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Caroline Flint (Don Valley) (Lab)
I beg to move,
That this House has considered the future of clean energy investment.
It is a pleasure, Mr Bailey, to serve under your chairmanship. I thank the powers that be for accepting my application for an Adjournment debate on this subject.
Last week, I spoke in the debate on climate change, responding to the Pope’s encyclical in which His Holiness said:
“Never have we so hurt and mistreated our common home as we have in the last two hundred years.”
As the Paris talks begin on Monday, it is vital that the world gets a strong deal to ensure the future of our planet for generations to come. We must also speak loudly and clearly about the new economic opportunities within our grasp. The challenge for the 21st century is how quickly we can fully benefit from the clean energy revolution.
As a patriot, I want the United Kingdom to be a global player, leading and innovating in the latest energy technologies and reaping the rewards, jobs and investment that will go to the leaders in this race. This requires an industrial and economic strategy fit for a world kept at less than 2° of warming. If that is the challenge and if that indicates the direction, I am afraid the Government have lost their satnav. The latest Ernst and Young renewable energy country attractiveness index puts the UK out of the top 10 for the first time ever. We now sit at 11th, behind Chile and the Netherlands, and the reason is simple. According to Ernst and Young it is
“death by a thousand cuts…At best it may be a case of misguided short-term politics getting in the way of long-term policy. At worst, however, it’s policymaking in a vacuum, lacking any rationale or clear intent.”
That is a damning verdict on the Government’s record over the past five years, a record with a very real cost from jobs and investment lost.
Investors do not have to choose the UK. If we do not make it attractive for them to invest in clean energy here, we will lose jobs in new technologies and their supply chains for the lifetime of those investments. That is exactly what happened when we lost out in the 1980s to other countries which saw the potential of wind energy.
I would never advocate that new technologies receive never-ending subsidies or that taxpayers and energy bill payers pay a penny more than required, but the Government’s actions cannot be justified only on those terms. The decision to charge renewable generators the climate change levy was a grab by the Treasury, pure and simple. Business plans that relied on that income have had to be ripped up. Drax lost a third of its share value in one day following the announcement, and as a result it and Infinis have launched legal proceedings against the Government. On 25 September, Drax said that policy certainty is no longer there to continue its involvement with the White Rose carbon capture and storage project.
Developing CCS is an important part of our clean energy infrastructure and I thought the Conservatives thought so too. Perhaps the Minister will confirm whether what we hear through the media—that the Government’s allocation of £1 billion to support CCS innovation is to be cut—is true. In October, the report of the Committee on Climate Change, “Power sector scenarios for the 5th Carbon Budget”, said:
“CCS is very important for reducing emissions across the economy and could almost halve the cost of meeting the 2050 target in the Climate Change Act.”
Ian Lavery (Wansbeck) (Lab)
I congratulate my right hon. Friend on bringing this timely debate to the Chamber. Does she agree that without carbon capture and storage, there is no likelihood whatever of the UK or Europe meeting the emissions level targets that have been set for 2050?
Caroline Flint
I agree with my hon. Friend, and what is so sad is that we have the brains, the skills and the interest from investors, but we do not have the Government’s political will to be a leader in this important area of innovation. Too often, we talk big but end up following, and lose the chances that are opened up to us.
Under the coalition Government, the ambition for CCS stalled. The Government’s favoured projects, Peterhead and White Rose, have suffered from dithering and delay, and they have put a brake on the other part of CCS—the development of industrial CCS, which can protect our energy-intensive industries such as steel from carbon leakage, watching our jobs exported elsewhere in the world. Alongside that, the cheapest forms of renewable energy seem to be constantly under attack.
Philip Boswell (Coatbridge, Chryston and Bellshill) (SNP)
I speak as the contract lead for Shell at the Peterhead carbon capture project. I obviously cannot say too much about it, but it is in the public domain that SSE and Drax have both withdrawn from each of those programmes. Is it incumbent on us to ask the Minister whether she can give assurances that the projects will go ahead?
Caroline Flint
That is a very good question to ask the Minister. I hope that she will give some attention to the hon. Gentleman’s point. I have visited Peterhead and I know how important those projects are to communities around the UK and, importantly, to future generations in creating more jobs and opportunities for work here at home, but also for exporting those skills and expertise overseas.
The cheapest forms of renewable energy are under attack. We have seen rapid changes to the renewables obligation and the feed-in tariff, which have already cost UK jobs and are putting off investors. Cuts of up to 87% in the feed-in tariff for small-scale wind and solar are being proposed. The Solar Trade Association predicts that it could put 35,000 jobs in the sector and supply chain at risk, affecting jobs in almost every town in the country. Its latest survey, which is currently being carried out, has found that at least 1,500 jobs have been lost already. More than 70% of the companies that have responded so far have put employees on notice.
The ending of the renewable obligation one year earlier than expected in April 2016 and changes to the planning system seem economically illiterate when onshore wind is the cheapest form of clean energy. The latest analysis of the power sector from the Committee on Climate Change, which will feed into the carbon budget to be produced this month, shows that the potential of onshore wind is around 80 TW, which is over four times its current deployment.
As with all development, account should be taken of location and impact, but I have become used to big statements from Tory Ministers about changes to onshore wind planning guidance to placate their Back Benchers. When the dust has settled, that has not amounted to much, but it damages and undermines an industry that provides nearly £900 million in gross value added. We know the damage that business short-termism has inflicted on our economy, but this is political short-termism at its worst.
In June, the Minister, in answer to a question from my hon. Friend the Member for Heywood and Middleton (Liz McInnes), said the UK was on track to meet our interim EU 2020 target for renewable energy generation. Thanks to a leaked letter, we now know the UK will miss our EU 2020 renewables target by a large margin. In that letter, the Secretary of State is frantically lobbying the Chancellor to keep support in place for renewable heat and I hope that the Minister will tell us how that is going. The Secretary of State goes on to suggest that to meet our EU 2020 renewables target we—bill payers and taxpayers—should pay for renewable projects in other countries. Where is the patriotism and ambition for our country in that? It is an affront to people in renewables industries who have lost their jobs or fear for them.
The Secretary of State seems to have woken up belatedly to a car crash about to happen on her watch. The renewables sector does not want or expect to rely on subsidies forever. Across the sector, it wants to work with the Government to set ambitious and achievable cost reduction milestones. For example, solar provides 2% of UK electricity, but the Government are leaving no room for future growth. That does not make sense when the sector is so close to parity.
How do we get the UK back on track? Here are five recommendations and I look forward to hearing the Minister’s response—if not today, perhaps in writing. First, the Government should set out right away the levy control framework for 2020-21 to 2025 or beyond. That would provide investors with confidence and certainty about what support will be available. Secondly, the contracts for difference auctions should proceed as soon as possible, including for onshore wind and solar. Contracts for difference were designed to drive down costs, so it is right that those technologies should be able to bid for them.
