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I know that the Government are concerned about investors. They want to protect existing investors, and they do not want uncertainty, but the ROC system has
uncertainty built into it, in that the value of a ROC is not certain. With a feed-in tariff system, the values are certain and investors can invest with confidence and certainty. Whether one goes ahead with the ROC system and bands it or uses feed-in tariffs, grandfathering arrangements must be made to protect existing ROC holders. Does it therefore matter whether one is grandfathering for a banded ROC system or a feed-in tariff system? I am confident that, if we take the opportunity to move to a feed-in tariff system now, we will have a much greater chance of succeeding in our objectives than if we do not. It is worth doing and will get us more gigwatts for the buck.
I want to consider Ofgem. During the passage of the Energy Act 2004, I tabled an amendment in Committee to give Ofgem a primary responsibility for promoting renewable energy. It was passed—the first time, as far as I know, that a Government had been defeated in Committee since the Rooker-Wise amendment approximately 30 years ago. I was very popular with the Chief Whip. Of course, the amendment was overturned on Report, but, as the Bill progressed through the House of Lords, Ofgem was given a secondary duty towards sustainable energy.
Has that made any difference to Ofgem’s performance? I cannot find anyone in the industry who has noticed it. Ofgem pays serious heed only to its primary responsibility. If we are to get more out of Ofgem, we must make sustainability a primary duty. In the modern context, sustainability is far more important than Ofgem’s current obsession with security of supply. There is no need to worry about security of supply if we operate a proper energy policy. We must amend Ofgem’s remit.
Ofgem has not performed impressively on consumer protection. Did it succeed in stopping the energy companies making billions in windfall profits as a result of the failings of the first phase of the EU emissions trading scheme? No. Is Ofgem succeeding in protecting consumers in any way from the oil price increases that are fed straight through by the energy companies to consumers, putting, as my hon. Friend the Member for Nottingham, South reminded us, another 500,000 people into fuel poverty? No, it blatantly is not. Has Ofgem managed to help with grid connections, over which it has a great deal of influence? No.
However, Ofgem was seriously influential in forming our current British electricity trading and transmission arrangements, which include transmission charges, based on location. The further a generator is from a notional centre just north of Birmingham, the greater the charge. Where are the renewable resources in this country? They are as far as possible from that centre in Birmingham. That must be revisited.
Time is against me. I have a list of prospective amendments, which my hon. Friend the Minister for Energy will receive in due course. We have an opportunity to make a difference. The Bill in its current form will not, and it must therefore be seriously amended and improved.
9.9 pm
Emily Thornberry (Islington, South and Finsbury) (Lab):
I would like to discuss many different aspects of the matter that we are considering. However, given the
amount of time I have, I will focus on renewables, especially our potential for using wind power.
Britain could be the Saudi Arabia of wind power. I understand that we have about 40 per cent. of Europe’s wind, which we could use to improve our country. It is said that there is no point in relying on wind power, because what do we do on the day the wind does not blow? However, according to the UK Energy Research Council,
“intermittent generation need not compromise electricity system reliability at any level of penetration foreseeable in Britain over the next 20 years.”
For those of us who do not have an engineering degree, I should perhaps go over some of the basics, because some of these things were beyond me. For those who think that a gigawatt is the brother of the Jabberwocky or something from a comic, it means roughly this. One kilowatt-hour of electricity is enough to power an electric bar fire for about an hour. One megawatt-hour will power 1,000 electric bar fires, while 1 gigawatt-hour will power 1 million electric bar fires for an hour. I will not make my whole speech in terms of electric bar fire units, but I hope that the House gets the idea, because that certainly helped me.
The Minister for Energy said this morning that we need a sevenfold increase in renewable energy by 2020. Most of that will need to come from an increase in renewable electricity, which means an increase from 5 per cent. of electricity coming from renewables to between 30 and 40 per cent. How are we going to do that in 12 years? It sounds like a fantasy, but it is possible. That is what the Labour party is about—we are about achievable goals and we can do it, as long as we are bold. Denmark got up to 20 per cent. of renewables from a standing start a few years ago, and we can do as well as that.
However, we need to make some difficult decisions and remove some of the obstacles that we have put in our own way. I am glad that the Government have already set about getting rid of some of them. First, we have created a market for renewables and established the renewables obligations—obligations on energy companies to provide a proportion of their energy from renewable sources. Introducing banding will mean that 1 GW of energy produced by offshore wind, tidal or wave power will create more renewables obligation certificates than the equivalent from onshore and other renewables.
