 House of Commons |
Session 2007 - 08 Publications on the internet General Committee Debates Energy |
Energy Bill |
The Committee consisted of the following Members:Chris Shaw, Committee
Clerk
† attended the
Committee
Public Bill CommitteeThursday 28 February 2008(Morning)[Mr. David Amess in the Chair]Energy Bill<++++>Clause 36The
rewnewables
obligation
Question
proposed [Tuesday 26 February], That the clause stand part of the
Bill.
9
am
Question
again
proposed.
The
Chairman:
I remind the Committee that, with we are taking
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.’
Charles
Hendry (Wealden) (Con): It is a
pleasure. Mr. Amess, to be back under your chairmanship this
morning. We finished our previous sitting with an extended, but
appropriate, speech by the Minister. Members of the Committee were
slightly surprised when I encouraged him to extend it further, but I
wanted to prove my alphabetical prowess by noticing that he had missed
out a few letters during his journey through the clause.
This part of the Bill will be
subject to substantial debate. Some of the issues that we shall discuss
this morning were chosen to be debated on Second Reading by many hon.
Members. They are the sort of matters that people have focused on
particularly in their representations to the
Committee.
I
shall start by speaking to clause 36 stand part, after which I shall
introduce new clause 6 tabled in my name and that of my hon. Friend the
Member for Billericay. We believe that most elements of clause 36 are
standard and sensible. In general, we support the changes but, as I
have said, it is against a background of a significant failure of the
Government to encourage take-up of renewable energy in the United
Kingdom. The other day I said that we were the second worst for
renewable energy in the European Union, but I gather now that we are
the third worst. It is not only Malta that is worse than us, but
Luxembourg. It is a bit of a league of shame to be 25th out of 27
nations.
The
Government should not boast about what they are doing, when the reality
is that we have come late to the issue and are now trying to catch up
with what other countries have already achieved. We hear the Minister
talking about his targets and hopes, while his counterparts in Germany
and other European countries can talk about their success in this area.
It is that success that we need to emulate.
We are moving away from the
targets that the Government had set. They had originally set a target
of 10 per cent. of our electricity to come from renewable energy by
2010. When that looked hard to meet, it sort of morphed into a target
of 20 per cent. by 2020. We know from the Minister’s written
reply to me a few weeks ago that the Government have now downgraded
those targets and it may be as low as 8 per cent. of our electricity
coming from renewable sources by 2010 and as low as 12 per
cent.—not 20 per cent.—by
2020.
That is made
particularly clear in respect of microgeneration. In an article in
The Guardian a week or so ago, Ashley Seager
wrote:
“BERR is
set to under spend the paltry £18 million in domestic grants of
its low carbon buildings programme by £10 million over the three
years to March 2009. This is in spite of strong demand for renewables
among the public
sector.
How bad is the
situation? Well, BERR handed out grants for parts of the cost of
fitting solar photovoltaic systems covering only 270 houses last year.
The Germans fitted 130,000. We have a total installed capacity
(including commercial) of 16 Megawatt peak (Mwp). They have 3,800
Mwp.
But even worse,
during the year the pace of grant-giving slowed. Last May BERR simply
slashed the grants and made them more difficult to get. The result,
entirely predictably, was a
collapse.
Throughout
much of 2006, for example, it was making 30-40 grants a month
for ground source heat pumps. In the last three months of 2007, no such
grants were made. There is a similar decline for solar
thermal...and micro wind turbines. Not a single grant was
allocated for a domestic solar PV system last month, while the Germans
installed about 12,000
systems.”
That was quite
a lengthy quote, but it makes a clear point that we had not one grant
for PV in the United Kingdom last year compared with 12,000
installations in
Germany.
Dr.
Brian Iddon (Bolton, South-East) (Lab):
We cannot underestimate the success of the Germans.
Like the hon. Gentleman, I am aware of their progress on renewables,
but the influence of the Green party has altered the debate in Germany
to such an extent that nuclear power is completely ruled out, so it has
had to make progress in renewables whether it wanted to or
not.
Charles
Hendry:
The hon. Gentleman has pointed out an interesting
dilemma that faces the German Government of how they can be green at
the same time as phasing out nuclear. They have a particular challenge,
and the rather unnatural coalition that exists in Germany exacerbates
that problem.
Albert
Owen (Ynys Môn) (Lab): My hon.
Friend the Member for Bolton, South-East is right that the Greens had a
huge influence, but is it not the case that the current German
Government are actually looking to extend their nuclear fleet? They are
looking at extension of each of their stations, which is causing them
some difficulty, as they cannot meet the demands of economic
growth.
Charles
Hendry:
There is a tremendous tension in
the German Administration on this—the CDU elements are keen to
go down that route but the socialists are not. It is a very different
approach and perhaps the Minister might wish to encourage his German
counterpart to understand the British Government’s position on
this issue. I do not think we should underestimate the very real
tension that exists in the German Administration on this
issue.
The
Minister for Energy (Malcolm Wicks):
I am sorry to subject
the hon. Member for Wealden to a series of interventions, but I was
thinking that one day, a long time hence, it could be useful practice
for him. He quotes the article in The Guardian, which I read
with great interest. I think it raises an interesting issue, because
sometimes there is a confusion between overall renewables
policy—which includes the big plant of huge wind farms offshore
and so on—and a subset of that issue, which is very important
and about microgeneration.
Now, The
Guardian article, having said the Government are rubbish at
renewables, then only talked about the low carbon building programme,
as the hon. Member for Wealden has done. Does he recognise that these
are complementary issues, but rather different? Is his new clause about
renewables generally, and the virtues of a feed-in tariff, or is it
just about
microgeneration?
Charles
Hendry:
I am very grateful to the Minister for giving me
practice in this role. I have, indeed, been learning carefully from
him, and what I have learned is to say that I will be coming to that in
my speech in a very short time. It is one of the issues that I most
particularly want to address, but the particular issue of the new
clause—and of that being tabled by the Liberal Democrats as
well—is feed-in tariffs and how they can encourage
microgeneration. However, they need to be seen against the background
of the more general challenge to us in this country about
renewables.
Looking
at the potential for renewables in this country, we have 40 per cent.
of Europe’s wind. We have massive tidal and wave potential; we
have PV potential—particularly in the south of England. That
does not even touch on the potential for the generation of domestic
heat through solar thermal technology or ground and air source heat
pumps.
We
are all clear that our energy security does not depend on one source of
energy. With one third of our generation capacity, about 30 GW, coming
out of commission in the next 20 years, we face a very real challenge
in keeping the lights on. I think people in this country would never
forgive a Government who allowed their lights to go off. They get used
to that in the United States, but in this country we are a civilised,
developed nation and we are not prepared to put up with that sort of
thing. [
Interruption.
] The Minister may draw
whatever conclusions he wishes from that. But the reality is that, in
this country, we have to put in place the measures that will ensure
that the lights stay on in 20 or 30 years’
time.
On
top of that energy security challenge, we also need to get as much
energy as possible from carbon-free and renewable sources. That means
we will need more wind, more solar PV and more decentralised energy and
combined heat and power—which I think is a very serious omission
from this Bill. We will need much
greater strides towards energy efficiency, a breakthrough in marine and
tidal power—and I made the observation the other day about the
comparison with Portugal. We should not be looking to be comparable
with a small nation with a relatively small coastline like Portugal. We
should be looking to lead the world in this. There needs to be more
biogas and biomass; there needs to be hydropower, and indeed a whole
range of technologies which we have not yet thought of—although
I imagine the hon. Member for Bolton, South-East probably knows more
about them than the rest of the Committee put together.
