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We face replacing many of our power stations by 2020; some 30 to 40 per cent. of our installed capacity will be replaced. As for the best estimates of when nuclear power will come on stream, even if everything went right and a nuclear power station were built ahead of schedulethat would be unparalleled in the worldeven if the permissioning regime for a new power plant were fired up and there were lots of new officers, so the process was very quick and even if the planning process were relatively short, there would probably not be a single new nuclear power station on stream by 2020. Just conceivably, 1 GW of power might be generated by then, and 2018 is the earliest possible date; that would be possible if everything went right and a number of processes were carried out in
parallel, rather than in sequence. It is more likely that it would be the early 2020s before any new nuclear power went on stream in the UK.
The real energy challenge for the next few years is how we replace on-market principles without being able to demand that any of our power stations be replaced. Indeed, we may well be unable to demand that any nuclear power stations be replaced. We have to replace all our capacityand on a low-carbon basis, because as we heard earlier this evening, the EU is coming up with mandatory targets for the percentage of power that will come from renewables by 2020. That will require 15 per cent. of the countrys energy to be renewable and that means that 25 to 30 per cent. of our electricity must be produced from renewable sources. Similar mandatory EU targets on carbon emissions will be imposed by 2020. That power must be replaced, without any intervention from nuclear power, on a low-carbon basis, and that must be done in a reliable fashion so that the lights can be kept on and the market can keep running.
As things stand, the most likely way of achieving that is by gas generation, but that would result in our missing all those EU targets, as well as all our climate change targets. The challenge is to make sure that, over that period, the vast majority of the gap is made up either by renewables or by sustainable forms of energy, carbon capture and storage orand this is my personal choiceenergy initiatives such as making sure that any new gas power station is not only combined heat and power enabled but is attached to CHP distribution networks, so that its carbon footprint is half what it would otherwise be.
That is how the renewables obligation banding will move centre-stage. Regardless of whether we think feed-in tariffs would be a better idea in the first instance, it is important that we give the industry certainty and a forward look at how we will replace those forms of energy. To do so, we must introduce a renewables obligation banding system that will develop initiatives on CHP, biomass, mixed fuel and waste co-generation of power. Achieving a different mix of nuclear and sustainable power on the basis of a known, forward, reliable system of underwriting should be our priority. That is probably the key way in which we will bridge the energy gap by 2020 without any new nuclear power coming on stream.
The Bill is important, given its proposals on renewables and the renewables obligation certificates. Those systems will cause the market to ensure that we invest in renewable and sustainable energy. I therefore hope that the Bill completes its Second Reading. I endorse many other things mentioned by hon. Members, including the need to ensure that we encourage microgeneration by installing net meters alongside smart meters. Overall, we have to make an effort now on renewable and sustainable energy: to coin a phrase, there is no alternative.
Mark Lazarowicz (Edinburgh, North and Leith) (Lab/Co-op): As other Members have said, there is an immense potential for renewable energy in the UK. Our geographical location and features give us resources, particularly in wind, wave and tidal power, that few other countries enjoy.
Unlike some hon. Members, I recognise that the Governments policies have helped us to begin to tap the potential for renewable energy. It is disappointing that only 5 per cent. of electricity is produced by renewable generation, but that is five times as much as was produced when the Government came to power. When one starts from a base of 1 per cent., it is not surprising that it takes a while to reach a higher figure. Practical steps have been taken by the Government. By contrast, some of those who criticise the Governments record on renewables were not supportive of renewable energy when they were in local government and had to decide whether or not to support renewable energy projects. We should bear that in mind when considering their sincerity in promoting practical forms of renewable energy.
