Clause
36
The
renewables
obligation
5
pm
Charles
Hendry:
I beg to move amendment No. 16, in
clause 36, page 23, line 47, after
‘sources’, insert
‘and research and development
costs involved in enabling the industry to make efficiency
gains;’.
The
Chairman:
With this it will be convenient to discuss the
following amendments: No. 21, in
clause 36, page 24, line 9, at
end insert—
‘(g) the
possible impacts on the environment associated with generating
electricity from each of the renewable sources or with transmitting or
distributing energy so
generated.’.
No.
17, in
clause 36, page 24, line 30, at
end insert
‘, providing
that such a review is undertaken at least every four
years.’.
Charles
Hendry:
The first of the two amendments in my name and
that of my hon. Friend the Member for Billericay examines the research
and development costs in enabling the industry to make efficiency
gains.
The Bill
outlines factors that the Secretary of State must take into account in
considering banding provisions, which predominately make a great deal
of sense. It looks at the costs, including capital costs, the income of
operators of generating stations and who is exempted from the climate
change levy, and the desirability of securing the long-term growth and
economic viability of the industries associated with a generation of
electricity from renewable sources. The amendment would simply add a
factor to that last one, which is designed to help the industry develop
as quickly as possible.
Challenging targets have been
set for the growth of the industry. The evidence is that it will follow
a traditional S-curve, with a slow start-up, then rapid growth before
tailing off subsequently. It is in all of our interests to have rapid
growth coming through as
quickly as possible, and therefore we should actively be encouraging
research and development work to make efficiency gains and to achieve
economies of scale. That is a different issue to proposed section
32D(4)(d) of the Electricity Act 1989, which relates to the long-term
growth and economic viability of the industries involved, as that does
not specifically involve trying to do anything to encourage early
growth. The amendment would add an extra element to encourage and
reward research and development. It would also help to encourage that
work to be done in the UK and, as it is research and development, such
work would not be affected by EU rules on state aid. Amendment No.
17 is a rather different issue and relates to the regularity with which
reviews should be carried out. As I said earlier, we support the
principle of banding, but we recognise that technology is changing fast
and levels of bandings need to reflect that. Having already seen how
the current ROC system has encouraged some technologies, such as
methane and onshore wind, over others, we recognise that there needs to
be change. ROCs have helped to mature the lower-cost industries
relatively quickly and now it is right to channel extra help to the
more expensive technologies. The Bill gives the Secretary of State the
right to alter bands, either at intervals set in secondary legislation,
or when there has been a specific change that he believes would justify
a reassessment. The amendment would put on the face of the Bill a
requirement that there should be a reassessment of the banding levels
at least every four years. If the Secretary of State decides to carry
out a review less than four years after the previous review, it would
not prevent him from doing so, but it would mean that we could not
simply stumble on without a review for several years. With the best
will in the world, things take longer than we might wish, but having
talked about banding for at least the last two years that I have been
doing this job, we owe it to those investing that they should have
clarity about how the process will move forward.
The Minister may say that the
order will specify the appropriate length of time between reviews, but
orders cannot be amended readily in Committee and there is a strong
case for the Bill to set down clearly when reviews will take place.
That would also make it easier for different industry groups to make
representations about the appropriate level of the ROCs and it would
drive forward investment if business knew when the next change was
likely to happen.
Martin
Horwood (Cheltenham) (LD): The hon. Gentleman is
addressing an important idea with this amendment, which is locking in
incentives to research and development. That is a laudable aim and we
would be entirely happy to support the amendment, should he press it.
That is a legitimate thing to take into account, and the Liberal
Democrats generally would support an amendment to the banding
system.
In order to
address amendment No. 21—and I am treading cautiously, having
been corrected this morning—I would like to comment on why we
think this would be a good idea. We also want to add a paragraph (g) to
proposed section 32D(4), so that the Secretary of State would be asked
to take into account the possible impacts on the environment associated
with generating electricity from each of the renewable sources or with
transmitting or distributing the energy so generated.
It is worth
remembering that the environmental movement has been around for a long
time, discussing many issues other than climate change. We can become
so focused on carbon emissions that we can sometimes forget that there
are other, wider environmental impacts that should also be taken into
consideration. The development of different, renewable technologies,
while obviously broadly a very positive development that we absolutely
support, can have environment impacts of their own and those ought to
be taken into account when banding is developed. This simple and
elegant amendment would ask the banding process to take into account
those wider environmental impacts.
Charles
Hendry:
Can the hon. Gentleman clarify what he means by
environmental impact? Would it, for example, also include the visual
impact? That would be seen to be an environmental concern in many
people’s eyes. How does one then assess wind turbines, for
example, which some people think are fantastic and wonderful while
others loathe
them?
Martin
Horwood:
The hon. Gentleman raises an interesting point. I
had not been thinking particularly of the visual impact, which I think
is dealt with by planning law—perhaps the Planning Bill might be
the place to address that particular issue.
I will, however, give one
example. We all know that if properly exploited, the Severn estuary
could contribute some 5 to 7 per cent. of the UK’s electricity
generating supply. In terms of carbon emissions it is an entirely good
thing that that should proceed and that either a barrage, lagoon system
or some other form of exploitation of the energy resources in the
Severn estuary should proceed. But there will be inevitable
environmental impacts—on the flow of the Severn and affecting
biodiversity and wildlife habitat—and it is very proper that we
take account of such impacts when banding different renewable power
sources .
There are
indeed concerns about their environmental impact of wind turbines,
although not so much their visual impact. I think that they are very
beautiful things. I have stood in many a Liberal Democrat supported
constituency, where the wind turbines have been supported by both the
local council and the local MP, and I have been underneath the wind
turbine and listened for this alleged noise and disruption that it is
supposed to cause people. I have heard very little that would disturb
me; I am an enthusiast for wind turbines. However, if they are
insensitively located and if the base of the turbine is rooted in an
environmentally sensitive habitat, such things would be taken into
account under the scope of our proposed amendment. It is quite proper,
even for those of us who support wind turbines, to acknowledge that
there are real concerns and I hope that the Minister will look kindly
on our amendment.
Anne
Main:
I am listening with a huge interest to the possible
impacts that the hon. Gentleman is discussing. I suggest that they are
so wide ranging that they would be almost unenforceable if they are all
put within this particular banding. Perhaps he would like to touch on
that, because there are so many visual, environmental, marine, and
biological impacts—the footprint of the wind turbine—that
I fail to see how they could all be encapsulated elegantly, as he put
it, in this amendment.
Martin
Horwood:
I am grateful to the hon. Lady for her
intervention but I do not think she is ambitious enough. A wide range
of policy tools that have already been developed from the EU’s
wildlife and habitat’s directive and from environmental impact
assessments are designed to tackle precisely such difficult problems.
This is an enabling provision that would allow the Secretary of State
to design a banding system that could take into account environmental
impacts of that kind—the technology and the systems behind
assessing environmental impacts are already well established so I do
not think that would be too much of a
challenge.
Anne
Main:
We often see from an environmental assessment
whether something will have a mild or moderate or severe impact, and
many of us will have seen that in the planning process. How will the
hon. Gentleman evaluate the differences between the benefit and the
harm? It will be a very fine and difficult line to tread and this Bill
is perhaps not the right place for it.
Martin
Horwood:
I am grateful to the hon. Lady, but she is
creating mountains out of molehills. All the other clauses in this part
of the Bill are similarly simply phrased relating to costs and, of
course, they will hide great complexity in the implementation. The same
applies to our amendment, but nevertheless I commend it to the
Committee.
Malcolm
Wicks:
This has been a useful discussion. Amendments Nos.
16 and 21 propose new matters that the Secretary of State should have
regard to. Amendment No. 16 seems designed to ensure that the Secretary
of State takes account of individual technologies’ research and
development costs when setting the banding regime. Few renewable
technologies that we brought forward under the RO are completely mature
and most have scope for technological development and efficiency gains.
Driving these gains is, of course, important, but I believe this
amendment is unnecessary as the Secretary of State will already need to
take account, under new section 32D(4)(a), of the costs associated with
generating electricity from each renewable resource. Any well managed
equipment manufacturer will set the price for their equipment at a
level that includes their necessary research costs. Therefore R and D
costs will already be covered in the banding regime, because these
costs will form part of the costs that a developer will pay for the
equipment that they use to generate electricity.
Furthermore,
for those technologies that are not yet competitive, even under the
banded RO, this Government have set up the Energy Technologies
Institute and the environmental transformation fund. In many cases, we
believe that high-risk projects, such as demonstration of wave and
tidal-stream technologies, are better supported by grant schemes that
can mitigate the initial capital risks, rather than simply by relying
on operating support under the RO, which will leave companies exposed
to high levels of technology risk. I therefore do not believe, on
reflection, that this amendment is necessary, but perhaps I can still
be
persuaded.
Charles
Hendry:
The provisions look at rather different things.
Subsection (4)(a) looks at the costs, including capital costs,
associated with generating electricity from each of the renewable
sources while our
amendment covers the R and D costs involved in making efficiency gains.
That involves the understandable R and D that has to be gone through
anyway in order for the project or particular source of renewable
energy to be developed, but that does not necessarily mean that we
would carry forward that technology as fast as possible so we can help
to meet the target the Government have set for themselves or have had
set by the European Union. The provisions are fundamentally different
and our amendment is specifically about how we would achieve efficiency
gains and would not deal simply with the R and D costs that would be
involved in any case in bringing the technology
forward.
Malcolm
Wicks:
Is this not a case in which the periodic reviews of
banding, which are the subject of another amendment, would allow such
consideration to be taken? If the technology has developed in such a
way, can we not look at it under future
banding?
Mr.
