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Mr. Weir:
I hear what the right hon. Gentleman is saying about offshore wind, which is clearly an important way forward. However, the deep offshore wind and marine renewables sector has expressed concern about changes in energy legislation and I have corresponded with the Minister for Energy on this matter. Although there are grants under the present system, I understand that they are repaid by future profit, but under the new scheme a choice will have to be made between the double-banded renewables obligation certificates or these grants, and I am told that that will result in the sector being unable to get investment for many of these projects.
Will the Secretary of State look at that again, because deep offshore wind and marine renewables are an important part of the renewables future, and unless we get this right, it could have a serious impact on our ability to meet the targets?
Mr. Hutton: It is true that companies cannot choose between grants or renewable obligation certificates. That has been the long-standing position, but perhaps the hon. Gentleman would like to intervene later on my hon. Friend the Minister for Energy. I am sure that that debate will be a fascinating one for us all to read in Hansard at our leisure.
Last week, as the hon. Member for Rutland and Melton pointed out, the Government published our own route map for achieving our ambition on renewable energy. A tenfold increase in renewable energy within the next 12 years is, I accept, a hugely ambitious target. We also aim for a sevenfold increase in the amount of renewable electricity generated in the UK and we are proposing measures that will extend and raise the value of the renewables obligation—the principal mechanism of incentivising such investment. We are proposing to introduce a new financial incentive to deliver a tenfold increase in renewable heat sources as well. Again, the hon. Gentleman referred to many of the technologies, including ground-source heat pumps, that could make a difference in that respect. We will consider increasing financial support, including feed-in tariffs, to stimulate microgeneration of heat and electricity in our homes.
I have to say that the policies of the Conservative party, as I understand them, represent in all those regards not a step forward, but a step backwards. The one thing that investors tell us time and again is to keep the incentive regime predictable and not to scrap the renewables obligation for large-scale electricity generation. So what do the hon. Member for Rutland and Melton and his party actually propose to do? They still propose to scrap the renewables obligation— [Interruption.] If the hon. Gentleman would like to correct that position, he is welcome to intervene.
Charles Hendry (Wealden) (Con): The Secretary of State should go back to the consideration in Committee of the Energy Bill, where we made it quite clear that we support the banding of ROCs for larger-scale projects. On feed-in tariffs, the measures that we proposed would give the Secretary of State discretion. He could therefore decide at what level feed-in tariffs would be appropriate for microgeneration and at what level ROCs would be appropriate. We would give him as much flexibility as possible because we recognise that the two systems can work side by side, but we want to give him the discretion to decide at what level they come in.
Mr. Hutton: I suppose that that is a clarification. [Interruption.] It is a clarification of sorts. I confess that I have simply referred to the Conservative party policy documents. Obviously, the hon. Gentleman has announced today that they have all changed. I very much— [Interruption.] Am I wrong to say that they have changed or am I right? I am not sure what the hon. Gentleman is talking about. I suggest that he read his own party’s policy documents. He will find them quite explicit—later in the debate, we can confer about that—and they confirm the Conservatives’ current policy.
Mr. Willis: May we perhaps concentrate on Government policy, and may I ask the Secretary of State a simple question? There have been estimates that up to £100 billion will be needed to fulfil the obligations courageously set out last week. Will that will be loaded through the taxpayer or entirely through energy bills?
Mr. Hutton: This is an Opposition Supply day, so it is quite reasonable for me to question the hon. Member for Rutland and Melton about his party’s policy.
Returning to the point raised by the hon. Member for Harrogate and Knaresborough (Mr. Willis), the £100 billion figure is the sum total of private sector investment needed to finance this change in our electricity consumption. Yes, it will be paid for, ultimately, by consumers. That is true, and we have set out in the document our baseline assumption about the impact on bills and what it will mean.