There is no doubt, however, that we could do a lot more with renewable energy, as is underlined by the example set by some of our European partners. They have set us an ambition to which we should aspire. As the Secretary of State said in his opening speech, that is not merely a matter of energy policy or environmental policy. There is a real opportunity for green jobsa massive number of jobs on a long-term secure basis. For example, the wind industry worldwide is worth £12 billion a year and is growing at 30 per cent. a year. There are also opportunities in the developing renewables technologies. I have in my constituency the headquarters of Pelamis Wave Power, which is a pioneering wave turbine technology company. That is already bringing jobs to my constituency and others in Scotland. We need to do more in the UK to draw from such potential.
The test for the Bill is whether it helps to advance renewable energy in the UK and whether it helps to bring about a step change in the take-up of renewable energy in the UK. The mechanism for bands for renewables obligation certificates, if applied in an imaginative way, can help to release the potential of the new pioneering technologies in renewable energy. I note, for example, that the British Wind Energy Association strongly supports changes to the renewables obligations system and the introduction of a banded system, even though that is likely to benefit technologies other than its own.
I recognise that there are questions about whether the renewables obligation certificate route is the best way to tap the potential of smaller producers and of microgeneration. If I may modestly refer to my private Members Bill a year and a half ago, that included provisions which required the Government to consult the industry to encourage it to bring forward proposals for microgeneration by domestic producers. If that does not result in the industry presenting practical proposals to promote microgeneration, the feed-in tariff is a mechanism that should be available, and it should apply particularly to small scale and domestic producers.
I was a little concerned that the Secretary of State suggested that the promotion of renewable heat was some way down the agenda for major shifts in Government policy. Again, I refer modestly to my Bill, which more than a year ago placed a specific obligation on the Government to promote renewable heat. I would not want to encourage the Ministers friends in Friends of the Earth or Greenpeace to go to the courts again and demand even more judicial reviews, but there
is a policy to oblige the Government to promote renewable heat, which I am sure the Minister will bear in mind.
Some of those involved in renewable energy suggest that there is a need to make it a specific primary duty of Ofgem to promote both renewables and energy efficiency. It would have been good to see that in the Bill. Perhaps it can be inserted at a later stage of the Bills passage through Parliament.
On energy conservation and energy efficiency, it would be good to get an update from the Minister on our efforts to get the EU to allow us to reduce the rate of VAT on energy-saving appliances. That was mentioned in the Budget last year and it would be useful to know what progress we are making.
Promoting renewables offers a more effective and quicker way of meeting our energy needs than would a new generation of civil nuclear power stations. I do not have time to enter into that debate, but I have not been persuaded that we need to go along the road of civil nuclear power. Like others who have spoken, I have looked at the example of Finland, whose new nuclear power station is well over budget and behind time. Despite the rigged pricing mechanism and subsidies to make it possible, it is still not meeting the objectives claimed for it by those who supported its development.
Finally, I shall touch on an issue that has been mentioned a number of times in the debate and in Parliament over the past few weeks: fuel poverty. In the past few days, we have again seen more increases, which have hit some of the most vulnerable in our society. I recognise that the Government are having meetings and discussions, but we need action now to respond to the damage that the increases could cause to hundreds of thousands of people in this country. That damage is taking place now and will take place in the next few weeks; we cannot leave the issue for discussions, however urgent, that will not result in specific policies until later this year.
We can address fuel poverty in a number of ways, but a comprehensive policy to encourage the take-up of social tariffs is part of the answer. There is clear evidence, already referred to today, that there could be a much better take-up of such tariffs if there were a more co-ordinated policy. There is certainly a case for mandatory minimum standards for social tariffs; such standards should have been in the Bill, and I hope that the Minister will introduce them during its passage.
There is a real crisis affecting some of the poorest in our communities, and we have to treat it with the urgency that it deserves if we are to address not only the financial consequences for those who suffer from fuel poverty, but the health effects on them. In extreme cases, fuel poverty can have life-or-death consequences for those who cannot meet their own needs as a result of the sharply increasing prices that we are seeing at the moment.
