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The Duke of Montrose: My Lords, I support the amendment. There is a need for research to develop a variety of renewables. We should consider how we can further assist research into micro and hydro energy, for example, in addition to the other sources we have discussed tonight.

Lord Ezra: My Lords, I too wish to support the amendment. It is important that a variety of renewables should be encouraged and stimulated. Market forces will not necessarily achieve that in all cases.

7.15 p.m.

Lord McIntosh of Haringey: My Lords, I assure the noble Baroness, Lady Byford, that the amendment is not necessary. If we wanted to set specific obligations for particular technologies, which is the purpose of her amendment, we can already do so using the powers in new Section 32A(1)(b),(c) and (d) in Clause 63. New Section 32A(1)(b) states,

New Section 32A(1)(c) states,

    "that only electricity generated by specified descriptions of generating station is to count".

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New Section 32A(1)(d) states,

    "that a specified minimum amount of electricity generated ... is to be counted".

Therefore, all of the measures that the noble Baroness seeks to provide for are already provided for in the Bill.

The amendment is contrary to the thrust of the Government's renewables policy, which is to leave the market, not the Government, to pick the winners. We recognise that this will lead suppliers to go for the immediately accessible technologies first. That is right and proper. We want to achieve our renewables targets as efficiently as possible to fight global warming.

I can confirm--the noble Baroness, Lady Byford, will recall this from the Committee stage--that we are looking at the scope for making limited additional government support available for offshore wind and energy crops. One possibility, though not the only one, is to draw some funding from the £50 million Climate Change Levy Fund. This and other options will be pursued in the Spending Review 2000.

I do not see any conflict between going first for those technologies which will have a quicker impact on the environment and the climate and providing resources for other renewable energy sources which may take longer to develop. I believe that the longer term renewables technologies will benefit from the renewable obligations too. As electricity suppliers move towards the 10 per cent target, they are likely to find that there is insufficient availability of cheaper renewables and they will need to look increasingly to offshore wind and energy crops to meet their obligation. I believe that it is recognised that these energy sources cannot be brought in overnight. It would be prudent therefore for energy suppliers to look ahead now to ensure that these technologies will be brought forward on a timescale and in sufficient quantities to meet their needs.

On the basis that provision is already made in the Bill to meet this amendment's objectives, I hope that the noble Baroness will not press it.

Baroness Byford: My Lords, I thank the Minister for those comments. I am slightly alarmed by his reference to the market picking the winners. I find that disturbing, as what one person might consider to be a winner one year may not prove to be a winner in the long term in terms of providing something that is beneficial to the country as a whole.

I refer to willow crops and energy crops. These crops may take a little longer to become established. The Arbre plant is still in its early stages. Those kind of plants need investment. Along with my noble friend Lord Jenkin, I have tried to ensure that we try to encourage a greater variety of renewable resources. I believe that the Government recognise that farming has gone through difficult times. If we are to allow the market to pick the winners, we may not get any winners at all. If we do, they may be those big, unsightly wind turbines about which the noble Lord, Lord Hardy, has reservations.

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I have spoken at length on this matter. I am disappointed with the Minister's response but at this stage I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord McIntosh of Haringey moved Amendment No. 58:

    Page 67, line 27, at end insert--

("if the Secretary of State is of the opinion that the differences are such that no electricity supplier would be unduly disadvantaged in competing with other electricity suppliers").

The noble Lord said: My Lords, in moving this amendment I shall speak also to Amendments Nos. 63 and 64. Amendment No. 58 fulfils the commitment I made in Committee on 21st June when I said that I would bring forward a government amendment in response to Amendment No. 241 in the name of the noble Lord, Lord Kingsland. This amendment has the effect that the Secretary of State may only make different provision for different suppliers if he is of the opinion that no supplier would be unduly disadvantaged in competing with other suppliers by his making different provision. I believe that the amendment is consistent with the objectives of the original amendment proposed from the Benches opposite and I ask the House to support it.

Amendments Nos. 63 and 64 are two small, linked technical amendments which simplify the drafting of the renewables provisions without altering their substance. They delete a specific power to amend the NFFO reference price because the powers under Clause 67 are sufficient to achieve the same objective. The amendments will also simplify the transitional arrangements made under the clause. I beg to move.

Lord Renton: My Lords, it may be that I am being a little dense. Can the noble Lord explain whether the qualification in Amendment No. 58 applies to both paragraphs (a) and (b) or only to (b)?

Baroness Buscombe: My Lords, I support Amendment No. 58 because the Minister has stated that it is in response to our Amendment No. 241 tabled at Committee stage and debated in full at that stage. We welcome the response.

Lord McIntosh of Haringey: My Lords, I am grateful for that. In answer to the noble Lord, Lord Renton, the qualification applies to both paragraphs.

On Question, amendment agreed to.

Clause 64 [Green certificates]:

[Amendment No. 59 not moved.]

Clause 65 [Alternative way of discharging renewables obligation: payments]:

Baroness Byford moved Amendment No. 60:

    Page 68, line 14, after ("may") insert ("in the circumstances set out in subsection (1A) below").

The noble Baroness said: My Lords, in moving this amendment I shall speak also to Amendment No. 61. Clause 65, as drafted, is no doubt intended to protect the consumer from the failure of the market in

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renewable energy or, as we hope, both the market in new and old renewable energy. I understand the Minister's concern for the fuel poor and indeed share it. However, the opportunity for suppliers to buy their way out of the obligation must be carefully controlled in order to ensure a stable market. In fact, there is no need for the mechanism until or unless there is market failure. This amendment requires the cost of electricity to have become excessive in the light of the need for renewables before the buy-out mechanism kicks in. I beg to move.

Lord McIntosh of Haringey: My Lords, I entirely support the noble Baroness's concern that the new renewables obligation should be met by the generation of renewables and not by the buy-out mechanism as far as possible. But these amendments would have the opposite effect of what is intended. They would allow the use of the buy-out mechanism under Clause 65 for renewables only after the event and only if the price of renewables was judged to be excessive.

The Government's intention is to put in place a long-term renewables obligation lasting until 2025. This will determine from the outset both the level of the obligation and the level of the buy-out price. Under our plans everyone will know exactly what the cost level will be beyond which suppliers will not be obliged to purchase renewables. Only by doing this can we provide the certain and stable regulatory framework against which suppliers will be able to plan to meet their obligations and generators, together with their financiers, respond by constructing the necessary plant.

However, the noble Baroness's amendment would leave the sword of Damocles hanging over the heads of the industry. Supplies and generators would never know when a price cap would be introduced, or at what level, so that they and their bankers would never have a certain basis on which to price their projects. That would be regulatory uncertainty at its worst. It would bear particularly badly on the more expensive, less near-market technologies that have been so rightly raised. That is because they would be operating closer to the cost margin at which this delayed price cap might suddenly be introduced. Nothing could be more calculated to deter long-term agreements for renewables, which was the concern of the noble Baroness, Lady Byford, when we discussed Amendment No. 53, than the risk that the underlying pricing assumptions could be suddenly overturned by a future price cap.

Therefore, I urge the noble Baroness to accept that the question of the level of the buy-out price under this clause has to be settled in advance and not left hanging, as this amendment would require. The level of the buy-out price will be a key element of the further consultation which we shall carry out before introducing the new renewables obligation.

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