Thirdly, I ask the Government to look seriously at the Solar Trade Association’s £1 plan to safeguard the bulk of the industry and to sustain cost reductions that depend on market volume. Fourthly, the Government must stop shilly-shallying and commit to our CCS projects, both in Scotland and in Yorkshire. Finally, the Government should give their full backing to those councils that this week pledged to make their towns and cities 100% clean by 2050.
Clean energy technologies are an industrial revolution unfolding before our eyes. It is not tomorrow’s world; it is here today and gaining pace. Britain was at the forefront of the 19th-century industrial revolution, and the UK was instrumental in the computer revolution and the development of the internet. This is the industrial revolution that will shape our planet beyond our lifetimes and I urge the Government not to squander this opportunity for the UK to seize the prize.
Several hon. Members rose—
Mr Adrian Bailey (in the Chair)
Given the number of hon. Members who want to speak and the fact that we will want to give the Minister the maximum time possible to respond to the debate, it looks as though four or five minutes would be the appropriate time for speeches in order to get in everyone who wants to speak. I will not impose a time limit at this moment, but I ask Members to bear that in mind.
Julie Elliott (Sunderland Central) (Lab)
As ever, it is a pleasure to serve under your chairmanship, Mr Bailey. I congratulate my right hon. Friend the Member for Don Valley (Caroline Flint) on securing this timely and important debate. It should surprise no one in the House that she has continued to throw her considerable energy and expertise into this area, both as a Back Bencher and as chair of Labour’s Back-Bench energy and climate change committee.
The Secretary of State for Energy and Climate Change will no doubt have hoped to prop up investor confidence in her “reset” speech last week. She was right to hope for such a response, because clean energy developers are going bankrupt and investors are fleeing the UK. However, I suspect that she may have been disappointed. As my right hon. Friend said, EY’s most recent renewable energy country attractiveness index, published in September, is a damning indictment of this Government’s record on clean energy and the power that they have unleashed to scare off investment and the jobs that come with it. In November 2013, the UK was fourth in the world for investor confidence. In February 2014, we fell to fifth; in May 2014, to sixth; in September 2014, to seventh; in March 2015, to eighth; and two months ago, we fell to 11th—outside the top 10 for the first time in a decade. I can see why the Secretary of State was hoping for a reset.
Boosting investor confidence and achieving clean energy security will require more than warm words. Rhetoric does of course matter, and this Government have thrown their fair share against renewables, but investors pay attention to policy. They put their money where they believe there is a stable regulatory framework. That cannot be said of the UK market at the moment. Wave after wave of policies have deterred investors and confused consumers. The Government claim that affordability is king, yet the main focus of their attacks has been on onshore wind and solar—the two cheapest large-scale renewable technologies. EY calls that
“policy-making in a vacuum, with no rationale or clear intent.”
That lack of confidence does not exist in isolation. It seeps into other sectors, such as CCS and offshore wind. Investors will naturally think, “If the most cost-effective and proven technologies are being attacked, surely we will be next.”
John Mc Nally (Falkirk) (SNP)
On the point about renewable energy, I think, coming from the background of what is happening in Scotland, where we are pursuing a clean and green energy policy, that the short-term approach to policy that is causing uncertainty among investors needs to go. We need a long-term policy to be agreed across the House, perhaps by means of an all-party parliamentary group. That would reassure investors for the long term that the money that they invest will be secure. We need to get rid of the repair and maintenance that we seem to be so intent on delivering at the moment.
Julie Elliott
I thank the hon. Gentleman for his intervention. Of course the key to good, stable energy policy is to have a long-term framework. Energy policy needs to last through more than one Government. Governments change every four or five years. Energy policy should be agreed and set out for the long term, to attract investment and so that we can regain our place as the world leader in this industry.
Uncertainty is this Government’s watchword. We have no idea what the size of the levy control framework will be post-2021. If we are relying on offshore projects with lead times of eight years or so, how can we expect people to invest when they do not know the size of the pot beyond 2021?
Ian Lavery
Is it not also extremely important, with regard to the levy control framework, that stakeholders should be aware of how this budget is being spent? It is not transparent at the moment, and people do not have a clue about what is being spent, when it is being spent and how it is being spent.
Julie Elliott
Absolutely. I thank my hon. Friend for that intervention; I totally agree with him.
The situation in which we find energy policy today can perhaps best be illustrated by the grotesque chaos of clean energy developers, starved of the certainty that they need, being encouraged to install diesel generators on their sites because the Government’s policies have led to the narrowest—frighteningly narrow—margins this winter. Approximately 1,000 diesel generators, second in carbon intensity only to coal, have been installed in the past 18 months, and another thousand are in the pipeline.
The Paris climate change conference starts in just five days’ time. I wish the Secretary of State and the Minister well, and I know that they will work hard to secure a binding agreement. They may, however, find that not everyone is taking them as seriously as they would like. The UK can take on global leadership abroad only if we are seen to be taking bold action at home. The Department of Energy and Climate Change does not exist in isolation. Our policies are noticed not just by investors, but by policy makers around the world. In passing the Climate Change Act 2008, Britain grabbed the baton of global leadership. Others took note and made steps to catch up. Now, we are being overtaken. Today, when we slash support for clean energy, the rest of the world looks on.
David Mowat (Warrington South) (Con)
The hon. Lady makes a point about the Climate Change Act. It is true that we showed global leadership on that. However, no other country in the world has passed anything similar and, worse, the EU, for the Paris climate change talks, has put in a submission for decarbonisation that is significantly lower than what the UK is attempting to achieve. We have shown global leadership.
Julie Elliott
I thank the hon. Gentleman for that intervention, but nothing in what he said takes away anything from the point that we were the global leaders. I take great pride in that. The Conservative party supported that measure while it was going through Parliament, so it obviously agreed with it at the time.
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
A very important point must be put on the record: countries have different climate legislation programmes in place, but this country has never been completely out there on its own and other countries have attempted to do what we have done. There is a huge academic study of climate legislation across the world. Hundreds of countries have attempted to do what we have done—many of them very successfully. Of course we will need to take a higher burden in this country than, for instance, Poland, and that will be reflected across the whole EU target, but we cannot say that other countries have not followed us down this route. That is simply incorrect.
Mr Adrian Bailey (in the Chair)
Order. Let me just point out that I did say five minutes. We are already way over that, and long interventions do not help.
Julie Elliott
I shall wrap up quickly, Mr Bailey.
The Washington Post noted last week that although Britain had been expected to play a leading role alongside the Obama Administration, the decision to cut support for clean energy at home
“threatens to undermine Britain’s international authority”.
As the United States pushes ahead with an ambitious programme and the rest of Europe pulls ahead of us in meeting renewable energy targets, Britain’s capacity to lead on the world stage is being squeezed.
I am confident that the Minister will deliver a rousing defence of this Government’s record and the importance that she personally places on delivering a low-carbon economy in the UK and securing a binding global deal in Paris. It reminds me of the line that Joe Biden, Vice-President of the United States, is credited with coining. He said:
“Don’t tell me your values. Show me your budget, and I’ll tell you your values.”