Brian Binley (Northampton, South) (Con): My concern is the
front-end costs. The costs of creating the technologies we need to
create in order to set all this renewable and alternative energy will
be very front-ended and we need to give all the help we possibly can if
we are to hit the targets we need to hit. It seems to me that the
suggestion of my hon. Friend the Member for Wealden would aid that
process and would be in the interests of the Minister’s
objectives. I am not sure that the Minister has really taken into
account that front-ended nature of the research and development, but
that is necessary if we are to progress in the way that we need
to.
Malcolm
Wicks:
As I said earlier, I hope that we have some capital
grant schemes to enable R and D. I mentioned the new Energy
Technologies Institute, which is particularly important, but I could
also note the support we are giving to marine technologies, supporting
them in an early phase and then again in order to get them through what
some people refer to as “the valley of death”, which is
the period between R and D and commercialisation. For marines, we have
a support fund, I think, of up to £50 million, so I understand
the critical importance of that early phase and what the hon. Member
for Northampton, South calls front loading.
Certainly, learning effects are
integral to technology development and cannot readily be separated out
under a banding regime. That is why, as I have said already, we have
the other support schemes that I have mentioned, such as the Energy
Technologies Institute, that support R and D. This has been a useful
discussion but I was about to say that I do not think that the
amendment is necessary.
5.15
pm
Amendment No.
21, proposed by the hon. Member for Cheltenham, has been cast slightly
wider, and seems designed to ensure that the Secretary of State takes
account of individual technology’s impact on the possible
environmental impact of new generating stations when setting the
banding regime. It is an interesting point. I hope to persuade him,
however, that sadly his amendment is not necessary, but I have some
sympathy with the intention behind it. It is a question of whether we
can proceed in better ways. The amendment seems difficult
to use for its intended purpose, and potentially risks confusing two
different processes. First, the amendment is drawn very
widely—the Secretary of State is asked to look not at the likely
environmental effects of a particular technology, but rather at the
possible effects of the generation, transmission and distribution
associated with a generating source. This could be defined in terms of
all possible positive impacts, such as carbon saving, or all possible
negatives, such as visual amenity, land use or impact on agriculture.
If we are into visual amenity, we are into difficult
territory—because the hon. Gentleman wanders and sees a host of
wonderful wind farms, whereas others seem to see the devil incarnate.
Assessing a visual impact objectively is not always easy, although I am
rather on his side, by the way, on that argument. It is difficult to
see how such a comprehensive assessment could be reached, and then how
it could be reflected in the banding structure, without acceptable
levels of complexity and bureaucracy, and indeed,
disagreement.
Secondly,
we need to bear in mind the possible impact on renewable deployment of
adding this additional requirement. We have set out our banding
structures to increase total renewables growth, increase RO efficiency
and help to bring forward developing technologies. The bands will
therefore be set to maximise renewable generation towards our targets
at best value for money. Future reviews would follow the same
principles. Therefore, introducing an additional environmental
assessment now would muddle the objective, and could even reduce the
ultimate level of renewable generation. If, as a result of this, we
reduce the incentives for some renewable technologies, rather than
seeing alternative greener renewables taking their place, we risk
seeing even greater levels of generation coming from fossil fuel
stations.
That does not
mean that we are not concerned about the effect on the environment of
renewable technologies. A number of elements in the Bill demonstrate
that we take this very seriously. For example, we will be introducing
powers through the proposed new section 32J to the Electricity Act 1989
in clause 36 to enable Ofgem to require biomass generators who receive
ROCs to provide information about where that biomass comes from.
Indeed, we are increasingly concerned about sustainability issues
around biofuels and biomass. So that is an important measure.
We will ensure that Ofgem
publishes the information. This reporting requirement will have the
express purpose of ensuring that we have an accurate picture of how
sustainable a given source of biomass is, and that this is exposed to
public scrutiny. There is also the power to exclude certain renewable
technologies or sources from the benefits of the RO, and this is laid
out in clause 36, and proposed new section
32C(1)(a).
However,
the environmental effect of individual generating stations—which
will vary according to geography, business plan and supporting
infrastructure—is better addressed on a case-by-case basis,
primarily of course, through the planning system and environmental
impact assessments. A developer will have to satisfy the local
authority or the infrastructure planning commission—should the
Planning Bill go through—that
the environmental impact is appropriate and limited. This is the correct
stage at which to undertake a full environmental assessment. Will the
hon. Member for Cheltenham consider not pressing his amendment in the
light of my description of these important
issues? Finally,
amendment No. 17 concerns the timing of reviews of the RO banding
provisions. It is clear that, once implemented bands, should not be set
in stone and that will allow us to respond to technological and other
changes, thereby ensuring that the RO remains an effective and
efficient tool to promote renewable generation. For that reason we have
made provision in the Bill, in proposed new section 32D(8)(a), to allow
the bands to be reviewed. However, in considering the appropriate time
for and interval between reviews, we need to balance ensuring that the
RO remains cost-effective and efficient with the need to give investors
confidence and certainty about the support that they will receive under
the RO.
The timing of
those reviews will be set out in the secondary legislation and, in the
Government response to the consultation, we have made the commitment
that the first of these will coincide with the start of EU ETS phase 3
in 2013. The timing received strong support during the consultation
process because in future the support levels required for renewables
will be increasingly dependent on the carbon price under the EU
ETS.
As I have already
indicated, our job is to balance the need for a stable and predictable
system for investors and developers with the need to change support
levels over time to reflect changes in the cost of renewable
technologies and other market developments. The approach in the Bill
achieves this. Setting out the review timetable in secondary
legislation provides investors with the considerable certainty that I
have argued for, but still allows for flexibility. Any changes to the
secondary legislation are subject to statutory consultation. Given the
strong industry support for linking the review of the EU ETS timetable
and the sufficient safeguards provided by setting the timetable out in
the secondary legislation, will the hon. Member for Wealden consider
withdrawing his
amendment?
Charles
Hendry:
The Minister has responded to amendment No. 17,
but my sense about the banding decisions is that they go into the
“it’s all too difficult” box for a while. There is
lots of discussion and there is plenty of opportunity for people to
make contributions, but decisions keep being put off. That has been the
history of the past couple of years.
The Bill provides an important
opportunity to put the banding provisions in place, but we have been
talking about that for a very long time. Amendment No. 17 would provide
greater certainty so that people knew when a decision would be made on
changing the banding arrangements. That said, I think that the
Minister’s point about the next banding decision being taken in
2013 to tie in with the next stage of the EU ETS makes sense. Clearly a
four-year rule would not work with the 2013 date. I understand
the sense of the his point, so I will not press amendment No. 17 to the
vote.
I remain
disappointed by the Minister’s response to amendment No. 16.
There is a difference between the terminology, which he has referred to
about costs and
capital costs required to bring in a new technology,
and the different research and technology costs involved in trying to
bring about efficiency gains so that one can speed up the development
of that technology. I am sorry that he has not seen that distinction
and has not been prepared to agree with it. On that basis, we will seek
to push this amendment to a Division, because all we are arguing for is
research, development and efficiency. I am sorry that he cannot support
that.
Martin
Horwood:
Of the amendments tabled by the hon. Member for
Wealden, we remain sympathetic to amendment No. 16 and from what we
have heard during the debate if the hon. Gentleman wishes to push that
to a Division, we will happily support him. I missed the opportunity to
express further sympathy for amendment No. 17, which also seemed a
sensible issue to address. There is almost an outbreak of cross-party
consensus now.
Continuing that theme, I was
pleased with the Minister’s remarks on our amendment No. 21,
where he made very encouraging remarks and seemed to be, at least,
expressing support for the spirit, if not for the letter of the
amendment. If he is concerned that the amendment is too broadly drawn,
or that it might have unintended consequences—that seemed to be
the essence of what he said—I suppose that in a spirit of hope
we would be happy not to press it so that he would have an opportunity
to introduce one that was even better and that went a little further
than he went and explicitly made wider environmental concerns part of
the banding process in the
Bill.
Question
put, That the amendment be made:—
The
Committee divided: Ayes 7, Noes
9.
Division
No.
1
]
Question
accordingly negatived.
Charles
Hendry:
I beg to move amendment No. 18, in clause 36, page
29, line 30, after ‘“biomass”’,
insert
‘and to set out
acceptable circumstances for the growing of
biomass;’.
The
Chairman:
With this it will be convenient to discuss the
following: New clause 15— Extension of Marine Renewables
Deployment Fund
‘The Secretary
of State shall make regulations to extend the remit of the Marine
Renewables Deployment Fund to include support for the early development
of wave and tidal technologies that need to complete pre-competitive
research and development through deployment and
demonstration.’.
New clause 17—Use of
biomethane
‘(1) In section
32(8) of the Electricity Act 1989 (c. 29), in the definition of
“renewable sources”, at end
insert—
‘(2)
“and shall
include the use of any gas drawn from a gas network to which premises
supplied by the supplier are connected where at the time the gas is
drawn from the network the supplier has arranged for the shipping to
the consumer at those premises of the same quantity of renewable
biomethane gas and that quantity has been introduced to the gas
transmission or distribution system to which the consumer’s
premises are
connected.”.
(3) In
section 124 of the Energy Act 2004 (c. 20), after subsection (5)
insert—
“(6) For
the purposes of this section ‘supplied’ shall include
supply of any gas or other fuel drawn from a gas or other fuel network
to any premises where at the time the gas or other fuel is drawn from
the network by a consumer the supplier has arranged for the shipping to
the consumer at the same premises of the same quantity of renewable
transport fuel and that quantity has been introduced to the gas
transmission or distribution system to which those premises are
connected.”’.
Charles
Hendry:
After that moment of excitement, we move on to yet
another exciting amendment. I am certain that this one will have even
more support on both sides of the
Committee.