I referred to
wind as being part of that equation. We need to recognise that the
Government’s targets for offshore wind are very challenging
indeed. They set out a target of 25 GW of new offshore wind by 2020.
Various people who are in favour of that say it means about two
turbines per day over the next 10 years. Those who are against it say
that it could mean as many as 10 turbines per day. The reality will
presumably be somewhere in between. However, the National Grid expects
that, on current policies, we will have only 12 GW of
additional wind onshore and offshore installed by 2020. That is well
below the Government’s target. The Government therefore need to
give us much greater clarity about how they expect that 25 GW to be
delivered.
In addition
to that, the Government have signed up to the EU’s proposal to
ensure that the EU gets 20 per cent. of its energy—not its
electricity—from renewables by 2020. When Prime Minister Blair
returned, having signed up for that, our sense was that he had not
quite understood what he was doing. We picked up that the reaction from
officials in the Department for Business, Enterprise and Regulatory
Reform was one of complete of horror that he had signed up for a target
involving 20 per cent. of energy and not 20 per cent. of
electricity. It is going to be an incredibly challenging objective. He
may have known exactly what he was doing, knowing that he was stepping
down in a few months’ time and that this would be something for
his successor to lead us to instead.
For the
United Kingdom to move to that target, a massive change has to take
place. It is likely that our contribution towards the EU target will be
that approximately 15 per cent. of our energy will need to come from
renewables by 2020. In which case, we will need a much higher
proportion of our electricity to come from renewables. The people who
know most about this subject estimate that perhaps 40 to 45 per cent.
of our electricity will have to come from renewables in just 12
years’ time. That is a staggering challenge.
To put that into figures, if we
think that in 2020 the peak electricity demand will be similar to
today—it is a brave challenge, because it means that there has
to be very strong progress towards energy efficiency—we will
need about 62 GW of peak energy capacity. If we were to go for the
lower figure of renewables—about 40 per cent.—we would
need to be getting 25 GW of electricity from renewables by 2020. On top
of that, the reality is that most renewables do not work at full tilt
all the time. The Severn barrage, if it were built, would be able to
give absolutely predictable flows of energy. However, wind turbines,
for example, cannot. A typical load factor would be 30 per cent. for
onshore wind farms and perhaps 40 per cent. for offshore wind farms.
So if wind alone was to deliver that 25 GW, we would need an installed
capacity of wind of 60 to 75 GW, compared to 2 GW
today.
Charles
Hendry:
We need to know from the Minister, or perhaps from
the Liberal Democrats, how we are going to achieve that. If we are not
going to be achieving it through wind, the Minister needs to tell us
where we are going to get that renewable capacity from.
Martin
Horwood:
This argument is often put
forward as a way of casting doubt over the potential of renewables in
the long term to support our overall energy needs. Does the hon.
Gentleman not accept—as he points out—that some of the
technologies such as tidal stream, tidal flow and tidal impoundment are
enormously predictable, far more so than nuclear power stations for
instance, which often have a downtime? In the full range of different
renewable technologies—even with wind and
photovoltaics—those variants get ironed out quite substantially.
There is therefore a very predictable way in which renewables can
contribute overall to base load and peak
capacity.
Charles
Hendry:
There is some predictability. However there is an
exponential difference in terms of the speed of the wind power and the
energy it produces. So, if the wind drops slightly, there is a
significant drop in energy which is quite a challenge for the National
Grid to manage. Similarly, with PV, if the sun goes behind a cloud,
there can be dramatic changes in the power that can be generated in
that way.
I said that
things such as the Severn tidal barrage or lagoons would be able to
deliver predictability and other tidal lagoons could work in the same
way. However, the challenge for renewables overall is that, in most
aspects of renewables, there will be a lower load factor than in other
forms of electricity generation. That is not to cast doubt on whether
it is the right way to go—I believe it is the right way to
go—but we also need to be realistic about what can be
achieved.
The hon.
Gentleman also mentioned nuclear power. Sizewell B has now been
operating non-stop for about 500 days, at full tilt, so the modern
fleet of nuclear power stations can deliver a tremendous amount of
predictability.
Steve
Webb (Northavon) (LD): In a non-partisan
spirit, I welcome the hon. Gentleman’s support for renewables
and I want to embolden him. It is clearly true that an individual
turbine may be on or off, but given that we are talking about a network
of turbines around the country and a whole mix of renewables, does he
not agree with the modelling evidence that the aggregate renewable
input is pretty predictable? Would he not further accept that the
National Grid is “incredibly relaxed” about the issue of
incorporating variable renewable input into the grid—it does not
see it as a problem.
Charles
Hendry:
The reality is that, in a country such as this,
the wind is blowing somewhere. There are a perhaps a few cold, still,
winter days when there is not
any wind movement. [
Interruption.
] My hon. Friend
the Member for Billericay says that there is plenty of wind blowing in
this room and, across the country at some point, there is almost always
going to be wind capacity.
We are right to recognise the
average load factor. Countries that have gone into this technology in a
big way, such as Spain, find a typical load factor of 25 to 30 per
cent. We should be realistic. If we want to achieve a huge input of
electricity from renewable sources, we have to take account of the load
factor. Therefore, challenging amounts of installation are required to
meet that.
9.15
am
The Government
are right to introduce banding. There is overwhelming agreement that,
unless banding is introduced, renewables obligation certificates will
go to the cheapest technologies, such as methane and onshore wind
farms. We recognise that there are already questions about the level of
the bandings—for example, will two ROCs be enough to stimulate
investment in marine and tidal technology? There is an issue there and
many in the industry have profound concerns. However, there is no doubt
that the banding proposals are a move in the right direction.
I have
specific questions about the Bill, before coming on to the new clause
on feed-in tariffs. It is not clear precisely what proposed new section
32A(4) to the Electricity Act 1989 is about. In which circumstances
will a ROC apply only to one part of the United Kingdom? What is the
breakdown on that? I am not sure if the Minister is referring to
Scotland or Northern Ireland, for example, or to a smaller element like
Croydon, which we know from what he said earlier is an area of
outstanding natural beauty with great wind potential. Can he be clearer
about what the proposed new section
means?
On proposed new
section 32B(3)(b), what is the situation if the electricity is
exported, for example, through the interconnector? Can ROCs be used
only with regard to electricity generated in the UK and sold to
customers in the UK or can they also be used with regard to electricity
generated in the UK and sold abroad? Particularly, I would like to draw
his attention to proposed new section 32B(10)(d) on page 21. For the
benefit of the Committee I will read that
out:
“Those
ways
are—...
(d)
being used, as respects part, as mentioned in one of paragraph (a), (b)
or (c) and as respects the
remainder—
(i)
as mentioned in one of the other paragraphs,
or
(ii) as respects
part, as mentioned in one of the other paragraphs and as respects the
remainder as mentioned in the
other”.
Charles
Hendry:
I am glad that the Minister
tells us that it is perfectly clear. We are looking forward to his
detailed explanation. I wish to be there with the Minister when the
Plain English Campaign next come to present the gobbledygook award.
There are sometimes elements of legislation that are, to some extent,
opaque. This is more opaque than we are used to.
