The Minister of State, Department of Energy and Climate Change (Charles Hendry)
I beg to move,
That this House has considered the matter of the draft Energy National Policy Statements.
The revised draft national policy statements for energy set out national policy, which must be considered in determining whether consent should be granted to infrastructure projects that are examined by the Infrastructure Planning Commission. As right hon. and hon. Members will be aware, the previous Administration consulted on a suite of draft energy national policy statements between November 2009 and February 2010. Alongside that consultation, Parliament undertook scrutiny of the draft national policy statements. Scrutiny in this House was undertaken by the Select Committee on Energy and Climate Change, which held a number of oral hearings, requested written evidence and published a report of its findings, together with 30 recommendations and conclusions. I would like to take this opportunity to thank the then members of the Committee for the important work that they undertook and the thoroughness with which they approached it.
This afternoon’s debate is part of Parliament’s scrutiny of the draft energy national policy statements, so I will talk about the purpose of national policy statements and the changes that we have made to them, the parliamentary scrutiny process required for national policy statements, and the coalition Government’s proposals for planning reform. The statements are complicated, lengthy documents that cover all aspects of energy policy, so I will talk at some length in introducing them. I hope that the House will bear with me. I will also give way to any interventions from hon. Members wishing to raise concerns. However, before going into the detail of the national policy statements, I would like to take a moment to set out the background to the coalition Government’s energy policy and the need to build new major energy infrastructure, as it is against that background that such massive new investment is required.
Our energy policy is based on four pillars: energy saving, more renewables, new nuclear, and clean coal and gas. That includes the green deal, which we believe will help to bring existing buildings up to 21st-century efficiency standards. We are taking steps to reduce demand for gas through both energy efficiency measures to help improve our energy security, and demand-side response, through interruptable contracts for large users that will ensure that domestic users are prioritised in an emergency. A reduction in demand will also help to improve our energy security. Under the green deal, home owners and businesses will be able to get energy efficiency improvements without having to pay cash in advance. The private sector will provide the up-front funding, receiving its money back from the energy savings on household bills. That will help to save energy, reduce carbon and protect energy consumers from price rises through greater energy savings.
John Robertson (Glasgow North West) (Lab)
I commend the hon. Gentleman on the work that he did on the Energy and Climate Change Committee, and on which he congratulated everyone involved—they say that self-praise is no praise, but there we go. My great worry, and that of many of my colleagues on the Opposition Benches, is that the poor will always suffer. While everybody else is looking for ways of saving money, they cannot do so. What will his Government do to help people who perhaps cannot afford to do what is necessary to make the savings that he is talking about?
Charles Hendry
The hon. Gentleman has often raised this issue in the Select Committee in the past, and it should be at the heart of our thinking. At this time of year, when people are struggling to pay their bills, how they will pay them in the future is a matter of great concern to us.
The nature of the green deal is that it does not depend on the creditworthiness of the individual householder. A charge will be set against the future energy bills of their property, with the condition that the total cost of the energy efficiency measures should be such that it can be repaid through that extra charge over a period of 20 or 25 years. So the people living in those properties will get the immediate full benefit in terms of warmth and reduced energy consumption, but the charge will be brought back over time. We think that this policy has been devised in a way that has at its heart the interests of those who are fuel poor and have difficulty in paying their bills. The hon. Gentleman is absolutely right to say that, in all these issues, there are massive costs for consumers. Our job as a Government is to find ways of trying to drive down the number of units that consumers will be using. The green deal is part of that process, as is smart metering.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
May I issue an appeal to the Minister and his colleagues that, as the green deal mechanism is being finalised and formulated, it should not be targeted at only cavity wall and loft insulation? There are many properties in my constituency and elsewhere for which that would be no use at all, and some of those properties are among the least fuel efficient.
Charles Hendry
The hon. Gentleman brings to the House a huge amount of expertise on these issues and I very much welcome his contribution. He has touched on an issue that is at the core of our thinking on how to take the green deal forward. He is absolutely right to say that, while a significant number of houses would be helped if it were to address issues of cavity wall and loft insulation, there are many that do not have cavity walls and many that need additional measures. We are looking at the role that boilers can play in regard to energy efficiency, because that area has not been given sufficient attention in the past. The key will be to find a range of measures that are relevant to each individual property, the savings from which will justify the investment over time. I can give the hon. Gentleman an absolute assurance that the type of houses that he is talking about in his constituency, in mine, and in many others across the country will be very much included as the green deal is developed.
Andrew Percy (Brigg and Goole) (Con)
In my constituency, many properties are not on the gas network, and there are no plans to expand the network into many of the small villages there. Will those properties be able to access alternative sources of heating through the green deal, perhaps through air source heat pumps and so on?
Charles Hendry
I am grateful to my hon. Friend for the work that he has done to highlight issues such as these. We said in the coalition agreement that prioritising off-grid customers would be an important part of what we are seeking to do. However, the help for them will not come through the measures in the green deal. His constituents will of course be eligible for support for energy efficiency measures through the green deal, but the renewable heat incentive will give them support for other mechanisms such as air source heat pumps, ground source heat pumps and solar thermal installations. There will be a different funding mechanism for that, and we have confirmed that £860 million will be made available for the renewable heat incentive. We will set out the precise details of that in the next few weeks, and it will target precisely the people that he is most concerned about in that respect.
Albert Owen (Ynys Môn) (Lab)
The Minister has been very effective in campaigning for the extension of the gas network throughout the United Kingdom, but what he has just said will be of little comfort to people in many areas who simply want a choice. At present, they have oil or liquefied petroleum gas, but they want mains gas, which is often located only a few hundred yards away from their village or hamlet. Do the Government understand their frustration? Given that the market is failing them, would it be possible for incentives to be given in this regard, and for the regulator to ensure that those gas connections can take place?
Charles Hendry
The hon. Gentleman raises an important point. Certainly, encouraging people to install renewable heat sources, particularly in off-grid properties, is part of the solution. He is absolutely right to say, however, that for many people, the convenience of being on the grid will be their primary concern. It must be extremely frustrating to live in a house close to the grid that is unable to benefit from it. Ofgem is working to ensure that the grid is extended, but that is obviously a gradual process. We are considering different ways of dealing with the problem. Grid development is mentioned in the planning policy papers, but we are introducing other measures such as the renewable heat incentive, to help people who currently have no alternative to heating oil or liquefied petroleum gas. I hope that it can be said that we are dealing with the issue comprehensively.
Sarah Newton (Truro and Falmouth) (Con)
Do not local councils also have an important role to play? Cornwall council, for example, is undertaking a project involving feed-in tariffs. It will work with the third sector in using the money that it earns from installing solar panels in the county to help those in the greatest fuel poverty—who, as other Members have pointed out, are often off grid—not only through energy efficiency schemes but by providing heat from more appropriate sources, such as ground-source heat.
Charles Hendry
My hon. Friend is right to draw that to the House’s attention. As a result of one of the changes that we have made, local authorities are now allowed to sell electricity directly to the grid. Rather than merely being able to host new facilities, they can now become involved in these processes as partners. They can sell the electricity that is generated, and benefit from the feed-in tariffs or other financial packages that are available. I hope that, in difficult times, councils throughout the country will see such measures as an important potential income-earner and a way of encouraging their communities to move in a low-carbon direction. That is a critical part of Government policy.
We have said that there will be special help for the most vulnerable. The new energy company obligation will provide additional funds for those who are most in need and for homes that are hard to treat, which may need additional support. Our policy also involves the electricity market reform programme, which is a wholesale redesign of our electricity market. There is no doubt that that process, which will begin in a few weeks, is the most fundamental reform of the market for 30 years. It involves a new way of encouraging people to invest in electricity generation, and I cannot over-emphasise the importance that we attach to it. The power sector needs to lead the way when it comes to cutting carbon.
Charlie Elphicke (Dover) (Con)
Many of my least well-off and most vulnerable constituents fear that in five years’ time the lights may go out. What action can the Government take to deal with the backlog of infrastructure repairs?
Charles Hendry
I am keen to reassure my hon. Friend. A couple of years ago, the outlook was a cause for great concern. The recession reduced demand by 5% or 6%, and, although it has grown again, it has not reached its previous level. What appeared to be a serious pinch point now seems to have been pushed further out, but that does not give grounds for complacency. We all know that cold winters and, in particular, cold still days place immense demand on the system, and we need to take action to deal with that.
As much as £200 billion of new investment may be required in our electricity infrastructure. We have to rebuild it. It would have been much better for the country if more of that work had been done before 6 May, and it would have been much better had there not been a five-year moratorium on new nuclear and a delay of some years in new installations. I applaud the conversion of the last Administration, which began to put us back on track, but a number of years were lost.
Charles Hendry
I will give way shortly, but I hope I shall be forgiven if I do not do so immediately, as I am in full flight.
We need to establish a structure that will give people an incentive to invest in new nuclear, clean coal, coal with carbon capture, renewables—in regard to which we have great potential—and new gas plant, along with gas storage. We are alive to all the challenges, and we are moving forward on all fronts.
John Woodcock
The Government talk a great deal about blank pages. Have they whitewashed their time in opposition, when one party was dead set against nuclear and the other wanted it to be a last resort? If they have converted, that is fine, but let us at least have a bit of candour about the process through which the Minister has got to where he is now.
Charles Hendry
The hon. Gentleman is new to the House and he might therefore be unaware of the extent to which we worked very constructively with the previous Secretary of State, the now noble Lord Hutton, and others to try to ensure that we took this agenda forward. As the hon. Gentleman has been a special adviser however, he will be aware that nuclear was taken off the agenda for five years. There was a Government White Paper that said, in effect, “We do not see a need for new nuclear in this country.” There were no qualifications to that statement; it was just stated that there was no requirement, full stop. For five years, that delayed the development of new nuclear.
I completely applaud the work of the previous Secretary of State, which has contributed to our country becoming one of the most exciting in the world for new nuclear development. The reality is that we were constructively involved in that process, but for five years nuclear was taken off the agenda.
Martin Horwood (Cheltenham) (LD)
To be candid, the Minister may know that, as per the coalition agreement, many Liberal Democrat Members are still absolutely opposed to nuclear power. Will he confirm that at no point in the last 30 years has it been impossible for private investment for nuclear to come forward, and if Government policy was not preventing that, why does he think no private investment did come forward in the last 30 years?
Charles Hendry
The Government are seeking to address a comprehensive range of issues to do with new nuclear. There have been planning issues; for example, the Sizewell B project took five or six years just to go through the planning stage. Also, regulatory justification is a legal requirement, and that process had to be gone through. Last week, a measure on that passed through this House with a massive majority of over 500 to a couple of dozen, so there has been a significant step forward in that respect. The long-term cost of waste management also needs to be known, and that figure is now being made clear and given to the industry. Other barriers to investment are also now being addressed. Therefore, although it is technically right that there was nothing to stop people investing in new nuclear, it is also absolutely clear that the circumstances did not encourage people to come forward with new proposals.
John Robertson
I should declare an interest: I am chair of the all-party group on nuclear energy. I think the Minister is being slightly disingenuous towards the Opposition. It was Labour who led the fight to put nuclear back on to the table. It was not that it had been taken off the table; it was just that nobody really wanted to touch it, including Ministers who were Members of this House at the time. Therefore, in a spirit of cross-party coalition, will the Minister accept that we did our bit in getting nuclear back on to the agenda, and does he agree that now is the time to make sure that these new power stations are built for the benefit of this country?
Charles Hendry
I am keen that this coalition should get larger and grander every day, so I am delighted to welcome the hon. Gentleman to it. I agree with what he said. I have already twice given credit to the previous Secretary of State. I am very happy to pay tribute to him and the previous Prime Minister for the role they played in putting nuclear back on the agenda.
In response to the question of my hon. Friend the Member for Dover (Charlie Elphicke), I think it is true that the challenges we face today are in part a result of not enough construction having been carried out early enough. If there had been more construction in our energy infrastructure over recent years, we would not now be faced with the mountain of needing £200 billion of new investment.
