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Mr. Bellingham: I am grateful to the Secretary of State for giving way—he is obviously in a benign and helpful mood. Is he aware, however, that at least 500 wind turbines either are under construction or have permission for sites in the Wash or off the Norfolk
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coast? Bearing that in mind, does he agree that there is now no justification for small clusters of onshore wind farms, which do great damage to the environment and are highly unpopular? Surely they should now all be offshore.

Mr. Hutton: I think that there will be an increasing move towards offshore wind generation, which would be a good thing. However, it would be quite wrong for me to prejudge individual planning applications, because that is not my role in the system. It does not help to create the balanced energy policy that the majority of people in the country want that every time a wind turbine application is shoved in, everyone opposes it but at the same time demands cleaner energy. Fundamentally, such nimbyism is not terribly constructive.

Tony Lloyd (Manchester, Central) (Lab): The previous two interventions illustrate exactly the problem that my right hon. Friend faces: everybody is against any alternative. What we need, however, is that balanced energy mix, which will give us security of supply. In cold winters, the old people in my constituency, for instance, will not be worried about the fine tuning; rather, they will want to know that they can turn the electricity on and that it will work.

Mr. Hutton: I have a great deal of sympathy for my hon. Friend’s point. On the issue of nuclear, which I shall come to shortly, one of the important points that we all need to address is not just how to face the low-carbon and energy security challenges, but how to ensure that we satisfy the base load energy challenge. Fundamentally, none of our constituents will thank us if, when the temperature drops and it gets dark, adequate and affordable power is not in place at the right time to heat their homes and enable them to go about their daily lives.

If we are to meet any of the challenges that I have outlined, change will be required—and that means change in some of our constituencies. I have wind farms in my constituency, for instance, and there is a multiplicity of views about such matters, as the hon. Member for North-West Norfolk (Mr. Bellingham) will know. What does not help is the idea either that there is one technology—the right hon. Member for Wells (Mr. Heathcoat-Amory) has made that argument in relation to nuclear power—or that we can successfully continue trying to delay, obstruct and, in the hon. Gentleman’s words, hopefully reject proposals for renewable sources onshore. I am afraid that there are no easy choices, as my hon. Friend the Member for Manchester, Central (Tony Lloyd) pointed out, but making no choice at all is not one of them.

Mr. Elliot Morley (Scunthorpe) (Lab): I certainly agree with my right hon. Friend that we must look at the whole range of alternative and renewable technologies. In that respect, will he give me an assurance that the Bill will provide encouragement for the expansion of new technologies such as micro-power, and for incentives such as feed-in tariffs? I know the arguments that he is rightly putting forward, but will the Bill provide for the introduction of a new sector such as micro-power, if that were considered acceptable?

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Mr. Hutton: We have announced proposals, of which my right hon. Friend will be aware, on microgeneration and on providing additional renewable obligation certificates—ROCs—for micro. We will need to come back to the whole issue of distributed energy and microgeneration as we respond to the proposals that are due tomorrow from the European Commission on how EU member states are to meet the new obligations that the Heads of Government agreed at the spring Council for a greater proportion of the EU’s energy to come from renewable sources. I am trying to reassure not only my right hon. Friend but Members on both sides of the House who want a balanced energy approach and reassurance that there is no belief on the part of Ministers in a single technological solution to our energy problems. I am giving my right hon. Friend that assurance. I believe strongly that, as he studies the Bill’s provisions—and, perhaps, serves on the Committee—he will see exactly the kind of balanced approach that eschews the false choice of a single technology and instead pursues the realistic choice of different technologies.

Mr. Michael Jack (Fylde) (Con): The Secretary of State referred to the challenge of the announcement tomorrow from the European Union about renewable energy in the round. Will he tell the House why the Bill does not contain a commitment to a renewable heat obligation?

Mr. Hutton: These are matters that we are currently looking at very carefully. The Office of Climate Change is looking at these matters, and we are going to have to consider the issue of renewable heat sources as we respond to the challenge of the new European Union requirements. The Prime Minister has set out the broad timetable that we shall be following, and once we have the details of the Commission’s proposals tomorrow, there will be a consultation. The hon. Member for Shipley (Philip Davies) will probably be disappointed by that, but I believe strongly that that is the way to proceed. There will be a consultation in the spring, and we will announce further, more detailed measures that I hope will cover the issue that the right hon. Member for Fylde (Mr. Jack) has raised.

Colin Challen (Morley and Rothwell) (Lab): My right hon. Friend might have seen the National Audit Office report on energy consumption on the Government estate, which shows how difficult it is to reduce such consumption. That must be a common experience. In the light of that report, will he tell the House to what extent the Bill predicts and provides for a growth in energy consumption? Should we not perhaps pay more attention to the demand side?

Mr. Hutton: There are no provisions in the Bill about the issue that my hon. Friend has raised. If he is asking me whether the Government could do more to promote energy efficiency on the Government estate, the answer is obviously yes. I am glad to say that my Department has quite a good record in that regard, and we will continue to try to improve on it.

