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Baroness Byford moved Amendment No. 53:

("( ) Before making an order, the Secretary of State must consult those persons who appear to him to represent the generators of electricity from renewable resources--
(a) as to the current availability and projected generating capacity of the industry;
(b) as to the terms proposed in the order;
(c) as to any specific provisions that will be required in the order as to length and terms of any contracts to be made by electricity suppliers or otherwise;
(d) as to the sum and different such sums which are to correspond with the supply of a given amount of electricity generated in different ways under section 32C(2); and
(e) on such other matters, if any, as he considers appropriate,
to ensure that the provisions of the order will provide a suitable environment for investment in generating capacity for electricity from diverse renewable resources in order to meet the targets for production of electricity from renewable resources set by the Secretary of State.").

The noble Baroness said: My Lords, I shall speak also to Amendment No. 56. The Royal Commission on Environmental Pollution reported two weeks ago that unless carbon dioxide emissions are reduced by 60 per cent within the next 50 years, our climate will change markedly. The changes will not be pleasant. They will effectively destroy the British landscape and submerge large tracts of low-lying and coastal land, rendering obsolete all the energy currently being expended on the Countryside and Rights of Way Bill.

The report makes 87 recommendations. I am principally concerned today with those that urge the Government to replace fossil fuels with renewable energy sources, such as wind power, solar power, energy crops and biomass. The report says that growing crops for energy purposes should be regarded as a primary use of our agricultural land.

According to Robert Shrimsley of the Financial Times, the Government expect a surplus of £50 million on the climate change levy. That allegedly fiscally neutral tax will apparently swell the coffers of the

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Government, who are minded generously to dedicate half of the income to research into offshore wind power, which should get at least £10 million, and other renewable sources. I hope that that will not be heralded as new money. The Government are ending the non-fossil fuel obligations. Perhaps the Minister will assure us that the integrity of existing generators' NFFO contracts will be protected.

We must ensure that the Bill allows, even encourages, parties to enter into long-term contracts for renewable resources. I spoke on Second Reading against any let-out clause to permit suppliers to avoid meeting their 10 per cent obligation by purchasing notional renewable energy certificates from the Government, the proceeds of which purchase will be shared among other suppliers. Such a scheme surely means that if the use of non-fossil fuels is too expensive or difficult, everyone in the producer pool can ignore their obligation, pay their fine and sit back and wait for their share of everyone else's fine.

Similarly, the ability of electricity generators to switch off electricity production from renewable sources whenever demand drops must be checked. There must be an obligation to encourage parties to make long-term contracts with a variety of renewable sources and to honour them through thick and thin. When demand falls, it should be fossil fuels--oil, gas and coal sources--that are switched off. Unless and until the Government ensure that these things happen, it will be difficult, if not impossible, to increase the use of non-renewables in electricity generation.

The British Wind Energy Association has said that £10 million will not fund a farm, although it might be enough for a couple of offshore turbines. Private finance will not be forthcoming unless there is a rock solid legal framework and a government-supported commitment to the regular use of renewable sources over the long term.

The same argument applies to biomass. To raise its contribution to the same level as hydro power would require the planting of 100,000 to 150,000 hectares--250,000 acres in old money--of willow short rotation crop or miscanthus. That would be a huge increase on current plantings, using approximately half the land currently set aside. The money available under the rural development plan for England should allow us to achieve 20 per cent of the above figure. However, that fund lasts only until 2005-06, after which farmers have to go on nurturing their crops in the expectation of continuous demand.

The Department of Trade and Industry publication Financing Renewable Energy Projects makes crystal clear the assurances that banks and others will seek before they will lend the money. I shall highlight but three. First, on the power purchase agreement, the document says:

    "This contract is the cornerstone of most renewable projects. The power purchaser must be creditworthy. Lenders will want the contract term to extend beyond the term of the loan. The contract will be assessed by the lenders for its economics and conditions that might cause early terminations--lenders will want the ability to cure any defaults rather than face termination".

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Secondly, the document goes on to say:

    "In a power purchase agreement the terms and price should be clearly defined and there should be no 'market out' clauses allowing for contract cancellation due to market conditions".