The Minister could also give us
greater clarity about proposed new section 32M—the fossil fuel
reference is rather vague, and what parameters are involved? We
certainly think it sensible that, as in proposed new section 32H, small
payments can be carried over. That is a practical way to avoid
unnecessary costs and excessive burdens. It brings us to the heart of
the problem with the Government’s proposals and to the new
clauses on feed-in tariffs.
The truth is that ROCs are too
bureaucratic and are not well suited to microgeneration. The Government
approach to microgeneration has failed to deliver the goods. There is
massive potential in the United Kingdom for huge growth in
microgeneration, but that could be thwarted by the Government’s
lack of imagination about how to fund its
growth.
Mr.
Hugo Swire (East Devon) (Con): I am most grateful to see
my hon. Friend in person having been woken by him this morning when he
was sticking it up the Government, which he is continuing to do with
tremendous aplomb. [
Interruption.
] This morning,
he was talking about post offices.
Does my hon. Friend agree that
this is an opportune moment for the Minister to speak a little about
the anomalies when he replies? In Scotland, wave attracts five ROCs and
tidal attracts three ROCs, which is a phenomenal incentive for
investment in Scotland that could cost investment in other parts of the
UK because of the
disparity.
Charles
Hendry:
I am grateful for my hon. Friend’s remarks
and for his clarification about how I managed to wake him this morning,
although I felt that he used less than elegant parliamentary
language.
Charles
Hendry:
Indeed. I am used to my constituents telling me
that they went to bed listening to me on parliamentary programmes; they
certainly went to sleep in the process. I am pleased to have had that
invigorating effect on my hon. Friend.
My hon. Friend raises an
important point, and there is a real issue. If we are serious about
stimulating these technologies—marine and tidal—that are
in their infancy and that have a tremendous amount of potential, we
have got to make sure that the ROC is set at the right level. People
will find it difficult to understand why different levels would be set
in different parts of the United Kingdom. They would assume that, if
that were the case, all the investment would go into Scotland even
though there is tremendous potential in other parts of the United
Kingdom for tidal and marine power to be developed.
There is strong agreement that
ROCs are not the right way forward for encouraging microgeneration and
decentralised power. An individual householder wanting to install
photovoltaics or a small wind turbine will find that the complexity of
the ROC system will make him lose the will to take the project forward;
indeed it could well make him lose the will to live it is
so complex. He wants three things: a simple system, a predictable income
stream over a given number of years and an easy ability to see the
return that he will get on his investment. The ROCs cannot do that but
a feed-in tariff will.
There has
been a debate about whether to replace ROCs with feed-in tariffs but
there has been no common ground because of concerns about switching one
system to another and how that could jeopardise long-term investment
decisions. I understand that concern. There appears to be evidence that
ROCs have merit for large projects while feed-in tariffs have merit for
smaller systems. What we found overwhelmingly in the evidence to the
Committee was that there is support for the move towards ROCs in that
way. In its briefing notes, the BWEA
said:
“BWEA
supports the introduction of a feed-in tariff for small renewable
systems generating under 50kW of
electricity.”
The Energy
Saving Trust, set up by the Government,
said:
“We would
welcome enabling measures in the Bill to introduce a feed-in tariff and
signal the Government's positive approach to encouraging domestic
microgeneration.”
The
Royal Society for the Protection of Birds said it would like a system
to
“pay small-scale
generators a premium for the electricity they produce via a feed-in
tariff”.
It goes on to
quote the Stern review 2006, which
said:
“Comparisons
between deployment support through tradable quotas and feed-in tariff
price support suggest that feed-in mechanisms achieve larger deployment
at lower costs. Central to this is the assurance of long-term price
guarantees.”
We
also had a very helpful note from Friends of the Earth on this matter.
[
Interruption.
] That is probably one of its
members ringing to ensure I get this in. It
says:
“Friends
of the Earth believes there is an urgent need for the Government to
introduce a feed-in tariff scheme to support an expansion of smaller
scale and decentralised renewable electricity schemes including:
domestic and commercial microgeneration, onsite renewable technologies,
and community owned renewable electricity schemes. These are
particularly neglected in current policy. The Government's recent
consultation on the Renewables Obligation admitted that it was never
designed to support microgeneration
technologies.”
It also
says:
“A
feed-in tariff has many advantages over a quota system such as the UK's
Renewable Obligation (RO). It gives certainty and guarantees for
investors, is transparent, easy to administer, promotes diversity of
supply and is
flexible.”
It
concludes:
“A
feed-in tariff is a proven cost-effective mechanism for developing
renewable electricity capacity which could be brought in alongside the
RO reforms in the current Energy Bill to support smaller scale
renewable technologies which are currently poorly supported by existing
policies but which will be vital if the UK is to meet its EU
target.”
We had
the chance in the evidence sessions to question people further on those
matters. I do not want to take up too much time going into these but
some of them bear a small amount of repetition. Philip Pearson on
behalf of the TUC
said:
“There is
a piece missing in the jigsaw, and that is to assign a portion of
electricity to securing a feed-in tariff in the way that has happened
in Germany and Denmark— particularly in Germany, where it has
been enormously successful with approaching 200,000 jobs in renewables,
driven by a support mechanism that we do not have.”
——[Official Report, Energy Public Bill Committee,
5 February 2008; c. 7, Q11.]
We
heard from Gaynor Hartnell of the Renewable Energy Association, who
said:
“I was
hoping to add to the question on green renewable technologies. I said
that the renewables obligation is not a very suitable mechanism for
smaller-scale generation. Similarly, it is not ideally suited for
emerging technologies where one is expecting the price to go down
fairly rapidly, because it builds in quite a lot of inertia. A feed-in
tariff is more effective for that kind of technology as well. Our wave
and tidal device developers look with envy at countries such as
Portugal and Ireland, which have feed-in tariffs for renewables, and
expect to do business in those countries where that policy makes the
climate much more conducive to their
business.”——
.”——[Official Report, Energy Public Bill
Committee, 19 February 2008; c. 91-2,
Q177.]
Finally, I have
a couple of quotes from our environmental sessions. Russell Marsh from
the Green Alliance said:
“We want the Energy Bill
to have a power that enables the introduction of a feed-in-type
mechanism, particularly for heat, although we also need a feed-in-type
mechanism for smaller-scale
electricity.”——[Official Report, Energy Public
Bill Committee, 5 February 2008; c. 68,
Q132.]
We also heard from Benet
Northcote of Greencoast—I am sorry, Greenpeace. I am not sure
who Greencoast are, but they are probably on the roof of the building
as we speak. He said:
“To reiterate on feed-in
tariffs, they are also tremendously important. You must look at the
success of countries that have adopted feed-in tariffs, notably
Germany, where they are massively outstripping our delivery of
renewables in terms of solar power and wind. It is acknowledged that
the changes that the Bill makes to the ROCs and the current framework
will not get us to the necessary
targets.”——[Official Report, Energy Public Bill
Committee, 5 February 2008; c. 68,
Q133.]
Malcolm
Wicks:
May I repeat my question, and it is a genuine
question, because I am interested in the argument? Is the hon.
Gentleman advocating feed-in tariffs as a replacement for the
renewables obligation or as a device for microgeneration? The arguments
are rather different. I say that because, in the evidence that he
cited, someone favoured feed-in tariffs for marine energy and talked
about Portugal, and someone else talked about micro. What is his
position?
Charles
Hendry:
Our new clause makes that quite
clear. We understand the concerns of those who currently benefit from
ROCs, who believe that the transition from ROCs to feed-in tariffs
would be too complicated and would jeopardise investment. We think that
there may be a case for such a transition, but we do not think that
this is the time. We therefore want the ROC banding system to move
forward and we think that that is the way forward for the larger
projects.
