon. Friend the Member for Morley and Rothwell (Colin Challen) for his shorter than expected but useful contribution. The hon. Member for North Cornwall (Mr. Rogerson) also made an important speech and raised one or two points that I want to address. As usual, the hon. Member for North Essex (Mr. Jenkin) spoke in a challenging way, but I would like to challenge some of what he said myself, if I have time.
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The recent declaration of Edinburgh is an important contribution to the debate on the security of our electricity supplies and on how we reduce greenhouse gas emissions. It is vital that we act to reduce those emissions, because climate change is already having far-reaching effects on our planet. For example, there is some evidence that the number of strong hurricanes has increased. This year has also seen a record hurricane season in the Atlantic, although it is too early to say how much climate change has influenced this year's storms; the scientific jury is still out on that one. Even so, Katrina, Rita and, more recently, Wilma demonstrate that such storms are a major threat to even modern cities, leading to considerable loss of life and economic damage.

Although renewable energy and energy efficiency have a key role in helping us to reach our emissions target, we also recognise that fossil fuels will still have an important role to play in meeting our long-term energy needs—I agree with the hon. Member for North Essex in that respect. That is why we need to adopt, and we believe that we have adopted, an holistic approach to the problem of greenhouse gas emissions.

On 14 June, I was pleased to announce the publication of a carbon abatement technology strategy for fossil fuel use and the development of a hydrogen energy strategic framework. That includes a funding package of some £40 million for demonstration projects of carbon abatement, hydrogen and fuel cell technologies over the next three or four years. The carbon abatement technologies strategy promotes a twin-track approach: more efficient plant producing lower emissions, together with carbon capture or sequestration storage to deal with the emissions that remain.

Hydrogen has the potential to contribute to cost-competitive carbon reductions and increased energy security for transport in the medium term. Indeed, when I was in Washington recently, courtesy of General Motors, I was able to drive, albeit briefly and nervously, a hydrogen car. I was nervous because I was told that it was worth $1 million in terms of development. The technologies are moving forward and they, together with renewables and increased energy efficiency, will help us to reach our environmental and energy policy objectives.

Of course, we are continuing our support for renewable technologies through the renewables obligation and dedicated funding programmes. My hon. Friend the Member for Edinburgh, North and Leith mentioned Ocean Power Delivery and its wave energy generator. That company is in the forefront of the development of an exciting new technology and has already benefited from more than £3 million of funds from the Department to help support six separate projects. Ocean Power Delivery will be able to bid for further funding under the marine renewables deployment fund—a fund of some £50 million—for which we have just received state aid approval. That will start in January next year.

It has been noted that the biomass taskforce report was published this morning; I was at the launch. As the hon. Member for North Essex knows, we thank Sir Ben Gill for his important report, which we need to consider.
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Biomass is already making a contribution, albeit a small one of 1 per cent. or so, to electricity generation. We need to consider its potential.

Mr. Jenkin : Before the hon. Gentleman moves on, may I take the opportunity to comment on the outcome of the biomass report? It was reported in The Daily Telegraph that it

That may have been garbled in the reporting. Will he comment on the outcome of the report, which seems to be against any compulsion?

Malcolm Wicks : The hon. Gentleman needs to read the report thoroughly and, indeed, so do I. I have not yet had a chance to read it all. We will respond to it in the fullness of time; I will leave it there.

The clear skies programme, which has been mentioned, and another programme to support photovoltaic solar panelling will be followed by a carbon buildings programme. I hope to say more about that quite soon.

All I was trying to say earlier in a little tease of the hon. Gentleman—I am pleased that his family are considering microgeneration for their home—is that these things should not just depend on support from the state. To enable citizens to become part of the solution to climate change, rather than, as we all are, part of the problem, we need to enable more people to think that such technology is a reasonable investment in the energy efficiency of their own dwellings.

I am interested in the position of the Conservative party. Although the hon. Gentleman spoke enthusiastically about microgeneration, he is clearly not so excited by the potential of other renewables and wind turbines. I am interested in what that means for the Conservative party in the future. I read the press, and I note that there is some activity in that party. I thought that the Tories were moving towards being a more caring and sharing party, and, one might have assumed, a cleaner and greener party. However, that does not really square with their abandoning the renewables obligation—I do not know if that is their policy—or abandoning any idea of setting targets for renewables. Despite what the press suggests, it appears to me that the Tory party is looking backwards. Or is all this just hot air, which does not help either? Is the Tory party looking forwards or backwards?