Secondly, we have conducted two rounds of bids, in 2001 and 2003, to identify offshore sites for wind energy, amounting to 8 GW in total. Projects such as the London Array, the biggest wind farm in the world, have now been given the go-ahead through that process. In December, the Secretary of State extended the ambition for offshore wind, by announcing potentially 25 GW more in possible sites.
Thirdly, the committee on climate change, to be created by the Climate Change Bill, will set out measures to allow us to hit our aim of a 60 per cent. cut—I hope an 80 per cent. cut soon—in carbon emissions by 2050. The committee will give much-needed guidance and advice, in order to ensure that we push the renewables agenda forward. Finally, the independent planning commission, contained in the Planning Bill, will play an
important role in ensuring that applications for wind energy are dealt with swiftly and efficiently.
However, we still have too many self-imposed obstacles in our way. The sites for offshore wind that were identified in 2001 and 2003 are taking too long to come to fruition, and no wonder when one considers all the hoops that applications have to jump through. First, the Government identify the areas. Secondly, the Crown Estate is given these and asks for bids for development. Thirdly, companies make bids. Fourthly, the Crown Estate gives exclusive rights to develop. Fifthly, the developers conduct an environmental assessment, which covers everything from bird migration and navigational routes to seals and the fishing industry, and so on.
Then the developers put together their plans for development and another application is made to the Department for Business, Enterprise and Regulatory Reform to build. After that, permission to install and build is given. Only then can companies finalise their connection to the grid, so that the necessary equipment can be procured and work planned. Companies then need time to get their financial package together, which can slow down the time it takes to start building. Then building can start, but before that happens, there must be further planning permission for transmission, hence the lag. From what I understand, the problem is not just the putting up of the poles and wires—that also needs planning permission—but the building of substations and the reinforcement of lines where necessary.
Ofgem needs to relax its policy on investment in the national grid, to allow a predict-and-provide approach, so that wind farms that are ready to go are not held back by a lack of capacity to get on to the grid. Ofgem’s role needs to be examined, to give it stronger direction and ensure that we focus on sustainability, either by directives from the Secretary of State or by changing its objectives in statute. We also need to put an end to the ludicrous situations in which an offshore wind farm application has jumped through all the hoops only to be held up by an individual onshore council’s planning committee, which is probably Lib Dem.
The proposed independent planning commission will have an important role to play in making the passage of applications for major infrastructure projects quicker and easier. However, as I understand it, its role will be limited to 15 big projects or 25 smaller ones. Given that there are currently more than 200 applications for generators over 50 MW or for large pylons under sections 36 or 37 of the Electricity Act 1989, the IPC will surely need to have a larger capacity in order to help the development of wind farms to motor on.
The present system is not working; 95 per cent. of applications for wind farms are not decided within the statutory 16-week period. Normally, 70 per cent. of planning applications are decided within 16 weeks, but for wind farms it is only 5 per cent., and most of those applications are rejected. So we need to ensure that the IPC has more capacity. Concern has also been expressed that the marine management organisation envisaged in the proposed marine Bill might give permissions on a different basis to that used by the IPC. Consistency is obviously important to the industry, if it is to develop properly.
There is currently 7.5 to 8 GW of wind power stuck in the planning system, half of which is being held up by the Scottish Executive. That is not good enough. If we really want to push on with renewables, we need to have a strong heart. We need to be radical, and we must not be afraid. We can do this, and if we do, we might well find that the policy initiative to build new nuclear capacity will be seen to be a cul-de-sac. We do not need that nuclear power. If we do renewables properly, we will be able to fulfil all our needs. Let us also think of the good that it will do for us and for our industry.
The Prime Minister said in November last year that we need vision and determination. He went on:
“If Britain maintains its share of this growth there could be over a million people employed here in our environmental industries”.
Building a low-carbon economy will enable us to create thousands of jobs, and Britain is exactly the kind of country that can do that. We have the capacity and the skills to build planes for our defence forces, and we have a huge amount of wind potential in this country. We just need to take away the obstacles that we have put in place ourselves. Let us concentrate on doing that. Let us be bold and radical. Let us lead the fourth technical revolution. Let us get on with it.