Angela Smith (Penistone and Stocksbridge) (Lab)
I am glad to hear that the future of the nuclear industry in the UK will be a good one. Will there, however, be a good future for the UK supply chain for the nuclear industry, particularly in terms of the construction of these stations? What will the Government do to support the supply chain?
Charles Hendry
We are very keen indeed to see the supply chain benefit. We talk to the companies that are looking to invest in this area, and they are very keen to use British know-how, skills and businesses. The Westinghouse approach is to buy where it builds. Therefore, together with Arriva, it has been setting up workshops around the country to encourage people to show the contributions and skills they can bring. From our point of view, this is a critical part of the project. We want them to partner British companies and, as part of that process, we believe there is an opportunity for them to sell that package internationally as well. That is absolutely at the heart of what we want.
Angela Smith
Why, therefore, do the Government refuse to support Forgemasters in its bid to play a strategic part in the development of the supply chain for the future of our power stations?
Charles Hendry
The hon. Lady is very familiar with the argument. We have said that we looked at the issues as we came into government and we identified those that were based on affordability, not on their importance. We believe that Sheffield Forgemasters makes an extremely important contribution in this area. The Government’s position has been clear and what we now do not understand is the Opposition’s position.
We had a vote on regulatory justification last week, which approved two specific reactor types, the Westinghouse and the Areva designs. In that vote the shadow Business Secretary, the shadow Chancellor and the shadow Energy Secretary voted against the approval of those designs. How can the shadow Business Secretary make a case for Sheffield Forgemasters when he has voted against the exact design that it is supposed to be supporting? There is a complete hole in the Opposition’s policy in this area. I hope that this shadow Minister will rise to his feet to give us clarity on those issues, but when three members of the shadow Cabinet vote against the heart of the nuclear policy, the Opposition’s policy is in tatters.
Huw Irranca-Davies
The hon. Gentleman would not expect me to agree that our position is in tatters. As I made clear to him in the debate on the justification orders in Committee, when they went through with our support, we would very much welcome an opportunity for the Minister, alongside his colleagues, to go back to Sheffield Forgemasters and argue the case for making sure that it can be part of the supply chain. He is continually reluctant to do so. I suspect that that is not necessarily because of his reluctance, but because his colleagues are reluctant to argue the case.
Charles Hendry
I had hoped that the hon. Gentleman, for whom I have the highest regard, was going to explain what his shadow Cabinet colleagues had done in that vote. During that debate two weeks ago, we had agreed fundamentally on the need for regulatory justification and he was speaking officially on behalf of the Opposition, yet when it came to the deferred Division in this House a week ago today three of the most senior members of the shadow Cabinet voted against those reactor designs being approved. If they had won that debate, the whole nuclear programme in this country would have been brought to a standstill. If the Opposition are to have credibility in this area, we need to understand why the shadow Chancellor, the shadow Business Secretary, who is the one who will lead on issues relating to Sheffield Forgemasters, and the shadow Education Secretary, who is one of the most senior members of the Labour party, chose to try to stop nuclear power in its tracks.
Mr Stewart Jackson (Peterborough) (Con)
Is the stark contrast between those on the two sides of the House not shown in the fact that the financing arrangements for Sheffield Forgemasters were cobbled together in the dying weeks of the Labour Government whereas just five months into a Conservative-led coalition Government we have a comprehensive, coherent national infrastructure plan for the next five to 10 years? That is the difference between government and opportunism.
Charles Hendry
My hon. Friend makes a very important point. In the months just before the election an enormous number of commitments were made, and one of the first things that we had to do as an incoming Government was to identify which of them were affordable. We went through that process extremely thoroughly—I think we have been robust about it—and Sheffield Forgemasters entirely understands the decisions that we have made. The Department for Business, Innovation and Skills leads on supporting businesses in these areas and my Department feeds closely into that process. We want Sheffield Forgemasters, which is an outstanding example of a British manufacturing company, to have a key role to play in the future. However, on the basis that I have outlined, we did not believe it was appropriate for the loan to go ahead.
John Woodcock
I hope the Minister will accept that it is important to correct what the hon. Member for Peterborough (Mr Jackson) said if the Government are to retain credibility on this issue. Does the Minister accept that the issue of this loan was being negotiated for more than a year, including at the time when Lord Hutton was Business Secretary, and that it was very carefully considered by that Department over that period?
Charles Hendry
I am grateful to the hon. Gentleman for that intervention. As a new Government coming in, we had to look at the financial commitments that we were inheriting. We had to decide which were bad decisions—the Sheffield Forgemasters loan absolutely did not come into that category—and which were the decisions we viewed as simply not affordable. Of course we would love to be able to shower money on a range of good projects around the country, but there is no scope for doing so. As we know from the former Chief Secretary to the Treasury, there was no money left. That was what the outgoing Government told us.
Charles Hendry
I am keen to get back to some of the areas where there is consent and general agreement, but I will of course give way to the Opposition spokesman.
Huw Irranca-Davies
I thank the hon. Gentleman for giving way. Will he acknowledge that this issue is pertinent to our debate on our national infrastructure and the supply chain? It is my clear understanding, unless the Minister can disabuse me of this, that only one other global supplier makes the piece that Sheffield Forgemasters was going to make. If the company had been given that repayable loan, which would have been repaid to the Government in short order, it would have led the global supply chain—not just for the UK but for export—in the reactors that we passed the justification orders for last week. It is a clear own goal. I ask the Minister to go back to his BIS and Treasury colleagues to see whether there is still an opportunity to bring the measure forward. It is not too late.
Charles Hendry
The hole in the argument is that the hon. Gentleman makes that case on behalf of the Opposition when the shadow Business Secretary, shadow Chancellor and shadow Education Secretary voted against the nuclear programme. As long as the shadow Cabinet has anti-nuclear sentiments at its highest level, any suggestion that the Opposition want a nuclear renaissance is fundamentally questionable.
Charles Hendry
I am keen to move on to other issues, but as the hon. Gentleman has such a strong constituency interest in new nuclear I shall give way.
Albert Owen
The hon. Gentleman and I were both very solid on nuclear power in the last Parliament when the then Leader of the Opposition thought that it should be a last resort. I am pleased that the new Secretary of State and the Prime Minister have made their journey and are in the same position as the Minister and I. The point about the supply chain is important. I know—the shadow spokesman is right—that if this work does not go ahead in Sheffield, Korea is the next port of call. That is not in the British interest. Will the Minister consider that as we go through these new policies and talk about infrastructure, so that we can keep British jobs and British business in the supply chain to help the nuclear industry?
Charles Hendry
I have said several times that our decision is no reflection on the quality of the workmanship at Sheffield Forgemasters. The Government came in, identified that £1 in every £4 of Government spending was borrowed, believed that that position was unsustainable and had to make difficult, tough choices about the right way forward.
Charles Hendry
I would give way to my hon. Friend the Member for Dover, but he was the one who made me depart from my extremely consensual speech into this area of great contention. I am keen that we should get on to the issues of planning policy that are at the heart of our debate.
Dan Byles (North Warwickshire) (Con)
To come back to the future of nuclear power in the UK and the comments made by my hon. Friend the Member for Dover (Charlie Elphicke) about keeping the lights on, Germany is now considering extending the lives of its reactors by up to 12 years. I am a great supporter of the idea that we need to replace our nuclear reactors with new nuclear reactors, but is there any scope in the Department’s plan to extend the lives of our current reactors to try to bridge that gap?
Charles Hendry
My hon. Friend raises an important issue. The situation in Germany is very different from the situation here. The plan in Germany had been to have an artificially early closure of the nuclear fleet, and Chancellor Merkel’s Government have allowed them to operate for their full lives. They have reversed a decision that would have brought about early closure. The approach that we have always taken in the United Kingdom is that plants should operate for their safe life. If there is an independent assessment that they can operate for longer than had been planned, that should be considered. The case here is based on safety and security issues and some recent life extensions have been given, which we welcome. At the end of the day the extensions are a bonus rather than a building block in energy policy, but my hon. Friend makes an important point.
I want to get back to some of the key areas of the debate. Our concern is that the existing market framework will not deliver the scale of investment needed in renewables, nuclear and carbon capture and storage, all of which have significant up-front costs. Our electricity market reform programme will examine the reforms necessary to restructure the electricity market to decarbonise the power sector by the 2030s while maintaining security of supply and affordable prices. We must move quickly to give investors certainty about our reforms because of the long lead-times in developing new generation capacity. Our reform of the planning system for major infrastructure, including for major energy infrastructure, also has an important role, as does the consultation on the revised draft energy national policy statements.
Reducing demand for electricity wherever possible is important in meeting our energy objectives. Our 2050 pathways analysis shows that total UK energy demand from all sources will need to fall significantly by 2050. As I have mentioned, the green deal will save energy in the home and non-domestic buildings. We will also roll out smart meters to help to reduce demand. However, those savings will be offset by increases in other areas, such as the increased use of electricity in industrial and domestic heating and in transport. Our 2050 pathways analysis suggests that demand for electricity may even double by 2050, as we plug into the grid to power our cars and heat our homes.
Decarbonising surface transport is essential to meet our target to reduce greenhouse gas emissions by 80% by 2050, as we are required to do by law. We expect electrification to play a major role in achieving that. While electric vehicles can be powered up overnight by fluctuating electricity generation, trains, for example, will need more base load generation. We have already announced £900 million of investment in the electrification of train lines from London to Didcot, Newbury and Oxford, and for lines serving Liverpool, Manchester, Preston and Blackpool. In the new year, we will consult on the next steps for building a national high-speed rail network, which will free up capacity to allow a shift of freight from road to rail and provide an attractive low-carbon option for travelling between our major cities.
Some 80% of journeys in the UK are currently made by car, and cars will continue to play an essential part in our national transport infrastructure. The Government announced in the spending review investment of more than £400 million in measures to promote the uptake of ultra-low-carbon vehicle technologies. That includes the plug-in car grant, which will be available from January 2011 and which will provide a grant of 25% of the vehicle price up to £5,000. We are also continuing the plugged-in places programme, which supports the development of electric vehicle recharging infrastructure in strategic locations. As part of the coalition agreement, we have also undertaken to mandate a national network of vehicle recharging facilities.
We want to see more decentralised and community energy systems, such as microgeneration, make a contribution to our targets on reducing carbon emissions and increasing energy security. However, we do not believe that decentralised and community energy systems are likely to lead to the significant replacement of large-scale energy infrastructure, which is why there is an urgent need for new major energy infrastructure.
Neil Carmichael (Stroud) (Con)
I have flicked through the plans, and I cannot see any reference to hydro-power in the context of micro-schemes. Do the Government intend to support hydro-power and particularly small-scale projects?
Charles Hendry
The Government are committed to taking us forward, and I welcome my hon. Friend’s support in that respect. Hydro has an important contribution to make. The Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for Bexhill and Battle (Gregory Barker), who has responsibility for climate change, set out how we can hope to achieve that ambition in his recent speech on the subject. Most issues that we are discussing today relate to major applications of more than 50 MW. Most hydro schemes will fall below that threshold and will therefore be subject to local planning decisions.
The section of the energy policy statement that deals with renewable energy does not cover major hydro schemes, such as major schemes involving tidal flow, because at this stage there is no evidence of a serious application for such a scheme of more than 50 MW. If that happens, we will need either to review the national policy statement or to introduce one specifically for marine technologies. In this country, we have a network of rivers, which are a potential source for electricity generation that we are keen to see harnessed.
Ian Swales (Redcar) (LD)
The Minister has discussed the urgent need for new renewable electricity generation capacity. If that is the case, why is the banding review of renewables not reporting until August 2012 with implementation in March 2013? Will he consider speeding up that process, so that we can get the capital that is waiting for, for example, biomass power stations released and get such projects under way?