Attacks on onshore wind and solar, no extension of the levy control framework, the UK’s position as a world leader dropping like a stone and the fact that we are on course to miss our 2020 target—with such a record, the values are very clear.
Gavin Newlands (Paisley and Renfrewshire North) (SNP)
I congratulate the right hon. Member for Don Valley (Caroline Flint) on bringing this important issue to Westminster Hall. Yesterday afternoon in this very Chamber, we debated fuel poverty and its impact on households that have to spend at least 10% of their income on energy costs. In the discussion about ways to eliminate and eradicate fuel poverty, a debate about the future supply and funding of clean energy initiatives is highly appropriate. I say that we debated fuel poverty; I sat patiently waiting to contribute, but one of my Scottish National party colleagues was a tad over-verbose and I was unable to contribute. [Hon. Members: Name and shame!]
It was my hon. Friend the Member for Ross, Skye and Lochaber (Ian Blackford). If I had been able to do so, I would have said that the actions and policies of the UK Government are pushing more and more people into fuel poverty. Furthermore, by slashing investment in clean energy initiatives, the Government will not only hurt the renewable sector but make it harder for households to access clean energy.
Clean energy is a massive area, and we in the SNP have made our views on the shameful cuts to onshore wind well known, so, given the time constraints this morning, I will focus my remarks on solar energy. Before I do so, however, it is worth reflecting on the Government’s green credentials. In a few short months, we have seen the early closing of the renewables obligation for onshore wind, the removal of the climate change levy exemption, the scrapping of the proposed introduction in 2016 of the zero-carbon homes standard, the cutting of subsidies for biomass and solar under the renewables obligation, the changing of the accreditation rules for the feed-in tariff and the announcement of the ending of finance for the Green Deal Finance Company. So much for the Prime Minister’s pledge to lead the greenest Government ever.
During the election campaign, I spent a considerable amount of time campaigning in the town of Linwood in my constituency. It was noticeable that a large number of households in the town had installed solar panels on the roofs of their homes. I appreciate that that is a relatively common sight these days, but not usually on the scale that I saw in Linwood, where every second house seemed to have a solar panel installed. I raised the matter with one of my constituents and asked why the town had taken to solar panels as much as it had. He explained that when he and his neighbours considered the cost of installing them and the subsequent savings on their energy bills, they realised that solar electricity was the most cost-effective way to provide their energy at home. It disappoints me to learn of the Government’s plans to make severe cuts to schemes that support solar power, because they will prevent tens of thousands of people from accessing clean energy.
Daniel Zeichner (Cambridge) (Lab)
Does the hon. Gentleman share my astonishment at the fact that there appears to be no consultation between the Department of Energy and Climate Change and the Department for Communities and Local Government regarding the impact of the cuts on councils? In my city, those cuts prevented the installation of a thousand solar panels.
Gavin Newlands
That is an entirely fair point, and I do not think that consultation is this Government’s strong point. The cuts do not make sense when we consider the significant growth that solar energy has experienced over the years. According to the Solar Trade Association, nearly 600,000 households in the UK have gone solar. That includes a 32% rise in solar installations in Scotland from 2013-14. Those figures highlight the popularity of solar energy. Instead of making moves to disrupt that growth, we should be encouraging more households to consider installing and using cleaner forms of energy.
My constituency accommodates a number of excellent organisations that work in the renewables sector, and we should note their importance to our local economy. They provide much-needed jobs in our area, and we should be very concerned about the fact that if we scale back our commitment to clean energy, it will put thousands of jobs at risk.
Jim Shannon (Strangford) (DUP)
I want to give a quick indication of the impact in Northern Ireland. In the North channel, for instance, if we lose clean energy, as we seem set to do through Government policy by 2017, the Ulster Farmers Union has told me and other representatives that it is very concerned that momentum will be lost in the clean energy revolution. That will affect investment and the resulting benefits. Does the hon. Gentleman share my concern that not just urban areas but rural ones will lose out on solar?
Gavin Newlands
I have not received many representations from Ulster, but I thank the hon. Gentleman for that one. Rural areas were discussed at length yesterday during the fuel poverty debate, so his comments are welcome.
Cuts to clean energy programmes send the message that we are abandoning our commitment to reducing our greenhouse gas emissions. As many hon. Members will be aware, Scotland has world-leading legislation on carbon reduction, and we are making great progress in tackling climate change and reducing our carbon emissions. That has, however, been severely undermined by the UK Government’s decisions, and the UK is plummeting down the Ernst and Young renewable energy country attractiveness index, as has been mentioned. It should be noted that Scotland continues to outperform the rest of the UK, and it is one of the leading countries in western Europe for reducing emissions. The progressive approach adopted by the Scottish Government is praised by Christiana Figueres, head of the UN climate body, who claimed:
“Scotland’s ambition to create a strong and healthy renewables sector and a low carbon economy is a shining example of measures that can be taken to diversify energy supplies, attain energy security and attract investments.”
Despite the success that Scotland has achieved, I fear that, once again, Westminster will force Scotland to tackle climate change with one hand tied behind our back and, as sure as night follows day, ensure that efforts to tackle fuel poverty are severely constrained. I urge the Minister and the Government to reconsider.
Mr David Hanson (Delyn) (Lab)
It is a pleasure to serve under your chairmanship, Mr Bailey. I welcome the contribution made to the debate by my right hon. Friend the Member for Don Valley (Caroline Flint), not only today but over many years, and I support her objectives on this important issue. I am concerned about ensuring that we have a policy to tackle climate change, but also about creating jobs and creating a fluent, diverse, dynamic industry in places such as my area of north Wales.
When the Minister responds to the debate, I want to hear four simple commitments from her. I want to hear a welcome for the contribution that renewable energy industries such as solar, wind farm and tidal can make. We need a commitment to ensure that we help grow those industries in all parts of the United Kingdom—Scotland, Northern Ireland, Wales and England. Crucially, we have to learn from Joe Biden’s lesson, which my hon. Friend the Member for Sunderland Central (Julie Elliott) mentioned, and put our resources where our policy mouth is. My right hon. Friend the Member for Don Valley has mentioned the key decisions that we need to take to ensure that stability and future planning happen.
In my area, we have all parts of the renewable energy picture in place. My right hon. Friend and I were seasick together off the north Wales coast in February this year when we visited Gwynt y Môr wind farm, which opened earlier this year, in my constituency. I am sad to report that no Minister sought to attend the opening of the wind farm, even though it is the second biggest in the world, with €1.2 billion euros spent on turbines and €2 billion spent on the development overall. That is a massive investment, which creates jobs across the United Kingdom.
