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My final point on ROCs is that the Government have been rather obsessed with wind power as the means of meeting their renewables targets over the last few years.
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That is partly because ROCs are suitable for that purpose, although I am glad that some variation has been introduced to the proportion of ROCs available in relation to power from different sources. I hope that the introduction of the feed-in tariff and microgeneration will enable us much more effectively to spread the sources of renewable energy and not depend so much on very large wind farms, which, as several hon. Members have said and as you and I are both aware, Mr. Deputy Speaker, cause immense local resistance, not least because they are often seen as huge blots on the landscape.

I want to discuss what I have seen happening in Germany, especially vis- -vis anaerobic digestion. As a number of hon. Members have said, virtually anything can be anaerobically digested—livestock manures, slurries, sewage sludge and, of course, food wastes. To return to the point about money, so much of what is done—the composting, which is virtually the only system on any scale that is getting rid of organic, putrescible waste—is viable for the compost operator only because of effective subsidy, either through landfill tax or whatever is coming back into the system.

If we want renewable power to be not only an important part of our climate change policy but accepted by the community as important, the sooner we can move it away from a form of subsidy, the better, although I am not suggesting that it may be impossible to achieve this without any form of cross-subsidy, as we get through ROCs.

I fear that, in financial and economic terms, some of the developments of the past few years, which may be a necessary staging post, are not sustainable because they rely too much on some form of cross-subsidy from either ROCs, the landfill tax or elsewhere.

Hon. Members have mentioned the fact that biogas can be fed, through the necessary filters, directly into the gas network. That is right, but it will work properly only if we have some sort of feed-in tariff that suits it. I want to stress in particular the point about agricultural waste. Those who know me will not be surprised that I have returned to the issue; my hon. Friend the Member for Hexham (Mr. Atkinson) referred to it briefly. In the last few months, the Government have introduced some highly restrictive measures on livestock farmers as a result of the nitrates directive. I shall not go into the rights and wrongs of that, but it means that farmers face huge investment costs in relation to storing and dealing with waste.

The time scale does not synchronise here, because farmers have to act within the next year, but if these two things could have been brought together with a little more cross-Government thinking, a lot of that investment could have been not in storage systems, but in biodigesters, enabling animal waste to be used to create a worthwhile resource in the form of biogas.

Biogas and the digestion of such materials create a useful digestate, which rightly can be fed on to the land. It is neutral in many ways, but it is a valuable source of nutrients—and that at a time when agricultural fertiliser costs have been rising dramatically, setting aside the issue of the sustainability of continuing to use fertilisers whose manufacture is itself often highly energy inefficient.

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As others have said, and as National Grid suggests, biogas could generate perhaps 18 per cent. of total UK gas demand. More importantly, it could prevent up to 75 per cent. of methane emissions from current manure management practices. As the hon. Member for Nottingham, South said, that is already happening commonly not just in Germany, but in many of the northern countries of mainland Europe. It is based on a feed-in tariff-type system, which was generated not only as a means to meet renewables targets, but as part of Germany’s search for greater domestic energy security.

As the hon. Gentleman also said, Germany is much less dependent on the vagaries of the world gas markets. That, too, is an extremely important measure and one reason Germany is probably two decades ahead of this country in this. In Germany, there are 3,000 anaerobic digestion plants. The National Farmers Union estimates that this country could have up to 1,000, but there are fewer than 20.

There are other bureaucratic obstacles. I have mentioned the issues of planning and the current lack of a feed-in tariff, which are important, but there is a third issue, which was touched on earlier. We need to find some way of incentivising—or forcing if incentives will not work—the companies that operate the electricity national grid and gas networks to be receptive to feed-in by microgeneration plants, whether it is electricity or gas. That is a huge challenge that I do not underestimate, but nothing else will work if we do not have that. It is part of the joined-up approach that is needed.

I strongly support this measure and I pay huge tribute to everything that my hon. Friend the Member for East Surrey has done. I entirely endorse what Members have said about the huge step forward, which I think my hon. Friend underplayed, that the Bill represents. However, it cannot make that step on its own. As I said, unless the connections—the rules, protocols and so on—enable the installation of such systems, it cannot work. That is a challenge for the Government.