Charles Hendry
One of the issues for investors in this area is certainty. They want to be able to plan for the long term and to know what rate of support they will get under whatever mechanism is in place. A date of 2013 enables people to plan a transition to whatever the banded level will be after that. I understand the need for early clarity, and if there are ways we can provide that, we shall seek to do so. We seek to work constructively because we understand that the alternative can be a hiatus in investment, with investment dropping off for a period of years in advance of the threshold and the level of support changing. It is important, in terms of national interest, to have a continuous flow of investment.
I turn now to the issues that have been covered in the energy national policy statements. Perhaps it would be helpful if I briefly set out the purpose of the documents before us today. The revised draft energy national policy statements consist of a suite of six national policy statements and a number of associated documents. They are not intended to set out new energy policy. They are consistent with and explain current energy policy and how it relates to the planning consent process. Similarly, we are not using national policy statements to change the standard for consenting projects. They neither raise nor lower the bar on how a major energy infrastructure project is examined and consented. They are there to explain how such decisions should be made. They set out the consenting policies that need to be considered in the examination of major energy infrastructure and the decision on whether to grant or decline consent. At the same time, they will ensure that new major energy infrastructure projects respect the principles of sustainable development. They will allow not only the Infrastructure Planning Commission but developers and local residents to see the basis on which applications must be considered.
There is an overarching energy national policy statement that sets out the Government’s policy on energy and energy infrastructure development; an energy need statement on the need for new nationally significant energy infrastructure projects; the assessment principles that need to be taken into account in examining and deciding on proposals for energy infrastructure development; and generic impacts for all energy infrastructure, and how they should be assessed and mitigated to ensure that the right balance is reached between securing our energy needs and protecting the environment.
There are also five technology-specific energy national policy statements, covering fossil fuel electricity generation; renewable energy infrastructure, which deals with onshore wind, offshore wind and energy from biomass and/or waste; gas supply infrastructure and gas and oil pipelines; electricity networks infrastructure; and nuclear power generation.
David Morris (Morecambe and Lunesdale) (Con)
We know that we are legally required to reduce carbon emissions by about 80% in the next 40 years. Can we fulfil that requirement, given that of the 59 GW of new capacity required in the next 25 years, 33 GW of which is needed from renewables, we have only 2 GW currently under construction? The other 26 GW that is needed will, presumably, come from low-carbon nuclear. The Government have made enormous progress in this area—I acknowledge that—but would there be more scope to look at nuclear if we, for whatever reason, did not hit those targets?
Charles Hendry
I pay tribute to the work that my hon. Friend has done as an ardent supporter of the Heysham plant in his constituency and of the case for a new plant in that area. The role for nuclear has been set out clearly in the national policy statements. We believe that it has a fundamental role, but we also have to be realistic about what is achievable. We have identified sites that could be used for 16 GW of new nuclear power, but that is as much as the energy companies believe can be constructed over the next 15 years, which is the time scale that the national policy statements cover. That is not necessarily the end of the ambition, but it looks like what is achievable and realisable over those 15 years. There is no doubt about the Government’s ambition in terms of new nuclear.
Martin Horwood
On the subject of what is realistic, and referring back to what the Minister was saying about sustainability, is he aware that the Chartered Institution of Water and Environmental Management has said that current known reserves of economically extractable uranium may last only between 40 and 85 years? Given that other economies are also investing in new nuclear, we may be looking at the lower end of that scale rather than the higher, so new nuclear cannot be regarded as sustainable in any real sense.
Charles Hendry
I have certainly heard that point before. The OECD has a fundamentally different view of the availability of uranium stocks, and there is work to be done in plutonium reprocessing, which would provide an additional source of fuel. Furthermore, work is being done on the development of thorium reactors, which do not give rise to many of the concerns that people have about uranium reactors. A great deal of progress can be made and, at the end of the day, the decision is for investors to make. If they do not believe that there is sufficient uranium to power their plants for their lifetime, they will not make that investment. They will base their decision on the facts available to them and they will need to be reassured about the availability of stocks.
The overarching national policy statement contains information on the impacts that need to be considered for all energy infrastructure, while the technology-specific NPSs contain additional information on the impacts that are specific to each technology. They take into account the appraisals of sustainability. We have revised the AOSs for the non-nuclear NPSs substantially, which is why we are a carrying out a fresh consultation.
We believe that the revised appraisals put readers in a much better position to evaluate the revised draft NPSs. The revised AOSs give a clear picture of the likely significant impacts at the strategic level of consenting energy infrastructure projects in accordance with the NPSs, by reference to a wide range of relevant environmental, social and economic factors. They also explain more clearly why we have not chosen a number of alternative policies that others proposed, but which would not have been as good in meeting our overall objectives of maintaining safe, secure and affordable energy supplies while moving to a low carbon economy and reducing carbon emissions by 80% by 2050.
We have made significant changes to the statement of need in the overarching national policy statement. It now includes research that was not available for the first draft, including more detailed analysis of scenarios to achieve an 80% reduction in carbon emissions by 2050. We have also included more detail on what is required for an economic feasibility assessment to ensure that fossil fuel generating stations are carbon capture-ready.
Neil Carmichael
The NPS gives great support to those of us who support a green investment bank because it provides a framework for investment, which is necessary to the platform of support that investors might require. How important does the Minister think the green investment bank will be in delivering some of the outcomes?
Charles Hendry
The Government have committed £1 billion to the green investment bank, with additional funding to follow in due course. I am extremely pleased that the Environmental Audit Committee is to examine how the bank might work. Infrastructure banks in other countries—for example, the one in Holland, which was funded with €2 billion of initial capital, but brought in €100 billion of additional finance—can play a critical role, particularly in getting business through the so-called valley of death.
Returning to the technology-specific NPSs, we have revised the fossil fuels policy statement—document No. 2—to clarify the requirements for carbon capture readiness in terms of technical and economic feasibility in line with the request made by the Energy and Climate Change Committee.
Ian Lavery (Wansbeck) (Lab)
On carbon capture and storage, will new applications for gas-fired power stations be treated the same as applications for new coal-fired power stations in that they will have to be carbon capture-ready before they can be accepted at the planning stage?
Charles Hendry
A new coal plant will have to be equipped with some degree of carbon capture and storage capability—we have made it clear that there will be no role for unabated coal in the future—whereas a new gas plant will have to be carbon capture-ready, because of the much lower levels of emissions associated with modern gas plants. Emissions from the most efficient coal plant are perhaps 750 grams per kWh, whereas the figure for the most sophisticated gas plant is perhaps 350 grams per kWh. Given the significant difference in emission levels, we are looking at requiring CCS to be part of the programme. That is why we have allocated £1 billion, which is more than any Government anywhere in the world have allocated to a single plant. We are keen to take forward the development, but we have also said that as part of the subsequent pilot projects 2 to 4, we are keen to see whether that can be applied to gas.
Ian Lavery
The Minister said that £1 billion had been invested in the carbon capture and storage programme. There were four initial demonstration plants, the first of which is to be a coal-fired demonstration plant. The contract will be awarded, I believe, in December 2011. Will that not take most of the £1 billion? If so, is he confident that moneys will be available to secure the phase 2, 3 and 4 carbon capture and storage projects?
Charles Hendry
The hon. Gentleman makes an important point. The £1 billion is specifically and only for that project. As I said, that is more than any Government anywhere in the world have allocated to a single project. The additional plants will be funded either by the levy introduced in the Energy Act 2010, or from general taxation. We are looking at the best way forward in terms of deliverability and the Treasury is examining the issue. The funding of projects 2 to 4 is separate from the funding of project 1, which has the £1 billion available to it.
The revised renewables NPS has taken particular account of comments on biomass sustainability for generating stations using biomass as fuel. We have also revised the text regarding noise from onshore wind farms, which is different from general industrial noise, so a specific assessment methodology is used to take that into account.
The method of assessing noise from a wind farm is described in “The Assessment and Rating of Noise from Wind Farms”, known as ETSU-R-97. The report recommends noise limits that seek to protect the amenity of those living close to wind farms. The recommended noise levels are determined by a combination of absolute noise limits and noise limits relative to the existing background noise levels around the site at different wind speeds.
Policy document 4 relates to gas supply and oil pipelines. We have clarified that the gas supply infrastructure and gas and oil pipelines NPS covers only oil and natural gas pipelines and not CO2 pipelines, which will be an important matter in relation to carbon capture and storage development. We have also added a new section describing the impacts on gas emissions due to the flaring or venting of gas.
Policy paper 5 relates to electricity networks. We have tried to make sure that Government policy on undergrounding and the need to treat each application case by case is expressed more clearly. I welcome the decision by the Institute of Engineering and Technology to make an authoritative investigation of the costs of undergrounding, particularly in relation to the issues that the hon. Member for Wells (Tessa Munt) has raised, so that we can have a clear fact-based assessment of the different costs involved.
Tessa Munt
Thank you. Will that investigation examine the cost of under-sea infrastructure as well? I understand that the project will look at networks not just underground, but under-sea. Is that correct?
Charles Hendry
That is my understanding of the report. We are all keen to have a fact-based scientific assessment of the relative costs. I know that in the hon. Lady’s constituency and many others there has been great concern and a need to know the costs of different ways of dealing with the issues, so I hope the report will examine the under-sea aspects as well.
Charles Hendry
I will give way to my hon. Friend, who has some issues in Suffolk.
Dr Coffey
Thank you. We do indeed have issues in East Anglia, and in Suffolk in particular. We have an enormous number of offshore wind farms, yet the green impact of pylons across our countryside is hardly palatable. I welcome the changes being made, and hope that we will have more detailed calculations of the costs and the impact of the benefits.
Charles Hendry
I shall give way again to the hon. Member for Wells and deal with both issues together.
Tessa Munt
How can I and my constituents be assured that the study is wholly independent and is not in any way informed or directed by National Grid?
Charles Hendry
I would hope that the nature of the Institute of Engineering and Technology, and its track record for independence and fact-based assessment, would be sufficient to assure everyone that a thorough approach will be taken. There is no doubt in any of our minds that if anybody tried to steer its conclusions one way or the other it would publicly require them to go away. I am absolutely satisfied that the process will be independent and robust, but in due course the institute will publish the full report so that it can be peer-reviewed.
Dr Alan Whitehead (Southampton, Test) (Lab)
Before the hon. Gentleman leaves EN-5, will he reflect on the question that he raised previously about investment in new infrastructure through the electricity markets as they stood, and the extent to which that investment stayed in existing equipment to shore up the electricity market? In the new circumstances, where investment in infrastructure will increasingly be required before the replacement of plant, will EN-5 reflect that change fully? If not, could the energy market reforms that he will undertake shortly inform a revision of EN-5 to take those new circumstances into account?
Charles Hendry
We have to see the national policy statements as part of the process. They are an integral part of an improved planning process, but they are not the full package. Electricity market reform will also be a key element in incentivising people to invest. Let me give an example of how things are changing. I was recently with Ofgem launching the second round of offshore grid transmission infrastructure bids. More than 100 different organisations, most of which were new players in this area, were keen to take part in that process, which was started by the previous Administration. A number of new organisations—new financial institutions—want to invest in our energy infrastructure, which is extremely encouraging, but to see the full package of these measures it will be necessary to ensure that they see the planning changes and the funding mechanisms that will drive it forward.
Charles Hendry
I shall take a couple of interventions and then seek to conclude my remarks.
Andrew Percy
While we are on the subject of new players coming into our energy industry, I invite the Minister to visit north Lincolnshire and the site of the South Humber Gateway project, where we hope to cluster a number of offshore wind farm manufacturers with the potential to create 5,000 jobs initially, possibly rising to 20,000. It will be incredibly important to our region, so I invite the Minister to join me and my hon. Friend the Member for Cleethorpes (Martin Vickers) on a visit some time soon.
Charles Hendry
I know that both my hon. Friends have done sterling work in pushing the case for the South Humber Gateway. I would be delighted to see the planned work to get a clearer understanding of the ambition. It is typical of many of the ambitions of people who see a fantastic new opportunity emerging in the energy sector, and we are keen to encourage that. I imagine that my hon. Friend the Member for Dover (Charlie Elphicke) will make a similar plea for a visit.