Only last week, I attended a wind farm presentation, where we saw that 220 jobs had been created in the Isle of Wight at Vestas for blades, jobs had been created at Lowestoft and 1,000 new jobs related to wind farms had been created at Siemens in Hull. I confess that we missed a trick in north Wales; we should have bid many years ago for that investment in manufacturing. We are now dependent on Mostyn docks in my constituency to assemble goods that are manufactured elsewhere, but there is opportunity for the future, because this industry will grow, to develop manufacturing across the country. Offshore wind at places such as Gwynt y Môr in my patch—the second-biggest wind farm in the world—Burbo Bank and North Hoyle have the ability to create jobs. Only last week, I met three apprentices employed by RWE Renewables to look at how they can learn skills for the future. This is high-skill, high-investment technology.
Jim Shannon
The Government could do more for tidal energy, which the right hon. Gentleman has mentioned. We have done that in my constituency with SeaGen at Strangford Lough, which involved significant investment from our Government at home and from the industry. The opportunities for tidal energy creation are great. It is clean energy, and I am sure that it can be generated in the right hon. Gentleman’s constituency, as it can in others.
Mr Hanson
One of the points that I want to touch on—briefly, because time is pressing—is the proposal for a tidal lagoon off north Wales, which will match the wind farm energy that is now being proposed. We are looking at how we can develop turbines off the coast that have the dual effect of generating energy and preventing flooding. The Minister should look at those interesting developments. Time does not permit me to go into the matter, but I want to flag up to her the fact that she should look at the tidal developments in north Wales and consider how Government can support them.
Solar is not a random idea; it is a practical way to promote renewable energy, and solar equipment is manufactured in north Wales at Sharp in Wrexham and at Kingspan in my constituency. As my right hon. Friend the Member for Don Valley has mentioned, however, the Solar Trade Association has said that it fears there will be 27,000 job losses in the industry because of the short-termism of Government policy. We need to address those issues.
I support my right hon. Friend in four areas: we urgently need to have an examination of the levy control framework for 2020; we need definitive statements on contracts for difference as soon as possible, so that people can plan; we need to look at the Solar Trade Association’s £1 plan; and, crucially, I would like the Minister to look imaginatively at how we can encourage public sector buildings—schools, hospitals and public council buildings—to develop solar.
Mims Davies
I just wanted to come in on the topic of the Solar Trade Association’s £1 plan. In my constituency, 40 jobs are based in the solar industry, and I would be keen for the Government to look strongly at the plan. I reiterate that public buildings are very important for our energy security.
Mr Hanson
I agree with the hon. Lady and I am grateful for her support. Finally, on public sector buildings, at a time of reductions in public spending, there is a real opportunity to put investment up front, to save future energy costs to the public sector, and for the public sector to take a lead.
In conclusion, wind and solar energy are generators of economic success, and tidal lagoons could be. The Minister has an opportunity to give certainty to the industry, so that it can plan for future investment.
Several hon. Members rose—
Mr Adrian Bailey (in the Chair)
I will now impose a time limit of four minutes on speakers. Please be disciplined with interventions.
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
Diolch yn fawr, Mr Bailey. It is a pleasure to serve under your chairmanship. I congratulate the right hon. Member for Don Valley (Caroline Flint) on securing this debate on a topic that is particularly important to Wales and my constituents.
Renewable energy has established itself as a significant contributor to the UK’s energy mix with considerable potential for further expansion. There is incontrovertible evidence that renewables are bringing down the wholesale costs of electricity, which is particularly significant for rural regions. An YnNi Llyn report revealed that in three rural wards in Pen Llyn, 43% of households were in fuel poverty and a further 33% were at risk; as an interesting aside, 69% of them were in transport poverty. There is a high level of dependency on unsustainable fuels, so it is deeply regrettable that the UK Government are effectively halting the previous progress on the deployment of low carbon energy and reverting to a policy of promoting fossil fuel generation.
It seems as though the UK Government are alone and swimming against the tide of worldwide scientific and political consensus that climate change is one of the most threatening prospects for mankind. The Government are also negligent in respect of the economic value of renewables, particularly in Wales. As a Plaid Cymru MP, I have always campaigned, and will continue to campaign, for responsibility over Welsh energy to be fully transferred to the Welsh Government. For as long as the UK Government refuse to do so, they should at least do what is in the interests of Wales on the Welsh Government’s behalf.
Constituencies across Wales, including mine, are already witnessing the damaging economic and social effects of the reversal of policy support for renewable energy. Community energy schemes are no longer emerging, and supply chain businesses in the sector—often very important to the local economy—are already contracting and struggling to survive.
The renewable energy business, Dulas, employs many people living in my constituency. It has seen an 80% drop in demand for its planning and environmental impact assessment services, owing to onshore wind and solar park sites being pulled. And for what reason? An audit of the Government’s policies on solar, the green deal and zero-carbon homes and offices shows that they will all lead not only to an increase in CO2 emissions, but to higher bills, according to a BBC report. Would the Minister honestly be able to look my constituents in the eye and tell them that the UK Government have the social, economic and environmental concerns of Wales uppermost in their mind?
Let us compare the situation in Wales with that in Scotland. In Wales, 10.1% of the electricity generated is from renewable sources; in Scotland, where energy is a matter for the Scottish Government, that percentage is 32%. Indeed, despite the fact that Wales is home to the second-highest tidal range in the world and 1,200 km of coastline, and is one of the most attractive locations in Europe for wind energy, it produces proportionately less renewable electricity than any other country in the UK. Yet Wales remains an exporting nation. She is an energy-rich nation. We produce almost twice as much electricity as we use, and the rest is exported to the rest of the UK. We want more to be generated from renewables, but our Government’s hands are tied.
I urge the Minister to work with her colleague, the Secretary of State for Wales, to ensure that energy is fully transferred to the Welsh Government in the Wales Bill: that would reflect the situation in the UK’s other countries, allow Wales to flourish as a resource-rich nation and resolve the confusion about onshore wind in the draft Wales Bill.
In conclusion, I ask the Minister to give her assurance that the UK Government will ensure that up-to-date information is provided in the form of a comparison between the renewable energy roadmap, Government forecasts and the 2009 EU renewables directive. It is essential that Members and constituents are fully informed on whether the UK is likely to achieve its targets.
David Mowat (Warrington South) (Con)
I congratulate the right hon. Member for Don Valley (Caroline Flint) on leading the charge today. I apologise that I was not here at the start of her speech; I was here at the end, in time to hear her five recommendations, all of which I agree with. I hope the Minister considers them. I have no difficulty with them, although I do have further recommendations.
It is a shame that the debate has become a little bit political but, as it has, I make the point that in 2010 the UK was ranked 25th out of 27 EU countries for the proportion of electricity generated from renewables. That is not the case now and I am proud of that. Although I am in favour of renewables, I think we talk too much about them and not enough about decarbonisation. We must try to achieve the decarbonisation of our electricity supply, as the Climate Change Act 2008 mandates us to do.
In response to my earlier intervention, the hon. Member for Stalybridge and Hyde (Jonathan Reynolds) made the point that I was saying that we are acting unilaterally. I am not saying that. Importantly, what I am saying is that, from looking at the initial submissions to the Paris conference of intended nationally determined contributions, the EU’s consolidated submission for reduction in carbon is at a lower rate than we are achieving—and what we are mandated by law to achieve through the 2008 Act—in the UK. That should give us all food for thought: why that is and what the implications are. The implications may be positive, but people in Redcar and Motherwell might not always agree. We need to be cognisant of and responsive to that.
