| Previous Section | Back to Table of Contents | Lords Hansard Home Page |
Baroness Hooper: My Lords, I add my voice in welcoming these regulations. Those long-standing Members of your Lordships' House may remember that I had responsibility for renewables as a Minister in the Department of Energy. In some ways I was also
responsible for the introduction of the non-fossil fuel obligation during the process of the electricity privatisation.I was interested in what the noble Lord, Lord McIntosh, said about coal mine methane. I should like to know whether that covers all methane from any source? For example, I am aware that waste disposal sites also create methane. In some countries that by-product of the process is put to good use.
As the regulations before us are to comply with our international obligations under the Kyoto agreement, I am interested to know whether the Government have consulted with other countries as to what measures they are introducing. The ultimate aim of these regulations of course is to improve the global atmosphere. It is therefore very important that not only we in this country but those in other countries fulfil our obligations.
Lord Monro of Langholm: My Lords, I should like to support my noble friend's point about planning. I am glad that the Minister included in his speech a paragraph about planning, because it is crucial that we get the balance right. At present, the balance is incorrect because it is weighted far too heavily on the side of renewables. In October 1996, I initiated a debate in another place calling attention to the proliferation of windfarms and telecommunications masts, which were sited on the top of almost every hill in Scotland—and, no doubt, in many places in England and Wales as well.
What detailed consultations is the department undertaking about planning? At the end of the day, the department and the Minister will answer to appeals. In almost every case in which I have taken an interest, the appeal has gone in favour of the developer and against those trying to preserve the beauty of the countryside. Often, inquiries overlook the issue of transmission lines that must run from the windfarms to where the electricity is required. They often add greatly to the concern of those interested in the countryside.
It is important that at least a word is said today to show that many of us are concerned about the development of windfarms, which are just as unsightly off-shore as on-shore. Are any practical steps being taken concerning tidal power using barrages, such as operate in northern France, where of course the stand of the tide is much higher than in the United Kingdom? They, too, can be unsightly.
The Government must have a fair balance between what is required under our renewable energy policies and the saving of our beautiful countryside.
Baroness Miller of Hendon: My Lords, 30 or so years ago, when I was teaching marketing, I used to instruct salesmen to close the sale by what is called the assumptive technique. That is, having made his sales pitch, the salesman would then without further ado simply start filling in the order form on the assumption that the customer was going to buy.
In his helpful letter to me giving the details of the orders that we are considering today, the Explanatory Notes and the reports of the debates in the other place, the Assistant Private Secretary to the Government Chief Whip said:
- "All the orders are welcome and all are uncontroversial".
I thank the Minister for his explanation of the Renewables Obligation Order 2002. Despite it being uncontroversial and welcome, it took the Minister for Industry and Energy 22 minutes and seven columns of the Official Report before the Third Standing Committee on Delegated Legislation to explain it. It certainly did not take the noble Lord as long. It took my honourable friend the Member for Salisbury another 26 minutes and another six and a half columns to explore the ramifications of the order. Your Lordships will be relieved to know that, following that detailed discussion in the other place, which I read with interest, and the Minister's helpful but nowhere near as long an explanation today, I shall need only a fraction of that time.
Only one aspect of the order concerns me. That is that apart from their own efforts, electricity suppliers will be able to meet their obligation by one of two other methods. First, they can purchase what are called renewable obligations certificates from another supplier, generator or third party instead of doing what is necessary themselves. Secondly, they can pay what the Explanatory Notes call a buyout price to the regulator, Ofgem, which will distribute what amounts to a penalty or fine to electricity suppliers that have themselves supplied excess renewable energy obligations certificates to other defaulting generators.
I agree that that will be an incentive to generators to produce as much renewable energy as they can in the hope of selling it to another defaulting supplier, as long as there is a market for it, but can we be sure that the buyout price will be set sufficiently high to make it worth while for generators to create their own renewable sources rather than taking the easy way out and relying on someone else? What incentives will there be for generators to create as much energy as possible from renewable sources, not merely the bare minimum to meet their obligations or to put on the markets to sell to others—those whom I have called the defaulting generators or suppliers?
The Minister in another place sought credit for the fact that the Government have exempted renewables from the iniquitous climate change levy—so they should. By their nature, renewable energy sources are the antithesis of the cause of climate change, so why should a levy have to be paid for them in any case? The Minister claimed that the new obligation will help to create a total market for renewable electricity of
approaching £2 billion a year. Perhaps it would have been more accurate to have pointed out that the market for electricity will exist in any case and that the objective is to divert its manufacturing renewable sources.The three-year package of other support measures for current research and development to which the Minister in another place referred, totalling £260 million, is welcome. Whether it will be enough to "kick-start", as the Minister put it, a research and development programme that will take more than three years, we do not know. As the Minister mentioned, that is another question. I do not expect the Government to commit themselves now, but an indication that further future funding is not out of the question would be useful and encouraging.