Mr. Jenkin rose—

Malcolm Wicks : We are going to get an answer—although the real answer will come in six weeks.

Mr. Jenkin : The truth is that the Government's energy policy has become a bit of a shambles, as they have bolted more and more on to the policy they inherited from the previous Administration. We are arguing for a proper review, and I have argued that the Government should consider extending the renewables obligation to all forms of non-carbon generation in order to create a level playing field for all such generation, which is presumably the objective—rather renewables becoming a religion.
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It would be interesting to see what came out of that review. I am working closely with my right hon. Friend the Member for West Dorset (Mr. Letwin) because we think that the priority is to reduce carbon emissions in the most economically efficient way. That is what we are working towards, and the Government should do the same.

Malcolm Wicks : I agree, but working towards that is not the same thing as coming here as a sort of modern Tory Don Quixote and tilting at windmills. Nevertheless, we will continue the debate.

I turn to the work of the international community in addressing climate change. The EU accounts for about 14 per cent. of global emissions; we in the UK account for about 2 per cent. The EU emissions trading scheme was introduced on 1 January 2005; it is one of the policies introduced across Europe to tackle emissions of carbon dioxide and other greenhouse gases. The scheme is considered to be one of the most cost-effective ways of meeting Kyoto obligations and of moving towards the low-carbon economy of the future. It is an imaginative mechanism—I can claim no credit for inventing it—to utilise the market for the benefit of broader European society.

On the domestic front, the UK is on track to achieve its obligations to reduce emissions of greenhouse gases under Kyoto, and we have set ourselves an even more ambitious domestic goal of reducing emissions of carbon dioxide by 20 per cent. below 1990 levels by 2010. The Prime Minister's decision to put climate change at the heart of our presidencies of the EU and the G8 demonstrates strong international leadership. We are committed to working with our partners in the International Energy Agency, the EU and the wider international community to deliver a global solution to a global problem.

The EU has already shown an appetite to address the challenge of climate change. The renewable electricity directive set the target for the EU of securing 22 per cent. of its electricity from renewable sources by 2010. In June 2004, the Commission published a communication on the share of renewable energy in the EU. It evaluated progress made by the EU 15 countries towards achieving national targets for 2010 for electricity from renewable sources. The overall assessment was that the EU 2010 targets for renewables electricity would be missed. That has lead to the call in the declaration of Edinburgh for a mandatory target of 25 per cent. renewable energy consumption by 2020.

The UK Government have yet to be convinced that a mandatory target represents the right approach. The energy White Paper made it clear that we prefer to create a market framework, reinforced by long-term policy measures such as the renewables obligation, which will give investors, business and consumers the right incentives to find the balance that will most effectively meet our overall goals. The European Union has also introduced the framework programme, which channels €810 million into support for sustainable energy research. In addition, the Intelligent Energy Europe scheme—that is a good name—seeks to promote the use of renewables, energy efficiency and better transport fuels. Several other EU directives also relate to renewable energy, including a biofuels directive.
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It is not just Europe that is determined to take action; the International Energy Agency is also active in reducing greenhouse gas emissions. It is not only responsible for fossil fuels, but has a strong commitment to renewables, with its own research division on renewables, a renewables working party comprising member countries, and nine implementing agreements.

The Energy Commissioner's announcement earlier this year that energy efficiency was to be his No. 1 priority epitomises the heightened focus and was both welcome and timely. Energy efficiency is now at the heart of the UK's energy and climate change policies and we have been a leading advocate of energy efficiency for some time. As President of the EU, we now have an opportunity to press for greater awareness throughout Europe.

In the EU, the focus is increasingly shifting from the supply to the demand side of energy, with increasing recognition by Governments, business and consumers of the positive impact that increased energy efficiency can simultaneously have on business competitiveness, security of supply and reducing greenhouse gas emissions.

A suite of recently adopted directives has already established a sound basis for future energy efficiency policy throughout the EU. The energy performance measures in the buildings directive aim to promote the improvement of energy efficiency of buildings in the EU through a range of cost-effective measures. Coupled with the changes in the UK to part L of the building regulations, it is expected to deliver savings of almost 12 million tonnes of carbon a year by 2010. That is equivalent to the amount of carbon that would be emitted from nearly 1 million dwellings built to current standards.