One of the reasons cannot be a lack of renewables in the EU. Germany has 30% renewables—perhaps more. It has a third more carbon emissions per capita than we do, because it burns so much coal. Incredibly, Austria burns 20% more carbon per head in 2015 than it did in 1990. That is extraordinary. When we cite the progress we have made in Europe, we need to be cognisant of what that means.
I did not say that we were acting unilaterally but, as we are citing European achievements, I use the example of France, which has significantly lower carbon emissions than any other country in Europe—even Scotland. I acknowledge, by the way, that the Scottish Government’s climate change targets are even more onerous than those of the whole UK. I gently say that I believe that those targets were missed last year. Nevertheless, they are in place. France is easily the lowest carbon emitter in Europe. Why? The reason is that about 70% of its electricity is produced from nuclear power. As a consequence, it has a massive start.
In the whole EU, 33% of electricity is produced from nuclear power. The UK is at about 19%, about the same as the total that we get from renewables. I am in favour of renewables and I would like to see more, but it is absolutely not feasible—not even worth thinking about—for us to meet our climate change objectives, particularly those to which we have signed up under the 2008 Act, without nuclear power being a central and dominant part of the solution. The Government have acted on that. I applaud that and I am sure that the Minister will talk more about it.
The other area on which we need to act more quickly is the removal of coal, which is why getting rid of coal and replacing it—at least as an interim measure—with gas makes a huge difference to our climate change position. We need to make more progress on that more quickly.
Paul Flynn (Newport West) (Lab)
My speech was made by the splendid hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts), and very much not by the hon. Member for Warrington South (David Mowat), who represents nuclear power in this Parliament. The pied piper of nuclear power has managed to bewitch many people in this country, but the facts are devastating.
We are planning to build a European pressurised reactor, but such reactors have never produced enough electricity to light a bicycle lamp. The reactor in Finland was due to be generating electricity in 2009, and it is now six years late; the one at Flamanville in Normandy, France, which the hon. Gentleman mentioned, is seven years late. Both reactors are billions and billions over-budget and neither has any date for completion. This year, the reactor at Flamanville had a very special problem when the pressure vessel, a vital part, was found to be made of steel that was brittle and liable to crack. That will add years of delay.
The financial deal that we have agreed with the French, of course, is crazy—Alice in Wonderland stuff. The French are in it because otherwise EDF would go bankrupt; it has debts of €33 billion. The Chinese want to come in after all the sensible investment has gone because they want to take control of not just Hinkley Point but all the future nuclear power stations that might be built. That is the deal. We have bequeathed to China the future of our nuclear industry, and to China it is a deal, but it is not a deal financially because nuclear power has been a basket case.
Lapping the walls of Hinkley Point C, or Hinkley Point A and B as it is now, is an immense power source that we have neglected for centuries. Tidal power has already been mentioned. A vast cliff of water flows up and down the Severn twice a day, and it could be tapped with simple technology to produce electricity that is, of course, not only green but entirely predictable. People have attacked other renewables, such as wind and solar, for being uncertain, but we can predict the power of the tide virtually for eternity. The Government appear to be slowing down on schemes for tidal barrages at Swansea, Newport, Cardiff and north Wales, and we know about Strangford lough. When the British-Irish Parliamentary Assembly considered alternatives, we were hugely impressed by what is going on in Scotland, including its real progress on hydroelectricity.
The blind alley—the nightmare—will be if there is another major nuclear accident in the world such as Chernobyl, Three Mile Island or Fukushima. Such accidents would be fairly reported in this country, and we might find ourselves in Germany’s position of turning against nuclear power. We would then have a half-built Hinkley Point, useless, having wasted literally billions of pounds on something that is unable to generate electricity because of public fear of nuclear power. We have these accidents about once every 10 or 15 years, and it is certain that there will be another in the future. Nuclear power is not the way forward; it is a technology whose time has gone.
Mr Adrian Bailey (in the Chair)
I have you on my speakers list, but feel free to sit down if you do not wish to speak.
John Mc Nally
I am quite happy to speak. I am very good at speaking. I spent 40 years as a hairdresser, so I can talk about any subject on the planet.
I was very interested in the speech made by the hon. Member for Warrington South (David Mowat). I recently had a meeting on this subject with Senator Kevin de León, who is over here. He is the leader of the Senate in California, which is spending vast amounts of money on renewable investment—California is the seventh richest economy in the world—and investment has followed that policy into renewable energy.
We have heard about France and various other countries, but there is a lesson to be learned from California. We are doing well in Scotland on our clean and green image, and we want to keep that image at all costs. We are extremely concerned about where the policy of the green investment bank is going, and we need to keep a hand on the tail of that dog—in fact, the tail is now a stump.
Storing renewable energy is the missing link in this debate. Compressed air energy storage needs to be addressed by this country. I would call this country’s policy a traffic light—we have a green, an amber and a red—and it is more red than amber. We are going nowhere, and the policy uncertainty does not make sense. We were going in the great direction of following green, renewable, clean energy and clean air, and we now seem to be moving in the opposition direction from the way we want to go. I am unhappy with that, and I think most of this country’s taxpayers, who were mentioned earlier, are unhappy with the direction of travel. We need to get back to a firm policy.
Gas is short term; I believe it is all built on the extraction on shale from this country. I can speak for everybody in the country of Scotland: we do not want to go there until it is totally proven to be a safe, efficient method of providing heat. I do not think any of us is convinced. The Minister needs to address compressed air energy storage and the salt caverns underneath this country that run down through England. We need a policy statement if we are to invest money in storage, and then we can start looking at how we produce more investment in the renewables industry.
Martyn Day (Linlithgow and East Falkirk) (SNP)
It gives me great pleasure to take part in this debate on clean energy. I start by applauding the right hon. Member for Don Valley (Caroline Flint) for securing this timely debate.
My constituency of Linlithgow and East Falkirk has quite a reputation for energy firms of one sort or another, particularly around Grangemouth, the location of INEOS—perhaps that should be firms with quite a reputation. Today, however, I will comment on perhaps one of the lesser known success stories in the area: a positive, environmentally friendly firm called Verdo Renewables. I first visited the firm about five and a half years ago, accompanying the then First Minister of Scotland on a tour of the plant not long after it opened, and I made a return visit earlier this month.
I have therefore seen for myself the development of the firm’s Grangemouth operation and the success of its business growth, and a significant contributing factor has undoubtedly been the support of the renewable heat incentive. In case people do not know, Verdo produces grade 1 premium wood pellets and briquettes suitable for burning in multi-fuel stoves, log burners and open fireplaces, all made from locally sourced sustainable timber. Verdo has another plant in Andover. The firm has made a £53 million investment in the UK with a turnover of around £25 million. After several years of losses, it is now making a profit, producing 120,000 tonnes of high-quality, sustainable wood fuels. Verdo proposes further investments, but those investments are dependent on UK energy market conditions. RHI tariffs or similar support will be needed to maintain the firm’s current progress.
