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In the absence of effective international effort, greenhouse gas emissions will continue to grow rapidly over the coming decades. On current projections, that will result in warming of between 1.7° C and 4° C by 2100. Rising temperatures will cause a range of stresses to our planet, causing radical changes to rainfall patterns; water shortages; loss of glaciers; loss of agricultural land; and extreme weather events of increasing frequency. We have seen in the dramatic flooding in the UK in recent times, which caused social upheaval and severe economic effects in flooded towns all over the country, how easily such
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weather events cause chaos. We have also seen how much it costs to tackle and remedy them. Stern was undoubtedly right about the costs of not acting.

Those are some of the reasons why the Government and Parliament have committed to cutting greenhouse gas emissions by 80 per cent. by 2050. We are not suggesting that reaching that target will be easy. It will require radical action, and we will need to roll out cost-effective quick wins such as insulation. We will also need to decarbonise the supply of electricity and heat, which we cannot live without. The challenge is clear when we consider, for example, that space heating accounts for 47 per cent. of our overall carbon emissions. In that context, it is critical to encourage renewable heat technologies.

As hon. Members know, microgeneration technologies are varied. They can deliver both renewable electricity, through micro-wind, photovoltaics and micro-hydro generation, and renewable heat through heat pumps, biomass and hopefully in future micro fuel cells. Microgeneration can help us contribute towards our 2050 target of reducing our emissions by 80 per cent. It can also help communities and householders work together to tackle the damaging effects of climate change, and it has the potential to increase the diversity as well as the security of UK energy supplies. In many cases, fitting microgeneration will help us to be aware that we must use energy more efficiently.

In the shorter term, those technologies, some of which are mature already and some of which are still developing, have the potential to help us meet our EU 2020 targets on renewable energy. We all know that those are challenging targets, which require a significant increase in renewable generating capacity. Indeed, we will need no less than a tenfold increase in renewables, which is a very daunting prospect. Our recent domestic supplies of gas and oil have come from domestic sources, putting our starting point for renewables behind that of many other EU countries. That is one more reason for supporting the Bill, which represents a second push towards reaching the microgeneration levels that will make a serious contribution to our 2020 targets.

We have already put in place an energy strategy to generate a baseload from technologies such as nuclear power, and to develop carbon capture and storage. Last year, the Energy Act 2008 set the framework for moving forward to ensure that the market is capable of delivering the changes that we need now and in the future. However, it is important that householders, communities and businesses can also play their part effectively. We are therefore working on a smaller community and householder scale strategy, too.

When we talk about energy saving, we must fully consider the fact that about 80 per cent. of the housing that we see around us today will still be standing in 2050. Those buildings include many millions of homes that are today highly energy inefficient. Problems can range from the cost and difficulty of double-glazing old windows to the lack of flues in houses that were built for gas central heating.

It is deeply unfortunate that much of the most energy inefficient housing is in the most deprived areas of Britain. However, with a need to ensure that everyone can heat their homes when it matters, initiatives like Warm Front will continue to be important. Hon. Members may be pleased to learn that yesterday I signed the new
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regulations on Warm Front, which will permit some installation of microgeneration technologies through Warm Front grants for properties that are off the national gas grid.

The Government’s forthcoming heat and energy saving strategy will try to tackle many of those issues. It will aim to support and encourage everyone—individuals, communities and the Government—to work together and make the changes needed in the fairest way possible.

We all know that homes and buildings currently use a lot of energy inefficiently. Wasting electricity on inefficient appliances and losing heat through poorly insulated walls and ceilings could cost the average household more than £300 a year. We are therefore looking at new delivery models and packages to provide whole house, house-by-house and street-by-street approaches, targeted particularly at the poorest communities. We are also considering ways of linking financial support to the property, rather than to the householder, so that subsequent house owners take on the overall costs, as they save money on their own energy bills. We will examine new measures to stimulate community-scale generation. Pilots of pay-as-you-save may be an important driver of the wider take-up of microgeneration technologies.

It is a sobering thought that about a quarter of all UK emissions come from the domestic homes sector. To meet our target of reducing emissions by 80 per cent. by 2050, we will have to eliminate emissions almost completely from households. That sounds like a tough ask, but when we consider how difficult it will be to hit those targets in other sectors, there is little option.

There are two separate but complementary ways of radically reducing domestic carbon emissions. The first is radically improving energy efficiency and the second includes looking at ways of generating energy more sustainably. That means that we need real growth in small-scale, low carbon and renewable energy technologies. Microgeneration will definitely have a key role to play, if we are to get where we want to be by 2020.

By brigading the concept of energy efficiency with renewable and low carbon sources under the broad definition of “green energy”, the Bill enables us to promote their use at that smaller scale. We recognise that, to tackle climate change, each and every person needs to play their part. We need to make it easier for individual householders and businesses to install microgeneration equipment and increase the amount of green energy generated. That is exactly what permitted development rights do—they grant planning permission at a national level and remove the financial and administrative burden of submitting a planning application. The Government have already made progress on that and granted householders permitted development rights for technologies such as solar panels and ground source heat pumps. However, we also know that that we need to go further.