Feed-in
tariffs are, however, the right way forward for microgeneration. In our
new clause, we say that we will set microgeneration facilities at less
than 250 kW, which is substantially higher than the Government’s
current definition, although we think that is about the right level. We
also see a case for introducing feed-in tariffs for emerging new
technologies to which ROCs do not apply. They would, for example, be
quite a good way forward for marine and tidal. We are not suggesting
the wholesale replacement of ROCs with feed-in tariffs, but we see
particular merit in the tariffs where microgeneration is
concerned.
As the
Minister will be aware, there was significant cross-party support for
feed-in tariffs on Second Reading. As he has heard, people outside are
urging us to go
down that route, and he will have heard for himself in our evidence
sessions that many people feel that feed-in tariffs are the right
forward.
You will be
aware, Mr. Amess, that two new clauses have been tabled on
feed-in tariffs—one in the name of myself and my hon. Friends
and one in the name of the Liberal Democrats. The approach that the
Liberal Democrats propose is rather more prescriptive, but both
approaches are equally
worthy.
Charles
Hendry:
I am happy to give way to the hon. Gentleman
because he has also tabled a new clause.
Dr.
Whitehead:
I was merely going to point out that the new
clause that I hope to move shortly also addresses this
issue.
Charles
Hendry:
I am sorry—I should have paid tribute to
the hon. Gentleman for the work that he has done on this issue, both in
Committee and outside. We owe him a great debt of gratitude. As he
says, his new clause addresses similar issues and concerns.
We do not mind which approach
the Government support, but they should support one. There is
overwhelming evidence that we will need feed-in tariffs if we are to
make the most of microgeneration, in particular. ROCs will never
achieve the breakthrough that we need on microgeneration.
There are
much wider issues about how we will achieve the extremely ambitious and
challenging targets that the Government have set for renewables, and
the Minister may wish to say something about that in due course.
However, on the new clauses dealing with microgeneration below 250 kW,
there is overwhelming evidence that feed-in tariffs should be the way
forward, and there is overwhelming support for such an
approach.
The
Chairman:
May I point out again that we are debating
clause 36 stand part, and no one is moving any new clauses? Those will
be dealt with at the end of the debate, and it will be entirely up to
hon. Members whether they wish to move them. However, we have grouped
the three new clauses with the clause 36 stand part debate, so it is
appropriate to debate them now.
Martin
Horwood:
I will start by referring to something that the
Minister said at a previous sitting. I have not yet had the opportunity
to congratulate him on the birth of his grandson Matthew, which I am
happy to do on this occasion. I am sure that it will give him a whole
new perspective on biomass—it certainly did for me when I became
a
father.
9.30
am
The
three new clauses are in the same territory—feed-in tariffs. I
will not dwell for long on the clause, but the hon. Member for Wealden
was a little unkind to the Government, because although we share many
concerns about the performance of the renewables obligation and
renewables obligation certificates as the basis for promoting renewable
energy, it is true that if we accept
that the renewables obligation is where we are at the moment and that it
will be part of energy policy in the immediate future, the clause and
the Bill as a whole take us forward quite significantly, in that the
banding of ROCs in particular is a very positive step, which is widely
welcomed by the renewable energy
industry.
Having
given that encouragement, I have to say that it is nevertheless true
that the basis for all three options on feed-in tariffs is that the
UK’s share of electricity from renewables is one of the lowest
in the European Union at only 4.3 per cent., compared with the EU 25
average of 13.6 per cent. I am happy to accept that, in some cases, as
in Austria, the very high percentages from renewables are due in large
part to the geography of the country. At the same time, however, other
countries that are not noticeably mountainous, such as Ireland, have
exceeded our renewables percentage quite comfortably, with none of
those in-built natural advantages, so the UK’s performance on
renewables is
poor.
A
menu of options is before us. We think that our new clause 8 is the
best and most comprehensive of the three on offer, but I am quite happy
to admire the simplicity of the Conservatives’ new clause
6—it has a certain elegant simplicity. Both of our new clauses
focus particularly on microgeneration and decentralised energy, but
also on offer is new clause 14, which is in similar territory but has a
broader remit. All these proposals can provide the basis for what I
hope will be a real debate with the Minister about the potential for
feed-in tariffs. Even if he does not accept any of the three options on
offer today, perhaps he will introduce amendments at a later stage that
go down the same
path.
The
problem with the renewables obligation scheme is that it is not really
succeeding, even within its own terms, because the proportion of
renewable energy generated within the scheme is falling as a percentage
of the renewables obligation itself. In other words, the amount that is
being fulfilled through the generation of renewable energy is falling
compared with the proportion that is being fulfilled simply by the
purchasing of ROCs. In 2006-07, 4.4 per cent. of the electricity supply
came from renewable sources, against an RO level of 6.7 per cent., so
the uplift that the renewables obligation is supposed to be delivering
is not actually pulling up renewable energy in the same proportion. I
am glad that the officials appear to concur with that
conclusion.
As
some witnesses said in our evidence sessions, planning issues may be
involved, and other factors may be causing a drag on the uplift of
renewable energy, but the contrast with the example of Germany is
striking. Let us consider photovoltaics, for instance. To date, Germany
has installed more than 3.5 GW of solar photovoltaics; the UK figure is
approximately 15 MW—a pathetically small amount in comparison.
Nearly 50,000 people are employed in the German solar PV industry; the
UK has approximately 1,000. That includes 500 at Sharp’s
European PV manufacturing plant in Wrexham, and 95 per cent. plus of
the Wrexham output goes to Germany and other non-UK markets, so the
extent to which the renewables industry in Britain is developing only
with the encouragement of other countries’ renewable energy
policies is quite
striking.
The success
story continues: in Germany, renewable electricity rose from 11.5 to 14
per cent. between 2006 and 2007. In the past year alone, there were
235,000
jobs in renewable energy as a whole in Germany. So that is an economic
success story, and it is identified as such by the German federal
Government.
Malcolm
Wicks:
I am interested in the hon. Gentleman’s
argument. He mentions the economic success story in Germany, but has he
been able to do any research on the costs on the German feed-in tariff
system, compared with, say, the £1 billion that we will be
spending on the renewables obligation by 2010? Perhaps he has not, but
that is a relevant
consideration.
Martin
Horwood:
I will emulate the hon. Member
for Wealden, who is, like me, learning from the Minister, and say that
I could write to the Minister in due course with that kind of
information. Clearly, the perception in Germany is that there has been
investment in and costs relating to the scheme, which is structured
differently from the way that we have approached the matter in this
country, but it has been a real success story and it has brought real
economic benefit to Germany. All that has happened, of course, with
fewer natural renewable resources than we have on these islands. We
have an enormous amount more natural wind and wave potential, for
instance, than Germany
has.
I
was interested in the comments made by the hon. Member for Bolton,
South-East on the interplay in Germany and the presence of a strong
anti-nuclear lobby in the Bundestag that has helped drive policy
urgently towards renewables at the expense of nuclear. That rather
supports the fears expressed by Greenpeace, Friends of the Earth and we
Liberal Democrats about a risk of crowding out a real drive towards
renewables by losing focus and being distracted by proposals to support
the nuclear
industry.
Dr.
Iddon:
I can assure the hon. Gentleman that there is
adequate pressure on the Minister from within his own
party.
