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Lord Jenkin of Roding moved Amendment No. 244:

("(2) The Secretary of State shall have regard both to the costs of production of differing sources of renewable electricity and to the implications of fulfilment of the renewables target when setting the differing sums which are to be regarded as discharging the renewables obligation under this section.").

The noble Lord said: In view of what has been said already about a meeting, I can deal with this matter briefly. I listened with interest to what the Minister said on the previous group of amendments.

Amendment No. 244 is intended to recognise, and therefore to ask the authorities to recognise, that renewables, certainly in the earlier years, will have many different price levels. The amendment suggests that a distinction should be drawn between what one might call the low cost and the higher cost renewables. There should not be a "one suit fits all" situation.

In the light of what the Committee has just agreed to in a government amendment, that may already be taken into account. However, it is certainly something that needs to be discussed. Those who will have to operate the system and the "buy-out" provision--if I may describe it as that--would think it unfair that the same level of price should be fixed, whatever the gap between the normal energy price, as it were, and the higher price of the renewables.

I also wish to give notice--I may write to the Minister on this matter--that a number of other issues have been raised with me by a rather splendid body called the Association of Electricity Producers, which represents some of the very small producers of electricity as well as some of the rather large producers. It has been involved in negotiations with officials in the DTI and has had some difficulty in getting its points effectively listened to. The association has some very interesting points as to how it could make this market work more flexibly and more effectively. I should like to draw the Minister's attention to those points as well. I beg to move.

10.30 p.m.

Lord McIntosh of Haringey: I am happy to add this to the agenda for our meeting. I do not fully understand the amendment. The fact that the Secretary of State was contemplating setting different buy-out prices for different technologies would imply,

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of necessity, that he was having regard to the different costs of different technologies. By the same token, it is not conceivable that the Secretary of State would set different prices without regard to the implications for the level of renewables generation likely to be achieved as a result. But perhaps we can tease out this matter better off-line than in the Chamber.

Lord Jenkin of Roding: With that assurance, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord McIntosh of Haringey moved Amendments Nos. 245 and 246:

    Page 65, line 10, leave out ("and") and insert--

("( ) for different such sums in relation to different periods;").

    Page 65, line 14, at end insert ("and

( ) for any such sum to be adjusted from time to time for inflation by a method specified in the order (which may refer to a specified scale or index or to other specified data of any description, including such a scale or index or such data in a form not current when the order was made, but in a subsequent form attributable to revision or any other cause and taking effect afterwards).").

The noble Lord said: I spoke to these amendments with Amendment No. 239. I beg to move.

On Question, amendments agreed to.

[Amendments Nos. 247 and 248 not moved.]

Clause 64, as amended, agreed to.

[Amendment No. 249 not moved.]

Lord Ezra moved Amendment No. 250:

    After Clause 65, insert the following new clause--


(" . In making an order and other arrangements under sections 32, 32A, 32B and 32C of the 1989 Act the Secretary of State may also make provision for--
(a) electricity generated by any form of combined heat and power stations;
(b) heat or chilled water produced in association with electricity.").

The noble Lord said: This amendment seeks to include combined heat and power in the obligation. The reason is that, first, the Government are fully committed to the concept of combined heat and power. I need only quote from the debate which took place yesterday in the other place to indicate what has already been contributed so far to the way in which energy has been saved and the environment improved by the combined use of heat and power. The Minister, Mr Chris Mullin, said:

    "The...combined heat and power capacity has already doubled in the past 10 years. It is now reducing energy costs by more than £500 million annually and cutting CO 2 by approximately 5 million tonnes of carbon a year".

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In the course of his remarks he dealt with the question of how the Government will stimulate the further use of CHP under the Utilities Bill. He said:

    "I can confirm that the Government are taking powers under the Utilities Bill to set energy efficiency standards of performance obligations on energy suppliers to encourage and assist consumers to use less energy. For the avoidance of doubt, let me say that CHP is defined as a form of energy efficiency".

So it comes into that part of the Bill. He went on to say,

    "The Government can also set specific CHP obligations, if they wish to do so. At present, we do not envisage that being necessary,"--[Official Report, Commons, 20/6/00; cols. 317-19.]

because of the other measures.

The purpose of my amendment is to make absolutely sure that the Government have the power to include CHP in the obligation. According to Mr Mullin, that is the case. Perhaps that could be confirmed. I do not press for that to be done immediately but this is a reserve power to be used if the Government's targets for increasing the use of CHP up to the year 2010 are not achieved. It is against that background that I beg to move.

Lord McIntosh of Haringey: Joined-up government requires that I should tell the Committee that what Chris Mullin, as a Minister in the Department of the Environment, Transport and the Regions, said yesterday in another place is endorsed by my remarks this evening on behalf of the Department of Trade and Industry. However, because I have not in fact read Chris Mullin's speech, I should prefer to be a little cautious here. I am sure that I will be able to confirm it, but it would be better if I gave that confirmation to the noble Lord, Lord Ezra, in writing rather than did so immediately.

The amendment would provide that the renewables powers under Clause 61 could be used to support combined heat and power as well as renewable generation. The Government fully understand the importance of the contribution that CHP can make--here I may well repeat what was said by Chris Mullin--to our environmental and energy efficiency objectives. We have made provision for it.

However, different approaches are required for CHP and renewables, reflecting their different market positions. CHP is not itself necessarily renewable. It is rather an established technology where what we need to ensure is that there is a level playing field in which it can compete. In the case of renewables, on the other hand, we are looking for the development of new technologies to deliver in the long term electricity which can be produced without damaging emissions of greenhouse gases. It is quite simply a matter of encouraging the new technologies which will protect the planet for our children. This is reflected in the structure for renewables provided for in Clauses 61 to 66.

As I have already described when speaking to Amendments Nos. 192 and 193, other parts of the Bill provide the right framework for CHP by removing barriers to embedded generation. There are additional measures in the Bill which will assist CHP. Fossil-derived CHP can by no stretch of the imagination be

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considered renewable but CHP which does use renewable sources may count towards the renewables obligation. Thus renewables in general may count towards our new energy efficiency targets under Clauses 69 and 98.

All this amounts to a major programme of focused measures to assist CHP. But I do not think that it would be helpful to regard CHP and renewables as somehow interchangeable and deserving of identical treatment. Both are important. However, as I have said, our objectives in the two areas, though related, are distinct. That is why I ask the noble Lord, Lord Ezra, not to press this amendment.

Lord Ezra: On the assumption that once the Minister has read the remarks made by his colleague yesterday in another place he will confirm that he agrees with what was said, I am willing to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 66 [Supplementary]:

Lord McIntosh of Haringey moved Amendments Nos. 251 to 256:

    Page 65, line 28, at end insert--

("(za) providing for section 32 of the 1989 Act to have effect, before its substitution by section 61 of this Act, with modifications specified in the order (but if this power is exercised the modifications must include the omission of subsections (3) and (4) of section 32);").

    Page 65, line 29, leave out ("as that section had effect immediately") and insert ("made").

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