There is consensus across the House, as has been said, about the need to promote microgeneration and renewable energy. I hope that, on that basis of consensus and understanding, the Government will not only welcome this Bill but do everything they can to bring it into force as soon as possible—unlike with some of the measures we heard about earlier—and do their bit to encourage and enable anyone who wants to invest in such a system to put their electricity or gas straight into the grid, so that the full benefit from the system can be gained.

11.42 am

The Minister of State, Department of Energy and Climate Change (Mr. Mike O'Brien): This has been a high-quality debate on an important Bill, and I welcome the important and significant contributions made by a number of Members. Before turning to the contribution and Bill of the hon. Member for East Surrey (Mr. Ainsworth), let me deal with some of the other contributions.

My hon. Friend the Member for Southampton, Test (Dr. Whitehead), who has a strong record in this area and has pushed hard in many ways the issues of feed-in tariffs and a renewable heat incentive, has championed this cause for a long time, as have other Members. My hon. Friend the Member for Nottingham, South (Alan
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Simpson), whose knowledge on these issues is also substantial, made some fascinating points about the local generation of gas and the importance of ensuring that we address the local generation of electricity. His point about the benefits that can come from local people owning the generation of their own energy is important, and was also made eloquently by the hon. Members for North Southwark and Bermondsey (Simon Hughes), for South-East Cambridgeshire (Mr. Paice) and for Hexham (Mr. Atkinson), all of whom have taken up this issue. The Government recognise the importance of local people becoming stakeholders, and we want that to be developed in the coming decade.

The hon. Member for Hemel Hempstead (Mike Penning) calls himself a recent convert to these issues; we welcome him to the green agenda. He made an important contribution to this debate, and I welcome that. The hon. Member for Bexhill and Battle (Gregory Barker) spoke about the importance of pulling microgeneration from the fringes of the energy debate and into the mainstream, and I share his wish. That approach builds on the Government’s microgeneration strategy and on the great raft of energy, planning and climate change legislation that we took through the House at the end of last year. Much of the microgeneration strategy, which I shall come to in a moment, has been implemented and we now need to ensure that it is revitalised; the Government fully intend to do that.

I am conscious of the House’s wish to move on to other debates. I suspect that my response will take about 30 minutes, and after the hon. Member for East Surrey has responded, I hope that we can move on—with your consent, Mr. Deputy Speaker—to the Bill that I know my Parliamentary Private Secretary, my hon. Friend the Member for Coventry, South (Mr. Cunningham), wants to speak on.

The hon. Member for East Surrey has a long track-record in raising green energy issues. That record is highly respected in the House, so when he introduced this Bill, we knew that it needed to be taken very seriously. He does not bring up these issues frivolously or to score points. Indeed, I am sure that he will not mind my repeating that when I asked him whether he wanted just to score some points, or to get a Bill through and do something serious, he was very clear that he wanted the latter. That, indeed, is how he has approached this issue throughout our discussions.

I hope that we can support the Bill and ensure that it will enable the Government to build on the work that we and others in all parts of the House have done in recent years to support the development of microgeneration technologies in the United Kingdom. My discussions with the hon. Gentleman have gone well, and the Government have sympathy with many of the points in the Bill and its aspirations. There are some clauses that we do not believe are right, however, and I shall say more about that in a moment. We think that quite a lot of work needs to be done on the Bill’s detail, and I hope that—without in any way gutting it, and making sure that its thrust is taken through—we can ensure that we get a Bill that the microgeneration industry regards as positive news, that advances the green agenda, and that makes the important contribution I believe it can make to ensuring that we deal with climate change issues.

Of course, significant parts of the hon. Gentleman’s Bill are already covered in the Government’s programme to support take-up of renewable energy and low-carbon
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technologies at domestic and community level. We want to ensure that we can create a sustainable market for renewables and low-carbon, on-site energy technologies.

There is increased interest in microgeneration technologies, with individuals and communities wanting to play their part in tackling the challenge of climate change. The Government want to encourage that interest and make it easier and more attractive for individuals and communities to contribute. Taking up the point made by my hon. Friend the Member for Nottingham, South, the key to feed-in tariffs is achieving the necessary degree of vested interest—in the best possible sense—that comes from having a local source of energy from which people benefit and which they can see making a direct contribution to their local community. That may well meet some of the concerns that Opposition Members have expressed about onshore wind, but other types of renewables may be helped by the introduction of feed-in tariffs and, in due course, the renewable heat incentive.