Charlie Elphicke
I do not wish to trouble the Minister to come down to east Kent, but for the benefit of the House will he say how many power stations were brought into operation during the last Parliament? The only one that we in Kent can recall is the dirty Kingsnorth power station. On the need for more funding and the need to build infrastructure and green infrastructure, I recall that during the last Parliament not many power stations were brought on line.
Charles Hendry
A number of gas powered plants were brought on stream. The last nuclear power station was Sizewell in the 1990s. There has not been a new clean coal plant yet because people need to know how the carbon abatement technology will move forward. Gas has been the fuel of choice: 60% of the consented plant—12 out of 20 GW—is gas. What people want to build remains to be seen, but there is significant interest. We now need the policies to drive this forward.
I want rapidly to conclude my remarks with a few additional points—
Charles Hendry
An enormous number of colleagues are keen to speak in the debate, but with your forbearance, Mr. Deputy Speaker, I will allow my hon. Friend to intervene as he is a member of the Select Committee.
Christopher Pincher
I am grateful to my hon. Friend for being so generous. May I take him back to his earlier remarks about energy security and how the national policy statements will feed into our energy security? Energy security not only relates to the Department of Energy and Climate Change, but has an impact on the Ministry of Defence, the Foreign and Commonwealth Office, the Department for International Development and the Department for Transport. How do the threads in our national policy statements interweave to ensure that across all those Departments we have a holistic approach to energy security?
Charles Hendry
One thing that has struck and impressed me most as an incoming Minister has been the extent to which Departments work constructively together, with information shared appropriately and buy-in from every Department on policy proposals. My Department clearly leads on the energy market and the Treasury is critically involved in setting a carbon price, which we believe is part of the process, but there is a holistic approach and investors are looking at that to make sure that there is joined-up government.
I want to close, so perhaps I can respond in my winding-up speech to any additional points about the exact way in which we will take the process forward. Having spoken for the best part of an hour, I feel that many hon. Members on both sides of the House will wish to have a chance to contribute fully to the debate.
In conclusion, our reforms of the major infrastructure planning process will ensure much greater democratic accountability. Ministers will be responsible for decisions to consent to or refuse major infrastructure development, and there will be a binding vote in the House on whether to approve national policy statements. Our debate today is about whether the House has considered the matter of the draft energy national policy statements, and I look forward to listening to it and having the chance to hear the expertise that so many hon. Members have to offer.
Mr Deputy Speaker (Mr Nigel Evans)
Order. As the Minister says, a number of Members will be trying to catch my eye during this debate. Therefore, I am introducing a seven-minute limit on speeches.
Huw Irranca-Davies (Ogmore) (Lab)
Thank you, Mr Deputy Speaker. I have indicated to you through the usual channels that, if it is your wish, I am more than happy to forgo any concluding remarks so that more people have time to make their contributions.
I welcome this general debate about national policy statements, which is timely and necessary. I thank the Energy and Climate Change Committee for its continuing effort and expertise and, of course, the Committee on Climate Change for its recommendations and analysis. We share much of the Minister’s analysis of the challenges, but that is not surprising because, as I say with some humility, my predecessors laid the groundwork that he is continuing. We are glad to see him and his colleagues taking up the baton with such relish, because they do so at a critical juncture, when delay and dithering would be terminal to investor certainty, UK energy security and our low-carbon future. There is a real need to get on with that work.
On that thought, the shadow Front-Bench team and I—and I am sure the whole House—send our best wishes to the Secretary of State and his team on their negotiations in Cancun. In government, Labour adopted the world’s first legally binding framework to cut emissions, by 80% by 2050, signalling our clear intent and leadership on tackling climate change. My right hon. Friend the Member for Doncaster North (Edward Miliband) played a difficult hand with some great skill and not insignificant personal commitment at Copenhagen when he was Secretary of State, and although the job has not become any easier, we hope that the new Secretary of State will keep the momentum going.
Let us reprise where we are, as laid out in the documents before us. One quarter of the UK’s generating capacity will close by 2018, and as much as 30% will need to be replaced by 2020. Without prompt action we face an electricity generation gap in the next 10 to 15 years as our nuclear and coal-powered stations are retired. World energy demand is rising and often highly politicised; as North sea reserves decline, we are increasingly reliant on imported oil and gas; and, as the Minister says, electricity demand is forecast to double over the next 40 years. That will require rapid decarbonisation of the electricity sector, diversification of the energy sector with a decreasing reliance on fossil fuels and unabated combustion, and an increasing reliance on renewables, low-carbon energy and decentralised energy.
We will also require development of carbon capture and storage and renewables technology for the UK and for international markets. We will need to create sufficient capacity to meet electricity generation needs at all times, and we will need to put the necessary supply chains in place. I will not go over the issue of Sheffield Forgemasters again, as it has been well aired already. We will require the development of smart grid and electricity networks to meet the needs of a reconfigured, smart and diverse electricity infrastructure and, of course, investment in gas infrastructure.
Ian Lavery
The doubling of the electricity recovery rate over the next 40 years is vital. As was mentioned, the first phase of the four demonstration plants will cost up to £1 billion. Does my hon. Friend agree that it is essential that funding is found from somewhere to fund phases 2, 3 and 4 if we are to meet our electricity requirements over that period?
Huw Irranca-Davies
Yes, I agree entirely. It was wonderful news that after a slight delay to do with the coalition agreement, getting things in order, and some wrangling with the Treasury, we had the announcement that £1 billion would be available—the commitment that the Labour Government had made to the first phase of CCS on a commercial scale. However, it is equally essential that we have phases 2, 3 and 4. I am sure that the Minister is committed to continuing that wrangling with the Treasury to ensure that we find the mechanisms that will allow that to happen, and promptly. We need it for coal, but we also need it for gas. I welcome the in-principle announcements that have been made about phases 2, 3 and 4, but what we are waiting for, as with so much else, is the detail to make it certain.
Angie Bray (Ealing Central and Acton) (Con)
Given that the previous Government had a complete lack of policy on energy, threatening constituents such as mine with the possibility of their lights being switched off for long periods in the next 10 years or so, I find it a bit rich that the hon. Gentleman is lecturing us somewhat, although I appreciate the consensus on some issues. Does he at least agree that the national policy statements brought forward by this coalition Government are a great step forward in attracting the kind of investment that we need to ensure that the lights are left on?
Huw Irranca-Davies
Well, we can debate who can claim credit for the NPSs. Of course, they were instigated and developed under the last Labour Government, but I give credit where it is due; I will come to that in a moment in looking at some of the detail. We agree that there has been some improvement in the intervening six months—it will be nine months by the time they are eventually signed off—but they were in darn good shape before, and they were ready to go. The hon. Lady pushed me on trying to claim the credit entirely, but these are the Labour Government’s documents. They have been refined and improved, but they were already in place.
Huw Irranca-Davies
Let me make a tiny bit of progress.
This short debate is informed by the ongoing consultation—or perhaps I should say, for the benefit of the hon. Member for Ealing Central and Acton (Angie Bray), reconsultation—on the national policy statements. The coalition Government have taken this opportunity to pause, to reflect, and to revise them. In a way, that is a good thing, because it has allowed more time for deliberation, but—let us be frank—it will also have cost a vital eight or nine months by the time that the final NPSs are produced in January. That is a luxury that has inevitably led to a delay in our national efforts to secure a long-term energy security future.
Nicky Morgan (Loughborough) (Con)
Is it not the case, though, that the report by the Energy and Climate Change Committee criticised the previous Government for leaving it quite so long to get to the stage where the NPSs were being considered? It published its report in March 2010, when the Government had had from 2005 onwards to put them in place.
Huw Irranca-Davies
Indeed. The hon. Lady will have noticed that between March 2010 and now an election got in the way. The national policy statements were in place, and this Government, had they so chosen, could have picked them up and run with them, or alternatively, as happened when we came into office in 1997 and had our policies ready to go having worked them up with the civil service, they could have got on with it straight away. We will be nine months delayed by the time we have these documents before the House for full consideration.
Huw Irranca-Davies
I will make a little progress.
Although I welcome this debate, we now have only one hour and 20 minutes to debate issues that, as I am sure the Minister will agree, are critical to our national strategic energy needs and to the balance between those needs and democratic accountability at national and local levels. Unlike the over-long process of reconsultation, this short debate demonstrates all speed, but limited accountability. It will therefore be impossible to do justice to the six core energy documents and the accompanying materials. This must be seen instead as a useful staging post to a much longer debate in this place in Government time.
I will begin with some points on the reform of planning in relation to NPSs, in response to the Minister’s opening remarks.
Martin Horwood
Before we leave the question of Labour’s legacy, can the hon. Gentleman put a figure on the unfunded liabilities for cleaning up the last generation of nuclear power? Some estimates put it as high as £160 billion. Does that sound accurate to him?
Huw Irranca-Davies
That question should probably be put to the Minister. I recognise the hon. Gentleman’s long-held position on nuclear power. I pay credit to the Minister and the Government for pulling the coalition into a semblance of agreement on nuclear—albeit with the odd person against it—which means that we can move forward.
Labour’s Planning Act 2008, which underpins this matter, made the planning system for major infrastructure quicker, more efficient and much more predictable. It laid the conditions for essential new investment in the UK’s infrastructure, including large-scale, low-carbon energy projects. The coalition Government have a responsibility to ensure that their plans, which include scrapping the Infrastructure Planning Commission, do not add delays or remove the clarity and certainty that industry needs to invest in new renewable and nuclear capacity, and low-carbon energy. I give credit to the coalition Government and the Minister, because they have wisely decided, despite the unnecessary delay, to continue with the Labour Government’s national policy statements, with the revisions, rather than wait for wholesale reform of the planning system. That is a welcome recognition of the excellent work of the Labour Ministers who formerly occupied the Minister’s office and of my right hon. Friend the Member for Doncaster North.
Christopher Pincher
The hon. Gentleman waxes eloquent about the right hon. Member for Doncaster North (Edward Miliband). Can he therefore explain why the Public Accounts Committee, when it reviewed the Department of Energy and Climate Change, said that it lacked a definite sense of energy and purpose under the now Leader of the Opposition?
Huw Irranca-Davies
The ball is now firmly in the court of the Minister. There is an issue with the urgency and delivery of some the Government’s ambitions that we share. They must get on with it.
Rather than take further interventions, I will get into the nitty-gritty. Some of my questions for the Minister arise from his appearance yesterday before the Energy and Climate Change Committee, which, as usual, did a very good job.
When we return to this matter with the finished articles in front of us—the final, beautifully honed, polished NPSs—will we be afforded adequate time? Will each national policy statement have adequate, separate parliamentary time in line with the coalition Government’s stated aim of enhancing parliamentary scrutiny of NPSs in their planning reforms, or will they be mixed together like a bag of all-sorts? If the coalition Government are true to their aims, the Minister should help us through the usual channels to push for days, not hours, to debate the NPSs. Much as we dearly love the Secretary of State for Communities and Local Government—we may ask who would not do so, when he is described on the front page of his website as “an absolute star” and a “saintly figure”, among other less self-effacing and more humorous things—when it comes to debating energy NPSs, we want the Minister of State, Department of Energy and Climate Change, the hon. Member for Wealden (Charles Hendry), or the Secretary of State for Energy and Climate Change. We want them—no one else will do. Can the Minister guarantee that he and his DECC colleagues will not be squeezed out of their seats by the right hon. and saintly Member for Brentwood and Ongar?
In the coalition’s drive for parliamentary scrutiny, I am sure that the Minister will be able to confirm today that there will be a separate vote on each NPS, having been unable to confirm it yesterday to the Energy and Climate Change Committee. To mix the nuclear issue with those of fossil fuels, renewables, pipelines and the electricity network infrastructure would tax the wit of Wilde and the wisdom of Solomon. For us mere mortals, will he make representations through the usual channels to ensure that the votes are separate?
Will the Minister explain to the House why he has set against the calls to make an NPS amendable? We understand that there will be a take-it-or-leave-it vote. It would be interesting to hear the justification for taking scrutiny so far but no further. He might have a very strong rationale for that position, such as wanting to avoid the unpicking of an NPS that has been through exhaustive consultation, but we need to hear it.