We will need to do more on energy efficiency and providing further help and support for fuel-poor households—we accept that challenge—but as I am sure the hon. Gentleman understands, as a distinguished Select Committee Chairman, there is no way of somehow conjuring up that money out of nowhere, with no consumer ever being affected by it and all of us getting on with the rest of our lives without noticing that £100 billion. We will notice the £100 billion in our bills over the next 10 years. There is simply no other reality for us to address. The challenge for the Government is to mitigate the impact of those rising bills. Again, in our renewable energy strategy, we set out some ways in which, sensibly, we could do that, but we must all keep in mind that simple reality.
I want to come back to the point made by the hon. Member for Rutland and Melton about feed-in tariffs, because he is right that they have had a significant effect in many other countries in bringing on new technologies, but at significant cost to consumers. Germany, for example, is often cited, as it was today by the hon. Gentleman. He, like the House, will be aware that there are moves to reduce the feed-in tariff because of the impact on consumer bills.
At a time of rising energy prices, it is incumbent on us to take into account how we make the transition to a greener power generation system. We must take into account the impact on people’s bills, because our constituents will come to us and say, “Why are my energy bills going up to meet the costs of going green?” We must have convincing arguments for that.
Mr. Robert Flello (Stoke-on-Trent, South) (Lab): Indeed, that impact will be not only on everyday folk through their energy use, but on companies in the ceramics industry in my constituency, which are high users of gas, for example. There will be an impact on the ability to produce products that can be sold at a price that people can afford.
Mr. Hutton: We have to be aware of the impact not just on consumers, but on industry. I want to come to that in the context of my remarks on the emissions trading scheme.
Paul Flynn (Newport, West) (Lab):
On the question of costs, how has my right hon. Friend become bewitched by the pied piper of nuclear power? It has been heavily subsidised, never delivered on cost or on time, and left
us a £73 billion legacy. The new nuclear facility in Finland is already two years late and £1 billion over budget. Are not all the other alternatives—wind, wave and the other renewables—far more attractive and practical? They will certainly come in at better value than nuclear.
Mr. Hutton: I do not think we should say no to any low-carbon form of power generation. Nuclear power is a proven and reliable way of generating low-carbon electricity, and I think it would be wrong for a generation that has taken advantage of the benefits of reliable nuclear power, as this generation has, to say to future generations “We are sorry, but we are not going to give you the option of nuclear power in the energy mix.”
My hon. Friend has a difference of opinion with the Government on nuclear power, and I am sorry about that. I do not think that he takes into account the new economics of energy in the world, the high—probably sustainedly high—prices of fossil fuels, and the necessity of action on climate change and the impact of a carbon pricing mechanism such as the emissions trading scheme. All those changes have opened up a space in which new nuclear facilities can operate, which is why so many countries around the world are actively pursuing the nuclear option, wisely and sensibly in my view. At the end of the day, however, it is for the private sector, not the taxpayer, to finance investment in a new nuclear power station, and my hon. Friend’s concern about subsidy is therefore misplaced.
Mr. David Hamilton (Midlothian) (Lab): Some of us are sitting on the fence in relation to nuclear power, and like others I am still to be convinced, although I am not closing my mind to it. As consumption in China and India is expected to rise by 50 per cent. between now and 2030 and as coal will have to be burnt, surely a country that has extracted only 15 per cent. of its coal reserves should be talking about major investment in the coal industry as well as the nuclear industry.
Mr. Hutton: I strongly agree with my hon. Friend. I think that we must keep the option of clean coal on the table as well, and that it would be wrong to introduce new measures, as proposed by the Conservatives, which would make it impossible for new coal-fired power stations to be commissioned at any time soon in the United Kingdom.
Richard Ottaway (Croydon, South) (Con): The nuclear industry is complaining of a shortage of skills in the sector. Its main complaint is that it has nothing to plan against when it comes to recruiting and training people. What certainty can the Secretary of State give the industry, and how will he provide the skills that are needed?