Martin
Horwood:
I am absolutely delighted to hear that: if it
comes from such a well-informed source, it will, I hope, prove
effective.
Of course,
it is equally urgent that we do not crowd out clean technology in
general. Perhaps we have all been slightly guilty of focusing on
renewables as the only clean path in the short term, whereas, as we
have already discussed, carbon capture and storage and clean coal
technology are equally important, at least as a transitional
technology, in fulfilling the potential energy gap that the hon. Member
for Wealden rightly raised concerns
about.
Steve
Webb:
In anticipation of the day when my hon.
Friend is a Minister and I pass him notes, let me say that, on Second
Reading, the Chairman of the Select Committee on Environment, Food and
Rural Affairs, the right hon. Member for Fylde (Mr. Jack),
said that it was a myth that the German feed-in tariff
was
“some giant German
subsidy or that it is costing German energy users an unaffordable
amount—it is not, as the average figure is €2 per
household per month.”—[Official Report, 22 January
2008; Vol. 470, c. 1414.]
That
sounds like good value.
Martin
Horwood:
I am, as ever, grateful to my
hon. Friend for putting that on the record and saving me the trouble of
writing to the Minister. That opinion underlines the point is that we
are making. The beauty of the German scheme is that it provides an
incentive not just for big generators, but for small and medium-sized
enterprises and for microgeneration at community and household level.
We have tried to facilitate that in new clause
8.
We propose enabling
powers. We use the magic word “may”, which has been much
discussed in the context of the European Union this week and the
meaning of which is well understood. We are not mandating the Minister
to do this straight away and not asking him to rush into things; we are
asking him to go into it in a measured way and, I say quite explicitly,
alongside the renewables obligation. In the evidence-taking sessions,
quite a lot of witnesses said that they thought that it was perfectly
viable to introduce a feed-in tariff system initially on a small scale
but one growing in stature, alongside an existing renewables
obligation. That is the basis on which we could do it. For example, if
the system were introduced simply for microgeneration at first, that
could provide a model for a wider scheme in due
course.
Charles
Hendry:
Does the hon. Gentleman agree that one of the
great advantages of feed-in tariffs is flexibility? Therefore, we could
start off by giving people a guaranteed amount in returns that the
energy saved would produce over 20-year period, but as that technology
takes off, we could reduce that for the next 20-year period. Each
investor would have a sense of a guarantee about the returns that they
would receive, but as the technology matures and moves forward, we
could make a quick and easy change to the feed-in tariff; it is a
flexible system.
Martin
Horwood:
I completely agree. The flexibility and assurance
that the feed-in tariff system would give to investors in certain
industries is an important advantage.
Another
advantage, one to which the hon. Member for Wealden referred, is its
simplicity and therefore its accessibility to those who aim to generate
renewably at a low level—for instance, households. In his
opening remarks on the clause during our previous sitting, the Minister
referred to village primary schools. I cannot imagine that a village
primary school would be brave enough to take on the ROC system; it is
an ambitious target. However, it is feasible under a system of feed-in
tariffs and microgeneration that a village primary school might
consider it, either through biomass or other technologies; it could
feed into the grid and receive a guaranteed sum in return for the
energy generated. In that way, a feed-in tariff system could release
the innovative potential of individuals, businesses and communities, as
it has in Germany.
I
believe that we have chosen our moment carefully enough to give the
Minister a system that could release that sort of potential without
undermining the existing renewables obligation system at a larger
level. I therefore hope that new clause 8 will attract widespread
support. If the Committee senses that one of the other two new clauses
on offer might provide a better path, I would be quite happy not to
press our new clause at a
later stage in favour of others—or, if the Minister gave
sufficiently strong assurances, to consider other options that he might
put on the table.
The
Minister is presented today with a menu of options—a rich
diversity of offers—all aiming to fulfil the hunger that we have
for feed-in tariffs in the drive towards renewable energy that has been
achieved in other European countries. We are opening the door for the
Minister, so that he can be one of the greenest Ministers ever, in
driving this forward in an imaginative way. I hope later to commend the
clause to the Committee.
Dr.
Whitehead:
I shall speak to new clause 14. We have already
heard that it is one of a plethora of options on how to address tariffs
in the context of the renewables obligation. Before proceeding any
further, in my view, it would be inappropriate to throw the renewables
obligation system up in the air; the world would presumably have to
stand still for a considerable period while a universal alternative
feed-in tariff was introduced.
Indeed,
investment decisions that have already been made, and investment plans
that have yet to be made, as I know from discussions with a number of
people who are thinking of investing in renewable energy, are all
related to the continuation of the renewables obligation. Those
decisions were considerably enhanced not by the passing of changes in
the renewables obligation banding but by the anticipation that such a
change will take place, and they would be put on hold or even
jeopardised as a result of changing horses in midstream.
Whatever the
universal abstract merits of a feed-in tariff might be, substituting it
now would not be a good way forward in developing renewable energy
installations in the UK. Indeed, one of the key lobbying elements of
many of those who are looking to invest in renewable energy has not
been about having a universal feed-in tariff but about ensuring a
longer-term certainty for the status of the renewable
obligation—and the status of the headroom behind it.
In that context, we must be
careful not to look at the difference between the issuing of renewable
obligation certificates and the amount of renewable energy that we have
as though that difference represented a failure in the renewable
obligations themselves. It is necessary to have headroom in the system.
That is part of the mechanism that drives renewable obligation forward,
because if there is headroom ROCs have a value; if there is no
headroom, they have little value and the system does not work as well
as it should do.
9.45
am
It is important
not only to have certainty about the time span for the existence of ROs
and the banding that they represent, but to have headroom in the
system, so that ROCs have some value and there is, therefore, some
ability to plan on the value of the certificates that come forward over
a period of
time.
Bearing
those points in mind, we would need to be careful when considering
whether to substitute the present ROC system with an entirely new
system. As has also been remarked in Committee, there is before us a
substantial development of investment in renewable energy. Part of our
deliberation has to be about how to ensure that that
happens and how best the different forms of renewable energy can be
developed within the time scale that we
seek.
It is also
important that we are careful not to make comparisons between different
countries’ levels of renewable energy without paying some
attention to the circumstances in which those countries have operated
in the past. It is not just about a feed-in tariff
and—certainly, in respect of microgeneration in this
country—it is not just about ROCs. For example, it appears that
there has been relatively little take-up of grants through the
low-carbon building programme, particularly for solar photovoltaics,
for a variety of reasons.
I speak from experience, and I
should declare an interest with respect to new clause 14: if it is
carried with acclaim—or even carried—at a future date, I
might benefit on the grounds that my house needs re-roofing and I will
be re-roofing it this Easter, with a 3 kW solar PV ray embedded in the
roof of the house. If there is an extremely generous feed-in tariff for
microgeneration in the near future, I will be able to retire on the
proceeds. However, in establishing the process by which that roof could
be installed, one of the things that I came across was the planning
regime, as do many people in such
circumstances.
As
those grants are presently constructed, certain requirements that
relate to planning must be fulfilled before somebody can start to
develop a timetable for the installation—getting the builder and
the solar roofer together and so on. The hurdles are so considerable
and the planning regime across the country for what people can and
cannot do concerning microgeneration is so uncertain between
authorities that, in this instance, I came to the conclusion that the
best thing to do was to proceed without even applying for a grant, and
that is what I have done.