Before going into the details of the Bill and our views on the clauses, I shall set out the broad background to the energy agenda and how the Bill fits into it, commenting on feed-in tariffs as I do so. We face challenging targets to increase the use of low-carbon energy, which will require a concerted effort over a long period. Having cross-party support is important to that effort, because we are talking not about a period of one Government, but about decades of change that will be required to deal with climate change. As much as I would like to believe that the Labour Government will continue for decades to come—ambition is important—I suspect that that will not be the case. However, I shall briefly outline our ambitions for the energy picture in the coming decades.

First, we need to ensure that electricity in particular is generated in a way that does not damage the environment. We need to ensure that the requirement for massive change and massive investment by large-scale energy companies is fulfilled, and we need a nuclear base load to provide the base on which renewables can be built—that is enormously important. In addition, substantial build-up of renewables is essential. Leaving aside microgeneration for a moment, I am talking not only about very large-scale renewables—the large offshore and onshore wind farms—but about more localised energy generation. In various ways, not through wind alone, such sources will provide renewable energy generation.

Renewables generation suffers from the problems of intermittency—energy is not generated predictably all the time—so flexibility is needed in energy generation. Our energy policy must therefore take in coal and gas-fired generation with carbon capture and storage. That fits well with escalating generation, but also key are the growth of community-based energy and ensuring that individuals can see that they can contribute by generating their own energy. Also, because the best energy is the energy that we do not use, as has been said, we must make an enormous effort on energy efficiency.

That is the overall picture. Nuclear provides the base load and renewables are the essential component. Flexibility comes from coal and gas-fired power stations with carbon capture and storage, but we also need local and diversified energy generation, as well as individuals, where possible, generating their own energy through microgeneration; and, on top of all that and across the board, we need greater energy efficiency.

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Simon Hughes: Would the Minister be kind enough to answer the specific questions on what percentage of green energy generation he thinks we will achieve by 2010 and 2020, and where we stand in relation to the Government’s targets? That is an important part of the description.

Mr. O'Brien: The target is clear: the Government want 15 per cent. of our energy to be generated from renewable sources by 2020. That is the key target—the European target that we want to hit. We are working hard to increase the amount of energy that comes from renewables—not just microgeneration, but other forms of renewables as well. We will have to wait and see where we are by 2010, which is not far away, but we are working hard to achieve the maximum possible generation from renewables, so that we can get for ourselves the sort of platform that we need to move forward. One thing that we need to do by 2010 is to make significant changes to boost the amount of renewable energy generation. We want an eightfold increase—a massive increase—and the present rate of progress is just not good enough. We are conscious of having constantly to accelerate the rate of change in the energy revolution that we need to take place.

Have we done enough so far? No. We are only at the beginning of an energy revolution that will transform things, and there is much more that we can, and must, do. Renewable energy and low-carbon technologies are an integral part of the Government’s strategy to deliver on our climate change goals, and they will play an increasingly important role. We face a no-less-than eightfold increase in renewables, and the increase may possibly go well beyond that. Small-scale, on-site energy technologies will definitely have a major part to play.

Before addressing that issue, I want to talk about the key objectives of our energy policy, which are: first, to tackle climate change; secondly, to provide energy security; and, thirdly, to tackle the issue of affordability, including fuel poverty—and we want to do all three of those things in the face of the global economic crisis, the credit crunch. The task before us is considerable, but the Bill has something important to say on all three of those key objectives on which we have to deliver—on climate change, energy security and affordability. We have to ensure that the challenges are met, and that we provide a clear vision on how we will do that.

Microgeneration must be not just small-scale, but community-scale. I should just mention that one of the impacts that feed-in tariffs will have is on the word “microgeneration”. There needs to be a discussion about what we are talking about when we say “micro” now. We were quite clear in the past that we were talking about individual homes having a small wind turbine, or a ground source heat pump or something like that, but now, with the move to feed-in tariffs, we are, at 5 MW, talking about something far more substantial. The opportunities for the renewables industry, which was regarded very much as an industry based on individual homes or small businesses, will be much greater after the introduction of feed-in tariffs in April next year. Feed-in tariffs will make a real difference, and I am not sure whether “micro” is quite the right word any more; perhaps we should refer to “small-scale renewables”, or something like that. Perhaps that is a debate for another time.

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Mr. Peter Ainsworth: I am listening to the Minister with great care. I am sure that he is aware of the need to be careful about the use of the word “renewables” to the exclusion of other technologies that are not, strictly speaking, renewable, but are low-carbon. Fuel-cell technology and micro combined heat and power are examples. I am sure that he is aware of that point, but I just want him to make it clear.