Thirdly, on page 14, it states:

    "Repayment provisions are usually a function of the project economics and lenders will require full repayment of their loans well within the period of the major contracts, in particular the power purchase agreement (and/or the fuel waste supply contract for an energy-from-waste project). Lenders will normally be prepared to see their repayments tailored specifically to the cash flow profile of a project. A typical repayment would be approximately ten years from the start of the project, with a maximum of 13-15 years, depending on the term of major contracts".

I should like to ask the Minister whether the people who wrote that had anything to do with the drafting of the Bill.

The use of biomass will not only result in cleaner electricity and somewhere for the banks to put their millions. It will enable farmers to grow a crop instead of having set aside. It will mean also that the growing trees will consume the same amount of carbon dioxide as is produced when the wood is burnt during electricity generation.

In other words, biomass, seen from an environmental viewpoint, should have a neutral pollution effect. From an agricultural point of view, it will enable farmers to switch from the much maligned common agricultural policy while continuing to care for and protect our green and pleasant land. Moreover, the crop has significant wildlife and biodiversity benefits.

I do not feel that with so much at stake we should simply rely on the promises of the Secretary of State to take the necessary steps to ensure the future. Our amendments spell out what must be included in a clear obligation to consult all parties involved and only to make a renewable order that takes into account the requirement for a suitable environment for the investment.

Amendment No. 56 merely corrects the grammar. I beg to move.

6.45 p.m.

Lord Hardy of Wath: My Lords, I congratulate the noble Baroness, Lady Byford, on her presentation of the case. I do not wish to be excessively partisan but I am reminded of an occasion some years ago when I was in another place, taking part in a debate on the threat of global warming. There were, I think, 90 Conservative Members sitting opposite, all of whom were passionately opposed to public expenditure. I pointed out that about 80 of them represented constituencies which lay less than 100 feet above sea level. I said that I looked forward to the time when each of them, being opposed to public spending, would have a squeegee mop and seek to do a Canute to stem the approaching waters.

Things are changing and the stakes are now seen publicly to be very much higher. I certainly endorse the basis of the noble Baroness's excellent presentation. But I have an anxiety. As I see it, the contents of the

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renewables basket, in terms of that which is likely to be imminent, is far less varied than it should be. The noble Baroness referred to wind power, biomass and energy crops. I am fearful about the question of on-shore wind power. The noble Baroness referred specifically to off-shore wind power, which is a different matter.

I should hate to think that because we can move rapidly in relation to wind power there will be too many wind power eggs in the basket. I should hate to think that in 50 or more years time the visible legacy of this Government, who are doing such good work, will be seen as a proliferation of windmills disfiguring the glorious landscape of our country.

I spoke briefly on the matter in Committee. My noble friend may wish to reply to the fact that there sometimes seems to be an inflated view of the contribution windmills can make. I referred--and I mention it again--to one proposed wind farm which is under consideration in part of my own county. That would produce in a year only the amount of electricity which Drax power station, the cleanest of our power stations, produces in six days.

We must give greater priority to biomass. We could rapidly start to produce energy crops of enormous importance and make a marked contribution to achieving the Government's splendid target. But my anxiety is that we do not have the outlets or the generative capacity to use those energy crops which the noble Baroness mentioned. If the Government are to see their very commendable targets achieved, they must give a push to ensure that British agriculture can use land wisely.

Let us think about the enormous areas of land which have been set aside in recent years. We could actually put that land to a positive and valuable use. Therefore, we should be looking with more urgency at that aspect.

I ask my noble friend for an assurance. I hope that we shall not get into a situation where, in order to achieve the Government's splendid targets and not having developed alternative forms of renewable energy, local planning authorities would have their arms and elbows twisted to give favourable consideration to wind power developments which their communities do not like and for which posterity would not thank us if our landscape was disfigured as it would be.

I do not suggest that we should have no windmills on-shore. But the place for them is at sea. To allow a temporary need, which is unnecessary if we develop biomass properly, to disfigure part of our glorious heritage would be a mistake. That is best avoided by urgent action in this year of grace instead of allowing a delay, creating a problem which we may regret before very long.

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