I hope that help is at hand, by
way of the imminent final lap of a change in the general permitted
development order. That change was heralded by the Climate Change and
Sustainable Energy Act 2006, which my hon. Friend the Minister had a
substantial role in assisting during its passage through the House some
while ago. The GPDO will be organised to provide a clear and
understandable regime across the country with regard to what is
permitted to be put on to roofs and in gardens and houses, and what is
not.
Mr.
Swire:
That is quite an ambition. Does
the hon. Gentleman concede that, in my part of the world, existing
buildings—very often thatched—are disadvantaged?
Photovoltaic panels cannot easily be put on a listed thatched house in
East Devon. Perhaps we should concentrate more on new build, rather
than on existing build.
Dr.
Whitehead:
Indeed; the hon. Gentleman has a point. The
sustainable buildings code will ratchet up the code level at which new
build will take place up to 2016. After a certain amount of new build
at particular code levels, that new build will require not only that
houses are reactively energy efficient, but that they are proactively
equipped for their own energy generation. That will be achieved through
the installation of solar PV, turbines or ground-source heat pumps
imbedded in the house as it is built, and it will be an important part
of the new build microgeneration approach. Thatched
buildings are rather bioefficient due to the thatch itself. Thatch could
be seen as a form of long-term energy efficiency. I am not sure that
those who developed thatched roofs in mediaeval times thought of them
in quite that way, but that is how they
are.
The
issue for microgeneration is to ensure that the GPDO happens. That
might be done by issuing a statutory instrument in the spring. If there
are impediments, or if people put forward reasons at a late stage about
why the SI cannot go ahead in April, a window of opportunity and a
considerable period will be lost. It is important that the statutory
instrument goes ahead and clarifies GPDO issue in April. In those
circumstances—I put this in the conditional tense—I might
have been the recipient of £2,500 to assist with my solar PV
roof.
Charles
Hendry:
I am interested to hear about the hon.
Gentleman’s plans. If the system of support came through ROCs
rather than from a feed-in tariff, would he bother to apply for ROC
support for the project, or would he decide that the system was too
complicated to bother about? One of our main concerns is that that sort
of good practice, which we are keen to encourage, would come through
feed-in tariffs, but not through
ROCs.
Dr.
Whitehead:
The hon. Gentleman anticipates my next
paragraph. The questions are, first, whether one gets any assistance
for the development of such a project, and secondly, what the lifecycle
of the project is after that and the extent to which that form, or
other forms of microgeneration, can be subject to an efficient use of
the ROC system. Given the output from the system that I am likely to
have, I can probably apply for a ROC. I have not yet applied for it, so
I am not certain how many hurdles need to be overcome. However, I
certainly anticipate that it would be
ROC-able.
However,
there is a wider issue around ROCs and microgeneration. I would
distinguish between the idea of changing horses in midstream as far as
a universal feed-in tariff is concerned and the question of how we
underpin microgeneration in the future. By and large, microgenerators
have not accessed the ROC system so far. Some have done so in some
circumstances, and there have been suggestions and, indeed, some
changes in terms of whether one could have so-called ROC-ettes for
microgeneration, and whether there should be ROC farming, whereby a
number of sub-ROC microgenerators in an area gather together as a ROC
farm and get a ROC at the end of the process. [Hon.
Members: “Rock on. Northern Rock?”] Yes, it
will be interesting to see whether confidence in the ROC system
continues in the north and north-east of England to the same extent as
in the
south.
The
central point is that, at the very least, we could and should look at
whether some form of tariff system would be a way to develop
microgeneration, either in parallel with or instead of the ROC system.
First, it would not interfere with the long-term planning process. In
effect, it would not change the system that applies to microgeneration,
because the system of ROCs is undeveloped anyway. Also, because most
microgeneration will be on the margin of ROC-ability given the lower
levels that ROCs apply to anyway, a tariff system probably would
represent an easier way to encourage the output of microgeneration than
by trying to gather together
part-ROCs and then deal them out to the various people who are in a
part-ROC system through some form of
farming.
My
new clause 14 would give the Minister a great deal of leeway in
deciding how such systems might develop. Indeed, it does not even
include the expression “feed-in tariff”. It refers to how
the Minister may develop systems and designate particular systems for
such arrangements, and how he may address the producers of electricity
in terms of what their obligations would be under such arrangements. It
also enables the Minister to vary the tariff rates according to the
kind of microgeneration or generation that is
involved.
My
modest suggestion is that, of the three new clauses on offer, mine
represents the best present to the Minister—naturally, I would
say that—but I join the hon. Member for Cheltenham in suggesting
that this is not necessarily a question of having a mighty battle about
which one gets the nod this morning. It seems possible, within the
overall outline of the present system, to vary the approach that is
taken to microgeneration. As far as our discussion today is concerned,
that idea has legs, and if my hon. Friend the Minister is able to
respond positively about how it may be taken forward, the question of
whether one has a particular line here or there, or a new clause here
or there, fades into the
background.
10
am
Steve
Webb:
It is a pleasure to follow the hon. Member for
Southampton, Test. His contribution was well informed, as ever. With
his reliance on solar photovoltaics, he will not be able to get a ROC
around the clock.
I
want to pick up on a few clause stand part issues that we have not
dealt with. I expected the Minister to say a little more, because, like
the hon. Member for Wealden, I was hungry for more when he was speaking
last Tuesday. On the relative value of the bands—we are getting
half ROCs, one and a half ROCs and two ROCs—the numbers in the
most recent briefing seem to have changed slightly from those in the
Library note, which is interesting. Will the Minister tell us the
reason for having two? Why not have two and a half or 1.75? The numbers
have a very specific implication—an extra amount of
subsidy—so they must be pro rata to something. Will he say more
about where the numbers have come from? I am sure that he knows off the
top of his head, and any source would be
fine.
The hon. Member
for East Devon raised the next issue that I want to discuss. I must
admit that I have learned something this morning: I had not come across
McROCs before, but the fact that Scottish ROCs appear to have different
rates from those south of the border is quite serious. Obviously, there
is coast all around the British isles, but if there is a different rate
of return north of the border, that is a significant issue. The
Minister did not mention that in his introduction, so I hope that he
will deal with that point.
Earlier, the
hon. Member for Wealden and I had some exchanges about what will happen
if the wind does not blow in one place, but blows elsewhere. Within the
UK, there is scope for pooling: the wind is always blowing somewhere,
so, provided that there is a comprehensive network, we will have a
reliable source.
The Minister will be familiar with the super-grid—a Europe-wide
version of the same idea. Clause 36 is essentially a market mechanism.
It puts a Government-induced price in, but leaves the market to decide
on the mix. A Europe-wide network will not happen only on the strength
of UK incentives, as in clause 36, but will need Europe-wide
co-operation between other Governments on planning, international
waters and so on. Does the Minister think that Governments should talk
to each other about collaborative projects that clearly have a
Government angle? Will he update us on the super-grid concept of a
network of offshore wind power across European waters? Are the
Government considering
that?
Charles
Hendry:
The hon. Gentleman makes a
fascinating point. I am a great enthusiast for the super-grid. It is an
extraordinary and exciting idea, and it would be wonderful if it
happened. However, given that we have a ROC system in the UK and
Germany has a feed-in tariff system, there will have to be some way of
marrying up those systems. The grid will be in different territorial
waters and investment will be according to where the system will have
the most support. How does he think those systems could be
reconciled?