The clause
provides for a definition of biomass, which is certainly necessary. One
of the principal concerns about biomass relates to the conditions in
which it is grown. Clearing food stocks to grow it could potentially do
more harm than good if food prices for those in developing countries
increase, just as clearing rain forests to grow biofuels would do more
harm than good. Biomass and biofuels have an important role to play,
but not at any
cost.
The technology
is moving fast. We are seeing the development of cellulosic biomass,
which uses different parts of the same product for food and for
biomass. We are also seeing biomass being grown in terrains,
particularly those adjacent to deserts, which could not sustain other
crops. Over time, technology will resolve some of the concerns, but it
seems sensible that the Bill should give the Government the power to
decide which methods for growing biomass are acceptable and which are
not. The amendment simply seeks to make that small
change.
Steve
Webb:
We have a group that includes one amendment and two
new clauses, all of which deal with different sorts of renewable
technologies. New clause 15 relates specifically to marine renewables.
I hope that the Committee will bear with me. I want to deal with the
new clause in some depth, as it is
important.
The
Minister will have been well briefed and will know that the wording of
our new clause, which involves extending what the marine renewables
deployment fund does, has been modelled on a similar scheme in
Scotland. The wording is taken directly from the objectives of the
Scottish scheme, which, unlike the Westminster Government’s
scheme, has
succeeded.
At present,
there is a £50 million budget for the fund—the Minister
gave the figure earlier—and £42 million of that
has been allocated for what are called
“multi-device early stage
commercial generation facilities using technologies that have completed
their R&D and are ready to move into a commercial
environment.”
The
final words,
“ready to
move into a commercial
environment”,
are the
key. Certainly as of about a fortnight ago, the amount that had been
allocated under the heading was zilch, zippo, nada, nothing. In other
words, despite the fund having been announced almost a year ago, I
understand—again, I hope that the Minister will correct me if I
am wrong—that there have been just two applications for the
£42 million section of the fund, and they have both been turned
down.
5.30
pm
I am concerned
that this is one of those Government grant schemes—the
Department for Environment, Food and Rural Affairs is very good at
them—that sound great and get a good headline but do not
deliver. The fact that they have not spent the money is some indication
that they have not achieved anything yet. Our new clause would expand
the scope of the fund to bring in somewhat less commercially developed
technologies. In this context, we should examine tidal lagoon
technologies.
I said
at the beginning of my contribution that our new clause is modelled on
Scottish Ministers’ wave and tidal energy support scheme, which
also funds—this is the crucial word—pre-commercial
projects: the early development of wave and tidal technologies that
need to complete pre-competitive research and development through
deployment and demonstration. The Minister has referred to Orkney and
the European Marine Energy Centre. If I remember rightly, the Scottish
scheme has already funded about half a dozen projects, which have
already taught us things about those alternative
technologies.
Why are
we so concerned to see pre-commercial technologies supported more
effectively? My hon. Friend the Member for Cheltenham mentioned earlier
the Severn barrage issue and that by 2020, we could get 5 per cent. of
the nation’s electricity from that source. However, many people
are concerned that a full-blown barrage might be environmentally too
high a price to pay. The principal alternative, which the Department
for Business, Enterprise and Regulatory Reform’s own feasibility
study is examining, is tidal lagoons.
Interestingly, when the
Sustainable Development Commission considered the issue, it said
that
“there is little
authoritative evidence”
on the technology, which again indicates
how preliminary it is. To clarify, tidal lagoons, to quote from the
SDC, use
“hydropower
turbines in an offshore
impoundment”,
and
the,
“lagoons could
potentially be developed in a number of shallow coastal areas with
sufficient tidal
range.”
That is what we
are talking about, and the SDC said that it
“would like to see the Government
investigating their long-term potential by funding a demonstration
project”
Steve
Webb:
The SDC continued:
“This would allow a full
evaluation of the costs and the potential environmental
impacts.”
That is what
the SDC recommended, and if I am right, the Government set it up to
advise them on such matters. In due course, I should therefore be
interested in the Minister’s response to that recommendation.
There is already a fund lying dormant, because the Government cannot
even find anybody to give the money away to, so £42 million has
been set aside and they have not given anybody a penny
yet.
Malcolm
Wicks:
Does the hon. Gentleman not recognise that the
money has not been spent because no project has yet satisfied the
criteria? One does not just give money away—even in a fantasy
Liberal Democrat Government. One does so when the project meets the
criteria. One must do things properly.
Steve
Webb:
I can always tell that we are making a good point
when the Minister gets narky.
The whole point of the new
clause is that the criteria are too restrictive. Nobody has been found
to give £42 million to, because people cannot meet the
criteria. The new clause would expand the criteria so that the Minister
could not only get another nice headline, but achieve more and spend
his £42 million analysing technology that is not quite as
advanced as the scheme that he set up is looking for but has yet to
find. There is a sort of Bermuda triangle problem at the
moment.
The reason
that we must expand the fund’s scope is, to quote the SDC,
that
“there is a lack of
evidence with which to assess the long-term potential of tidal
lagoons.”
Given the
nature of the British isles, it says
that
“there is
potentially a significant resource in shallow water areas around the
UK.”
The commission also
talks about an “information gap” and
“a strong public interest in
developing one or more tidal lagoon demonstration
projects.”
There is the
Minister’s answer:
“one or more tidal lagoon
demonstration projects.”
The Minister urges me to be
realistic, but I am being exceptionally realistic. We do not call for
additional public spending or money that has not already been
allocated; the money is in the Department’s budget, allocated
for marine renewables deployment, but it cannot spend it because nobody
can leap its hurdles. We therefore suggest broader criteria, and the
evidence north of the border is that when broader eligibility criteria
are applied, schemes get in. Lessons are being learned north, but not
south, of the border.
John
Robertson (Glasgow, North-West) (Lab): The hon. Gentleman
has obviously done much more inquiry north of the border than I have.
Can he tell me what the likelihood is of a return on the money that we
put into such renewables? I am a Labour Member, and we do not have many
rural or coastal seats. What are the chances of the councils in those
areas allowing us to develop lagoons?
Steve
Webb:
I am slightly surprised by that intervention,
because part of the point of the technologies is that they are deemed
more environmentally friendly than some of the alternatives. A number
of Labour seats are not far from the Severn estuary, and a number of
Labour Members attended the meeting about the Severn barrage that the
Secretary of State organised a few days ago. This is not a rural
Tory-Lib Dem issue; it is one for all of us. Lagoons are regarded as
potentially a more environmentally friendly way of meeting our
renewable energy needs without the damage caused by bigger
schemes.
To answer the
hon. Gentleman’s specific question, I believe that the
Government are considering an application for the Humber estuary. I
have a suspicion that there might be some Labour seats in that
area.
John
Robertson:
And we would probably have the problems that we
seem to have in other areas. I return to my first question—what
are the chances of getting a return for our money? There is no point
putting money into such developments because the hon. Gentleman wants
to expand the criteria if, by doing so, we develop a form of energy
that is not sustainable and that is of no use. If we are going to spend
money on promoting energy policies, should it not be along the lines
that we should actually get a return for the taxpayer’s
money?
Steve
Webb:
The nature of the schemes that we are discussing is
that they are pre-commercial. The short answer is that we do not know;
if we did, we could make a commercial judgment, people could get
renewables certificates and a whole mechanism could kick in. We are not
at that stage; the point is that there are technologies that have
potential. In principle, tidal lagoons could give a
return—whether it would be a commercial return, I do not know.
It might well need the sort of subsidy that we are giving other
renewables.
I do not
understand where the hon. Gentleman is coming from. The technology is
at an early stage and we do not know whether it is the answer. There
are schemes to subsidise early-stage research on it, which will help us
to answer the hon. Gentleman’s question, but if nobody can get
money from the fund in the first place, that must be crazy. A fund of
£42 million has been set aside and the Government cannot even
give it away because nobody can clear the hurdles. That cannot be a
rational
strategy.
Mr.
Jamie Reed (Copeland) (Lab): The hon. Gentleman is making
interesting points. Does he share my fear that there is a risk that we
might spread our public money too thinly, on too broad a range of
potentially accessible and productive renewable resources? Does he have
any indication of the costs that lagoon projects might
entail?
Steve
Webb:
I do have that concern, because I understand that
the Scottish scheme, which is obviously on a smaller scale, has funded
nine projects. I do not know the precise details, but that might be
spreading the money a bit too thinly, as the hon. Gentleman says. We
might be able to learn more by giving a bit more money to fewer
schemes. There is a trade-off. A substantial sum of £42 million
has been earmarked, and a fair amount of pre-commercial research and
development could be done with that.
As I indicated earlier, tidal
lagoon technology is critical because the big-bang Severn barrage
scheme, which could account for 5 per cent. of all our electricity, has
environmental objections attached to it. Lagoons are the principal
alternative, and we need to know as soon as we can how viable they are.
The Government have set up a feasibility study, which will report in
two years. If it says, “We are worried about the environmental
impact of barrage, but we have no idea whether lagoons are any
good,” because there is no demonstration project anywhere, we
risk yet more delay and decades rolling
by.
Mr.
Reed:
In response to that point, surely we would know what
alternatives to the Severn barrage were available to us by dint of the
fact that projects would have taken place in
Scotland.
Steve
Webb:
No, because the things that have been funded in
Scotland are pre-commercial developments. That is the problem. The
title of the fund is the marine renewables deployment fund. It is
intended to fund things that are ready to be deployed on a commercial
scale. The technology is not yet there, and it is
unlikely—looking at the sorts of schemes that have been funded
in Scotland—that by the time the feasibility study is finished
they will have gone through all the early research and development, got
to the stage of commercial deployment, been deployed and be ready for
evaluation. That is why I want to try to remove the obstacle. If the
money is sitting there now waiting to be used, it seems criminal not to
do so.