Micro wind turbines and air source heat pumps have a big role to play in contributing to the generation of green energy. The Bill recognises the Government’s commitment to those technologies by ensuring that we will grant permitted development rights for them in a domestic setting in six months of the Act’s coming into force.

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However, home owners are not the only ones who can help. The potential for green energy generation on land occupied by farms and premises used for commercial purposes, such as offices, is huge. Our job is to grant permitted development rights that allow developments in the right place without adverse impacts on neighbours. Let us not pretend that that is easy—what is acceptable to one person is a nuisance to someone else. It is important to get the balance and the pace of change right.

The Bill commits us to consider introducing permitted development rights in a non-domestic setting in six months of the Act’s coming into force. We have already started work on proposals, and we will produce a consultation paper later this summer.

Of course, those are not the Government’s first steps on promoting microgeneration. I mentioned earlier that we have already had one microgeneration strategy, which was published in March 2006, and had the objective of creating the conditions for the technologies to become a realistic alternative or supplementary source of energy generation. Of the 25 actions that the strategy contained to tackle the barriers to widespread uptake of microgeneration, 21 were completed and three were closed. The only outstanding action was in relation to “deeming” under the renewables obligation. That is now covered by provisions in the Energy Act 2008 to introduce a feed-in tariff for small-scale electricity generators.

Work on the microgeneration strategy allowed us to benefit from a greater insight into how the market for microgeneration works and to understand better its potential as we move towards creating a low carbon economy. As I have already mentioned, relaxed planning from permitted developments, for example, will help communicate to a wider audience the real need to act on climate change now. By facilitating an easier process for installing microgeneration, it is to be hoped that schools will take a more active role in developing renewable and low carbon microgeneration projects, allowing children to gain valuable, practical knowledge about what they can do as contributors in a lifelong effort against dangerous climate change. The Building Schools for the Future programme gives immense scope for acting sooner rather than later in both primary and secondary schools.

While it is vital to engage readily with home owners, small businesses and community actors, we must ensure that future generations will be keen to act, able to judge what it is possible to deliver in homes and communities, and equipped with skills to use that knowledge positively.

Another key achievement of the microgeneration strategy was the introduction of the microgeneration certification scheme—MCS. I am pleased to say that it is making good progress, in terms of product and installer certification, with more than 310 installer companies certified. To bring down costs, we opened up the scheme to 14 new certification bodies, five of which—BRE, NAPIT, British Board of Agrément, NICEIC and Action Renewables—have already achieved accreditation from the United Kingdom Accreditation Service for MCS. In the next few weeks, they will be joined by EC Certification and TUV NEL. That is an excellent opportunity to build on what BRE has achieved, and a new microgeneration strategy will ensure that we continue to push forward with a robust certification process.

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MCS will not only provide consumers with impartial certification of installer companies and products but offer enhanced consumer protection and a means to register complaints. Through MCS, consumers can have confidence that complaints will be dealt with effectively and faults corrected. The scheme will also ensure that consumers get accurate estimates of the likely performance of the largely unfamiliar energy technologies before they sign up to them.

Gregory Barker: That is all terribly interesting, but the Under-Secretary has been on his feet for nearly an hour. Will he assure us that he is reaching the conclusion of at least his opening remarks?

Mr. Kidney: The hon. Gentleman is too cruel. I can assure him that we are almost there. I hope he will agree that certification is important for ensuring the greater use of microgeneration technologies and for the reassurance that it gives to the public about the standards that are set for them. Certification to robust standards is the key to delivering a sustainable industry in the UK. We have learned lessons from countries where negative media reports about installers over-promising energy outputs or about low-quality or even unsafe installations have scared off potential consumers, deeply damaging the wider microgeneration industry.

Confidence is key to moving forward. We recently convened a citizens’ dialogue about how we will need to heat and power our homes and communities in the future—in other words, about how they will make the big energy shift. Participants from communities in England, Wales and Northern Ireland came together for that dialogue. It was clear from their questions that, as well as economic incentives to make microgeneration attractive, they want free, impartial and reliable advice before making investment decisions on such a scale.

People also want information about the support and services available to them. Last year, the Act on CO2 helpline was accessed by 1.5 million people and was able to point home owners towards the best and most cost-effective means of saving energy, and of course money, by raising awareness of the opportunities for energy efficiency products in the marketplace today. I am also informed that the Energy Saving Trust’s online interactive diagnostic tool for microgeneration technologies is now live. It will allow consumers to enter details about their properties and get advice on which technology would be most suitable, and equally importantly, which would not. Information provision, support and skills are just some of the issues for consideration as work begins in earnest on the new microgeneration strategy required by the Bill.