There is a more fundamental point to be made about the parliamentary scrutiny of the NPSs, which goes to the very heart of the planning reforms that the Government are developing. The argument advanced by the coalition is that democratic accountability is best assured by laying the NPSs in front of the House and making a Minister, hopefully this Minister, answerable for them. In fact, he said back in June:
“A fast and efficient planning system is critical for facilitating investment in much needed new energy infrastructure. By abolishing the Infrastructure Planning Commission we will ensure that vital energy planning decisions are democratically accountable.”
His colleague the Minister of State, Department for Communities and Local Government, the right hon. Member for Tunbridge Wells (Greg Clark), went further, saying:
“Today the coalition is remedying those deficiencies by putting in place a new fast track process where the people’s elected representatives have responsibility for the final decisions about Britain’s future instead of unelected commissioners.”
Yet we understand that for the Minister, the consideration of the NPSs is a quasi-judicial decision. He has described it as such. Ministers, formerly myself included, are used to making quasi-judicial decisions and are made aware of the very strict limitations that bind them. His decision is strictly limited, involves the application of policy to a particular set of facts and requires the exercise of discretion and the application of the principles of natural justice. It is not a prescription for localism, political interference or ministerial hokey-cokey. It is about policy and facts.
May we safely assume that the NPSs, once presented to the House by the Minister in January, will be a fait accompli? May we assume that he will have satisfied himself, in a quasi-judicial role, that the NPSs presented are fit for purpose? He will listen to fellow MPs, but his mind will be made up. On that basis, will he tell us, first, what is the point of putting the NPSs to the House if they represent his full and final view? Secondly, if he has a mind to amend them, what specific examples can he give that would cause him to change his quasi-judicial view and alter the documents, and what further time delay would ensue?
Charles Hendry
I hesitate to intervene on the hon. Gentleman after my own comments went on for quite a while, but I wonder whether I can provide clarity on that issue now. The quasi-judicial aspect relates to a ministerial decision on a planning application, not to the approach taken to the national policy statements themselves. We are in the course of a three-month consultation, which will finish on 24 January. There will quite possibly be amendments to the NPSs after that, which will be in the final version put before the House for debate, assessment and a vote. We do not have a quasi-judicial capacity in that respect. My comments about acting in a quasi-judicial capacity related to ministerial decision making on individual planning applications under the rules set out in the NPSs.
Huw Irranca-Davies
I thank the Minister for that intervention, but will he clarify two things? Has he just said that NPSs will be amendable on the Floor of the House. He will sign off and present NPSs to the House, but will he sign them in a quasi-judicial role, or will he perform such a role only in respect of individual planning applications?
Charles Hendry
There is confusion between the approval process for NPSs and the role that Ministers will take in respect of individual planning decisions when the IPC has been abolished. On individual planning decisions, Ministers will act in a quasi-judicial capacity, but on NPSs, a revised consultation period to take account of the initial representations—we felt that improvements needed to be made—will end in January. If further revisions are necessary, a document will be put to the House for its final consideration and approval.
Huw Irranca-Davies
Is the Minister suggesting that the final document will be amendable and subject to a decision by the House, as I think I heard him say from a sedentary position? It would be helpful if he could clarify that, because we are talking about significant decisions over the future energy needs of this country. It is important that the House knows whether it is voting on a batch of NPSs or on each one individually and for how long they will be debated. It is also important that the House knows whether it has the ability to amend NPSs. If so, would that cause delays? My assumption is that if the House changes any individual NPS, it will need further consideration and possibly consultation. The Minister’s officials would certainly become involved, and relevant stakeholders would need to be consulted. There would be a minimum of 13 weeks’ consultation, as recommended by civil service guidelines, but possibly a heck of a lot more. It would be helpful to get some clarity on those issues before we debate NPSs.
Charlie Elphicke
Speaking of clarity, can the shadow Minister explain why we are threatened with the lights going out in 2015? Should he and his party not apologise for that shocking situation?
Huw Irranca-Davies
If the hon. Gentleman is seeking apologies, may I suggest that he starts by knocking on the door of No. 10? He should ask the Prime Minister why it took so long for him to move from a position of equivocation on nuclear new build to a position of indifference. Following Labour’s leadership, the Prime Minister finally rowed in behind on the need for nuclear new build. The five-year hiatus to which the Minister referred happened, as someone remarked earlier, because there was no appetite in the country or among the body politic to move forward on new nuclear. We showed leadership; certain individuals rowed in behind, but it took them a long time to do so.
For the sake of taxpayers, who are always in the mind of the coalition Government, will the Minister tell us what he knows about the cost of abolishing the IPC? What are the costs of the transition to the new major infrastructure unit within the planning inspectorate? Will there be savings for the taxpayer, and if so, will he or the Government publish those figures after the debate?
In the absence of the much anticipated localism Bill, where in the reformed process does localism rear its lovely head? Will the Minister explain how parliamentary scrutiny of NPSs, which represent the Minister’s opinion on the strategic needs of the UK, allows for localism? If the answer to that question is not in the Government’s response and if we will not be told in January, where is it?
What is the expected lifespan of NPSs? I ask that for a very good reason. The Minister recently spoke with clarity and purpose at a meeting of the World Coal Association, which I was pleased to attend, and made a bold prediction. He said with certainty that next spring, he would draw a line in the sand on his forthcoming decisions on a range of market mechanisms and incentives, including electricity market reforms, carbon floor-pricing, emissions performance standards, capacity payments and so on. The NPSs are part of that line in the sand, giving investors certainty for years ahead, yet they do not stand alone. There are so many “What ifs?”, and the Minister has to take these into account—it is like multi-dimensional chess.
I know that the Government do not particularly like the idea of school sport, as we discovered yesterday, but the Minister has been indulging in his favourite sport with his ministerial colleagues—an extreme sport known as Treasury-wrangling. After some delay, he came out with a partial win, announcing the first stage of commercial CCS—carbon capture and storage—which has delivered, after a slight delay of six months, the first part of Labour’s commitment to CCS. We look forward to him rapidly bringing forward not only that pilot, but the three others, including a pilot on gas CCS. However, may I urge—or should it be “nudge”, in the Government’s new lexicon?—the Minister to get on with that pronto? He has honestly and publicly acknowledged that there is no future for coal in the UK unless that technology is made to work. However, there is also a global imperative, as developing nations rush towards their own coal-powered futures. As such, this Government must avoid any further delay on the complete CCS programme of work.
However, what if CCS on a commercial scale does not work? What if there are delays because of cost, lack of funds or complexity, or because the technology to bring it forward is not available on time, or even not at all? We all want CCS to succeed—we all say that it has to succeed—and we are full of hope that it will, both for UK energy security and abating the global exploitation of fossil fuels. However, a reasonable man—and a reasonable Minister—cannot just assume that that will happen, and must therefore make contingency plans.
Martin Horwood
Given that carbon capture and storage technology has been in use on a commercial scale in the United States for some 40 years—albeit not on the same scale as that envisaged for the power stations in question—what does the hon. Gentleman imagine the technical barriers will be?
Huw Irranca-Davies
I am glad to say that I am not an engineer, but that is exactly the point behind the large-scale commercial CCS pilots. That is exactly why we are running them, and we all hope that CCS will work. Indeed, I recognise the hon. Gentleman’s confidence that it definitely will work. However, there are some nagging “What ifs?”. What if CCS is not delivered on time, or cannot happen because of the technology, the scale or the investment?
In my short time in this post, I have come to realise that the Minister’s Front-Bench colleague, the hon. Member for Bexhill and Battle (Gregory Barker), positively exudes enthusiasm. Indeed, he leaves a trail of enthusiasm wherever he goes, and for every conceivable energy source. His enthusiasm is demonstrated in photo-ops around the country and around the world, but what if the latest enthusiasm for decentralised energy, which the Minister mentioned, and combined heat and power is not realised, because the electricity grid is not smart enough to make it work locally or because the right incentives are not in place, or for other reasons?
I have a final “What if?” for the Minister: the nuclear “What if?”. He has been categorical in recent days—heroically categorical—that new build nuclear is on schedule for 2017-18. Yet he knows that the Health and Safety Executive will not be issuing final certificates next year on the two designs that this House has taken through in the past few days through justification orders, but will instead issue interim certificates. There is more work to be done on the designs and, equally importantly, the build speed of new nuclear, as evidenced by delays internationally, in Europe, the US and Asia.
The coalition Government have struggled to come to terms with their identity crisis on nuclear—do they love it or hate it, and will they unequivocally support it or sit on the fence—but the Minister deserves some credit for helping his Lib Dem comrades down off the fence. However, the industry still waits for the long-term certainty of market signals that will bring forward the investment at all, let alone on time. So, there are “What ifs?” on nuclear, decentralised energy and CCS, as well as on other things, if only we had the time to discuss them in this short debate.
Huw Irranca-Davies
I will not take another intervention because there are other people waiting to speak.
Meanwhile, part 3 of the overarching energy policy statement details new electricity projections. It outlines the need for 59 GW of new capacity by 2025, of which as much as 33 GW will be from renewables, thus leaving a significant potential gap, on top of the energy gap that we already acknowledge, if the Minister’s best laid plans do not come to fruition. This raises the question of how the Minister can avoid re-carbonising instead of de-carbonising the energy sector if an unabated dash for expensive imported gas rushes in to fill the looming energy gap. The dash for gas and the energy gap could be made far worse if any of the “what ifs” were to happen. The Minister has honestly and openly accepted that gas will form part of our journey to a de-carbonised future, but how will he ensure that we do not stumble into a new generation of unabated gas use by default?
As a former Minister, I recognise the problem of dealing with highly complex issues and scenario planning. I therefore ask the Minister to share with the House his scenario planning and risk analysis for the energy market, before we come to debate the national policy statements in detail on the Floor of the House in January. If there is to be real democratic accountability, the House needs to see the complete assumptions on which the Minister is making his case for the NPSs and for the energy market underpinning them. We assume that these have been done. If nuclear, CCS, decentralised energy or a whole host of other variables were delayed or undeliverable, what is plan B, plan C or plan D, and would any of them allow us still to reach our aims on energy security and low carbon energy?
In that regard, what is the Minister’s response to the recommendation of the Committee on Climate Change, in response to the proposals for national policy statements on energy, that the Government act on the Committee’s proposal that the widely accepted concept of fully de-carbonising the electricity sector by 2030 should be made explicit in Government policy and NPSs? It has been widely accepted anyway, and it would drive the achievement of the 2050 targets on greenhouse gases. The Committee asserts that making explicit that commitment would drive forward decision making on new generating capacity and give certainty to investors regarding the Government’s overarching energy policy.
Dan Byles
The shadow Minister has highlighted the concern that many of the Government’s plans are predicated on CCS working and on investment in nuclear coming through, and he has asked what plan B is. Can we look forward to hearing from those on his own Front Bench what their plan B would be if they were in government?
Huw Irranca-Davies
I can give the hon. Gentleman a guarantee that we are committed to assisting the Government to deliver this, but to ignore the potential scenarios of not making good in any one of these areas would be to bury our head in the sand. There are real concerns that there could be delays in one of these areas, and if that were to happen, we, as a constructive Opposition would have to work jointly with the Government to fathom a way in which we could still deliver de-carbonised energy, hit our carbon reduction targets and deliver energy security and affordable energy. I have not even touched on the issues of the green deal and the green investment bank that were raised by other Members earlier. That is why we need to see the Government’s working assumptions, the detail behind the Minister’s development of these NPSs and, as soon as possible, the proposals for electricity market reform.
I am pleased that the Minister is talking a lot about the intentions behind the NPSs, but we are really up against time. I know that he will once again stand up and say that that is all the fault of the previous Administration, but actually it was the previous Administration who put in the foundations for what the coalition Government are now rightly taking forward. We will look to the Government to make good, and we will be constructive in helping them, but the House and the Energy and Climate Change Committee need to be able to wrestle with the facts as well as with the broad thrust of the statements. I have spoken longer than I intended to, and I look forward to hearing the comments of other Members.
