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Bill Wiggin: The fact that the Prime Minister makes the report is one of the most important aspects of the Bill. The Minister will be aware that the Secretary of State for the Environment, Food and Rural Affairs has stated:

A few moments ago, the Minister said that the Government would. That is why it is so important for the Prime Minister to make the report.

Malcolm Wicks: The Prime Minister has led from the front both domestically and internationally on climate change. A report on micro-generation should, in our judgment, come from my Secretary of State rather than the Prime Minister.

Clause 3 requires that Her Majesty's Treasury produce a fiscal and economic strategy for micro-generation and energy efficiency. As hon. Members will be aware, all consideration of fiscal measures is undertaken as part of the normal budgetary process, so a separate fiscal and economic strategy for micro-generation and energy efficiency is unnecessary and would risk prejudicing the outcome of the overall budgetary process. I should add that the Chancellor has asked the Government's chief economist, Nick Stern, to review climate change and economic instruments.

Norman Baker: I do not wish to take up too much time, but I want to return to the point about the Prime Minister. The reason why the Bill suggests that the report should be done by the Prime Minister, at least in name, is that responsibilities are set out in clause 2 for greenhouse gas emissions—not just micro-generation—which involve the Department of Trade and Industry, the Department for Transport, the Department for Environment, Food and Rural Affairs, among others. It is important to aim for cohesion and accountability across government. That is why the Prime Minister's involvement is an important aspect of the clause.

Malcolm Wicks: The Government could not be more joined up, Mr. Deputy Speaker, on issues surrounding climate change, energy efficiency and the rest. I do not believe that we should get into too much of a lather about who presents the report. I have explained why I think that it should be my Secretary of State. The hon. Gentleman should beware of casting himself in the role of talking the Bill out by making too many interventions.

Clauses 4 and 5 relate to the setting of national and local targets for micro-generation. Let me remind the House that the Government already have two targets to
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which micro-generation contributes: 10 per cent. of electricity generated from renewable sources by 2010 and 10 GW of combined heat and power capacity installed by 2010. A formal requirement to set targets for micro-generation would be premature at this stage.

We recently held a consultation exercise on the development of our strategy to promote micro-generation and we are analysing the responses before putting together a package of measures in the final strategy. There are also difficulties associated with setting a realistic target for an industry that is still in its very early stages. However, I understand the importance of targets in providing long-term signals to the industry, particularly for those looking to make significant investments. Although we could not support the clause as drafted, the Government would accept an enabling power in relation to the setting of micro-generation targets.

It goes without saying that we would report on the progress made in implementing our micro-generation strategy on a regular basis, so clause 6 poses no problems—[Interruption.]

Mr. Angus MacNeil (Na h-Eileanan an Iar) (SNP): I notice that the Minister has accepted the importance of finding ways and means of alleviating fuel poverty, to which clauses 1 and 6 relate. What specific extra measures do the Government propose, particularly for constituencies such as my own of Na h-Eileanan an Iar, which has some of the highest fuel poverty in the whole of the United Kingdom?

Malcolm Wicks: Fuel poverty is a crucial issue. In the context of the Bill, one of the issues that I wish to explore in detail over the coming months is how best to use micro-power to help to address the fuel poverty agenda. They are often seen as different subjects, but I do not think that they should be. We have heard about areas that may be off the gas mains and having to pay higher costs. We need to explore further how micro-generation and energy efficiency can play a part. I am rather with the thrust of the hon. Gentleman's comments.

Clause 7 gives the Secretary of State a duty to establish a scheme enabling the sale of electricity by domestic micro-generators. Such a scheme could then require electricity suppliers to buy at the market rate the electricity produced by their domestic customers by micro-generation. Micro-generators can already sell their electricity, so legislation is not required to achieve this. To require suppliers to buy that electricity at the market price risks distorting the electricity supply market and would be incompatible with our liberalised arrangements. This Government would like more suppliers to engage in the market for this exported electricity, perhaps through an obligation on them to offer terms, in a manner similar to their obligation to offer terms for supplying electricity to householders. So we are looking at this issue and I am anxious to make some progress on it, but I am unable to accept the clause as drafted.

Clause 8 appears to put a duty on any public authority, including Ofgem, to have regard to the needs of micro-generators when carrying out any function relating to various green energy certificates. I have some concerns about imposing a specific duty on Ofgem in
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respect of micro-generation. It already has a clear set of duties that govern its work, including a duty to contribute to sustainable development. A requirement to have specific regard to the needs of micro-generators would inappropriately skew its focus toward this still relatively small section of the energy market. But the Government support the general thrust of this clause, in so far as it would encourage actions that help micro-generators to gain access to the benefits associated with green certificates, such as renewable obligation and levy exemption certificates.

Mr. Carmichael: On Ofgem's remit and possible changes to the Bill, the Minister and I have discussed informally the possibility of varying the cap arrangements in the Energy Act 2004 to allow Ofgem's transmission charging regime to work more favourably for projects in island communities. Can the Minister offer any prospect of using this Bill as a means to achieving that end?

Malcolm Wicks: Our policy is this area is still under review, but I hope to announce a conclusion in two pages' time. [Laughter.]

Clause 9 gives the Secretary of State a duty to promote community energy. I am happy to say that this Government already do much to promote community energy schemes. The clear skies initiative provides funds for renewable installations in the community, and the new low carbon buildings programme will continue to fund such schemes.

Dr. Roberta Blackman-Woods (City of Durham) (Lab): I am pleased to be able to put on the record my support for this Bill. Does the Minister accept that the enormous advances taking place in photovoltaics and solar energy research, particularly in respect of materials and efficiency, could bring costs down and support the development of community energy?

Malcolm Wicks: Yes, which is why we have supported photovoltaics and hope to do so in future. It is still a relatively expensive renewable technology, but we hope to see the developments that my hon. Friend describes.

The Secretary of State for Environment, Food and Rural Affairs has provided £60 million for the community energy programme, which aims to increase the development and installation of community heating schemes throughout the UK, so our record on supporting community energy is clear. The imposition of a duty to promote community energy would not have any significant impact on our activities in this area, so we do not see the immediate need to include clause 9 in the Bill.

Clause 10 enables the Secretary of State to introduce a renewable heat obligation. I am aware that the House has debated this subject at length, particularly during the passage of the Energy Act 2004. There is no doubt that we need to take action to support renewable heat, but it is important that that action be appropriate and effective. We have the evidence base provided by a recently published study on biomass, and by the recommendations of Sir Ben Gill's taskforce, to help us
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to provide suitable measures to promote renewable heat. At the moment, there is nothing to suggest that a renewable heat obligation is the definitive way forward, so to commit to such an obligation at this stage would be premature. We will of course look carefully at the possibility of introducing such an obligation alongside other policy options suggested in Sir Ben Gill's report, and we will be happy to discuss the matter with colleagues in Committee.

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