On my recent visit. I was pleased to see that, with current orders, the Grangemouth plant is at manufacturing capacity, and the firm has a number of plans to expand further by addressing the layout of the factory, developing adjacent land, increasing the number of production lines and storage capacity and, of course, generating vital local jobs. Unfortunately, those expansion plans are subject to uncertainty on whether RHI will come to an end. RHI has been critical in kick-starting the biomass heat market, and further efforts are needed to decarbonise the heat market if we are to meet EU and UK targets. Biomass heat offers a low-cost route to saving CO2 compared with other sources of energy. Cost reductions in biomass installations are being achieved, and further cost reductions in installations and fuel are now possible but only if sustained RHI support is available, whereas cutting all subsidies would potentially kill the biomass heating market. Industry sources believe that the UK pellet market needs to triple from its current annual 500,000 tonnes to be sustainable and commercially viable—
Chris Evans (Islwyn) (Lab/Co-op)
It is a pleasure to serve under your chairmanship once again, Mr Bailey.
I congratulate my right hon. Friend the Member for Don Valley (Caroline Flint) on securing this debate. I say to her personally, as a friend, that our Front Bench is weaker for her not being on it, and I am glad that both she and my hon. Friend the Member for Sunderland Central (Julie Elliott) are serving our party as chairmen of our Back-Bench committees.
The future of clean energy investment in the UK is now more at risk than at any other time in history. The decisions to end subsidies for onshore wind early, to remove the guaranteed subsidies for biomass conversions and to consult on controlling subsidies to solar are putting investment in clean energy at a clear and present risk.
The Renewable Energy Association states that the UK is currently eighth in the world for investment in clean technology. When the companies and investment firms interested in clean technology look at the UK and compare us with France, Germany, China and America, the question must be asked: does chopping and changing strategy really inspire confidence? It is not just investment and companies that have been put at risk. In pursuing short-term decisions rather than long-term interests, Ministers have harmed the wider economy.
It is not as if the Government do not know that. In 2012, the BiGGAR Economics report, “Onshore Wind: Direct and Wider Economic Benefits”, for the Department of Energy and Climate Change found that, if different decisions were taken, onshore wind could be worth £1.18 billion in gross value added by 2020 and an extra 17,900 jobs could be created. That is in addition to the 19,000 jobs and £1.7 billion in GVA that onshore wind already supports in the UK economy, according to figures from RenewableUK. Equally, the removal of subsidies from onshore, biomass and solar suggest that there will be higher bills in the long run, because onshore wind is the cheapest method of achieving our 2020 obligation and solar the second cheapest. Any other method of achieving greenhouse gas reductions in the UK is likely to result in higher bills, not next year but for the next 20 years.
However, although encouraging investment in solar, wind and biomass by creating a stable and consistent environment will go a long way, the clean energy sector in the UK has no future without nuclear power. Although I am pleased to note that Ministers are taking action to replace the UK’s provision of nuclear energy by 2030, and then to dramatically increase it by 2050, I question the investment decisions.
While the UK accepts investment from China and France for new uranium-based reactors, India is preparing to build new thorium-based reactors. Thorium, unlike uranium, cannot be weaponised and reactors using it have a significantly lower risk of meltdown. Fewer raw materials are needed, and the construction and running costs are lower. Perhaps most importantly of all, the waste from thorium is minuscule and has beneficial applications in medicine and exploration. Indeed, this new technology is so impressive that China and the United States agreed a bilateral project in February to build two thorium reactors on the Chinese mainland. I wonder whether the Minister will commit to asking our new Chinese partners if they would be willing to share not only their investment but their expertise in thorium reactors.
The UK was close to leading the world on clean energy investment, and was quickly catching up with California. Decisions by this Government have put that at risk. Of course we can talk about clean technology, but it really is our last best chance for this country and I am seriously concerned that we are falling behind. I hope that today the Minister brings the type of urgency that we need.
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
I congratulate my right hon. Friend the Member for Don Valley (Caroline Flint) on securing this debate and on her speech. It was a privilege to serve under her in the shadow Energy team in the last Parliament, when we frequently made the case that the Government’s energy policy was ineffective and incoherent. I listened to the Secretary of State’s recent speech—the much-lauded “energy reset” speech—but my assessment of the Government’s energy policy has not changed a great deal.
The Secretary of State said she wanted an energy policy that was affordable, but the Government have banned the cheapest forms of renewables, such as onshore wind, and they have an abysmal record on energy efficiency. She said that she wanted a system that was competition-led, but—I say this as a supporter of nuclear power—Hinkley Point C is at the heart of the Government’s energy policy, and it was certainly not a competitive system that delivered that. She also said that she wanted a system that was “consumer-led”, but the most popular forms of renewables are frequently undermined by the Government while shale gas, which may have a role to play but is frankly unpopular with the British public at the moment, is always lauded as the solution to everything. So the Government’s record is not good.
There are many ways to massage the figures on energy investment; I am sure that we will hear some of them today, or simply a comparison with the past. However, the key question is whether the level of clean energy investment in the UK at the moment is sufficient to meet our needs, and the answer is no.
The situation will almost certainly get much worse today. So much of DECC’s budget has to be devoted to nuclear decommissioning that absorbing the type of departmental cuts that non-protected Government Departments will receive today will require the loss of some very effective programmes. The renewable heat incentive is such a programme, and I can almost guarantee that it will be heavily reduced today.
In addition, no assessment of this country’s clean energy investment needs can be properly made without proper consideration being given to energy efficiency. Energy efficiency is the only way to decarbonise our electricity and heat supply while also making sure that bills are affordable. On that issue in particular, the record of both this Government and the last Government is absolutely appalling.
The coalition Government’s record was very poor because their ambition for the number of measures installed was very poor and, frankly, their policies gave them to the people who were not in the most need. But this Government have managed to surpass the coalition Government by setting an even less ambitious target and, frankly, in some areas they have no policy whatever.
Improving energy efficiency is the urgent priority for UK energy policy. Scotland and Wales have the measures to be able to do a little bit more, but fundamentally the UK Government need to do more on energy efficiency and fuel poverty, or none of their energy policy objectives can be fulfilled.
I will say something specific about heat policy because frequently, and understandably, clean energy investment is devoted to conversations that are simply about electricity generation. However, heat policy is in many ways much more challenging—in fact, it is certainly more challenging— than electricity policy when we consider how we will meet our climate change targets while still giving people the security of supply that they need.
That is because low carbon heat requires us to heat our homes in different ways, and we have to choose from three broad options. First, we can electrify the heat load, but that is very difficult to do because the seasonal demand for heat is so strong. Secondly, we can build heat networks in new-build, but again that is difficult to do because there is less consumer choice with that option and, frankly, to retrofit heat networks is very expensive indeed. Thirdly, we can stick broadly with what we have at the moment, which is the gas grid, but seek to decarbonise some of that gas through green gas, anaerobic digestion and other technologies, and we can also make our boilers even more efficient in the future.
