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Lord Ezra moved Amendment No. 237:

("(3A) The renewables obligation shall ensure that 5% of Great Britain electricity requirements shall be met from renewables by the end of the year 2003 and 10% by 2010.").

The noble Lord said: Amendment No. 237 relates to the renewable obligation which we have been discussing at considerable length. It aims to have printed on the face of the Bill the Government's 10 per cent objective for an increase in renewables by the year 2010.

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We were told in informal discussions that there is no need for this amendment; that the Government are fully committed to this objective. We know that they are. But we believe that the issue is of such considerable importance that it should find its place on the face of the Bill. I beg to move.

Lord Jenkin of Roding: I added my name to that of the noble Lord, Lord Ezra, and in doing so I have one clear objective in mind. I have already referred to the need to finance the development of renewable resources. Generators must be able to borrow. One of the ways in which it will be possible to engender in lenders the confidence that this area has a future is by including the renewable targets on the face of the Bill. They would then be part of the law of the land. Lenders would be able to point to that and say, "That is what is going to happen" and would find themselves able to lend the money to the people who wanted to invest it.

Lord McIntosh of Haringey: Amendment No. 237 seeks to fix the government targets for renewable electricity in statute. The Bill gives the Secretary of State power to place obligations on electricity suppliers and sets the framework for those obligations. This amendment seeks to establish a general target on the basis of which the level of the obligations would be set. The two would not, of course, be the same because some renewables, such as large-scale hydro, will count towards the Government's target but will not count towards an obligation.

Let me make it clear, although I perhaps do not need to in the light of what the noble Lord, Lord Ezra said, that there is no question of the Government going back on their commitment to achieve 5 per cent renewable electricity by 2003 and 10 per cent by 2010, provided that the cost to consumers is acceptable. The only issue before us is whether it would be right to put such figures on the face of the Bill.

We have said that we shall consult further about how the powers under this clause will be exercised. We need to consult on the profile that, so as to reach our target, the obligation will impose on the buy-out mechanism and on the cost to consumers of achieving the obligation. To get the profile right will not be a straightforward matter. We can be sure of doing so only if we listen carefully to the responses from the wide body of expertise in the electricity industry, including the renewables industry, as well as to the views of consumers, who will be paying for it through their electricity bills.

We believe that the provision which the amendment would introduce, namely, that the obligations will ensure a particular target, is wrong in principle and that it therefore has no place in the Bill. However, that does not mean that we resile at all from our commitment to renewable energy.

Amendment No. 247 refers to recycling buy-out receipts. That is an option which has advantages and disadvantages. The primary advantage is that it is an

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additional incentive to meet the obligation by supplying renewables. One disadvantage is that it could push the price that suppliers are prepared to pay for renewable electricity above the price cap set by the buy-out mechanism, which would impose additional costs on consumers.

The important point for us now is that the Government need to consult further on whether this or another mechanism is the right one. The order-making powers of Clause 61 allow a system of the kind that the amendment addresses, and that is where it should be--in secondary legislation, not on the face of the Bill.

Amendment No. 248 refers to using buy-out receipts as additional support for renewables. We cannot accept that argument. It would undermine the objective of recycling the receipts in the first place, which is to limit the cost to consumers in the event that renewable generation turns out to be more costly than we expect. Of course, the recycling of buy-out receipts to finance specific technologies will create a further subsidy for renewables at a price much greater than we originally intended when the buy-out price was set. If we get the buy-out price and the incentives right, the level of buy-out receipts should be fairly small, which would not be a good way to support renewables.

Therefore, with no derogation from our commitment to renewable energy, I regret that we cannot accept these amendments.

Lord Ezra: If we are to have a discussion about renewables, I suppose we can widen the agenda to take on board these points.

With regard to the other amendments with which I did not specifically deal, although the Minister did, the Secretary of State is due to make orders dealing with how these repayments should be made. Perhaps we can also discuss whether the ideas that are being formulated fit in with the proposals contained in these two amendments. Having said that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 238 not moved.]

Clause 61 agreed to.

Clause 62 [Orders under section 32: supplementary]:

Lord McIntosh of Haringey moved Amendment No. 239:

    Page 63, line 46, after ("32(6)") insert ("or in the definition of "renewable sources" in section 32(8)").

The noble Lord said: This is a series of minor government amendments which, with one exception, do not make substantive changes to the renewable powers in the Bill, but make technical adjustments and enable the provisions to be more effectively applied. The one exception is Amendment No. 240 to Clause 62. This states that an order may provide that, to a specified level, underachievement or overachievement in a particular period of a supplier's obligation may be carried forward into a subsequent period. I believe that that is known as "banking and borrowing".

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The Government are considering whether to use this power to allow for a small percentage of a supplier's under or over-achievement of his obligation in a given period (probably a year) to be carried forward into the following period. This would help to avoid potential volatility in the market for renewable electricity that might otherwise take place at the end of a period, as suppliers attempt to clear their positions. It will not allow a supplier to escape his obligation. We intend to consult further on how the power should be used.

Amendment No. 239 provides that an order under Clause 61 may determine how the proportion of fossil-derived material in waste that may count towards a renewables obligation is to be calculated.

Amendments Nos. 242 and 243 provide that a "green certificate" may be issued to a supplier as well as to a generator to provide the flexibility which may be necessary.

Amendments Nos. 245 and 246 provide that a different "buy-out price" may be set for different periods within the overall period of a renewables order and may be adjusted for inflation.

Amendments Nos. 251 to 255 provide necessary flexibility in the order-making power under Clause 66 so that an order making transitional arrangement to preserve the existing non-fossil fuel obligation contracts can be made at the same time as the implementation of the new electricity trading arrangements.

Amendment No. 256 allows for an order under Clause 66 to make different provision for Scotland from that for England and Wales. I beg to move.

On Question, amendment agreed to.

Lord McIntosh of Haringey moved Amendment No. 240:

    Page 64, line 12, at end insert--

("( ) An order may, in relation to any specified period ("the current period")--
(a) provide that evidence of electricity supplied in a later period may, when available, be counted towards discharging the renewables obligation for the current period;
(b) provide that evidence of electricity supplied in the current period may, in a later period, be counted towards discharging the renewables obligation for that period;
(c) specify how much later the later period referred to in paragraph (a) or (b) may be;
(d) specify a maximum proportion of the renewables obligation for any period which may be discharged as mentioned in paragraph (a) or (b);
(e) specify a maximum proportion of electricity supplied in any period evidence of which may be counted towards discharging the renewables obligation for a different period.").

On Question, amendment agreed to.

[Amendment No. 241 not moved.]

Clause 62, as amended, agreed to.

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Clause 63 [Green certificates]:

Lord McIntosh of Haringey moved Amendments Nos. 242 and 243:

    Page 64, line 35, at end insert ("or to an electricity supplier").

    Page 64, line 37, after ("station") insert ("or, in the case of a certificate issued to an electricity supplier, a generating station specified in the certificate").

The noble Lord said: These amendments were spoken to with Amendment No. 239. I beg to move them en bloc.

On Question, amendments agreed to.

Clause 63, as amended, agreed to.

Clause 64 [Alternative way of discharging renewables obligation: payments]:

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