Alan Simpson (Nottingham, South) (Lab): The Secretary of State will know that the Prime Minister has committed the UK to meeting the EU target of obtaining 20 per
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cent. of our energy needs from renewable sources by 2020. Will he specify which parts of the Bill will deliver that 20 per cent. by 2020?

Mr. Hutton: There are parts of the Bill that address that concern, but I simply have not been able yet to reach them in my speech. The parts that will make the greatest difference will be the provisions relating to the reforms to the renewables obligation, and in particular to banding, which will allow us to encourage and bring to fruition those technologies that, at the moment, are slightly further away from making a contribution than they should be. I am thinking of sources such as offshore wind and tidal power. In the UK, we should be considering utilising our natural resources more efficiently and intelligently. I shall say more in a minute that I hope my hon. Friend will find reassuring.

Several hon. Members rose

Mr. Hutton: I should like to make a bit more progress with my speech before I give way again. I hope that the House will allow me to do that.

Measures in the Bill to reform the renewables obligation will increase the amount of electricity that we get from renewable sources. Other measures will help to support the deployment of new nuclear power and to enable investment in carbon capture and storage and in offshore gas infrastructure. All of those will help cut carbon emissions, increase the diversity of our energy mix and improve our energy security—important goals that I hope will gain the support of Members of all parties.

The Bill also implements key parts of our energy White Paper strategy. It will update the legislative framework to achieve three particular things: first, to reflect the availability of new low-carbon technologies; secondly, to meet our changing requirements for security of supply infrastructure; and, finally, to ensure suitable protection for the environment and the taxpayer as our energy markets change.

The Bill is divided into six parts. Part 1 relates to offshore gas importation and storage. As the UK increasingly relies on international energy markets, our strategy for ensuring secure energy supplies must also evolve. Competition for energy supplies is increasing. The International Energy Agency forecasts that inter-regional trade in gas will more than double by 2030. The UK currently imports about 20 per cent. of its gas requirements, but as many hon. Members will know, that is projected to increase to well above 50 per cent. by 2020 as supplies from the UK continental shelf decline. Part of our response to that challenge must be to ensure that companies have a clear regulatory framework for investing in the new offshore storage and import infrastructure that our country requires.

Current offshore legislation was designed principally for oil and gas production or extraction. As a result, there is no single piece of legislation that covers the new kind of offshore gas infrastructure that we in the UK need. The current regulatory process is therefore complex and fragmented. It must be improved and streamlined if new investment is to take place in the time scale that we are discussing.

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Through clauses 1 to 15, the Bill creates a new regulatory and licensing framework specifically designed for offshore gas storage and offshore LNG—liquefied natural gas—unloading projects. That will simplify the regulatory process and will, I hope, create greater clarity and certainty for investors. The Planning Bill, which I have already mentioned, will streamline the consenting processes for onshore gas projects. The Energy Bill will create a fit-for-purpose regime for offshore gas projects.

This part of the Bill also creates a new regulatory framework for offshore carbon dioxide storage projects. Fossil fuels will continue to be part of the UK’s diverse energy mix for decades to come. On present policies, global energy demand could be more than 50 per cent. higher in 2030 than it is today. With a significant percentage of that being met by fossil fuels, energy-related greenhouse gas emissions could be around 55 per cent. higher than today. Finding a way to reduce the emissions from fossil fuel generation is therefore absolutely essential if we are to meet the challenge of climate change. That is why the Government are supporting a competition for the demonstration of carbon capture and storage. Clauses 16 to 34 will establish a licensing framework that allows storage of carbon dioxide under the sea bed. Without the new legislation, I do not believe that that demonstration project could proceed.

In addition to making provision on licensing, the Bill will also assert the UK’s rights to store carbon dioxide beneath the UK sea bed and extend relevant existing offshore legislation—on the decommissioning of offshore gas installations, for example—to future facilities that might be used for carbon dioxide storage. That is a key part of enabling the long-term development of carbon capture and storage. Once constructed, the demonstration project, which we hope will be operational by 2014, will be one of the world’s first commercial scale power stations with carbon capture and storage. Our aim is to drive forward the development of a technology that has the potential to reduce carbon emissions from fossil fuel power stations by as much as 90 per cent.

Stewart Hosie (Dundee, East) (SNP): On the issue of carbon capture and storage and the much vaunted competition, first announced in 2005, has not the Government’s dithering been so bad that not only has BP pulled out of the project to use Miller field, which was due to be decommissioned, but it was announced yesterday that the project is to go to Abu Dhabi rather than Peterhead? Referring to 2014 sounds great and the competition sounds wonderful, but has not the dithering lost BP’s investment and the opportunity to use the Miller field?

Mr. Hutton: I consider that a thoroughly miserable intervention from a member of a party that has absolutely diddly-squat to say about the United Kingdom’s energy requirements. We will not take any lectures from the hon. Gentleman and his hon. Friends about how we meet the UK’s energy requirements, given the stance that he has taken. We are not interested in that kind of niggardly comment. The hon. Gentleman has a vested interest in talking down the United Kingdom. What we must recognise is that the UK is one of the world’s leading countries in the development of carbon capture and storage technology, although we would not have understood that from listening to the hon. Gentleman’s whingeing and sarcastic remarks.