Steve
Webb:
That is an important issue. I assume that because
different national economies will draw electricity from the super-grid
at different points, when a British power company or electricity user
draws electricity from the super-grid, reimbursement will be in the
form of ROCs. In Germany, it might be used by German industry or
generators. I imagine that that is how it could work. However, there
might be perverse incentives. One can imagine it being drawn in one way
and there being an inter-connector to sell it back. There must be
co-ordination.
Charles
Hendry:
That brings us back to the issue of exporting
power, which I discussed earlier. The idea with the super-grid is that
when the wind is blowing in the British part of the North sea, if the
electricity is needed in Denmark or Germany, it will be sent there,
where it will be bought. The whole notion of the super-grid is that it
will be tradeable. Has the hon. Gentleman, or the Minister, thought
about how that could tie in with the proposed
system?
Steve
Webb:
I share the hon. Gentleman’s interest in
imports and exports. He raised that issue earlier, and I look forward
to hearing the Minister’s
response.
The
only other issue that I want to raise, on which the hon. Gentleman
might have touched briefly in a previous sitting, is the Ministry of
Defence’s attitude to offshore and onshore wind. That is germane
because clause 36 provides differential incentives in relation to
offshore and onshore wind, which is great if DBERR is trying to promote
such development, but problematic if, at the same time, the MOD is
trying to stop it. We have had a written answer suggesting that the MOD
has objected to a significant number of wind projects—I will
give the Minister a reliable number in a moment. Defence Estates
objects to more than half of all wind farm applications and the reason
for that seems to be that the radar systems cannot cope. I find it
alarming that advanced military radar systems cannot tell the
difference between a stationary wind turbine and an incoming
intercontinental ballistic missile. That is alarming on several
levels.
The Ministry
of Defence says no because it can, but really it ought to be asked more
difficult questions. Why does our Ministry of Defence want to block so
many applications whereas other Ministries of Defence, which presumably
also want to tell the difference between an incoming missile and a wind
turbine, appear not to be blocking them? Surely, if there is a general
radar and air traffic issue, Britain will be affected in the same way
as mainland Europe. Why is our Ministry of Defence being picky? A
written answer from the Secretary of State for Defence says that the
MOD has opposed 28 wind farm applications between 2005 and 2007.
Defence Estates itself objects to just over half of 1,000 project
application pro formas that it receives annually. There is a
substantial problem and it is getting worse. I hope that the Minister
will take action to deal with
it.
Anne
Main (St. Albans) (Con): Does the hon. Gentleman agree
that the timing of some of the objections is a problem? Often, there is
no voice against an application until a very late stage. I was talking
to the wind energy companies about that, and it is disheartening for
them to face significant costs and disappointment at a late stage of
the planning application.
Steve
Webb:
The hon. Lady is absolutely right. Apparently, in
some examples, initial consent is given, the process drags on and the
consent is then revoked, which makes the whole process much more
expensive. On the one hand, we are trying to give incentives through
clause 35; on the other, another arm of Government is making this form
of development more expensive. There are a whole raft of examples of
that.
Dr.
Stephen Ladyman (South Thanet) (Lab): I am concerned that
the hon. Gentleman is being a little unfair to the MOD. It is true that
air traffic control centres and the MOD raise objections to wind farms.
They did so in the case of the London array, which was being built off
the shore of my constituency, but eventually the concerns were
negotiated away. That seems to be the pattern: they register their
objection to get people to the table and negotiate the problems
away.
Steve
Webb:
If that were the case, the picture
would not be as bad as the one I am painting, but there are two
problems. First, when the MOD does not register an initial objection,
the wind turbine does not end up in a different place and remains where
it always was. Then two years later the MOD suddenly decides that there
is a problem. That must be unacceptable, as I am sure that the hon.
Gentleman would agree. Secondly, such objections add to the cost of the
process. If there are legitimate objections—and in some cases
there will be—they need to be addressed quickly, but
unpredictable behaviour and long delays cannot be the way
forward.
I have a
whole sheet of examples but I will spare the Committee those and give
one example. Fallago Rig in the Scottish borders is a 144 MW wind farm.
Nearly three years ago in 2005, a formal planning application for 62
turbines was submitted. The MOD confirmed to the Scottish Executive
that it had no concerns about the project, but the council objected on
the grounds of
the way it looked. A re-submitted smaller application for 48 turbines
was made in October 2006, and in March 2007 the MOD objected to the
smaller wind farm. There may be a technical reason for that, but one
senses that there was an internal policy shift. I find that concerning
because, as far as I know, other similar Ministries are not doing the
same thing. In this project, more than £1 million has already
been spent on development costs. If the obstacles are insuperable, why
should people make such an investment in our country when other
Ministries of Defence do not make the same
objections?
Dr.
Ladyman:
I wonder whether the hon. Gentleman appreciates
the irony of what he has just said. He makes a big deal about the MOD
making a complaint on rational grounds, which I argue will get
negotiated away, but he skates over the fact that the local council
objected simply because of the way the project looked.
Steve
Webb:
That is part of the planning
process and the council had a democratic right to make those
observations. Central Government cannot stop local authorities
expressing those views; nor should they. The hon. Gentleman is being
too glib in saying that the problems will all be negotiated away; what
if objections are erratic, come late in the process and take a long
time? Wind farm folk who come to talk to me say that it is hard to get
to the key decision maker in the Ministry of Defence, and that they do
not get responses. If there are particular objections, they are not
negotiated, and there is paralysis, which is a
problem.
Charles
Hendry:
Is not the vital point that the
council was right to object, but it did so at the appropriate time?
What went wrong was that the Ministry of Defence said initially that it
had no objections, but subsequently changed its mind, by which time the
company had spent an enormous amount of time and money on development.
Everyone understands that the Ministry of Defence has an absolute right
to object on grounds of national security and radar issues, but it
should do so at the appropriate time. Furthermore, the MOD’s
vision is that every wind farm application that has ever been submitted
is still a live application, even when they have been dropped. It
thinks that it is looking at masses more applications than is the
case.
Steve
Webb:
I think that that is right. The Ministry of Defence
has a legitimate role, but if there is an insuperable issue, or one
that needs addressing, it must raise it at the start, it must be
consistent, and the matter must be resolved quickly. None of that is
happening. If the Minister wants clause 36 to work, and the banded
renewables to provide the incentives that he wants, he must assure us
that he is—dare I say it?—banging heads together in the
Ministry of Defence to try to get it to stop behaving
inappropriately.
Malcolm
Wicks:
I was listening with great care to the discussion
about the MOD, and I hope to be able to say something about that. The
matter is obviously one of concern, but I think that we are making
progress. In a way, the debate has been in two halves: part of it was
about my speech on clause stand part, and that was followed by a
fascinating series of speeches primarily
about how we can better incentivise microgeneration. That has been the
essence of the debate, and I shall start by responding to some of the
issues raised by the hon. Member for
Wealden.
By way of
context, I agree entirely with my hon. Friend the Member for
Southampton, Test, who indicated that we need to understand the recent
history of different countries with regard to renewables. Our
country’s recent energy history needs to be understood partly in
the context of the huge energy resource in the North sea and the wider
UK continental shelf. Unlike other countries, we have had an abundant
resource of fossil fuels. We took the decision shortly after the second
world war to build civil nuclear reactors, whereas other
countries—understandably, because it is up to member
states—are opposed to
nuclear.
It
is fair to point out, as Liberal Members have done, that some countries
are rich in hydro resources because of their terrain. I sometimes think
that those who make too glib a comparison with Europe—no one
here has done so today—do not take hydro into account. It is a
significant percentage of European renewable resources, and it is only
fair to point that
out.