Mr. Hutton:
I agree with the hon. Gentleman; the issue of skills is a potential key bottleneck in the United Kingdom’s nuclear renaissance, and we must address it systematically. How can we do that? We can do it in a number of ways. Obviously a deal flow on new nuclear power generation will create the certainty to which the hon. Gentleman refers, and I hope we will begin to see that. In the meantime, however, there are things that we can do, and are trying to do, to address the problem that he has highlighted. The National Skills Academy
for Nuclear, for instance, has recently started to function, and it is taking on and planning to train 1,000 extra apprentices in the industry.
What we cannot afford to do is wait three or four years before doing anything to address the skills problem. If we do that, our ambition will be constrained and we will probably have to rely on migrant experts to come and help us with our nuclear programme. I see this very much as an opportunity for the nuclear industry in the United Kingdom to undergo a significant revival.
I heard a Liberal Democrat say in response to a comment from my hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson) that there were no suitable British companies. If that is really the Liberal Democrats’ view, I think that they should get out of the House a little more and travel around to see some of our outstanding manufacturing companies, which have tremendous potential to create tens of thousands of highly skilled jobs in this sector, many in parts of Britain that desperately need them.
David T.C. Davies (Monmouth) (Con): While we may disagree on other matters, does the Secretary of State not share my concern that, paradoxically, those who are most worried about global warming appear to have shut their minds to the only reliable form of electricity generation that does not generate any form of carbon dioxide? Does he not find that puzzling? Will he ensure that we get on with building nuclear power stations as quickly as possible? Rather than building only enough to generate 24 per cent. of our electricity, should we not go beyond that, as the French have?
Mr. Hutton: I hope the hon. Gentleman feels better for that. I agree with him about the scale of our ambition. At present about 19 per cent. of our electricity comes from nuclear sources, and I have made it clear that we should not set a cap on the contribution of nuclear power in the future. That is for the market to decide, not Ministers. My personal sense is that our ambition should be significantly higher, for the good and sensible reason the hon. Gentleman has given: that such power is low-carbon and reliable, and the technology is proven and safe.
We would be cutting off our nose to spite ourselves if we were to take an ideological view about nuclear. In the 12 months that I have been in this post, I have learned that the ideologues on energy policy are those who jeopardise our energy security the most. What we need is a hard-headed, practical, common-sense view about how we can have a broad-based energy policy in the UK that utilises all the technology available to us, including nuclear. We are going to need all those energy sources in order to be sure about our energy supplies in the future.
There is a long section of my speech dealing with nuclear, but I might already have dealt with the subject.
Mr. Jamie Reed (Copeland) (Lab): Before my right hon. Friend departs from the issue of nuclear, on skills retention and development in the UK, will he confirm that the national nuclear laboratory will be of fundamental importance in making us a world leader yet again? Also, as to the decommissioning costs of the civil nuclear programme, can he confirm that the £73 billion or £78 billion that is often talked about—sometimes rather glibly—is principally a military waste inventory?
Mr. Hutton: My hon. Friend probably knows more about the nuclear industry than any other Member, having worked in it for many years and now representing Copeland, which adjoins my constituency. He is right about the legacy issue, and he is right generally about the role of nuclear going forward. I pay tribute to his work.
I hope that we are all agreed—perhaps with the exception of my hon. Friend the Member for Newport, West (Paul Flynn) and others who share his view—that the job in terms of nuclear is to clear away the barriers to investment in new nuclear, strengthen the regulatory framework, create a clear, fair and predictable planning process, incentivise the UK supply chain, where there are tens of thousands of jobs in the making, and continue to build public confidence in a long-term solution to waste management.
Anne Main (St. Albans) (Con): Will the Secretary of State give way?
Mr. Hutton: Will the hon. Lady allow me to speak for a little longer?
We are beginning to develop an important consensus with the Opposition party on the importance of new nuclear as part of the UK’s energy mix. I very much welcome that, and I also welcome the distance travelled by the hon. Member for Rutland and Melton, although even now a nuclear investor could be forgiven for not being entirely clear about his party’s view on some of these matters. Not that far into the past, I and many others heard the Leader of the Opposition say that his
“policy, green energy first, nuclear as a last resort, is absolutely right.”