The directive on eco-design of energy-using products sets out a framework for design requirements aimed at reducing the overall environmental impact of strategically important energy-using products, excluding means of transport. The Commission estimates that this measure alone could reduce EU energy consumption by around 10 per cent.

Another piece of legislation—the cogeneration directive—places an obligation on member states to ensure that support for combined heat and power is based on useful heat demand and primary energy savings. The UK is already largely compliant with the requirement, but the directive ensures that the majority of UK-based CHP schemes that are already providing primary energy savings are likely to continue to be eligible for public support.

In addition, the UK continues to press for agreement of the energy end-use efficiency and energy services directive, which is currently under negotiation. That is a priority for the UK presidency. The directive will set energy-saving targets for all member states and will place obligations on energy suppliers to offer and promote energy efficiency improvement measures to consumers and to provide better information to consumers to allow them to make informed decisions about their energy usage. The whole theme of work and discussion on improving metering and the idea of smart meters has a resonance in terms of microgeneration, and we need to look further at that. A good deal of work is going on and there is much practice in Italy on smart
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metering, which is interesting. Both the European Parliament and the Council have thrown their support behind this approach and we hope to reach a deal before the end of the year.

The announcement of the energy efficiency initiative and the publication of the Green Paper on energy efficiency before the summer were also a notable step forward and gave us a valuable opportunity to have an input into a longer term European framework on energy efficiency.

Mark Lazarowicz : Will my hon. Friend indicate in his discussion on the energy services directive his view of the status of the energy-saving targets that would be placed on member states?

Malcolm Wicks : As my hon. Friend knows, there is some debate and disagreement between the European Parliament and the Council about the status of those targets. As President of the EU, the Government are trying to achieve some consensus on the issue. Essentially, we are in the business of supporting challenging but indicative targets, not mandatory ones, which I understand are not welcomed by the great majority of EU nations. However, that will be a matter for December's meeting of the Energy Council, which I chair.

We are keen to see the Green Paper lead to a further strengthening of the evidence base for energy efficiency. We cannot expect full buy-in until we can clearly point to benefits through increased competitiveness, security of supply and environmental improvements. In turn, those should help facilitate better regulation, better sharing of information and best practice between member states, and greater consistency and coherence throughout EU policy. The Green Paper should also offer an opportunity to add political impetus to proposals for further action in key sectors such as transport.

We are currently facilitating debate on the Green Paper between member states in Europe and I am looking forward to an important ministerial debate on it at the December Council. With the Commission, we are also co-hosting an international energy efficiency conference next week that will further consider the international elements of the Green Paper.
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All that is very much part of the European dimension, but all the time we need to relate the international and European dimensions to the local dimension. I have not forgotten about the hon. Member for North Cornwall, who made an important contribution. He was talking about people in his constituency whose homes are not even part of the national grid. I am aware of that issue; we are making inroads there—no pun intended. More people are being connected to the grid, but not enough. I hope that we can do more with the national grid and Ofgem on that issue.

I say to the hon. Gentleman that microgeneration has a part to play. If people are off-grid, they need alternatives, and microgeneration is one of them, not least for those whom we would describe as the fuel poor, who need to make sure that they get enough energy. I want to think more about how we can connect up and I shall be happy to talk to the hon. Gentleman and other colleagues whose constituents are off-grid.

This debate has been useful and we have had a number of noticeable contributions. It has certainly reminded us that although climate change is by definition a global issue, and although global players—the EU, the UN and the rest—need to play a major part, there is also a very local dimension. As I said earlier, there is a sense that we all, not only the big institutions and players, need individually to take some personal responsibility in our lifestyle choices, such as what car we drive.

Colin Challen : I draw my hon. Friend's attention to the 25-5 challenge, launched by the all-party group on climate change, which seeks to make Members reduce their carbon emissions by 25 per cent. during the next five years. Does he think that a willingness among MPs to cut their emissions would be a good example to the public? I can tell him that 37 MPs have already signed up.

Malcolm Wicks : I think that I can name them all. Initiatives of that kind are important. The hon. Member for North Essex was talking about his compost heap; I was distributing my leaf-mould over the weekend. We are all part of the problem; we should become part of the solution.
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