Damian Collins (Folkestone and Hythe) (Con)
We have had a tour de force from the Minister and the shadow Minister on many of the issues in the national policy statements for energy. I shall restrict my comments to an issue that affects my constituency, which is the list of suggested nuclear new build sites and, in particular, the Dungeness site. At present, there is an A station and a B station at Dungeness, and the site was included on the previous Government’s original list of 11 sites to be consulted on. Before the general election, it was removed from the list after the initial stage of the consultation, and it has remained off the list of potential sites to be taken forward within the national policy statement in the draft consultation that has been presented to Parliament.
I have already discussed the issue in debates in the House and in Westminster Hall and I do not want to go over all the ground again, but I do want to deal with some specific points raised by the draft national policy statement which may be of interest to other Members. Let me say first that I am grateful to the Minister for the interest that he has taken in the subject, for his time, and for agreeing to meet me later in the month, along with representatives of Shepway district council and Kent county council, to establish whether any progress can be made.
I note from the draft statement that the Government consider the site of Dungeness nuclear power station to be a credible site for a new power station should the principal concerns about it be addressed during the rest of the consultation period. Those concerns lie chiefly with Natural England’s objection to the development in a special protected area, a Natura 2000 reserve with a European designation. Dungeness is the only site under consideration in the initial consultation in which development would take place within a protected area. There are problems with the other sites that the Government believe can be solved, but the problems affecting Dungeness remain.
My constituents have particular concerns. They are typical of many communities living alongside nuclear power stations who have grown used to them, and are gratefully respectful not only of the energy that they contribute but of the large amount of employment that they bring to the communities that they serve. The existing Dungeness B station brings about £20 million a year into the local economy in Romney Marsh and in my constituency. That is not to be sniffed at: it would be difficult for a community to obtain the same amount of investment from any other source.
My constituents’ concerns lie with Natural England’s objections, with which the draft statement deals in some detail. The statement gives an answer, but it does not provide much further consideration that could help us to address some of those concerns. One objection is that building on the vegetated shingle at Dungeness would damage the site, and that that damage could not be mitigated. The counter-argument is that there would be a relatively small amount of development, and that a new nuclear power station would take up less than 1% of the entire protected area and thus could not be said to damage the integrity of the whole site. Natural England, however, believes that the damage will be greater, and that it will be impossible to mitigate.
We would like to know what further study could be conducted. Some of the land that would be lost has been developed before: it is not virgin territory that has never been disturbed. Much of the area that would be disturbed by the building of a new power station was disturbed when the existing power station was built. We would like any further study to consider the areas containing flora and fauna, and the vegetation on the shingle, which is the reason for the designation. Natural England says that if that vegetation is lost, it would not come back, but in parts of the peninsula it can be seen that where vegetation has been disturbed and lost, it has grown back.
Is a further study possible? Could it be said that Natural England’s concerns are not as great as it would have us believe, and that there is room for mitigation? We would welcome some guidance, either from the Government or through the process that is taking place. At present, the response seems to be an absolute “no”, although there have been a series of detailed considerations. EDF Energy, the owner of the current site, has made three presentations to the Government during the consultation, and Shepway district council has presented the Department with its own report, written by Ian Jackson. I know that those views have been considered, but we have been given no further detailed information about why they have been rejected, and we would like to know how we can make progress.
The behaviour of Natural England raises a different concern. A view is developing among local people that Natural England is not particularly interested in the opinions of others, but is interested only in its own opinion, and that that colours its desire to extend the protected areas beyond the current Dungeness site. At the end of last month, Shepway district council passed a motion which includes the following paragraph:
“This Council therefore rejects any need for the extension of the Dungeness, Romney Marsh and Rye Bay area nature conservation designations. It further looks to Natural England to work with the local population and businesses to find a more collaborative and integrated approach in preference to the prescriptive approach it is currently favouring.”
We would certainly welcome that.
Turning to the nature of the national policy statements, the site report on Dungeness states:
“Given the nature of the issues at Dungeness, it may be easier to ascertain that there will not be adverse effects on the integrity of the SAC at the detailed project level of an application for development consent.”
My concern in that respect is that no energy company would take forward such a proposal for Dungeness if it were not included in the list of preferred sites. The Minister said to the Energy and Climate Change Committee yesterday that national policy statements
“set the framework for major planning decisions. I think that the thoroughness with which they address those issues gives investors a significant amount of security.”
I agree; that is what the national policy statements are for. However, if a site is not included in a list, even though it can in theory be taken forward, no one will do so without a degree of certainty. I therefore wonder whether Dungeness could be included within the draft NPS, but with caveats listing the concerns of Natural England, which could then be addressed at a later stage. I would like us to be able to get to that stage first, however.
Dr Alan Whitehead (Southampton, Test) (Lab)
We have a scandalously short time in which to address these issues this evening. I have calculated that if we were to stack vertically the documents we are talking about this evening—important documents fundamental to the future of our energy planning—the pile would be 7 inches high. We have therefore been allocated 21 minutes per inch of document. As I have seven minutes, I will address just one third of the documents by focusing on EN-1 and EN-5. However, I hope the powers that be will press through the usual channels for a lot more time in the Chamber to discuss these documents as they go through the consultative phase, because it is just not right that we have such a short time to get to grips with them.
EN-1 is an overarching policy document setting out our energy planning framework for the future. It deals with our climate change commitments, and our commitments to reduce our greenhouse gas emissions by 80% by 2050. That, in turn, means the documents have to address the decarbonisation of the UK’s energy supply. The Committee on Climate Change wrote to the Secretary of State for Energy on 17 June, stating baldly:
“The path to meeting the UK’s 2050 target to reduce emissions by 80% requires that the power sector is largely decarbonised in the period to 2030 (e.g. average emissions should be about 100 g/kWh in 2030 compared to around 500 g/kWh currently).”
I assume that the Government largely agree with the Committee on Climate Change that to meet the requirements of our climate change budgets this, or something like it, should be the scenario and that that will be reflected in the planning documents that are published. After all, if we are to achieve these goals we cannot just hope they will happen; we need to plan for them, and to achieve them through a combination of planning signals, market incentives and supply and trading arrangements.
EN-1 states that under some of our pathways some revisions have taken the scenario beyond 2025 towards the 2050 targets. It states:
“Under some of our 2050 pathways, energy would need to be virtually emission-free”.
Tessa Munt
Does the hon. Gentleman agree that the Infrastructure Planning Commission successor body appears to be carbon-blind in its decision making under the arrangements? The IPC successor body should give significant weight to any project’s carbon emissions and ensure that cumulative emissions from the various projects do not jeopardise the UK’s carbon targets and their budgets. The national policy statement should provide an additional safeguard to that process.
Dr Whitehead
The hon. Lady is absolutely right. In response to the Energy and Climate Change Committee report examining the previous national policy statements the Government have accepted they need to undertake some sort of spatial planning arrangement which will look at the cumulative impacts between various arrangements as they progress. She is also absolutely right that in this NPS that question of decarbonisation of supply needs to be part of the process, not anterior to it. The current level of emissions of our energy supply means that if we are to get to that position, gas at about 450 grams per kWh unabated probably will have no part to play in the energy economy by 2030—when abated, it comes in at about 100 grams per kWh.
What are we planning? What are we looking for in these overarching documents? According to EN-1, we are planning to require a capacity of about 113 GW of installed power sources by 2025, which is a substantial increase on 2010 levels because of the penetration of wind, in particular. According to the scenario of that capacity projection, wind needs greater capacity to balance its variability. So the 113 GW, which is an increase on the about 80 GW of installed capacity that we have at the moment, will need to be installed by that point. However, 22 GW are expected to go offline, including most nuclear plants and a number of power plants, under the large plant directive and the industrial emissions directive. So 59 GW of new power will need to be built between now and 2025, one way or another.
If we reach the renewables targets for wind, and we probably will, given the amount of wind power already in planning, we will have about 33 GW of wind power on the grid. That means that we will need 26 GW of new build non-renewables or non-wind. Of whatever type, they will, for the reasons I have outlined, need to be low-carbon or lowish-carbon. Some 8 GW are under construction and almost all that construction relates to gas. That leaves a balance of 18 GW. Some 9 GW is not under construction but has planning permission. The Government dismiss that as uncertain, but 5 GW of that relates to gas; plans for a further 7 GW are under consideration, most of which also relates to gas. So it appears that most of the current gap is set to be made up by gas. As the Select Committee has been told by the Committee on Climate Change, more gas is in the pipeline in terms of planning, permissions or build than we need for that future decarbonisation strategy to work.
The NPS says that
“it would be for industry to determine the exact mix of the remaining 26 GW of required new electricity capacity, acting within the strategic framework set by the Government”.
If industry decides as it appears to be deciding, it will choose gas. If it is to be gas and that gas is unabated or only partially abated, the decarbonisation of our electricity supply will not happen.
Dr Whitehead
I am sorry but I have to make progress because I will not get injury time for the second intervention I take.
David Mowat
Thank you for your help on that matter, Mr Deputy Speaker. I agree with the hon. Gentleman’s point about decarbonisation, but it prompts the question: how much cost penalty would he advocate as reasonable in order for us to go down the route of a totally carbon-free mix in the way he is suggesting? Each household in the country already pays about £50 for the renewables obligation. The implication of his remarks is that the sum should be very much higher. I wonder whether he has thought about that.
Dr Whitehead
Indeed I have. I think we will find out considerably more about that in the material that will come out on energy market reform, particularly the details on what a carbon floor price will look like and what capacity payments will look like to keep the energy balance more decarbonised in future. Yes, that will add costs to the system and there need to be circumstances in which those can be abated for the public, but that is a particular issue for the energy market reform material to address.
When the Minister was asked in the recent Energy and Climate Change Committee sitting about the gap that I have mentioned he said that it is possible that 16 GW of the 18 GW gap could be new nuclear. That represents 10 new nuclear power stations by 2025, and although that would solve the gap problem it has the unfortunate downside of being inherently implausible. The Minister may want to rectify what he said in the light of that implausibility at a future date.
The Committee on Climate Change’s estimate for the nuclear roll-out, produced in 2009, said that there would be a maximum of three nuclear power stations online by 2020, even based on optimistic build and planning time scenarios. Indeed, as we have seen, the timing of the justification process has already slipped.
That leaves a gap that is not filled by nuclear. It is clear at the moment that there is an apparent contradiction in our national planning statements. We want to decarbonise our supply, but for 2025 we are pushing towards having a majority of gas as opposed to a small amount of peripheral gas at peaking periods, which is what our future energy supply should be based on.
That is compounded by NPS EN-5, which attempts to collate permissions for plant and line. It will therefore replicate the question of providing grid capacity for plants as they stand and not provide new grid capacity for plants that are not yet completed and that will be needed for a decentralised and decarbonised future energy supply.
I do not have time to go into the matter of electricity storage, but I hope that the NPSs will pay some attention to that question. It is not true that electricity cannot be stored, as NPS EN-1 says. It can be stored and storage must be a future part of our increased capacity, as the Minister mentioned in the Select Committee yesterday. I hope that the Minister will reflect on that.
Richard Graham (Gloucester) (Con)
Thank you, Mr Deputy Speaker, for allowing me to contribute to this stimulating debate, which is fundamentally focused on the process of establishing the Government’s important plan for the greatest increase in energy capacity and generation that we will see in our lifetimes. It is required, of course, to avoid a situation such as the one described by the line, “The lights are going out all over Europe; we may not see them lit again in our lifetimes.” That phrase was used by Sir Edward Grey, the British Foreign Secretary at the beginning of the first world war, as a metaphor for the catastrophe that was enveloping our continent, but by 2014 it could be the reality of our energy situation.