The choice between those three options must be made in this Parliament and at the moment I would say that we are either making no decisions or simply making poor decisions. Cutting carbon capture and storage when this country has the legacy of offshore oil and gas is, frankly, a terrible decision. Cutting the renewable heat incentive when we need to do more, not less, on heat is, frankly, a terrible decision. Banning onshore wind and sabotaging solar are, frankly, terrible decisions. Doing nothing on energy efficiency is abysmal, zero-carbon homes being stopped is appalling, and the green deal being abolished without a replacement being put in place is simply not good enough. I could go on and on, and I tell the Minister that the Government just have to start doing better.
Mr Adrian Bailey (in the Chair)
We come now to the Front-Bench spokespersons. I advise 10 minutes for each spokesperson, and for the Minister, which should give us a couple of minutes at the end for Caroline Flint to sum up.
Callum McCaig (Aberdeen South) (SNP)
We have had a very good debate this morning and I thank the right hon. Member for Don Valley (Caroline Flint) for bringing this subject before us. Her speech summed up incredibly well the issues facing the renewable energy industry and the green industry as a whole, and what can be done to make things better. A lot of the discussion this morning has been about the problems that we have had. That is right, but we also need to start looking at the ways in which we can go forward.
The potential of clean energy in terms of jobs and investment has been summed up by colleagues from all parties in this Chamber this morning. We have also heard from hon. Members from all four nations of the United Kingdom, which shows how important the green economy can be to the United Kingdom. It can provide jobs in areas where previously it would have been thought incredibly difficult to provide employment. As for the opportunities in the future, we have heard about how we may have missed the boat in some regards in terms of manufacturing. To some degree, that boat may have sailed, but there is still huge potential for the future. A number of hon. Members have mentioned the potential loss of jobs in the solar industry if the cuts to the feed-in tariff go ahead; I very much hope that that will not be the case. We have also heard about the untapped potential of solar in Scotland.
The right hon. Member for Don Valley outlined her five-point plan for support for industry. My party would back all those five targets. Over and above those targets, however, there are a few things that I wish to see added to the mix. Last week in the debate on climate change, I raised with the Secretary of State the possibility of establishing subsidy-free contracts for difference for onshore wind. As we have heard from a number of Members, it is the cheapest form of renewable energy and compares very well with what we are looking at with nuclear. Albeit that there are different pressures on the system that are addressed by the technologies, I would rather see the investment going into onshore wind. As the industry suggests, it can be done without subsidy and to block that would be unpardonable. To block that in planning terms when the matter is devolved to Scotland would be ridiculous.
Over and above those five points, will the Minister consider whether the future CfDs can be brought forward from the dates announced last week? Having those CfDs at the end of next year could be damaging for certain projects. Is it possible to extend the lifetime of the CfD beyond 15 years to reduce costs further? The hon. Member for Stalybridge and Hyde (Jonathan Reynolds)—my pronunciation of such places is better than it would be for the constituencies of some of my Welsh colleagues—mentioned energy efficiency. That is often the Cinderella, and efforts on energy efficiency are even further behind than those on renewable heat. It is one of the easiest things, and a lot could be learned from the decision by the Scottish Government to put energy efficiency measures as a national infrastructure priority in Scotland. If that could be done on a UK-wide level, it would not only provide additional funding for Scotland, which would be welcome, but it would help the UK as a whole meet its climate change targets, reduce fuel poverty and boost the economy.
My hon. Friend the Member for Linlithgow and East Falkirk (Martyn Day) mentioned the renewable heat incentive, which is the area where we struggle most in getting the step change required in investment. The technology is there, if it has the support. To see that support stopped would be foolish and very much a retrograde step.
One thing that we need to do, over and above all that, is look at energy storage. We have heard talk about some of the technologies that are there, but we need a proper strategy and support mechanism for storage to take off as an industry. There is huge potential in the green economy as a whole. Storage provides the balancing support that is required for the grid in terms of intermittent generation. I do not know whether the right thing is battery technology, pumped-storage hydro, compressed gas or whatever, but developing a strategy, providing a mechanism and, dare I say it, allowing the market to decide which solution is best is a sensible way of dealing with things.
We have heard a lot about the damage that has been done. The debate timeously falls on the day of the comprehensive spending review. A number of us who support the green economy have great fears as to what will be announced in a little over two hours’ time. The damage has been bad, but the situation is not irretrievable as yet. That may not be the case once the Chancellor sits down later this afternoon. We have heard suggestions from the right hon. Member for Don Valley about the potential for the support mechanism for carbon capture and storage being withdrawn as part of the comprehensive spending review. Frankly, that would not only be a betrayal of the industry, which has invested hugely, but a betrayal of our requirement to take the challenge of climate change seriously. If we are to do what we are required to do, carbon capture and storage provides perhaps the most straightforward solution in adapting to a new way of life. To pull the rug out from under it yet again would be completely and utterly unforgivable.
I will not use my full time to allow more time for others. That time will ideally go to the Minister, although my colleague on the Labour Front Bench may choose to use it himself. So many points have been raised by Members that it would be fitting to hear less from me and more from the Minister.
Mr Adrian Bailey (in the Chair)
I am sure your brevity is much appreciated.
Dr Alan Whitehead (Southampton, Test) (Lab)
It is a pleasure to serve under your chairmanship this morning, Mr Bailey. I congratulate my right hon. Friend the Member for Don Valley (Caroline Flint) on obtaining this important debate and on how she put forward the case that, so far as the future of this country is concerned, the recent attacks on renewable and low-carbon energy have created a difficult set of circumstances for future investment and have reduced Britain’s standing in the world as a good place for renewable investment. That is an extremely important point to make, because renewable energy has enormous potential, and the recent investment in it has started to release that, particularly with solar photovoltaics and onshore wind. As a result of support and assistance, those technologies are coming close to market parity, but the rug is being pulled from under them. The subsidy was not permanent and was decreasing, but, as my hon. Friend the Member for Sunderland Central (Julie Elliott) said, the Government have made it a cliff edge. At the very least, that is being extremely reckless with future investment in renewables in this country.
My right hon. Friend the Member for Don Valley set out a number of the changes that have taken place, and it might be useful to set them out again briefly. We have had the early closure of the renewables obligation to onshore and large-scale solar; planning rules changed to restrict the deployment of onshore wind; the announcement of the end of the feed-in tariff for small-scale solar; the scrapping of pre-accreditation for small-scale renewables; investment tax relief removed for community renewables; the scrapping of the zero-carbon homes target; future rounds of the contracts for difference under the levy control framework delayed; the scrapping of the green deal, as my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) mentioned; and the extending of the climate change levy to renewable energy, effectively placing an additional carbon tax on the purchase of renewable electricity.