As action elsewhere continues apace, we need to ensure that the financial support is available. The Government are working hard on two financial incentives that will have a genuine impact on pushing microgeneration into the forefront of our energy future. Our renewable heat incentive will be one of the world’s first financial mechanisms to support the generation of renewable heat. As with feed-in tariffs, our aim is to make the renewable heat incentive as accessible, flexible and user friendly as possible to potential investors in renewable heat at all scales, from the domestic up to large industrial installations.

We are building the renewable heat incentive from scratch, as currently there is no physical or regulatory market for heat, so there is a lot of work ahead of us.
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The powers in the Energy Act 2008 are broad and allow maximum flexibility in designing the details of the incentive. That flexibility will allow us to work with all parts of the energy industry and other stakeholders to understand better any issues that could arise from implementing the mechanism. The details of the renewable heat incentive have not been finalised, but we will be consulting on these towards the end of the year. We aim to have the incentive in place by April 2011, and through it we expect to see a genuine impact on domestic heating technologies such as solar thermal, and air and ground source heat pumps.

That is one financial incentive. Feed-in tariffs will also act as a major incentive for the development of small-scale electricity generation. We are committed to having them in place by April 2010. The tariffs are intended to be a simple, easy-to-understand mechanism to provide certainty of reward to make small-scale low-carbon electricity generation a more economically attractive proposition to anyone wishing to invest in it. We will consult on the feed-in tariffs this summer, alongside a consultation on changes to the renewables obligation. There is much work yet to be done. My Department will look particularly at lessons learned from abroad where similar schemes have already been introduced.

At this moment, I am unable to say what the levels of the feed-in tariffs reward will be, as they may differ for different technologies and may depend on the size of the installation and the initial cost to buy equipment. Such features can be decided only following further analysis and the consultation that I have described. However, there is no doubt that they will offer the opportunity to draw small-scale generation fully into the mainstream. By not restricting such incentives to the domestic sector, we hope to allow for plant of a size used for community-scale generation. That includes buildings such as schools and hospitals, and small businesses. We wish to open up the opportunities offered by small-scale energy generation to all who can benefit from installing such technologies.

Another support mechanism to encourage take-up of microgeneration is the low carbon buildings programme, which I mentioned earlier. The programme has delivered very successfully, not only by helping to create the first microgeneration capacity in the UK, but by helping to create the supply chain needed to support the introduction of feed-in tariffs and the renewable heat incentive. In light of that ongoing success, in this year’s Budget the Chancellor announced a further £45 million of funding for the low carbon buildings programme. That additional £45 million will help to avoid a potential gap in funding before the new incentives are put in place and will bring the total level of support through the programme to more than £130 million.

On Wednesday of this week, phase 2 of the extended programme for the low carbon buildings programme opened to new applications. We have introduced a pot for solar PV of £9 million, bringing the total budget committed to solar PV through phase 2 to more than £40 million. The remaining budget will support a wide range of technologies. We want to provide support for the heat technologies through to the intended start of the renewable heat incentive in April 2011. That is excellent news for microgeneration technologies and demonstrates the Government’s commitment to helping microgeneration move to a sustainable position.

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I want to emphasise that there is already a great deal of activity to support microgeneration. Over the past few years, we have begun to develop the tools with which to tackle the energy challenge ahead on the small scale. As a consequence, it is now time to draw on the lessons that we have already learned and build on the successes of the first microgeneration strategy. In order further to promote the use of renewable and low carbon sources, the Green Energy (Definition and Promotion) Bill provides us with the opportunity to consult on, and thereafter publish, a new microgeneration strategy, which will take us into the coming decade. That will be critical in giving greater certainty to industry and the microgeneration sector. Although the new strategy will be applicable only to England, I am sure that the devolved Administrations will join us in our commitment to deliver a prosperous future for microgeneration throughout the UK.

I am pleased to draw my comments to a close. I know that there is already much support for the Bill. I am sure that it is about to receive its Third Reading in this House, before passing to the other place, where I wish it equally great success and approval and, given what we said earlier about the shortness of time there, a speedy passage on to the statute book.

11.47 pm

Mr. Peter Ainsworth: May I thank the Minister for his exhaustive speech? By the time he reached his “live diagnostic tool”, I think that even he was losing the will to live. However, the other place will notice the thoroughness of his remarks, which will no doubt be helpful when it considers this legislation.

I thank all right hon. and hon. Members who have contributed to what was, until the last hour and a bit, a fascinating debate. I apologise to the citizens of Bexhill and Battle for an unwarranted slur on their character. I did not mean to single them out: they are no more nor less selfish chimpanzees than the rest of the human race. Finally, may I again implore the Government to do all that they can to ensure that the other place expedites its consideration of the Bill? Otherwise all our labours will have been in vain.

Question put and agreed to.

Bill accordingly read the Third time and passed.

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Industrial Carbon Emissions (Targets) Bill

Second Reading

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