John
Robertson:
The hon. Gentleman has been very generous with
his time, but I still want to get my head around what he is saying. The
£42 million is there to be used. Is he saying that we should
keep opening up the criteria until we have spent £42 million
just for the sake of spending it? I could be wrong, but if a Government
did that, would it not be the duty of the Opposition to call attention
to the fact that £42 million of taxpayer’s money had been
wasted? Should we not look at several criteria that suggest that there
is a chance that we will get a return for our investment, or do we
throw the money away and hope that some day we might get something
back?
Steve
Webb:
Let me take the hon. Gentleman through the steps of
my argument. Step one is that the Government have set up a Sustainable
Development Commission to advise them on sustainability, renewable
energy and similar matters. Step two is that the Sustainable
Development Commission has said that tidal lagoon technology is very
interesting, and that the Government should consider it as part of
their renewable energy objectives. Step three is that that same
commission has said—I think that I quoted this
earlier—that there is a huge information gap about that
technology. I started at the end, with the money, and perhaps I was not
clear about it, but my sequence of reasoning is that the technology has
potential. Expert advisers employed by the Government have said that
that is the case and that there is a gap in our knowledge. We need
demonstration projects and money for those projects. Where could the
money come from? There is a marine renewables deployment fund that has
not spent its money. With a
tweak that we know gets schemes in north of the
border, why do we not apply that available money to something that
needs doing? I assure the hon. Member for Glasgow, North-West that I am
not desperate to spend the £42 million on just anything lying
around. Independent respected advisers say that there is a need to
progress such schemes; there is no obvious source of funding beyond
this, and it seems to be a good way to spend the
money.
Charles
Hendry:
The hon. Gentleman has made an extremely
interesting case, for which I have a great deal of sympathy. It seems
that many of the Government funds have not been used adequately to
encourage microgeneration, photovoltaics and so on. Has he examined
whether the banding of ROCs could be used to help achieve the right
result? Were the banding set at the right level—two is suggested
for marine and tidal, but that might not be enough—would that
not have the same result?
Steve
Webb:
I am grateful for that intervention. The hon.
Gentleman asks a fair question. However, no one can get ROCs until they
generate on a commercial scale. Getting to that point is the barrier
that we wish to overcome.
Charles
Hendry:
The valley of
death.
Steve
Webb:
Indeed, the valley of death. We are trying to
overcome that hurdle and barrier and get to the point at which the
renewables obligation can kick in. The fact that the Government offer
two ROCs, or doubled ROCs, for wave and tidal stream technology,
suggests that they want to encourage it. However, if we do not get to
the starting block—or the starting ROC—we will face that
problem. I hope that I have given a flavour of what we are trying to
achieve through new clause 15. We support the fact that the Government
have a marine renewables deployment fund, and we would like to see it
deployed on pre-commercial technology, which is critical to the whole
renewable electricity strategy of the country.
Malcolm
Wicks:
This has been a useful debate. I hope that I can
persuade colleagues that the amendments and new clauses are not
necessary—I might need to speak at some length on
this.
5.45
pm
On amendment
No. 18, the Government believe in the importance of ensuring that the
most sustainable forms of renewable electricity are incentivised over
the long term. We are aware of the interest in the sustainability of
biomass. Earlier, the hon. Member for East Devon asked me a question,
and I managed to muddle up my answer through no one’s fault but
my own. By definition, crops grown principally for energy production
are known as energy crops, which seems perfectly sensible. Non-energy
crop biomass is any other biomass type. Energy crops include
short-rotation coppice willow and poplar, as well as elephant grass,
also known as miscanthus. Non-energy crop biomass includes crop
residues such as straw. No farmers should be left unable to sell their
crops as a result of the cap, which does not apply to energy crops. If
I am able to supply the hon. Gentleman with more information to provide
even greater clarification, I shall attempt to do so.
Amendment No.
18 would allow secondary legislation to set out acceptable
circumstances for growing biomass. The Government take sustainability
seriously. In 2006, we published research into the sustainable impact
of the major biomass fuels used under the RO—mostly co-fired
alongside coal. The study by Themba, an external consultancy that
specialises in the sustainable use of biomass, examined those major
fuels and found that the net carbon balance for the production,
transport and use of biomass for co-firing was positive in all
circumstances for both imported and domestic biomass. Clearly, as the
use of biomass grows, the potential for other fuels to be used and for
some of them to raise issues of sustainability, will also grow. That is
why the Bill contains provisions to introduce sustainability reporting
for all generators of more than 50 kW that use biomass.
Our approach to sustainability
of biomass is the right one, and the amendment is therefore
unnecessary. As I have mentioned, the renewables obligation order will
require generators to report on the nature, quantity and source of the
biomass, what land has previously been used for and whether production
meets any of the other existing or planned sustainability standards.
That information will be published by the authority, Ofgem, to bring
transparency to the issue. Clearly, we must balance the benefits of
regulating sustainability against the administrative complexity
involved and any evidence that such regulation is necessary.
We believe that having a
transparent reporting requirement is an appropriate approach to
monitoring the sustainability of biomass under the RO. Implicit in our
approach is the recognition that this is a developing area; as such, we
must keep it under review. If industry practices develop that have a
significant, negative impact on sustainability, we will, of course,
act. It would not be appropriate to introduce speculative legislation
specifying criteria for biomass when we have no compelling evidence
that its use in electricity generation is unsustainable. Our proposals
under proposed new section 32J(3) will allow us to build an evidence
base to help us to decide whether action is necessary in
future.
The amendment
is unnecessary. However, we recognise that there might be a case for
ensuring that the Government have powers to take further account of
sustainability issues relating to biomass. In terms of reporting to
Ofgem, to which the amendment seems to relate, we already have the
ability, under proposed new section 32J(3)(a), to specify the
information relating to biomass that must be provided.
If we need to act, we have
other powers generally under the Bill that allow us to take appropriate
measures through secondary legislation. First, under proposed new
section 32A(2), the Secretary of State may limit the eligibility of
specified renewable sources under the RO. Secondly, under proposed new
section 32D, the Secretary of State may allocate renewable sources into
different bands. Those powers allow for a range of responses. For
example, we might consider excluding certain forms of biomass if we had
concerns about their sustainability. That has been our approach to
peat, which is an excluded fuel. Such responses will, as ever, be
subject to consultation. For those reasons, I ask the hon. Member for
Wealden to withdraw his amendment.
Moving on to new clause 15, I
think that all Committee members are aware of the importance of marine
energy technologies and the part that they could play in our overall
renewable strategy. If marine energy technologies can be successfully
developed to the point at which their costs are reduced sufficiently to
allow them to compete alongside other forms of large-scale renewables,
they have the potential to make a very significant contribution towards
achieving our medium and longer-term renewable energy and emission
reduction
goals.
The
MRDF, to which the new clause relates, was designed to assist with a
commercial demonstration of the marine energy technologies that are
ready for full-scale deployment. Some £50 million has already
been allocated to that fund in order to support the first large-scale
commercial demonstration of marine energy technologies. Although no
technology developers have yet met the fund entry criteria, owing
mainly to a lack of data operating in real-life marine
conditions—not enough of the kit has been in the water for long
enough—we expect at least two developers to be in a position to
apply later this
year.
New clause 15,
tabled by the hon. Member for Northavon, suggests that we move the
focus of the MRDF scheme away from commercial demonstrations of new
marine energy technologies towards pre-competitive research, which
could duplicate other research funding. Perhaps it would help if I
briefly set out what we are currently doing on R and D for marine
technology.
Dr.
Brian Iddon (Bolton, South-East) (Lab): I was slightly
concerned to read last Sunday in The Observer that
Edinburgh-based Pelamis Wave Power is about to take its machine
offshore in Portugal, after trialling it in the Orkneys. As a result of
the lead that the Government have taken so far, I thought that this
country might be the first to begin the large-scale generation of
electricity from wave power. According to The
Observer, an Ernst and Young study recommended three
ROCs, instead of two, which might have kept Pelamis Wave Power, and
perhaps other developers, in Britain. Will the Minister comment on that
Ernst and Young report and the claims last Sunday in The Observer
on Pelamis Wave
Power?
Malcolm
Wicks:
First, let me pursue my own analysis. I, too, read
the article. I did not agree with all of it and hence checked the
football results in another newspaper in order to verify them, because
of my doubts about that particular
article.
Funding
of R and D for marine technologies has been available from our
technology standards board—I think that that should be the
Technology Strategy Board, but I stand corrected—the research
councils’ SUPERGEN marine programme and, of course, will be
available under the new Energy Technologies Institute. At the moment,
we are at the R and D phase, which we are taking very seriously.
However, I hope that we are approaching the deployment and
demonstration
phase.
Mr.
Swire:
I know that the Minister is not responsible for
other countries, and least of all European countries, as he has pointed
out already.
However, does he have any idea of how much other European countries are
spending on R and D in marine technology? Are we at the top of the
pile, or further
down?
6
pm
Malcolm
Wicks:
I believe that we are somewhere near the top, but
if I can get accurate data to send to the hon. Gentleman, I shall do
so. There is a militant tendency, of which I appreciate that my hon.
Friend the Member for Bolton, South-East is not part, to suggest that
other countries are way ahead on everything. They are not. We are one
of the leading nations, partly for geographical reasons—we are
an island people—in marine technology.
The ETI was
formed specifically as a collaboration between industry and the
Government in 2007 to take forward R and D work in the energy sector.
In December last year, it launched two calls for expressions of
interest, one of which focuses on marine technologies. Since 1999, more
than £35 million has been committed to research and development,
which had led to a number of marine technologies being developed and
tested at full scale. The Government have also invested in the European
marine energy centre in Orkney, which I had the good fortune to visit
and which is a £50 million dedicated test facility for wave and
tidal technology developers. The South West of England Regional
Development Agency’s £28 million wave hub project is also
important. It is a purpose-built proving ground for larger-scale
demonstrations.