Alan Simpson (Nottingham, South) (Lab):
The most controversial thing about the Bill is the elements that are not included in it. The Bill makes no mention of feed-in tariffs for electricity or gas, nor of renewable heat. It does not really address fuel poverty issues. It does not mention any imposition of regulated social
tariffs. No clause addresses the urgent need for Ofgem to be restructured and the Bill does not honestly address the issue of who will pick up the costs of the disposal of waste.
To be fair to them, the Liberal Democrats were right to say that as it stands the Bill is a big-energy rather than a coherent-energy Bill. I hope that in Committee and on Report all its sins of omission will be brought forward in new clauses so that it is strengthened into a Bill that is genuinely appropriate to our time. Let us be clear about the time in which we are living. The intergovernmental panel on climate change warned the Bali climate change conference that the world has a window of opportunity of perhaps no longer than six to eight years in which to make profound changes to the nature of our energy systems. If we do not deliver those changes within that period, we are stuffed, because the feedback mechanisms of the planet are likely to outstrip any of the intervention measures that we put off until after the period has elapsed. Within the same big-picture scenario, petroleum experts argue about when we will hit peak oil and when oil output will start to decreasewill it happen in 2011, or not until 2015? The argument is now about when rather than whether.
Several Members have raised their concerns about the 15 to 27 per cent. increases in energy prices charged to UK consumers today and about the fact that the 70 per cent. increases in energy charges in the past three years have reversed the progress that was being made in the Governments fuel poverty eradication programme. At one stage, the number of households living in fuel poverty had got down to just over 1 million; now we are back to 4 million. My hon. Friend the Member for Coventry, North-West (Mr. Robinson) was right to say that as soon as the latest round of price increases kicks in, at least another half a million households will be added to those who are going back into fuel poverty.
At the same time, the Prime Minister rightly signs Britain up to the European Union target of 20 per cent. of our energy supplies being from renewable sources by 2020. If, for practical purposes, we set the target at 15 per cent., that will probably mean that between 25 and 30 per cent. of that will come from renewable electricity by 2020. Our starting position is that 1.75 per cent. of the UKs energy needs are supplied from renewable sources. I have a diagram setting out the European league table, which shows the UK ahead only of Maltaa record of leadership that makes our recent submissions to the Eurovision song contest look positively inspirational. We are leading from the back in this process, and the question is how we get out of the position that we find ourselves in.
I want to spend a little time on nuclear. I do not think that a single nuclear power station will be built. The House should remember that Margaret Thatcher promised to build 10 nuclear power stations and ended up building one. In the past eight years, the world collectively has built one new nuclear power station. The problems in Finland, where the power station programme is two or three years behind schedule, reflect the fact that over the past two years there has been a 300 per cent. increase in the costs related to nuclear construction. There is a six-year waiting list for
coolant pumps for nuclear reactors, and only two places on the planet produce the reactor vessels needed for nuclear power stations. It is just not going to work. When people start to see the disposal costs and who has to pick them up, the Government of the day will conclude, given the other problems that we have on our plate, that there are only so many lost causes that we can support. The nuclear programme will not materialise, but it will distract us from the more serious choices that we need to make in terms of renewables and fuel poverty.
My hon. Friend the Member for Coventry, North-West asked why the renewables obligation has not worked. I might be the only Memberor one of the few Memberswho generates clean energy from my home and who is entitled to claim RO certificates, and I have to tell the House that it is a bloody nightmare to try to do so. I have been unsuccessful in making my way through the morass of regulations. In the assessment of the Audit Commission and the EU, the renewables obligation is a phenomenally expensive way of doing things inefficiently.
By comparison, the German system of feed-in tariffs works so much better. It would be immeasurably better for me and my neighbours if we knew that, as in Germany, we would be paid four times the market price for clean energy that we supplied for a guaranteed period of 20 years. If one talks to people in any of the German cities that are pioneering Germanys drive to double the EU 2020 commitment, they will say that it is citizen-driven. It would be an act of political suicide for any German political party to talk of revoking that legislation.