9.17 pm
Mr. David Chaytor (Bury, North) (Lab): I am tempted immediately to invite interventions, because of the brilliant timekeeping and discipline shown by all my colleagues. I want to speak in support of the Bill. The Government are to be congratulated on the way in which they have dealt with these extremely difficult issues. They are no longer kicking them into the long grass. However, I also want to endorse the comments made on both sides of the House about what is not in the Bill. I hope that as it passes through the Committee and into its Report stage, we shall see more about fuel poverty and social tariffs, and particularly about rising tariffs, which are one of the most effective means of dealing with fuel poverty and assisting energy conservation. We must also investigate feed-in tariffs, which have proved so successful in Germany.
I was struck by the earlier comment by the right hon. Member for Fylde (Mr. Jack) about the disconnect between the Energy Bill and the Climate Change Bill. He raised the question of whether they should have been combined. He asked whether the Bill dealing with the problem should be linked with the Bill offering some of the solutions. I would go further and point out that if we had a Department of Energy and Climate Change, we would have a completely different kind of Bill. Had we had such a Department 10 years ago, we would already have made far greater progress on renewables and energy efficiency. That is something to ponder.
I also want to point out a superb irony in the context of the nuclear debate, on which I want to focus my remarks. The chief lobbyist for the expansion of nuclear power and the creation of a new generation of nuclear power stations is the chief executive of EDF, a company whose nuclear power stations have been built entirely on the back of the French taxpayer in a state that is doing its utmost to prevent the liberalisation of the market. Yet Mr. de Rivaz comes here and tries to tell our Government that he can now build nuclear power
stations without taxpayer subsidy in a completely liberalised market. At the same time, however, our Government—who, like every Government in the world, have no experience whatever of regulating nuclear power stations built or operating without subsidy—are assuring the nuclear lobby that there will be no subsidy in the future.
We have a kind of twin conspiracy here, whereby the nuclear industry is pretending that it can build these stations without taxpayer subsidy, the Government are pretending that there will be no taxpayer subsidy, but at the same time everybody knows that nuclear can expand only on the back of open-ended taxpayer subsidy. I point that out because I really want to move on from whether we are pro or anti-nuclear, which is no longer the best way to approach the problem.
The real issue now is whether nuclear is relevant to climate change, whether it is cost-effective and whether it is timely. It seems to me that a number of my colleagues, particularly my hon. Friend the Member for Southampton, Test (Dr. Whitehead), have produced extremely logical arguments to explain why nuclear is not relevant to the urgent issue of climate change. It also seems to me that if we accept climate change as the imperative for energy policy, we have to focus far more intensively on the growth of renewables and energy efficiency policies to achieve the cuts that will have to be made by 2020. The Stern report was absolutely unequivocal that if we are to avoid dangerous climate change, deep cuts have to be made before 2020 to set us on the right trajectory to make the longer-term cuts by 2050.
I commend the nuclear White Paper, as it was an extremely honest document, but the time scale in it shows, as others have pointed out, that there will be no nuclear build until at least 2018—and even then, only if everything goes to plan. In respect of that time scale, therefore, nuclear cannot contribute to the need to have deep CO2 emissions cuts before 2020. Let us also remember that if there is nuclear build before 2020—or, as is hoped, 2018—we are talking only about one nuclear power station. There will not be a new generation of them producing electricity at that time. As the Minister said at Question Time last week, one new 1.2 GW power station will contribute 0.8 per cent. to total energy usage. The fact remains that the contribution of each power station, or even a new generation of 10 new power stations, is marginal in the face of the urgency of the threat of climate change.
Dr. Ladyman: Will my hon. Friend give way?
Mr. Chaytor: I happily give way, as I still have another minute.
Dr. Ladyman: I would be happy to donate another minute to my hon. Friend. His point that no new nuclear power stations will be available until 2018 is valid, and the argument advanced by my hon. Friend the Member for Southampton, Test (Dr. Whitehead) was also well made. However, my point would be that the Climate Change Bill already requires us to make 60 per cent. cuts in carbon emissions by 2050. That is a huge target, yet we are all getting letters from environmental groups saying that that is not good enough, as we need to make 80 per cent. cuts. There is no conceivable way of making that leap without having a significant proportion of nuclear power beyond 2020.