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Martin Horwood (Cheltenham) (LD): The Secretary of State’s rather dismissive reply to the hon. Member for Dundee, East (Stewart Hosie) ignored the fact that the BP project at Peterhead might well have been on line by 2010, thus possibly beating the competing project’s time scale. Is there not a serious point to be made, namely that the Government’s single-minded and rather ham-fisted approach to carbon capture and storage has damaged the prospects of UK industry?

Mr. Hutton: I do not accept that either. The whole point of what we are doing is organising proper competition. If we had proceeded with the time scale of the project that the hon. Gentleman has mentioned, other equally promising technologies and solutions would have been automatically ruled out, and instead of hearing from him, we would have heard from many of my hon. Friends and other Members about why their particular projects had not been allowed to proceed. To be honest, I do not think we want to hear any more from the hon. Gentleman about these subjects. [Interruption.] The debate has taken rather a sour turn, has it not? I shall endeavour to be more cheerful on the subject of part 2.

Mr. Adam Ingram (East Kilbride, Strathaven and Lesmahagow) (Lab): Let me try to help my right hon. Friend in raising a key issue for Scotland. Under the levy requirements applying to the Scottish renewables obligation, there is a fund of £100 million waiting to be spent which has not been called on by the Scottish Executive. Will my right hon. Friend ask the Executive why they will not spend the money on renewables in Scotland?

Mr. Hutton: I will gladly raise that question with Scottish Ministers, and I am sure that I will have my right hon. Friend’s support in doing so.

We all have reasons to be cheerful now, because we have reached part 2, which focuses on renewable electricity. The Government are committed to an increasing role for renewables in the UK’s energy mix, and part 2 makes a number of important changes to the renewables obligation.

First and foremost, it must be said that the renewables obligation has been highly successful. Since its introduction in 2002, renewable electricity has more than doubled, from about 2 per cent. to more than 4 per cent. of electricity generated in the United Kingdom. By 2020, alongside exemptions from the climate change levy, the renewables obligation will be worth about £1 billion a year in support of the renewables industry.

The changes in the renewables obligation include the introduction of a power to band the obligation to allow different levels of support for different technologies, and will help to promote a more rapid deployment of a wider range of renewable technologies. That will include more support for microgeneration—mentioned by my right hon. Friend the Member for Scunthorpe (Mr. Morley)—and renewable combined heat and power, helping the UK’s electricity from distributed generation sources to grow over the long term.

I know that some people, in the House and outside, believe that the renewables obligation should be replaced. They cite the success of feed-in tariffs, particularly in
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Germany, as proof that they constitute a more effective means of developing renewables. I think that we should be clear about the economics. Whatever the merits of feed-in tariffs in the context of other countries’ energy systems, we need to consider what will work best here in the United Kingdom. Germany has benefited from a consistently supportive policy for renewables since the early 1990s, and it is paying dividends. That clarity and consistency of approach has been a big part of Germany’s success, which we celebrate with our German colleagues.

UK renewables investors have highlighted certainty and consistency as two of the factors that will be crucial to continued and rapid growth and development of renewables in the UK. That is why our measures will build on and strengthen the renewables obligation. Our reforms are the result of more than 18 months of working closely with renewables investors and others to ensure that we got them right.

Steve Webb (Northavon) (LD): The Secretary of State has rightly praised Government clarity and consistency as a way of raising renewables. Is that why the UK is so low on European league tables—because this Government have not provided clarity and consistency?

Mr. Hutton: Oh dear, oh dear. I think we have returned to the mood created by the hon. Member for Dundee, East (Stewart Hosie). That is simply not the case. As I said a moment ago, the renewables obligation has allowed renewable electricity generation to double in the UK. The hon. Gentleman’s proposals would create a lack of the clarity, uniformity and confidence that investors want to see in the UK.

Our reforms will make the renewables obligation more efficient for renewables deployment from 2009 to 2015. As a result of our reforms, we expect the electricity generated by renewables obligation-eligible renewable sources to treble by 2015, and that will be only the first instalment of a major expansion in renewables over the years to 2020 and beyond.

Tomorrow we expect to hear the Commission’s proposals on how the new EU target will be implemented and shared among member states. We have made it clear that other measures will be required once the detail of the EU target has been finalised. As I have said, I plan a public consultation in the summer leading to the publication of our renewable energy strategy in the spring of next year, once the EU directive has been finalised. In the meantime, I am convinced that the right next step forward is through the clauses in this Bill to strengthen the renewables obligation, maximise its effectiveness and help drive greater deployment of renewable electricity in the UK. I strongly believe, as does the industry, that the principal barriers to renewables deployment in the UK are not financial, but are to do with the planning and the grid connection regimes. That is why the Government are taking steps to address those issues in the Bill.

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