Mr. O'Brien: The hon. Gentleman is quite right, which is why we probably need to be a little careful about the Bill, too; it is about green energy, but there are those in the nuclear industry who would regard nuclear generation as green energy. The same is true of other energy generators. Perhaps we need to have a discussion about definitional issues and what they mean. I certainly take his point: there are green energy sources that may not necessarily be renewable. He is quite right about that. Perhaps we need to have further discussions on that, not today but in time set aside for that debate.

I want to move on to how the microgeneration strategy has developed. The Government brought forward a microgeneration strategy in March 2006 with the aim of identifying obstacles to creating a sustainable microgeneration market. Many of the actions in the strategy were completed, and we reported on those in June 2008, when the renewable energy consultation was published. There is no doubt that the microgeneration strategy has helped to galvanise support for microgeneration technologies. It also increased the limited knowledge of the small-scale renewable and low-carbon technologies that existed at the time, such as ground source heat pumps, solar photovoltaics, solar thermal and micro-wind turbines. The House will be aware of the significant progress in successfully implementing the majority of the actions in the microgeneration strategy. It is right to say that as a consequence of our work over the past two years, we have benefited from a deeper understanding of how the microgeneration market works, and how important it is to making a contribution to an 80 per cent. reduction in CO2 emissions by 2050.

Building on evidence from research into consumer behaviour, from tackling planning restrictions, and from tracking capital costs means that we are now in a better position to take forward building a sustainable market for microgeneration in the UK. A key object of the microgeneration strategy was to create the conditions for microgeneration to become a realistic alternative or supplementary source of energy generation. The strategy contained 25 actions to tackle the barriers to widespread uptake of microgeneration. To date, 21 of the 25 actions have been completed, three have been closed as they were overtaken by other events or other measures, and one remains and will be completed later, we hope. With the majority of the strategy now fully implemented, and many of the barriers to microgeneration removed, we believe microgeneration policy needs to be revitalised by the forthcoming renewable energy strategy and the heat and energy saving strategy.

Some have felt that the strategy does not go far enough in bringing microgeneration into the mainstream. We believe that we need to go further. However, we want to identify some of the key achievements to date. Many households have seen microgeneration installations put in as a result of their becoming permitted development. We have some issues to resolve in relation to noise,
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particularly on micro-wind and air source heat pumps. The Bill will give us the chance to examine some of those.

The microgeneration certification system is making progress and should provide consumers with independent certification of microgeneration products and services and a route for complaints. Consumers tell us that a robust certification scheme which provides quality assurance and information and advice on performance is important in building confidence in microgeneration technologies.

The big six energy suppliers, as well as some of the smaller ones, now offer export tariffs for excess electricity sold back into the grid. As outlined in last year’s Budget, Ofgem and energy suppliers have committed to providing impartial advice to consumers on obtaining the best financial rewards.

Since April 2007 there has been a large increase in the number of microgenerators accredited under the renewables obligation, from 410 units to 1,329 by 31 March 2008, of which 1,047 are represented by an agent. The strategy as a whole has been largely successful in addressing some of the barriers to microgeneration, particularly some of the planning and technical barriers. Most of the individual actions have been successfully delivered. However, there is still work to be done to ensure that conditions for microgeneration as a realistic option are improved, especially in ensuring good information provision, and further work to address the costs of microgeneration.

The low carbon buildings programme is helping with up-front costs and easier access to renewables obligation certificates—microgenerators now get the highest level of ROCs. Better export tariffs provide ongoing support.

The hon. Member for North Southwark and Bermondsey mentioned the low carbon buildings programme phase 2, which was the £50 million capital grants scheme launched in December 2006, and he referred to the money running out. He seems not to have noticed that in the Budget there was the announcement of a further £45 million of new money allocated to the low carbon buildings programme. I was able to announce last week that £5 million of that would go to ensure that some of the applications in relation to solar photovoltaic could get going again. We hope that that issue has been addressed.

Simon Hughes: I was aware of the announcement, but not of its impact on this year’s prospective opportunity for the disbursal of money. Are people still allowed to apply if they had not applied by the end of February? Will some of those applications be granted? Is the scheme open for bids again, so to speak, and will there be further disbursal to projects in this financial year?

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