Mr. Chaytor: My hon. Friend makes an important point, but it comes down to whether any new generation or fleet of power stations will be built simultaneously or consecutively. Given that everyone agrees that it will take about 10 years for the first station to be built, and then after that perhaps five years, at least, for each successive power station— [Interruption.] Is that an official intervention from the Minister? I think that experience elsewhere in the world would suggest that that would be the sort of time scale. There is also the question of the resources, skills and people available to design and build future stations. Even if they can be built without taxpayer subsidy, we are not going to have a new fleet of them much before 2050, by which time the emissions problem will long since have needed to be solved. If we do not make the deep cuts by 2020, the escalation of emissions will mean that we are not on the trajectory to meet the 60 per cent. or higher cuts by 2050.
The time scale is a real issue, and there is also the question of whether we need to take the decision now, and whether we should focus on other aspects. Should we let other countries take the decision first? I am actually in favour of importing our electricity from French nuclear power stations. I can see that in some countries nuclear must be an option. I can see the logic of the Finns building a new nuclear station. I do not think that they have fully understood what it will cost them, but I can see the logic, given that they were so hugely dependent on Russian nuclear power anyway. I can see the logic of the French making the decision some years ago, given that they had no oil reserves and declining quantities of poor-quality coal. For some countries, at certain points in time, nuclear may well be the only option.
Mr. Geoffrey Robinson: I apologise for not being present for the earlier part of my hon. Friend’s speech, but may I point out that nuclear energy imported from France would be less attractive to him if he knew the terms of the existing interconnector agreement with France? We pay a huge amount on anything over a base level that we take from France, because there is a phenomenal premium attached to it.
Mr. Chaytor: I am not saying that that is the way forward; I am saying that it is an option. I am trying to make the point that we must take a different approach to the nuclear issue. Rather than being fundamentally for or against it, we must consider the role that it can play in any one country at any one time, in the light of that country’s other options. Given that we still have considerable coal reserves, along with the scientific basis on which to develop clean coal technology—which would open up enormous markets in India and China, and would be of enormous economic value to the United Kingdom in decades ahead—and given that we have, arguably, Europe’s best reserves of renewable wind, wave and tidal energy, I feel that at this stage a commitment to nuclear, which is what the Government seem to be making, may be premature.
Of course, the old concerns about nuclear remain. There are the issues of safety and sustainability, and of how, conceptually, we can pass to future generations a
legacy of unknown threats in view of the unpredictable consequences of storing highly radioactive waste for many thousands of years. I know that some of our scientist colleagues would say that the consequences are entirely predictable, but I believe that the capacity of human beings to predict so far into the future is not yet tested, and I find it difficult to understand how we can say that that is something that we should pass on to future generations.
My hon. Friend the Member for Copeland (Mr. Reed) dismissed the issue of terrorism—although I am glad that he raised it, because no one else had discussed it. All that is needed is one suicide bomber getting through the security zone in any nuclear power station in the world, and the nuclear fission industry is dead. All that is needed is one aircraft flying into Sellafield, or any other nuclear installation in the world, and the impact will be exactly as it was with Three Mile Island and Chernobyl.
Mr. Jamie Reed: I realise that time is tight, but may I urge my hon. Friend to speak to the director of civil nuclear security, who will allay all his fears on all those hypothetical points?
Mr. Chaytor: I would very much like my fears to be allayed, but I think that the risk is there. The evidence of what has happened in the last seven years in terms of the growth of international terrorism is something that we cannot simply ignore.
When it comes to costs, the White Paper on nuclear power is, again, extremely illuminating. The Government and the nuclear lobby are now saying that nuclear indisputably provides the cheapest form of low-carbon electricity generation, but the White Paper does not say that. It says that in certain scenarios it is likely that nuclear could be competitive. That is an important distinction, and we should be careful what we say about the costs.
At the end of the day, there is no solution to the question of waste storage. Theoretically a repository may have been designed, but no country in the world has built a repository, no country in the world is anywhere near building a repository, and no country in the world has the slightest idea what the ultimate costs of a repository would be. If the Government are to be absolutely committed and sincere in saying that any new nuclear build will have to internalise the full costs, that cannot happen until we know what the full costs of long-term waste management will be.
Let me say finally that I think the dilemma is that we are pretending that we have—
Mr. Deputy Speaker (Sir Michael Lord): Order. The hon. Gentleman has said his “finally”, I am afraid.
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