Having admitted
that the UK has come relatively late to renewables, we have not come
late to CO2 and greenhouse gases. We are one of the few
member states that will hit the 2012 Kyoto protocol target. Greenhouse
gas and CO2 emissions reduction are the primary objectives
for tackling climate change, and I sometimes think that when talking
about nuclear, energy efficiency or renewables, we should keep our eye
on the ball: the threat to our planet from global warming. We must
approach that task in a number of ways, of which the renewables
strategy is a key component, but not the only one.
We have heard some comparisons
with Germany today, and I want to give some data on Germany in terms of
feed-in tariffs. But it is worth bearing in mind—we like to beat
ourselves around the head a bit in the House—that the
UK’s CO2 emissions per capita are lower than
Germany’s.
Charles
Hendry:
Will the Minister confirm that two of the main
reasons that we have been able to meet those Kyoto targets are first,
the dash for gas, because we invested in gas in a way that other
countries did not, and secondly, the loss of the United
Kingdom’s manufacturing industry, which has been exported to
China? China and other countries in Asia now produce the CO2
that those businesses historically produced, but above all, the
dash for gas was
responsible.
10.15
am
Malcolm
Wicks:
Yes, that is a very substantial
component, and the hon. Gentleman is right to remind us that when
examining a nation’s carbon dioxide emissions, the balance
between traditional manufacturing and the development of service
sectors is important. That was a useful intervention—as ever.
There may be a deterioration in the future, but currently, the quality
is extremely high.
May I say
something about the Government’s renewables strategy? I shall
say it briefly, because we must understand the issue in two parts.
Current Government policy will, by 2010, already deliver about
£1 billion of resource to
the renewables sector per annum through the renewables obligation. So,
when some say that we should spend more, let us bear that figure in
mind: by 2010, as I understand it, £1 billion will be spent per
annum through the RO. We are providing other grants and so on, too, so
it is already a substantial resource.
Our White Paper set out
ambitious measures to increase renewable energy production in the UK
from 2 per cent. of all energy, which is more or less the
figure now, to some 5 per cent. by 2020. However, we know that we need
to do much more in the light of the challenge posed by the European
Union’s target of 20 per cent. for the whole European
Union by 2020. We expect the amount of electricity that we produce from
renewable sources to triple to about 14 per cent. by 2015 when compared
with now. On electricity, we currently produce about 4 or 5 per cent.,
and we expect the figure to triple by 2015.
My main point is that we now
recognise that we must do far more if we are to meet our share of the
European Union’s 2020 target. The Commission said that our
target should be 15 per cent.; I am sure that it will be there or
thereabouts, but we are discussing the fine detail. It will be a very
substantial effort, and current policies alone will not, in any way,
enable us to hit that target, whatever it turns out to be.
We are therefore thinking again
and hard about a renewables energy strategy. We will consult on it and
publish a document in the summer to develop a strategy that will get us
to whatever our target turns out to be. It will be very substantial. We
have a raft of successful policies that are moving us ahead, but are
they enough? No, they are not. Do we need to do more and do we need a
new strategy? Yes, we do. In simple terms, that is our current
position.
Anne
Main:
I congratulate the Minister on his forceful support
for renewables. There is in my constituency a renewable energy station
at junction 20 of the M25, and I should like to welcome him there to
see some of the groundbreaking work that it staff are doing. I hope
that he will accept that invitation to see what can move us forward
with extra renewable impetus.
Malcolm
Wicks:
I am very happy to accept that invitation. It would
be wonderful to go there next Thursday afternoon, but unfortunately
there are more theoretical issues to deal
with.
Charles
Hendry:
The Minister is always welcome to my constituency;
I am not sure, after my earlier comments, whether I would always be
welcome to go to his. On the size of the challenge, if 40 per cent. of
our electricity will have to come from renewables to meet the EU
target, does he agree that that equates to 25 GW, or
thereabouts, of available peak demand, which will have to come from
renewables? Does he agree that that is the size of the
challenge?
Malcolm
Wicks:
I certainly recognise, given that
it is easier at the moment to produce renewable energy for electricity
than for some other things, that the proportion of our electricity
coming from renewables—I have heard
figures of 35 or 40 per cent., perhaps more—will be colossal. As
we develop our renewable energy strategy, we will look at the numbers
and the implications very carefully and I think it is best to leave it
there.
The
hon. Gentleman asked me about proposed section 32A(4) and the
implications for the UK. As he knows, there are already three separate
renewable obligations: one for England and Wales, one for Scotland and
one for Northern Ireland and these are co-ordinated for maximum
efficiency and we want this to continue. Certainly industry wants this
consistency and this certainty. If, however, devolved Administrations
decide to open up differences in banding, this power allows us to make
sure it does not disrupt the other obligations, but we are working very
closely with the devolved Administrations to ensure that our united
approach continues, which, I repeat, is what the industry is asking of
us.
The
hon. Member for Wealden, who was the only person in this room who was
disappointed by the shortness of my speech the other day and who
obviously went to a very good school because he understands the
alphabet pretty clearly, asked me about the proposed section 32M which
touches on fossil fuels. I think I need to give him a detailed
explanation. This section defines some of the terms we have already
discussed and allows the Secretary of State to set out in the order the
definition of what constitutes waste for the purposes of the RO and how
the proportion of fossil fuel in the waste is to be determined. The
provision enables waste, which has a relatively high proportion of
plant and animal matter, and—this is the crucial point—
some fossil fuel content to be treated as a renewable resource, for
example crop residue left over after a production process that contains
some fossil fuel contaminants. This type of waste is typically referred
to as biomass. As well as waste that can be treated as biomass, the RO
also supports the electricity generated from the non-fossil fuel
content of waste when used in combined heat and power stations,
or when converted to a fuel by anaerobic digestion, gasification or in
other ways.
This new
section will enable the order to make provision as to what may be
accepted as sufficient evidence of the proportion of fossil fuel
content of waste in these circumstances, which could include the use of
declarations by generators. This is intended to overcome difficulties
that operators face in the accurate and cost-effective measurement of
the fossil fuel content of mixed wastes. To avoid the risk of
inaccurate calculations, this section also includes a provision
enabling the regulator, Ofgem, to require sampling of fuels in
specified situations to ensure that ROCs are awarded only for genuine
renewable
generation.
The hon.
Member for Wealden also asked about proposed section 32B(3)(b) in terms
of the implications if some renewable electricity is exported. The
amount of electricity exported is a very small proportion of the whole,
but as long as generators can sell to suppliers in the UK, they will be
able to claim ROCs should some of that electricity be exported. That is
the only sensible way to
proceed.
The
hon. Member for East Devon asked about Scotland. Decisions on banding
in Scotland have not been made and it is not the case that marine there
gets five ROCs. There is currently additional support for marine
through the marine supply obligation in Scotland. However, this is
currently set at zero. We are working with the Scottish Executive to
ensure a UK-wide banded RO system, and this is really what the industry
and what generators
want.
The hon. Member
for Cheltenham referred to a technical, arithmetical matter about the
fall in the rate of compliance for
RO—
It being
twenty-five minutes past Ten o’clock,
The
Chairman
adjourned the Committee without Question put,
pursuant to the Standing
Order.
Adjourned
till this day at One
o’clock.
|
| |
| ©Parliamentary copyright 2008 | Prepared 29 February 2008 |