Germanys difficulty is in keeping up with the momentum; ours is in finding a momentum. I hope that we will do that in building a serious engagement with renewables. That must, however, include the notion of renewable heat and gas. I went to see a plant in Munich where people take domestic or crop waste and put it not into incineration plants but biodigesters, where they harvest the methane and then use the existing network to pipe the gas back to provide energy to the estates from which they collected the waste. They are credited for that as having contributed to a closed cycle of taking a problem and turning it into a solution, which they were able to do by changing the nature of the energy market. That is the significance of the feed-in tariff systemit shifts power from corporations receiving subsidies to citizensand the driving force behind the 50 countries worldwide that have opted for feed-in tariffs, not a renewables obligation.
Let me race quickly through my two remaining points. The first is the need to change Ofgem. When we asked Ofgem where it stood on social tariffs and enforcement, it said that it was shining a light on the problem. I think that it meant shining a light in those areas where the sun never shines, because it does absolutely nothing in that respect. We must ensure that Ofgem puts at the forefront of its energy policy the duty to pursue demand reduction and to address and deliver on the targets for fuel poverty, renewables and cuts in carbon emissions.
Germany has reduced its carbon emissions by 97 million tonnes a year through its feed-in tariffs. In doing so, it has been able to tackle issues that relate to the poor. That is my final point. We know that
4.5 million households live in fuel poverty, but what does that mean in practical terms? Last year, 24,000 people died in this country of illnesses relating to fuel poverty. If we are to have an energy policy worth its salt, the poor have to be able to live to be part of it. If we fail in that, we have failed in everything.
Dr. Desmond Turner (Brighton, Kemptown) (Lab): I am not going to devote any of my precious minutes to the nuclear question for the very simple reason that, as my hon. Friend the Member for Nottingham, South (Alan Simpson) said, it is quite irrelevant to the scale of the challenge facing us. Even if they are built, not one single kilowatt-hour will be provided from a new nuclear station to address the coming energy gap, or to help us to meet our climate change demands.
Enough of nuclearit is renewables that seriously matter at the moment, for various reasons. My right hon. Friend the Secretary of State, in opening this debate, put the issue fairly in the context of climate change. He made that the central issue, and it is a yardstick by which the Bill must be judged. I have to say that when I opened the Bill I was painfully disappointed at its lack of promotion of renewable energy. It has essentially only one provision relating to that matter, and I am afraid that I want to argue about it. Having said that, I guess it is not such a bad Bill, provided that it is very significantly amended. But without significant amendment, it is a feeble Bill that does not address the real issues.
The EU renewable energy target is 20 per cent. of total energy, not just electrical energy. That figure translated into British terms means, according to various estimates, that between 37 per cent. and 47 per cent. of our electrical generation will have to come from renewables by 2020. We are struggling badly enough to meet our existing renewable electricity generation targets. We will miss the 10 per cent. targetthere is no doubt about thatand 20 per cent. by 2020, if we continue on a business-as-usual basis, is looking pretty sick. Now is the time. There is a need, an absolute imperative, to make a commitment to make a step change in our energy policy. Now is the time to address that issue in the Bill, but it is not there. I find that deeply strange, deeply worrying and more than a little disappointing.
Let us talk about some of the possible prospective changes. I shall jump into the renewables obligation certificates versus feed-in tariffs argument as well. I am not just followingthe records will show that I have been advocating feed-in tariffs, as opposed to ROCs, for years. The ROC is just about the most inefficient, expensive and administratively cumbersome way of promoting renewable energy that anyone could possibly think of. It is very British. One just has to look at the comparison between the German experience, with its feed-in tariffs, and our own. The Germans have deployed about 10 times as much renewable energy in the same time for no greater public cost. Therefore, per gigawatt of renewable energy deployed in Germany, the feed-in tariff system has been much cheaper to the public purse.
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