I congratulate my hon. Friend the Minister on leading us towards a plan and through a process that will attract the enormous new investment of some £200 billion that is required to replace a third of all power stations in the next 10 years. I want to touch briefly on one aspect of it, which is the nuclear energy part. I am conscious that the shadow Minister said earlier that our overall energy situation was in “darn good shape” and “ready to go”. If new nuclear power stations had been under starter’s orders for 13 years, there must have been a terrible problem with the starter’s pistol.
Today those plans are closer to becoming reality, not least because of the contribution made by EDF and its plan for a new nuclear power station. It is worth reminding Members that EDF took over the eight existing nuclear power stations previously operated by British Energy from Barnwood in my constituency. It is also worth noting EDF’s considerable investment, which will benefit people all over this country, of £20 billion towards the next new power station. That is almost twice EDF’s initial investment in buying British Energy.
With the new generation of nuclear power stations come one or two other things I want to make the House aware of. First, the Barnwood nuclear power academy is becoming the training academy for nuclear engineers not just from this country but from all over Europe, and it brings thousands of young engineers to learn their trade in the centre of England. It is also running the country’s leading apprenticeship scheme, with some 400 apprentices studying on a four-year course. I am optimistic that before the Gloucestershire apprenticeship fair in February of next year, the academy will offer more apprenticeships in finance and human resources as well as in the core business of engineering on the operations side. Nuclear power is critical to the future of our energy supply and to employment opportunities in the energy sector—EDF will create some 2,000 jobs over the next 10 years. It is also important in terms of employment opportunities for our young through an ever-expanding apprenticeship scheme. That illustrates how important it is, first, to attract foreign investment to Britain; and secondly, to set up a framework and a robust plan so investors have the confidence to fulfil their part in the important new energy capabilities that the Minister is shaping us towards.
I conclude by saying that I hugely look forward to hosting a visit by the Minister to Barnwood soon to see at first hand the enthusiasm in my constituency both for tackling the energy shortages in our country and for building new nuclear power stations. Overall, the national policy statements will contribute hugely to having a more robust process, and I will certainly vote in favour of them this evening.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
I am grateful for the opportunity to speak in this debate. I served for a short time on the Energy and Climate Change Committee before being moved on to other things.
As the Minister and the shadow Minister, my hon. Friend the Member for Ogmore (Huw Irranca-Davies), made clear in their opening remarks, the policy statements are important, and it is crucial that we have the opportunity to debate them—I hope that we will have more opportunity to debate them than the short time that is available this evening. Bearing in mind that several Government Members want to speak, I will try to curtail my remarks to less than seven minutes, if possible.
As the Minister has said, policy statements are crucial to energy security, our capacity and our ageing plant, which needs to be replaced. As the hon. Member for Gloucester (Richard Graham) said, they are crucial to investment, which can create and sustain jobs in the industry and the supply chain—I know that many Members on both sides of the House have a definite interest in that.
I will not repeat the issues with Sheffield Forgemasters, other than to say that it is a crying shame that opportunities to develop, nurture and create jobs and skills will be enjoyed by other parts of the world, when we are focused on trying—in the words of the Prime Minister—to “rebalance the economy”.
I want to touch on a couple of issues, to which I hope the Minister will respond. Many Members are more than aware of the huge frustration at the time it takes to move an infrastructure project from planning to building and to being ready for use—the clock is, as we all know, ticking. The previous Government looked to address that frustration through the Infrastructure Planning Commission. There are concerns that by choosing a different route—by making the IPC part of the Planning Inspectorate—the Government might be subjecting the certainty that investors need to further delays. In moving to that model, I hope that some reassurance will be given that delays will not result in investment decisions not being taken or in investment being taken elsewhere. That is absolutely crucial.
The Minister knows from our discussions that I welcome the Government’s commitment to carbon capture and storage and to the pilot project at Longannet. That is the right project, given the speed with which existing coal technology can be retrofitted and be up and running.
As my hon. Friend the Member for Wansbeck (Ian Lavery) said in an intervention, it is also important that gas forms part of future carbon capture and storage projects. I have heard the Minister refer to that, but I would be grateful if he reaffirmed it and gave further information. Otherwise, we will miss out on technology that can be developed, tested and used in this country, which goes back to my earlier point about some of the jobs and skills that can be nurtured in this country but exported elsewhere. When the Prime Minister and others go off to China, India and other parts of the world evangelising for UK manufacturing industry, there is potential for jobs to be created in the whole of the UK, not only in one part. That can help to join up the parts of the policy agenda.
I want to touch on some of the issues of electricity market reform. I know that I am getting a reputation for being able to bore on about transmission charging for ever, but I have about two minutes, so I will bore on about it briefly. As the Minister will be aware, there is considerable concern in some parts of the industry that investment decisions are being limited by the current transmission charging regime. Although the Ofgem review is being conducted—I welcome Ofgem’s recent change in stance—we have to be absolutely clear that as the electricity markets are reformed the transmission charging regime changes too. It was designed primarily for the pre-renewables world and is not serving our interests in achieving our overall targets for reducing carbon. There is potential for that industry to develop, partly, but not entirely, in Scotland, where investors could be put off making a number of decisions on projects as a result of the current transmission charging regime.
There has been a lot of talk about the importance of the green investment bank. The idea originated under the previous Government and has been carried forward under this Government. It is crucial that we get the model right. It has to be about levering in green investment on a certain scale if it is to have any positive impact.
I use my last few seconds to reiterate my plea to the Secretary of State for Scotland—which he seemed to begin to agree with—that the green investment bank be based in Scotland, given the industry and the expertise that is there.
Sarah Newton (Truro and Falmouth) (Con)
I am pleased to be called to speak in this important debate. Like many MPs, I believe that the first responsibility of any Government is the security of its citizens, and I take that responsibility very seriously. Securing our energy supplies is vital for the well-being and prosperity of the people who sent us here to represent them. The failure of the previous Government to invest, despite the so-called boom years and their great appetite for spending other people’s money, has led to our being far too dependent on imports to supply our national energy needs. Why? As we are discovering from so many other areas of policy that we have inherited, the reason is the previous Government’s failure to fix the roof while the sun was shining. There has been a lack of coherent and consistent policy to enable the UK to have a secure energy supply.
Like any industry, the providers of energy need a clear and timely planning process, and the national policy statements are a step in the right direction. Along with proposals that we anticipate in the localism Bill, they will create the right processes that will enable the development of sustainable and secure energy supplies for the UK. I believe that the new policies should provide an efficient and democratically accountable system, and a fast-track process for major infrastructure projects. There is no doubt that there is an urgent need for a new energy structure in the UK. In developing that structure, the right balance must be struck between consenting to and building new energy infrastructure and the importance of protecting our environment and the quality of life for those who live in the communities where that important infrastructure is located.
Jacob Rees-Mogg (North East Somerset) (Con)
I wonder whether my hon. Friend might also emphasise the great importance of ensuring that energy is affordable for the poorest people in the country. There are some high-falutin’ ideas that seem to add cost for consumers, and they should be opposed.
Sarah Newton
I very much agree. Far too many people in constituencies such as my hon. Friend’s and mine, especially in rural areas, are living in real fuel poverty and enduring the hardship associated with high energy bills.
In establishing the right balance between environmental protection and the need to build new infrastructure, my hon. Friend the Minister must take very seriously the points my hon. Friend the Member for Folkestone and Hythe (Damian Collins) made about Natural England. Many of us up and down the country face the problems he described.
I welcome in the draft statement the recognition of the important role that local authorities will play in the development and consideration of proposed major energy projects. The extent to which local authorities wish to be involved in the planning process has always been, and will continue to be, up to them, but the new regime is a significant improvement, giving local government statutory rights in the process and ensuring that its views are adequately taken into consideration. In addition, rather than imposing additional costs, there are potential savings for local government from the new regime, as shorter hearings and quicker decisions should ensure that in future local authorities do not incur the costs incurred now.
As hon. Members will be aware, I represent a constituency in Cornwall, where we aspire to be world leaders in the new low carbon industrial revolution. As a result I have a particular interest in how the relevant parts of the NPS support the development of renewable energy. We are blessed with an abundance of natural resources that make us ideally situated to develop significant quantities of low carbon electricity to feed into the national grid. In the universities of Exeter and Plymouth and the Camborne school of mines, we have a world-leading knowledge base in renewable and sustainable energy. In local companies such as GeoScience and Kensa Engineering, we have pioneering and highly skilled engineering companies. The wave hub off Cornwall’s north coast is the first of its kind in Europe and it enables the testing of prototype wave and tide devices. We have great light for photovoltaics, an abundance of onshore wind and the hottest rocks in the UK. What we do not have is a national grid infrastructure able to take the anticipated volumes of electricity that can be generated locally to be fed into the grid. I believe that the NPS will help to tackle that wholly unsatisfactory situation.
Although I understand the Government’s reasons for feeling that there is no urgency about including technologies such as wave and tide in the NPS until large-scale commercially viable schemes have been developed, I urge the Minister to keep them in mind for the next round and subsequent revisions and, in the meantime, to do all he can to support that sector of renewable energy generation and to keep a watching brief on how the Marine Management Organisation handles its responsibilities. He will not be surprised to hear a similar plea from me for deep geothermal energy generation, which has the potential to contribute 5% of the UK’s electricity. That technology, which is tried and tested in other countries—often developed by UK engineers—is yet to receive the support it deserves from Government in this country. With my hon. Friend’s assistance, I hope to reverse that.
Given the scale of the challenge ahead, it is vital that NPS is capable of being revised and updated, so that, as we learn more about new and emerging technologies and develop an evidence base for their capacity to deliver energy into the grid and to contribute to the Government’s aim of decarbonising electricity production, they are supported and given the chance that inclusion in the NPS will provide.
Andrew Percy (Brigg and Goole) (Con)
It is a delight to follow my hon. Friend the Member for Truro and Falmouth (Sarah Newton), who spoke about the energy potential of the hot rocks of Cornwall. I shall say something about the energy potential of the East Riding of Yorkshire and north Lincolnshire, which it is my privilege to represent. My rocks may be a little colder, however.
We already contribute significantly to the energy infrastructure of this country, not least through the power stations just outside my constituency and the constituency of my right hon. Friend the Member for Haltemprice and Howden (Mr Davis), at Drax and Eggborough, as well as through the coal-fired power station at Keadby in my constituency. There are also the potential opportunities that I raised with the Minister earlier with regard to offshore wind at the South Humber Gateway. I shall not mention in the presence of my neighbour, my right hon. Friend and the Member for Haltemprice and Howden, onshore wind turbines, as he and I are engaged in a number of skirmishes with various developers.
I welcome today’s debate, which has ranged much broader than simply the national policy statements. We have gone into many wider areas of energy policy. The national policy statements will contribute to putting our energy policy on a much more secure footing, which we recognise is essential if we are to attract the necessary investment to keep the lights on in this country, as other Members have mentioned.
I shall speak about two issues associated with the potential for offshore wind. I mentioned earlier the potential for clustering the manufacturing for offshore wind at the South Humber Gateway, which has been progressing somewhat slowly through the planning system, owing to similar problems to those mentioned by other Members in relation to Natural England. In fairness to both Natural England and the developers, I should say that there has been significant movement in recent days and we may well get agreement. The planning structure is a problem for us because the developers are looking at sites not just in the UK, but internationally. Unless we get that right, we risk losing a potentially huge amount of investment, in this case to other countries in Europe.
I was pleased to hear the Minister talk about the review of overhead lines, which are another massive issue in my constituency. The national grid seems to criss-cross all over some beautiful Lincolnshire and east Yorkshire countryside. I shall follow the proceedings with interest.
On the relationship between national policy statements and local councils, I echo some of the concerns expressed by the Energy and Climate Change Committee, which said:
“We are concerned that the current status of the NPSs within the wider planning system is, at best, ambiguous.”
I note the Government’s response, which states that
“the degree to which Government policy, including the policy in the NPS, or draft NPS, is relevant to any particular planning application . . . is not for Government to prescribe.”
They go on to say that they therefore do not believe that any additional guidance is necessary.