I turn to the question of costs. The energy review states that the existing renewables obligation will cause a price increase to domestic consumers which could be as large as 4.5 per cent in 2010. The proportionate increase on industrial bills could of course be double. The Minister's response to the committee in another place on the question of the added cost to industry was to suggest that, contrary to what the energy review predicted, the cost would be only an extra 4.4 per cent by 2010, spread over the next years, and that the cost will therefore not add more than 0.1 per cent to the retail prices index. If he can, I should like the Minister to tell us what steps are being taken by other EU countries to encourage the development of renewable energy sources, and whether the cost to their domestic industries will be no less than that being inflicted on British industry.
The Minister will recall that one of the world's greatest producers of so-called greenhouse gases, the United States of America, has not only resiled from the Kyoto treaty but is seeking to buy out the quotas of greenhouse gases from underdeveloped countries, rather than reduce its own production. Perhaps the Minister can remind us what steps the Government are taking to persuade our friends in the United States, who invariably rely on the United Kingdom when they need help, to help those of us who are worried about millions of tonnes of ice breaking away from the Antarctic ice shelf.
Finally—I mentioned this point to the Minister—I have just received a brief from, or perhaps it would be more accurate to say that I have been lobbied by, a commercial firm that has apparently been trading environmental instruments abroad, notably in Australia and New Zealand. While I accept that it clearly has its own business interests at heart, it raises two questions that I should like to pose to the Minister. First, the draft order gives Ofgem five days to decide whether a trade is valid. The company points out that that could be done more quickly using electronic means. The Minister may well say that five days is not an unreasonable time limit, and that there is nothing to prevent Ofgem from operating more quickly if circumstances permit. I should be interested to hear the Minister's comment on that point.
A point of more substance arises from the possibility of two trades taking place at more or less the same time. I suppose that that depends on Ofgem's intended procedure in creating its register, on which it has promised consultation with interested parties. Can the Minister assure us that he is pushing Ofgem to deal with that aspect, including the consultation exercise, with all speed?
Although I said to the Minister that I would raise two points, I did not tell him what they were. I was notified of them only late last night and until re-reading what I had written about them at the time I was not sure myself. I appreciate that I have sprung them on the Minister at the last minute, just as they were sprung on me. I would therefore be satisfied if the Minister chose to write to me on those points. As I said, we are happy with the order.
Noon
Lord Ezra: My Lords, we on these Benches also support the order. We regard it as an important step towards reducing carbon emissions and meeting our Kyoto obligations.
As the Minister said, one of the big issues is whether there will be enough renewables to meet the obligation. One reason why there might not be is the restricted definition of eligible renewable sources. The Minister referred to methane from coal mines. I find it extraordinary that methane from landfill sites should be regarded as renewable, but methane from coal mines should not. We have raised the issue several times. I suppose we regard rubbish as something that will go on for ever, but the country's coal resources will virtually go on for ever, or at least for several centuries. The Minister referred to other measures being introduced to cover methane from coal mines, but this would have been an opportunity for what I consider a sensible and desirable step, and I cannot imagine that anyone would have challenged it.
Combined heat and power is another issue that arises from the definition of eligible sources. The Minister also referred to it and said that the Government had considered it carefully and would like to have included CHP in the renewables obligation but felt that existing legislation prevented their doing so. Like many noble Lords, I took part in the debates on the Utilities Bill. At every stage, I pressed for the inclusion of CHP in the eligible sources of energy. I find it surprising that the Government, who resisted that amendment, now say that, unfortunately, the legislation does not allow them to act. I do not see how they can have it both ways.
There is also the question of the support that the Government will give to other new energy technologies that can contribute to the reduction of carbon emissions. For example, the extraction and sequestration of CO2 from coal—my old industry—could make a substantial contribution to the reduction of carbon emissions if provision were made for it in the renewables obligation. There is also the question of substantially encouraging distributed generation—small-scale generation, as opposed to large-scale
generation—which is far more efficient because the waste heat can be used and transmission losses avoided. That is another area where a big contribution could be made to the achievement of our Kyoto objectives.It is also surprising that, although the Government are substantially encouraging renewables—even on the restricted basis to which I referred—there are measures in train that operate the other way. The Minister will not be surprised to learn that I refer to the balancing mechanism of the new electricity trading arrangement, which still operates against small-scale, intermittent generators. The matter has been under discussion since long before NETA came into operation, but no solution seems to be in sight. I cannot see the justification for, on the one hand, stimulating renewables and, on the other, putting obstacles in the way. That seems a disjointed approach.
Subject to those comments, we support the order.
Next Section
Back to Table of Contents
Lords Hansard Home Page