The hon. Member for Rutland and Melton very shortly afterwards popped up and said, in an attempt to correct his leader, that it was not a last resort, but just “two words” in a document that “we binned months ago”. The Conservative party’s green supremo, Mr. Zac Goldsmith, upon whose shoulders the Tory detoxification process largely resides, then described nuclear power as a total waste of money and stated that
“if the party said nuclear power was good, I’d fight like hell against that.”
No wonder, then, that recently Baroness Warsi—a member of the shadow Cabinet, no less—in response to a question from Andrew Neil about whether the Tory nuclear policy was unfathomable, replied simply, “Um, it is.”
The planning reform Bill debated in the House last week is seen by every potential nuclear investor as critical, and we cannot afford a rerun of the six-year Sizewell B inquiry. Those who opposed the Bill—
Mr. Hutton: I have not yet quite finished this point. I will give way to the hon. Lady shortly. [Interruption.] This is the only part of my speech that I am actually enjoying, so I hope that she will let me finish it.
Those who oppose the Planning Bill put our country’s energy security and our climate change objectives at direct risk. Investors need predictability. We are in a fiercely competitive global market for new nuclear and I
want to ensure that investors see the UK as the best new-build market in the world. Our planning reforms will help us to achieve that.
Anne Main: I thank the Secretary of State for giving way. Will he briefly address the comments of Hamish Roberts, managing director of the Aon natural resources team for strategic risk management? He said that the Government’s plans for nuclear expansion are unachievable unless they think beyond the risks of safety. Will the Secretary of State address the terrorism risks in future plans for fuel security?
Mr. Hutton: I have not seen that comment, and I do not believe that the ambition we have set out for nuclear is unachievable. Of course we must address the issue of nuclear safety, but nuclear power in the UK is a safe and secure form of technology. There is very substantial security designed specifically to deal with terrorism, as I am sure the hon. Lady will know if she has ever visited a UK nuclear power plant. So I do not think that terrorism is the issue here. Security certainly is, but our nuclear industry is a secure industry. Nuclear is not a last resort, as some have said, but a vital resource for our country and I hope that there is emerging common ground between us on that.
As we bring on these low-carbon technologies, we are not naive enough to dismiss the importance of fossil fuels for UK energy security. Generators will want to continue to have the flexibility that fossil fuels provide to cope with peaking demands, and they can have that flexibility while meeting our international climate change obligations. As we all know, emissions are capped by the EU emissions trading scheme—not an emissions cap on individual technologies, because that is not necessary, but a cap for power and energy-intensive sectors as a whole.
That is why I believe that the Opposition’s new policy on the future of coal is another potential threat to UK energy security. In practice, it would place an effective moratorium on new cleaner coal facilities in the UK. It would place a double dose of regulation on energy investors for no beneficial effect. It would lock in older, higher- emitting coal generators and would not make a jot of difference to whether we were more or less likely to meet our climate change targets. Instead, it would necessarily make us more reliant on gas imports—at a time when gas supplies around the world, as we all know, are increasingly politicised.
Policies that might get three cheers from some lobby groups usually turn out not to be worth the paper they are written on. If one prods this latest one from the Opposition for 30 seconds or so, it becomes clear that it is ridiculous—short-term, populist, headline-seeking and naive. In fact, it looks at first like a Lib Dem policy, not a policy from a party that aspires to be in government. It is not just my views on these matters that, I am sure, the hon. Member for Rutland and Melton would take seriously; it is the views of Richard Lambert, from the CBI, who has condemned this policy in very trenchant terms, and David Porter, from the Association of Electricity Producers. Effectively, the Opposition policy is to make carbon capture and storage mandatory before it has been demonstrated successfully as a technology. That is the wrong approach.
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