I ask the Minister to reconsider that. Having served as a local councillor for 10 years, I know that it is an undeniable attraction to planning officers to look for leadership from national Government in local planning decisions. Could we have a clearer statement that the NPSs will not impact on local planning decisions and should not be used as an excuse? We saw regional spatial strategies often being drawn into planning applications, where they had no real role. The temptation is irresistible to many planning officers to look to national policy for guidance. Perhaps that can be considered in more detail when we debate national policy statements next year.
I welcome the general direction of policy. The debate today has been interesting, with the Minister and the shadow Minister working on a consensual cross-party basis on many topics. That is significant on a subject that is so important to the country. I look forward to seeing the Minister at the South Humber Gateway shortly, and I thank him for that.
Dan Byles (North Warwickshire) (Con)
I shall keep my remarks brief, as I am conscious of time.
It is extremely important that we get energy policy right. It is right that the Department has reconsulted on it, rather than rushing ahead, as it might have done. If we get energy policy wrong, we will live with the consequences for decades to come. There is a huge infrastructure challenge. As has been mentioned, we need to replace about one third of our entire energy generating capacity in the next 10 years.
All our nuclear power stations bar one will be off line by 2023, and we need to rebuild substantially, if not completely, our energy transmission infrastructure if we are to move towards a smart grid, which we will need to enable the 21st century energy infrastructure that we are trying to put in place to work. This huge infrastructure challenge translates into a huge investment challenge. Some £200 billion of investment is required in the coming years. To put that into context, I point out that it is approximately one third of the entire investment in energy infrastructure that the whole of Europe will require. EDF is looking at spending some £20 billion on what we hope will be the first of a new generation of nuclear power stations. That £20 billion represents the largest single investment by a French company outside France, I think ever, but certainly since the second world war. We need another nine just like that if we are to hit our £200 billion.
At the risk of over-emphasising this issue, let me say that we absolutely have to get the investment climate right. We need to put in place a stable regulatory and investment climate that will give investors the confidence to invest staggering sums of money for 30 or 40-year timelines and beyond. The investment challenge here is probably the biggest single part of the issue that we are discussing today. I therefore strongly welcome the broad degree of cross-party consensus that we have on our emerging energy policy. Investors must have the confidence that we will not lurch from one energy policy in this country to another with potential changes of Government, but work together and put something in place that will give the confidence for 10, 20, 30, 40 years or more.
That is all I want to say. It is a plea as much to those on the Opposition Front Bench as to those on the Government Front Bench. We must ensure that we put together an investment and regulatory regime that will not change, that will be stable and give the confidence that is necessary if we are to have the investment that we need.
Tessa Munt (Wells) (LD)
I will return to my favourite subject of the electricity grid, particularly as it affects Somerset, Suffolk and the other areas that have been mentioned today. Electricity networks have a significant effect on the beauty and tranquillity of the countryside, and to date the industry has been guided by a set of principles called the Holford rules in routing new overhead lines. I particularly want to note that the second draft of the NPS on electricity networks proposes to weaken the standing of the Holford rules. The latest draft says only that decision makers
“should bear them in mind”.
That is likely to mean that there will be no requirement on either the electricity companies to demonstrate that they have sought to avoid damaging impacts on important areas of landscape, or that the decision maker should base its evaluation for proposed overhead transmission line schemes on whether the Holford rules have been met. Neither does there seem to be an expectation that the mitigation measures suggested in EN-5, at paragraph 2.8.9, should be carried out for schemes where one or more of the Holford rules are not met. The effect of this will be seriously to weaken the protection of the countryside from unnecessary or intrusive energy infrastructure.
The other minor points that I would like to make include the wording of several sections of the NPS where minor changes of wording could have major impacts. I will write to the Minister in detail about those if I may, but certainly there are paragraphs in EN-1 that relate to the historic environment where there is weakened protection for non-designated but still important heritage assets, and there are impacts on the visual landscape that relate to the regional economy departing from existing protections for nationally designated areas such as national parks or areas of outstanding natural beauty. In addition, EN-1 also seems to advise applicants on how to circumvent green belt protection.
Finally, I cannot reflect the comments that were made earlier, and I should like to be sure that there is some way in which local authorities can negotiate a realistic contribution from developers, especially, for example, for residents in my area, which will be providing a storage facility for nuclear waste on a temporary basis that I understand to be somewhere in excess of 100 years.
Charles Hendry
We have had a good debate. It has been brief, but it is part of the process, not the end, and there will be further opportunities to discuss the issues at length when the House returns in the new year. We have had a very good mix, involving national interest and a great tour of the energy opportunities horizon in the constituencies of many Members on both sides of the House. One of the most encouraging outcomes of the debate is the recognition that, throughout the country, people are looking at how we can generate electricity in a new way. Where are the new opportunities? The hot rocks in Cornwall and the cold rocks in Yorkshire—the great opportunities that we find around us—are something that we should truly celebrate as we look at the issue.
The hon. Member for Ogmore (Huw Irranca-Davies), who speaks for the Opposition on these matters, talked about who should take the credit, Labour Ministers or Conservative Ministers? I do not think it should be any of us, because it should be our incredibly hard-working officials, who have done almost all the work in getting us to our current position and an outstandingly good job on a very complex set of documents.
The hon. Gentleman talked about the delay. We wish that there had not been one, but we recognised that in the previous draft statement there was a flaw in the appraisal of sustainability, and we felt it right to re-interpret that in order to make it stronger and clearer. Because that was so fundamental and in the overarching national policy statement, it seemed right that we should re-consult on all the statements, and it has been absolutely the right way to take the matter forward.
On the question of how the process will move forward, we have assumed that there will be a debate about the national policy statements overall and, at the end of the day, votes on the individual statements, but we do not anticipate the scope for hundreds of amendments to them. We have changed the previous Government’s decision that there would be no vote at all, because we believe it important that, as part of this democratic process, the House should have the chance to vote on them.
The hon. Gentleman asked also about the role of localism. There is a difference between the nationally critical strategic infrastructure, which we deal with in the national policy statements, and the local agenda, where we believe that local authorities should have significantly more power when deciding on the issues that come to them below the 50 MW. Of course, the views of local people, directly and through their local authorities, will be an integral part of individual planning applications, and they will be heard.
I shall pick up on some of the other points that have been raised during the debate. My hon. Friend the Member for Folkestone and Hythe (Damian Collins) talked about Dungeness, and from our conversations and his consistent representations, I understand where he is coming from. We recognise that the development of a new nuclear power station at Dungeness would be a continued source of employment and bring economic benefits to the surrounding area, but the Government are obliged by law to consider adverse affects on the integrity of European-protected sites which might be caused by development and to consider alternative sites if those impacts cannot be mitigated.
Dungeness is not on the NPS, because we have not yet been persuaded that a new nuclear power station could be built there without having adverse impacts on the integrity of the Dungeness special area of conservation, or that adverse impacts could be avoided or mitigated. The Dungeness SAC is the most important shingle site in Europe, so after careful consideration of the representations made so far our view that Dungeness should be excluded has not changed. The consultation is continuing, and, if additional evidence that changes that conclusion emerges in the course of the meeting that I will have with my hon. Friend and his local authority’s representatives, or in written submissions, we will take it into account.
The hon. Member for Southampton, Test (Dr Whitehead), who speaks with such authority, raises several issues, but I shall focus on the role of gas. We see a need for gas, but part of the issue is that we have inherited a situation in which new nuclear cannot be built until the end of the decade, because its construction did not start earlier. Further, when it comes to the mass roll-out of renewables, we are third from bottom in the whole EU. We have great ambition but start from a long way behind. Carbon capture and storage on a major commercial scale cannot play a massive role until the end of the decade, although our ambitions for that are high.
Gas will therefore have to be part of the process; that is the simple, practical reality. Gas-powered stations can be built quickly; gas requires lower capital expenditure than other technologies, so the write-off period is lower; and importantly it is flexible, so it can back up other, more inherently variable technologies.
Of course, the issue of emissions will be critical. That is why we are taking forward the work on the carbon floor price and looking at emissions performance standards and the other measures that will be brought to bear, which investors will need to take into account as they make decisions on these critical investments. The time scale of that is now almost upon us. In the next few weeks, before Christmas, we will set out how the electricity market reform process will work.
My hon. Friends took me on a fascinating tour of the country. We heard about the nuclear opportunities in Gloucester and the great training opportunities at the Barnwood EDF facility. My hon. Friend the Member for Gloucester (Richard Graham) is absolutely right to talk about the skills agenda and the supply chain opportunities that we are determined to realise.
My hon. Friend the Member for Truro and Falmouth (Sarah Newton) focused on energy security and the issues surrounding the wave hub and deep geothermal resources. I look forward to visiting those facilities with her in due course. My hon. Friend the Member for Brigg and Goole (Andrew Percy) talked about the supply chain and his concerns about power lines, which we completely understand.
My hon. Friend the Member for Wells (Tessa Munt) spoke about the Holford rules. We will reflect on the concerns that she expressed, but we must also have clarity about what benefit local areas will achieve from these new investments. That is at the heart of the localism Bill. Thinking about how local communities should benefit in terms of business rates and other direct benefits coming into their communities will completely transform the relationship between these facilities and the communities who host them. That will be an important element as we move forward.
The hon. Member for Rutherglen and Hamilton West (Tom Greatrex) speaks with great authority on these issues, and the House benefits from his expertise. He is absolutely right that time is not on our side. The whole purpose of what we are trying to do is to remove the barriers to new investment in these areas. We are absolutely clear that there will be no public subsidy for new nuclear, but we must then remove the other potential barriers—the regulatory barriers—to ensure that that investment can go ahead. On carbon capture and storage, I can absolutely give him the assurance that we are looking to gas as part of the next projects. The market-sounding exercise showed a significant interest in gas, and we will therefore open up this competition to gas plants as well.
The hon. Gentleman talked about EMR and the cost of transmission. We have to look at this in a new way. People will not build power plants if they do not believe that they can get their power to market. Historically, power plants were built in the coal centres or outside the big industrial centres; now, we are looking at new places for them to be built. We have to look at this afresh, and I am delighted with the work that Ofgem is doing to look at the best structure for the process. I will leave others to deal with the issue of the location of the green investment bank.
Finally, I want to deal with some of the points made by the hon. Member for Ogmore. He mentioned “what if?” scenarios. He was right to do that, but we are in that “what if?” environment because of the situation that we inherited. After 13 years, we have to get £200 billion of new investment coming into the infrastructure. If more decisions had been made to take forward the role of nuclear and not to have the five-year moratorium, we would be significantly further advanced, and the challenging energy situation in the middle of this decade would not have applied in the same way.
My hon. Friend the Member for North Warwickshire (Dan Byles) talked extremely clearly and effectively about the energy security needs that we have to address. It is possible that CCS may not work, or that the price may be too high, but if we do not push the process forward and take advantage of the extraordinary opportunities that we have in this country, we will always be followers and never be leaders. That is why we have been so keen to take forward that technology.
The hon. Member for Ogmore suggested that decentralised energy may be unable to deliver as much as we hope, and he may be right. However, we are right to try to look at what can be done locally, although we are doing it against the backdrop of how much more should have been done historically. In the end, this all comes back to the broad portfolio of policies that we are putting forward—the need to have clarity on national planning issues, which is exactly what these documents are about, and the need to have clarity on the market structure that will exist.
The hon. Gentleman talked almost as if EMR—the market reform process—was his own idea. Seven months ago, Labour Members were saying that there did not need to be a price on carbon, that there should not be an emissions performance standard, and that we did not need capacity payments. We are having to reinvent a market in order to take us forward and give us the security that we need. This is part of a package. I hope that he is in no doubt about our determination to achieve that and to drive it forward. Let me assure my hon. Friends and all hon. Members that we totally understand everything that needs to be done to drive forward investment in this area. We will take nothing for granted. Our goal is to make this the most attractive place in the world in which to invest in new energy infrastructure. We are determined to do that and we look for consensus and partnership to take it forward. This debate has been a constructive and important part of that process. I hope we can conclude that we have had a good debate on these issues—