The
hon. Gentleman would not want to give the wrong impression because he
is an optimist by nature, but already our country is doing a great deal
on research and development. It is important to keep the MRDF to
support larger-scale demonstration for the next important phase of the
innovation process for the development of marine technologies. To
repeat a phrase, of which I am not the author, there is always an
interim period. Sometimes the money is available for research and
development—I am arguing that we have put a good deal
in—but the gap between that and deployment is often the
difficulty before it becomes commercial and profitable: the so-called
valley of death.
That
is why there is a strong argument for keeping the fund for its original
purpose, rather than, as the hon. Gentleman seeks to persuade me, to
push it early into the process for further research and development to
compete with the other technologies. I want to keep the fund to support
larger-scale demonstrations for the next important phase, and in my
view the proposed changes would dilute that focus and risk duplication
with other research and development funding available from the
Government.
I
understand the hon. Gentleman’s question about Pelamis, which is
not to be confused with the old refrain, “Och, och, och,
there’s a monster in the loch”, which I think was
Polaris—I must not go back to my radical youth. At that stage I
had a quarrel with another form of nuclear technology. The Ernst and
Young report did not recommend three ROCs. I am advised that for wave
and tidal stream, it assessed only the costs of technologies. I am told
that it made no recommendations.
We expect schemes to come
forward in the UK over the next few years to exceed the level in
Portugal, helped in part by the support offered through our banding
proposals, but if there is an opportunity now with Pelamis to test the
technology and in simple terms to have it in the water for long enough
to prove its effectiveness, I rather welcome that. I am a patriot and,
as someone reminded us the other day, a patriot is someone who does not
hate other countries. I rather welcome Portugal’s interest in
the technology, and I hear that the contract is a commercial
one.
That is the
situation, and I am sure that I have persuaded the hon. Gentleman that
we are doing enough for him to consider withdrawing his amendment. That
does not bring me to his new clause, so I shall sit down and hope that
someone moves us on to new clause
17.
Dr.
Alan Whitehead (Southampton, Test) (Lab): I will indeed
move on to new clause 17 so that my hon. Friend can respond to it. Its
purpose is simply to draw into the renewables obligation mechanism
supplies of biogas when they are placed in the distribution network. Do
we want to encourage the development of biogas? My view is that we do,
for a number of reasons. The most important is that the targets for
renewable energy that we have agreed in the EU suggest that we should
produce 15 per cent. of our energy from renewable sources by 2020. At
present most of that target will have to be achieved from renewable
electricity because, since the target talks about energy, the other
part of that is heat and road transport
fuel.
Heat is overwhelmingly supplied
by gas. At present there are no significant mechanisms for introducing
a renewable element into gas supply and therefore the target for about
15 per cent. of renewable energy will almost all have to be borne by
the generation of renewable electricity. So widening the ability to
reach that target by including the way that gas can supply heat from
the grid appears a sensible way forward.
We have had debates recently
about whether there should be a renewable heat obligation. Following
that, we had considerable discussion about how one measures what goes
into a renewable heat obligation. Since the overwhelming majority of
heat is produced by gas, having a renewable gas obligation is a good
proxy for renewable heat obligation. It is measurable and, as my
amendment suggests, can relatively easily be incorporated into a
renewable obligation arrangement.
The problem is that biogas can
get an ROC if it makes electricity. The very helpful guide note which
has been distributed to accompany this clause sets out on page
6:
“If an
anaerobic digestion plant is receiving two ROCs from now on, it will
keep that level of support even if the bands change and support for
anaerobic digestion drops down to 1.5
ROCs.”
Support
for anaerobic digestion is based on the gas coming from the anaerobic
digestion plant making electricity, effectively on a private wire
arrangement, directly from the plant to electricity production. If the
gas goes into the grid or does not go to make electricity, it does not
get any ROCs. That appears to be an anomaly especially because all
analyses show that if
biogas goes into the grid, it saves 72 per cent. more carbon dioxide by
being used for heat and other purposes than if it were used to make
electricity in the way that I have described. The question we have to ask is
whether it is possible for that biogas to go into the grid It is
technically possible and very straightforward. Many people will have
heard of Schmack Biogas, the largest biogas company in Germany, which
has undertaken numerous developments in biogas and now has a capacity
around Munich of almost 4 million cubic metres of bio-methane per year.
It is cleaned, goes through a process and goes into the grid. It is
relatively straightforward.
Hon. Members will not be
surprised to know that the managing director of Schmack Biogas is
Ulrich Schmack. He suggests that within five years his biogas, with
rising energy prices, will be comparable in price to imported gas
supplies. It is not a technology which is way beyond the boundaries of
cost; it could contribute substantially to our renewable targets.
Biogas is readily available both in rubbish bins via digestion and, of
course, standing in fields around the country. The technology could be
encouraged and could make a substantial contribution if it were
introduced into the renewables obligation system. In the same way, we
are banding ROCs to try to bring forward renewable technologies so that
they are able to play their part in a much larger renewable energy
economy. Doing that for biogas seems eminently sensible and
straightforward.
I
have no doubt that my hon. Friend the Minister will suggest that it
would be a good idea if I did not press the new clause. I trust that he
will underline the importance of biogas to the energy economy and the
understanding that methods might be considered to introduce some form
of renewable gas obligation system, either through the mechanisms in
the Bill or otherwise in the near future. However, I shall pre-empt my
hon. Friend by asking leave to withdraw the amendment. The new clause
is not a complete amendment because it would be necessary to introduce
further clauses to ensure, for example, that the Minister was able to
set levels of renewable gas that gas suppliers would be obliged to
produce, in the same way as the technical details of clause 36 do for
electricity.
I hope
that my hon. Friend will provide considerable encouragement on the
principle of the new clause and about providing a way to allow him to
play a role in renewable energy through biogas in future. I beg to ask
leave to withdraw the
amendment.
Martin
Horwood:
Thanks to the mysteries of parliamentary
procedure, I find myself supporting a new clause that the hon. Member
for Southampton, Test intends to withdraw. Nevertheless, I shall press
on in the hope of influencing the Minister in the spirit of the new
clause, which we Liberal Democrats
support.
At a time
when questions are being raised in public about various forms of
bioenergy, not least by the Environmental Audit Committee, of which the
hon. Gentleman and I are both members, it is important to identify
sources of bioenergy, including biomass, that are highly efficient at
reducing carbon emissions and highly sustainable. Biogas anaerobic
digestion is one of those sources and it also has commercial
potential.
I am told that
the injection of methane into the national gas grid is not only viable,
but is growing apace across Europe with a 25 per cent. per annum growth
rate. The Department for Environment, Food and Rural Affairs has
already identified biogas produced by anaerobic digestion as one of the
best ways of dealing with food waste. That will please the hon. Member
for St. Albans and others who have raised great concerns in the House
about the future of the collection of putrescible waste. Providing that
important energy source, which is also sustainable, is an important way
of contributing to the handling of food waste. If DEFRA welcomes
it and wants to see it developed, it would be a good example of
joined-up Government if DBERR also picked up this opportunity to look
kindly on the general thrust of the new clause, which we Liberal
Democrats
support.
Malcolm
Wicks:
I wonder whether I can trespass on your patience
slightly, Mrs. Humble, by replying to the point that the
hon. Member for Northavon made about lagoons before talking about gas.
I was going to save it until the end of my speech, but I have realised
that I shall not be able to finish it for procedural
reasons.
I
listened carefully to the hon. Gentleman. Lagoons are supported under
RO, as he knows. There are plans for lagoons off Rhyll and Swansea bay.
My Department has been in discussions with companies that are
interested in bringing forward these projects. Our banding proposals
will provide two ROCs for tidal lagoons. As the hon. Gentleman probably
knows, although he did not mention it, tidal lagoons are covered by the
Severn barrage feasibility study. We are looking not only at the
barrage, but at all tidal ranges—I think that is the technical
term.
I
turn now to new clause 17. As members of the Committee know, when
finalised in spring 2009, our EU renewable energy targets will be
fulfilled through renewable electricity, heating and transport fuel.
The way in which we support each element will be subject to careful
analysis, but there are some areas where they overlap. Biomethane
certainly seems to be one of them. The new clause is drafted to enable
electricity generated from natural gas to be treated as a renewable and
therefore eligible for ROCs as long as the electricity supplier has a
contractual arrangement with a renewable gas supplier and that an
amount of biomethane equivalent to that supply has been introduced to
the grid. It would further enable a supplier of transport fuel to
fulfil their renewable transport fuel obligation without actual
delivery of the fuel from renewable sources, but introduction to the
grid of an equivalent amount of
gas.
The Government
recognise that biogas produced from the anaerobic digestion of organic
materials may be an important part of the fuel mix going forward, but
also that it has a number of uses. By way of digression, I must say
that, in my family, it is not me who is the fan of “The
Archers” on Radio 4. However, I was home the other day listening
to the news on the wireless after which the familiar refrain came on
the air. I was about to turn it off, when suddenly I heard those magic
and exciting words “anaerobic digestion”, which seem to
be creating some concern in Ambridge. That goes to show how such
matters are now becoming mainstream in our media.
Biogas
can be burned to provide heat and/or electricity or it can be used as a
transport fuel and, as such, could qualify for support under the
renewables obligation or the road transport fuel obligation. It
therefore has a role to play in meeting our renewables targets.
However, I am unconvinced that the new clause is the correct way in
which to proceed. I was encouraged that my hon. Friend the Member for
Southampton, Test seemed slightly unconvinced, too, towards the end of
his speech. He was conceding that it was not necessarily perfectly
formed, although I thought that it was a good work in
progress.
The
renewables obligation has always been based on electricity actually
generated by renewable sources. The new clause would break that link.
We therefore need to tread carefully and to consider the impact that
such a proposal would have on the RO and the implications for its
administration. It is also important that we should not end up double
counting. Once the link between actual delivery of the renewable fuel
and generation is broken, that becomes more of a risk. For example, if
such a provision comes into effect, we will need to be careful not to
allow the same gas to count towards both the RO and the
RTFO.
We
will also have to deal with the potential for subsidy shopping, whereby
the producers of biomethane will sell simply to whichever—the RO
or the RTFO—provides the greatest reward. That could maximise
the cost to the consumer and lead to potential disruption of the supply
chain to downstream industries if support levels change. Furthermore,
as I said, renewable heat will very much be part of our renewables
strategy. More work is being undertaken at EU and national level, which
will have an input.
As my hon.
Friend knows, the Government published a call for evidence on heat
generation in January to continue developing a strategy in the area and
that document specifically includes questions on the use of biomethane.
Indeed, should we introduce a support scheme for renewable heat, there
would be a further opportunity for double or even triple counting and
further subsidy shopping if we did not carefully consider the issues
and support structures in the
round.
Although I can
therefore express some sympathy for the intention behind the new
clause, while work on all the issues is being undertaken in the context
of the renewable energy strategy, it would not be appropriate to accept
it. I was therefore grateful to my hon. Friend the Member for
Southampton, Test who suggested that he might consider withdrawing
it.
6.15
pm
Martin
Horwood:
I want to ask the Minister a technical question.
Earlier in his remarks he said that lagoons would be covered within the
current banding of ROCs at the level of two ROCs and, therefore, in the
emerging technologies section. I do not have the exact text, but from
the brief we were given, emerging technologies included wave and tidal
stream but I do not think that that very clearly includes barrages and
lagoons. I may be wrong and I look forward to being corrected, but as I
understand it, tidal stream is about turbines under the surface of the
water; a wave is about
exploiting wave power and not tidal flow as we would be talking about in
the case of the Severn and others. If the Minister does not have the
technical answer at his fingertips right now, I am happy for him to
tell me the answer later.
Malcolm
Wicks:
In the Government’s response to our own
renewables obligation consultation, we set out the banding criteria.
Under emerging technologies, as well as wave and tidal stream and many
other forms of renewables, we talked about tidal empowerments and, in
brackets, as an example, we said tidal lagoons and tidal barrages below
1 GW of potential. I hope that that has satisfied my
colleague.
Steve
Webb:
Perhaps I can respond to new clause 15. I was trying
to think of an analogy that would help me to explain where the
difference lies between myself and the Minister. The best I could come
up with was considering the Minister as a finely honed athlete, but one
who is a relay runner. I will not get too carried away with this idea,
but when it comes renewable technologies, it seems that there is a
continuum that might be analogous to a relay race. The first lap might
be pure research; the runner of that lap hands on the baton to the
second lap which might be the first R and D starting to apply this pure
research; the next lap is the commercial stage development and so
forth; another lap and suddenly we are up and running with full-scale
commerce. In this race the Minister is like the runner at the start of
the third lap, holding out his hand, waiting for the baton, saying,
“We have a Marine Renewables Deployment Fund, but you have to
get to my starting line before I can have the baton and carry
on”. The state of play as far as I can see it is that—at
least so far—the previous runner is only halfway round the
lap.
I was interested
in the Minister’s response about Swansea and Rhyl. Presumably
the Marine Renewables Deployment Fund is for England and Wales. I am
waiting for a firm nod but I will carry on. Therefore, if there are
millions of pounds of Government subsidies to be had, I am interested
in the fact that neither of them applied for it. Presumably if they are
at the stage of putting these things into bays, one might imagine that
they were, more or less, at the starting line that I have just
described.
Were it
the case that we are on the brink of these demonstration lagoon
products, I would be much more reassured. But the Minister said that we
have been doing R and D for eight years, and still nobody can put the
baton in his hand and take the money off him. There must be some
barrier that we have still not overcome.
Malcolm
Wicks:
Might not the barrier be that this is not easy. I
visited Orkney and met professionals and enthusiasts there. The
professionals had their feet on the ground, when they were not in the
boats. One of them likened this situation to being where the Wright
brothers found themselves. I thought that a comparison with aviation
was very interesting coming from a professional involved in this work.
It indicated to me, in terms of the use of the marine development
fund—which, as every schoolgirl knows, is for England and Wales
as Scotland has its own interest in this—that we have to be
quite careful to safeguard that scheme.
By the way, I, too, am rather
frustrated that we have not been able to spend the money, because I am
an enthusiast for this work, although a level-headed one. I told the
hon. Gentleman that we have spent quite a lot of money on the R and D
phase and that there are a number of companies and pieces of kit in the
country that show great promise, but I suppose that he is saying,
“Forget what the fund was meant to be about. Just use that for
more R and D.” I am not sure that that is a very disciplined
approach to the
question.
Steve
Webb:
Is this still an
intervention?
Malcolm
Wicks:
Yes. I would prefer to do the R and D properly and
then use the fund for its
purpose.
Steve
Webb:
I am grateful for that very full intervention. I
will not repeat myself, but I do not understand why those Welsh
projects that are about to come on stream, or whatever the verb is,
have not come under the scope of the fund. Perhaps they did not think
that they needed it. My sense is that these things still need subsidy,
so I am intrigued that they do not need it, but perhaps we can park
that for a second.
All
I am saying is that this is a continuum. My argument is not that we
simply take the money and do exactly the same as all the other things
are doing. That would just be duplication. There is a gap, according to
my analogy. I am urging the Minister to take one step back in the
continuum. The runner from behind might then be able to hand on the
baton and we might achieve what we all want to achieve. I am not wholly
reassured that the Minister has satisfied us on that
point.
Charles
Hendry:
I am not quite sure how biomass, biogas, marine,
wave and tidal all got lumped into one debate, but we have had an
interesting debate on a range of
issues.
I shall
comment first on the new clause that the hon. Member for Northavon was
just discussing. I sense complacency on the part of the Government,
which is worrying and unfortunate. There is an interesting distinction
in relation to the proposal that was dealt with just now, about
research and development and efficiency gains. The Minister did not
feel that that was necessary, but he is now being rather complacent
about the research and development that is taking
place.
The sense that
I get from talking to companies in this field is one of frustration
that they are not receiving more help. Perhaps the reason why no one
has been able to claim the money from the Government’s fund is
that the fund has not been framed correctly, not that every company
trying to work in this field has got it wrong in terms of the stage of
development that they are at. It is right to go back and examine the
basics of this again to see how more support can be
given.
The Minister
said in his response that we will soon be overtaking
Portugal—that is a bit like saying that the rugby team had a
fantastic result when they beat Andorra. It is not quite the same to
compare the coastline potential of Portugal to that of the United
Kingdom. The coastline potential of Portugal will be some hundreds of
miles compared with several thousands of miles of UK
coastline—we should be
massively ahead of Portugal. One concern raised by the hon. Member for
Bolton, South-East was that Pelamis is considering where it goes next.
It would love to be developing its technology and taking it to
commercial reality in the United Kingdom. The fact that we are in
danger of losing that technological advantage and finding that
companies like that, which is one of the world’s leading
companies in this area, are going to Portugal instead of developing the
technology in the United Kingdom should give us profound cause for
concern. The Minister has not been able to satisfy us yet on the
Government’s approach and clearly we will need to return to the
matter. On amendment
No. 18, however, the Minister has been able to give us assurances. He
has rightly pointed that there is no evidence of abuse of the system so
far and that the powers are included elsewhere in the Bill. He was very
comprehensive about that. The only area on which I am anxious relates
to his remarks about the reporting elements that are required. The
Liberal Democrats have tabled a subsequent amendment, which would
delete clause 78, because that changes fundamentally the reporting
criteria that exist, which we believe would be profoundly misguided at
this stage. For the Minister to rely on the reporting element is
something that we would have to review carefully, but I will in due
course, with the leave of the Committee, withdraw the
amendment.
Perhaps we
can finish on a note of agreement on biogas. We support the instincts
that the hon. Member for Southampton, Test mentioned when introducing
his new clause and we agree with the comments that the Liberal
Democrats made on this. I hope that the Minister will feel reassured
that the measures that he takes to try to address the issue will have
cross-party support, because we all see that biogas has enormous
potential that has not been exploited. We would like the Bill to
address that. We have tabled a new clause, which we hope will be
debated in due course, on a renewable heat obligation. Those are all
parts of a comprehensive energy policy. I hope that the Minister will
be reassured to know that there will be cross-party support for the
measure. I beg to ask leave to withdraw the amendment.
Amendment, by leave,
withdrawn.
Question proposed, That
the clause stand part of the
Bill.
The
Chairman:
With this it will be convenient to discuss the
following:
New clause
6—Feed-in
tariffs
‘(1) The Secretary of
State may by regulations make provision to introduce feed-in tariffs
for renewable micro-generation and decentralised
energy.
(2) In this
section—
“feed-in
tariffs” means a requirement on utilities to buy electricity
from renewable sources at a feed-in rate to be set by the Secretary of
State, dependent on available renewable
technology;
“micro-generation”
means any generation under
250kW;
“renewable
energy” means any form of energy produced in the generation
stage without using fossil fuels or emitting
carbon;
“a feed-in rate” means a guaranteed
payment by the energy suppliers for each kilowatt of electricity
generated.’.
New
clause 8—Feed-in tariffs (No.
2)
‘(1) The Secretary of State
may make regulations for the purposes of requiring designated
electricity suppliers to purchase the electricity generated from
renewable sources by small-scale generators (“feed-in
tariffs”).
(2) For the
purposes of subsection
(1)—
(a)
“small-scale generators” are persons generating
electricity below a level to be determined by the Secretary of State
following consultation,
(b)
“renewable sources” are such energy sources as may be
determined by the Secretary of State following
consultation,
(c)
“designated electricity suppliers” are those persons
licensed by the Secretary of State to supply electricity as set out in
section 6 of the Electricity Act
1989.
(3) The Secretary of
State must consult for the purposes of determining the appropriate form
of regulations as set out in subsection (5) below and
must—
(a) commence such
consultation within a period of six months of the day on which this Act
is passed,
(b) determine a
reasonable period of
consultation,
(c) consult
with—
(i) designated
electricity suppliers,
(ii) the
National Consumer Council (incorporating
energywatch),
(iii) the Gas and
Electricity Markets Authority
(“GEMA”),
(iv)
the National Grid,
(v) such
generators of electricity from renewable sources as he considers
appropriate,
(vi) such
environmental organisations as he considers appropriate,
and
(vii) such other persons as
he considers appropriate.
(4)
The Secretary of State shall, within six months after the end of such
consultation, make regulations for the purpose of bringing into effect
feed-in tariffs pursuant to subsection (1), in such manner as the
Secretary of State shall consider
appropriate.
(5) The
regulations mentioned in subsection (4) above
must—
(a) define the
renewable sources in respect of which feed-in tariffs shall
apply,
(b) define the maximum
level of electricity generation in respect of which feed-in tariffs
shall be available, as referred to in subsection (2)(a)
above,
(c) define which persons
generating electricity from renewable sources shall be eligible for
feed-in tariffs,
(d) prescribe
the means by which tariffs applicable under feed-in tariffs are to be
calculated and, where necessary,
amended,
(e) prescribe, where
appropriate, the terms and duration of the feed-in tariff
arrangements,
(f) make
provision for the payment and incidence of the costs of connection of
relevant small-scale generators to the National
Grid,
(g) make provision for
the regulation of feed-in tariff arrangements by a designated
body,
(h) make provision for
the Secretary of State to report periodically on the effectiveness of
the regulations made under subsection (1) in achieving their
objectives,
(i) provide for the
making of any necessary amendments to distribution licences or supply
licences held by any person, and
(j) make such changes as may be necessary to
existing legislation, including that providing for the Renewables
Obligation
Order.’.
New
clause 14—Tariffs for renewable
energy
‘(1) The Secretary of
State may by order impose on each energy supplier falling within a
specified description (a “designated energy supplier”) an
obligation to reimburse producers of renewable energy falling within a
specified description (a “renewable energy producer”) for
each unit of renewable energy produced as set out in subsection (4)
(and that reimbursement rate is referred to in this section as a
“renewable energy
tariff”).
(2) The
descriptions of energy supplier upon which an order may impose the
renewable energy tariff are those supplying electricity or
gas—
(a) in Great
Britain;
(b) in England and
Wales; or
(c) in
Scotland,
excluding such
categories of supplier as are
specified.
(3) In this
section—
“renewable
source” has the same meaning as in the Utilities Act 2000 (c.
27);
“renewable
energy” means energy from renewable
sources;
“renewables
obligation” means the obligation specified in section 32 of the
Electricity Act 1989 (c.
29);
“specified”
means specified in the
order.
(4) The renewable energy
tariff shall set the reimbursement level for each kilowatt hour of
energy produced by the renewable source and
may—
(a) be set at
different levels for different types of renewable
source,
(b) be varied at
different times as prescribed in the order or in successive
orders.
(5) The order shall set
out—
(a) the renewable
sources in respect of which renewable energy tariffs shall
apply,
(b) the tariff
applicable to each renewable
source,
(c) which installations
shall be eligible for renewable energy tariffs, and any provisions to
exclude installations accredited under the renewables
obligation,
(d) which renewable
energy producer shall be eligible to receive renewable energy
tariffs,
(e) which designated
energy supplier shall be responsible for paying the renewable energy
tariff to a particular renewable energy
producer,
(f) the terms and
duration of the renewable energy tariff
arrangements,
(g) how the
amount of energy produced and upon which the renewable energy tariff is
payable shall be measured, determined or
deemed,
(h) provisions for the
regulation of renewable energy tariff arrangements by a designated
body,
(i) provision for the
Secretary of State to report periodically on the effectiveness of the
regulations made hereunder,
(j)
any necessary amendment to distribution licences or supply licences
held by any person, and
(k)
such other provisions as may be required for the efficient and
cost-effective operation of the renewable energy
tariff.
(6) Before making an
order, the Secretary of State must
consult—
(a) the
Authority,
(b) the energy
suppliers to whom the proposed order would apply,
(c) representatives of renewable energy producers to
whom the proposed order would apply,
and
(d) any other persons he
considers appropriate.
(7) An
order under this section shall not be made unless a draft of the
statutory instrument containing it has been laid before, and approved
by a resolution of, each House of
Parliament.’.
Malcolm
Wicks:
There are no other volunteers to introduce this
debate, so I shall. I ask colleagues to bear with me, because I need to
address this group at some
length.
The group
covers a clause stand part debate on clause 36, which is about the
renewables obligation, plus three proposed new clauses that suggest a
feed-in tariff enabling clause for large-scale renewable generation and
microgeneration. I will introduce the debate, and I assume that
colleagues will introduce their new
clauses.
In essence,
clause 36 replaces the existing sections in the Electricity Act 1989
that relate to the renewables obligation with new sections that
incorporate all the amendments to the RO that have been made in primary
legislation since 2002, as well as our proposed changes. It will enable
industry, Ofgem and other key stakeholders to consider the RO in its
entirety.
In many
respects, this is a consolidating measure, as well as one that
introduces a new development in the RO. I propose to focus only on the
parts of the clause that represent real changes to the RO, but I have
provided a paper, which colleagues now have in front of them, that
covers in more detail all the new sections that we propose to bring
into the Act.
Clause
36 allows the Government to make important changes to the RO placed on
electricity suppliers in Great Britain in order to improve its
cost-effectiveness and to drive even greater renewables deployment in
the UK. I contend that the RO has been hugely successful since its
implementation in 2002 and, in a short time, has led to a significant
increase in the amount of renewable electricity generated in this
country. Eligible electricity generation in the UK has increased
from 4.9 TWh in 2001, the last year before the obligation came
into effect, to more than 14.5 TWh in
2006.
However, we can
do more to increase further the effectiveness of the RO. The aim is to
move to a banded system that reflects the cost and stage of development
of each technology, and makes the RO more effective at increasing the
deployment of renewables. Some technologies are amply rewarded by the
existing system. Landfill gas, for example, does very well, and we will
seek to reduce the support for new plant that that technology gets in
future.
In contrast,
most offshore wind farms do not receive enough support under the
existing RO alone to make them economic. We will need to bring
developing technologies forward if we are to achieve our ambitions to
diversify and decarbonise our electricity supply. The existing
obligation is for each supplier to provide evidence that it has
supplied to customers in Great Britain a specified amount of renewable
electricity. New section 32 will change that. In the future, the
obligation will be to submit to Ofgem a certain number of renewables
obligation certificates, or ROCs. That important change will allow the
introduction of banding.
We have
already talked about how the current RO is technology-neutral, in that
all generators of renewable electricity receive one ROC per
megawatt-hour of electricity generated. Following our changes, some
technologies will be awarded with a ROC if they produce less than 1 MWh
hour of electricity in the future, while other technologies will need
to produce more than 1 MWh of electricity to receive a ROC. In terms of
fulfilling the obligation, however, which is expressed as a number of
ROCs, each ROC will have an equal
value.
6.30
pm
The major new
element in new section 32 is in subsection (2)(a), which provides for
the supplier’s obligation to be calculated. Our intention is
that the overall level of the obligation for the years up to 2015 will
be the same as it would be under the current order. To achieve that we
will, in the first instance, convert the existing
RO—which increases in annual steps to 15.4 per cent. by
2015—from an obligation calculated in megawatt-hours, to one
calculated in ROCs. For example, the obligation for 2011-12 under the
current order is set at 11.4 per cent. For an electricity supplier with
sales of 50 terawatt-hours, this would represent an obligation to
supply 5.7 terawatt-hours, or 5.7 million megawatt-hours, of renewable
electricity. In future, the obligation will be to present 5.7 million
ROCs or pay a buy-out price for each ROC not
presented.
In setting
the obligation levels, we need to balance the interests of generators
and investors with those of electricity consumers, who are paying for
the costs of the deployment of renewables. The costs of moving towards
a lower carbon economy are increasing, and we need to understand the
price impacts. Ofgem has calculated these costs to be around £7
to the average household in 2006-07. The higher the level of the
obligation, the greater will be the cost to consumers, but equally, if
generation goes higher than the level of the obligation in any year,
the trading value of ROCs may crash, since no suppliers need to buy
them.
Anne
Main:
The Minister referred to the consumer of power being
responsible for the renewables. Energywatch drew it to my attention
only yesterday that every consumer can ring up and find out about what
they are entitled to, as a result of that contribution. It is
interesting that the Minister has raised it now; perhaps we can
highlight that we are all entitled to contact our energy supplier and
find out more about what they can offer us in return for that
contribution.
Malcolm
Wicks:
That is useful, but if I have understood the hon.
Lady correctly, consumers are entitled
to—
Malcolm
Wicks:
Yes, it must be advice on how to make one’s
home more thermally efficient or to deploy renewables and so
on.
Charles
Hendry:
On a separate point, the Minister has just said
that Ofgem has calculated the cost of renewables to be about £7
to the average household.
Will he confirm that that is the cost of the ROCs, and not the whole
cost of the contribution towards renewable energy, because into that
must be counted the EU ETS and carbon emissions reduction targets,
which would give a figure of about £70 per £1,000 of
electricity bills.
Malcolm
Wicks:
Certainly, that is just one element of the
environmental costs that fall on the consumer. The hon. Gentleman is
right to say that we need to factor in other things, not least the ETS.
This is beginning to be, cumulatively, quite a significant part of
one’s energy costs.
I was saying
that we must ensure that we organise the scheme so that the trading
value of ROCs does not crash to a situation where no suppliers need to
buy them. Although this represents a risk to investors and generators
who want to know that they will get a level of return, we do not think
that consumers should pay more than is necessary to deliver a given
amount of renewable electricity. To balance those two considerations,
we want to keep the obligation just above the level that the market
will deliver. We will introduce a level of headroom in the obligation,
so that it remains 8 per cent. greater than the predicted supply of
certificates in a given year. At present, we intend that to happen up
to a level equivalent to 20 per cent. of electricity
sales.
New section 32B
makes just one addition to what was previously provided for by existing
section 32B—to expand the existing list of “permitted
ways” to cover private wire networks in subsections (10) and
(11). Permitted ways cover various situations in which electricity
generated from renewable sources is eligible for the award of ROCs
despite not having been sold on through a supplier, or if it is
difficult to prove that it has been. A private wire network means that
the generator does not hold a supply licence under the Electricity Act
1989 and supplies to a customer or customers over a distribution or
transmission system, which usually provides a direct link between the
generator and the customer.
Private wire networks have the
potential to benefit community and distributor generation projects. We
want to encourage those projects, and the change will allow them easier
access to the benefits available under the RO. We will consult on
whether a size threshold should apply to generators using permitted
ways, but we certainly intend to apply the provision to small
generators under 50 kW, such as a micro-hydrostation operated by one
party on the site of an old water mill, supplying community buildings
such as a village primary
school.
Dr.
Whitehead:
Is it my hon. Friend’s understanding
that if a private or small commercial dwelling was both using
microgeneration to power its own energy necessities and exporting some
of it, it would get a ROC for everything and not just for the energy
that it
exported?
Malcolm
Wicks:
I think I need clarification on that point, but I
think that the short answer is yes. It may even be the longer answer as
well. I shall leave it there, unless I am corrected. So that is good
news.
The changes being introduced in
proposed new section 32C clarify the existing flexibility to exclude
other forms of generation or to award ROCs for only a proportion of the
electricity generated. Those matters would be specified in the RO
order, following statutory consultation. Exclusions could be based on
the type of renewable source, the description of the station or the
method of generation. For example, we will continue to exclude well
established hydroelectric stations that do not need support under the
RO. As my hon. Friend knows, some of them are very well established
indeed.
We intend that
Ofgem should award ROCs for only a proportion of the electricity
generated where renewable fuels are used alongside fossil fuels or
where renewable fuels, such as biomass, have some fossil fuel
contamination. In both those instances, the provisions will allow the
RO order to specify that Ofgem may first require an operator to
determine the respective proportions of fuels used, and then issue ROCs
only for the renewable element of the fuel burned and not the fossil
fuel element. The new section also provides scope for revoking ROCs
after they have been awarded to a generator in certain circumstances.
The order will specify the circumstances in which that might
happen.
Proposed new
section 32D is key to our reforms and provides for the power to band
the RO. That will allow us to tailor levels of support to the
technology involved, which will have two benefits: first, it will bring
forward a wider range of technologies, and secondly, it will avoid
over-rewarding cheaper technologies at an unnecessary cost to the
consumer. We covered in our early debates a number of issues relating
to
banding.
Technologies
that are well established, low-risk and require little capital
investment, such as those used in gas and sewage works, will receive
less support than they currently do. Those that are well established
but require high capital investment, such as new hydroelectric plants,
will continue to receive one ROC per megawatt-hour. There is a further
group of technologies that are relatively well developed but whose
commercial deployment still represents significant challenges,
including offshore wind, most importantly, as well as dedicated biomass
stations.
Finally,
our banding proposals recognise a further group: emerging technologies
that need to show much greater reductions in cost if they are to become
competitive but have the potential for large-scale deployment in
future. They include electricity generated by wave and tidal power,
about which we had a useful debate, advanced technologies for waste
treatment and solar power. The criteria on which Ministers will take
banding decisions are set out in proposed subsection (4). The aim of
the provision is to provide comfort for investors, and that the
decisions taken on banding will be rational and consistent. Ministers
will have to take into account the full economic costs and incomes
faced by certain projects, the overall stability of the RO, the future
of the industry and any targets for renewables arising from the EU
renewables directive.
During our consultations, the
industry also asked that the banding regime be not subject to
continuous review, and I have already touched on that point in the
debate. New section 32E is a new provision that allows for
grandfathering, which is a key principle of the
reforms. Having become a grandfather myself for the first time two weeks
ago—[ Hon. Members: “Hear,
hear.”]—through the birth of young Matthew, I am very
interested in grandfathering and have a lot to learn about it. It is a
key principle of the reforms. [Interruption.] I just wanted to
ensure that everyone was awake.
Dr.
Whitehead:
So Matthew will get the same pocket money
regardless of any changes in pocket money levels in the
future?
Malcolm
Wicks:
He is not on the staff.
The provision ensures fairness
by safeguarding investments entered into prior to the announcement of
banding in the 2006 energy review. After we introduce banding, our
proposal is that those stations that were in operation and receiving
one ROC per megawatt-hour prior to 11 July 2006, with the exception of
co-firing, which we propose to band down, and microgeneration, which we
propose to band up, will continue to receive that level of support. The
same principle will apply when we reassess the bands at the next
planned review in 2013, so if a plant receives two ROCs from now on, it
will keep that level of support even if support for the technology
drops to, say, 1.5 ROCs. The provision will ensure that as
costs reduce, the RO will be able to step down the overall level of
subsidy being provided, thereby increasing the value for money of the
RO and protecting customers while not prejudicing those generators who
have taken the initial risks.
The new section also allows the
Government to ensure that state aid rules are not infringed. Some
projects have received capital grants on the basis that they will
receive one ROC per megawatt-hour. Where the generator is due an
increase in ROCs once banding is introduced, it could mean that the
cumulative amount from the grant and the RO will breach the state aid
thresholds. Proposed subsections (4) to (8) provide a power for the
order to allow generators to choose to surrender the grant and receive
the higher level of ROCs. Ultimately, that will be a commercial
decision by the generator.
New section 32I introduces a
new funding arrangement for the administration of the RO. Currently,
the administration costs of the RO are funded through licence fees from
the gas and electricity network operators. They are not participants in
the RO, and it seems inappropriate that the costs of administering the
obligation should fall to them. Instead, the new section will allow the
administration costs to be taken from RO by out-payments. We anticipate
that the administration costs will account for only a small percentage
of the buy-out fund, but should Ofgem reach a stage where the buy-out
fund is very small and cannot cover the costs, my Department will cover
them.
Charles
Hendry:
The Minister was going through the measures in a
logical order—A, B, C, D, E, F, which is logical to my mind.
However, he suddenly skipped G and H. We have them on the helpful note
that the Liberal Democrats circulated on behalf of the
Minister’s office earlier, and I wonder whether he plans to
return to them in due course.
Malcolm
Wicks:
My very useful officials originally provided me
with quite a long speech, and this is a slightly, but some might say
not greatly, reduced version. I apologise if I have not gone through
the whole alphabet, but during the debate, I may be able to satisfy the
hon. Gentleman’s alphabet curiosity—a little
bit—if he is itching for me to do so. Does the hon. Gentleman
want to press me at this stage? [ Hon. Members:
“No!”]
6.45
pm
Allow me,
therefore, to proceed to the very exciting proposed section 32J, which
creates a power to require biomass users to report on sustainability.
We have covered that area in some detail already, so I shall say no
more for now. Proposed sections 32G and 32H are rather important
because they carry over existing powers other than the Ofgem funding
points. Proposed section 32K is largely a standard implementation
clause, about which I therefore do not need to say anything. Proposed
section 32M defines some of the terms that we have already discussed,
which are also very important, but about which again I do not have to
say anything.
The
whole thing enables an order to make provision for what might be
accepted as sufficient evidence of the proportion of the fossil fuel
content of waste in such circumstances, which could include the use of
declarations by generators in view of difficulties with accurate and
cost-effective measurements. To avoid the
risk of inaccurate calculations, proposed section 32M also includes a
provision enabling Ofgem to require sampling of fuels in specified
situations to ensure that ROCs are awarded only for genuine renewable
generation. I think that that is an important
provision. Finally,
subsection (3) of proposed section 32M is intended to deal with the
establishment of a single electricity market in the island of Ireland,
which pools generation between Northern Ireland and the Republic, and
sells the electricity on a single market basis. The new section should
allow us to ensure that the single electricity market does not disrupt
the incentives that we give to generators and suppliers in Northern
Ireland by allowing suppliers to demonstrate equivalent supply in
Northern Ireland, given that they cannot demonstrate that a particular
amount of electricity was generated in the UK and supplied there.
My notes say to
“canter through” that very detailed passage in the Bill,
so I hope that I have done justice to its contents, and obviously, in
due course, I shall be happy to expand on some of those points. I
apologise to the hon. Member for Wealden, and to the majority of the
Committee, I think, for not covering the provisions in greater
alphabetical detail. As I think that George Bernard Shaw once
said—if I may appropriate his words—I apologise for
writing such a long letter, but I did not have time to write a shorter
one.
Further
consideration adjourned.—[Alison
Seabeck.]
Adjourned
accordingly at thirteen minutes to Seven o’clock till Thursday
28 February at Nine
o’clock.
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