My right hon. Friend the Member for Don Valley said that the ending of that exemption represented a grab by the Treasury. Indeed, it can be described no less starkly than that. It also comes close to retrospectivity, as those who benefited from the exemption for the climate change levy expected it to be phased out by the early 2020s. As my right hon. Friend set out, the sudden change now has led to serious difficulties for a number of the companies involved, including Drax and Infinis.
Just the ending of the exemption may have been sufficient evidence for investors to decide that it was probably not a good idea to continue investing in the UK. However, when that measure is combined with all the other measures that I mentioned, it cannot fail but produce a bleak outlook for investors in renewable energy in the UK. As we know, because we are enjoined in the UK to export our renewable investments, it works the other way round; investors are not necessarily looking at coming to the UK only. They can go to invest in other places, and all the evidence is that that is beginning to happen. My hon. Friend the Member for Sunderland Central pointed out that we have now fallen out of the attractiveness index top 10 for the first time since the list began, with a serious decline in our country’s renewable energy attractiveness.
The case is compounded by the fact that not only have events of the past three months weakened investment, but the Government are simply not taking decisions on various schemes for the next period. If the decisions were taken, we could enhance greatly the certainty for investment in renewables and low carbon energy. There is no certainty on the future of the levy control framework, as several hon. Members have pointed out. Not only is there no certainty on the future of that framework post-2020, but the opaque figures we are presented with at the moment for the levy control framework prior to 2020 mean that it is very uncertain whether there will be further auctions of low carbon energy over the next period, and, even if there are auctions, whether the content of those auctions will be sufficiently large to present any serious opportunities for investors to take part in.
My hon. Friend the Member for Stalybridge and Hyde mentioned the Government’s heat policy shambles and the complete uncertainty over the future of the renewable heat incentive. Like him, I fear we may hear further bad news about that incentive this afternoon. As my hon. Friend also pointed out, there is no certainty on the future of the energy company obligation post-2017, and the green deal has been taken out and shot with apparently nothing to take its place over the next period. So that adds up to a really shambolic picture.
John Mc Nally
I should have mentioned it earlier, but I have to declare a family interest in the solar panel business. The right hon. Member for Delyn (Mr Hanson) mentioned that nobody turned up at an official opening. In my own constituency of Falkirk, in Denny, we have the world’s first Difgen, which generates electricity from a natural water source. I opened it with another couple of nonentities: Lord Colin Moynihan and Nicola Sturgeon. The significant difference is that they attended and turned up at meetings and official openings. Although it was a small-scale turbine, it was the world’s first. That signals the step-change that this Government should follow.
Dr Whitehead
I thank the hon. Gentleman for that intervention. That comes under the category of the signals that the Government are giving out, which are almost wholly negative as far as renewable and low carbon investment are concerned.
Ian Lavery
My hon. Friend mentioned the fact that the Government’s energy policies are in complete turmoil and are a shambles. Speculation has it that over the next three years, the number of staff in DECC may be reduced by up to 90%. How will that help the situation?
Dr Whitehead
My hon. Friend puts his finger on a very real fear among many people. Future Government cuts will mean that the Department will no longer be able to function as a Department that can marshal investments together. If that is a consequence of the spending review being undertaken at the moment, it is a serious state of affairs not only for the future of energy management, but for the future of our investment in renewables overall.
My right hon. Friend the Member for Delyn (Mr Hanson) pointed out how much investment has gone into offshore wind, with the emergence of the Siemens arrangement in Hull, the Vestas investment on the Isle of Wight and the appearance of Gwynt y Môr, which he was recently able to attend the opening of, unlike some other people.
The hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) pointed out the possible economic value for the future of renewables. Perhaps it is worth reminding the House that, according to a recent report by Cambridge Econometrics, the economic value of offshore wind over the next 20 years could increase UK GDP by £20 billion a year by 2030. It could create 70,000 more jobs and reduce gas imports by £8 billion, and emissions in the power sector could be three times lower than at present. That is the prize ahead of us as far as investment in renewables is concerned. That is the prize being dashed by what has happened recently and by the longer-term uncertainty that the Government have introduced in terms of support for renewable investment.
The Minister will say—has said, I am sure—that this is okay because our targets for the deployment of renewable energy to generate electricity look as though they might be reached. I remind the House—indeed, my right hon. Friend the Member for Don Valley underlined this point—that we are failing miserably to reach our overall EU energy targets in electricity, heat and transport. The recent letter from the Secretary of State, which came to public attention, indicated how badly we were likely to miss the targets over the next period. The EU is quite happy for us to overachieve in certain areas, even if we underachieve in other areas. The idea that because you have achieved in one area, you can then drop the baton in all the other areas and not worry about it seems a further misunderstanding of the task ahead of us.
Mr Adrian Bailey (in the Chair)
Order. Will you address the Chair? I would also be grateful if you could wind up as I want to give the Minister an appropriate amount of time to respond.
Dr Whitehead
Indeed, Mr Bailey. I was doing exactly that.
Finally, I want to emphasise the importance of the decisions that we take in the near future for our future energy supplies, and how important this debate has been this morning. I look forward to hearing from the Minister what she intends to do to get us back on track as far as these important investments are concerned.
The Minister of State, Department of Energy and Climate Change (Andrea Leadsom)
It is a great pleasure to serve under your chairmanship, Mr Bailey. I add my congratulations to the right hon. Member for Don Valley (Caroline Flint), who has done so much. She really does feel passionately about the importance of climate change and a clean energy future. I salute her for that.
Last week the Secretary of State set out a clear new direction for our energy strategy, with security and keeping the lights on at its heart. It recognises the need for investor certainty, but also that security is not possible without action on climate change. The system is not delivering for consumers if energy is unaffordable. So clean energy investment is critical to successfully delivering our strategy.
In the Paris climate change talks, the UK will play a leading role not only in meeting our own ambitions for our decarbonisation targets, which are some of the toughest in the world, but in working to influence other nations in being more ambitious about their need for a clean energy future. It is disappointing that so many Opposition Members are pretending otherwise. I believe we have cross-party agreement on the need for ambitious decarbonisation targets.
A key pillar of our new direction is to consult on a shift from unabated coal to gas. Gas produces half the carbon emissions of coal when used for power generation: it is one of the most cost-effective and significant steps we can take in reducing emissions from our electricity sector and sends a very powerful message to the rest of the world about the level of our commitment.
My hon. Friend the Member for Warrington South (David Mowat) absolutely rightly made the point that in Germany and Austria, in spite of a high level of renewables deployment, emissions are increasing because of their use of coal. One of the biggest decarbonisation efforts we can make is to move from coal to gas.
Andrea Leadsom
I am sorry; I will give way in a minute, but I want to make some progress first.
From day one of this Government, our new nuclear programme has been fundamental to our approach to energy security and our shift to low carbon. Industry has set out proposals to develop 18 GW of new nuclear power for the UK, which could deliver around 30% of the electricity we will need in the 2030s. If built, the power plants will reduce our carbon emissions by more than 50 million tonnes, bringing an estimated £80 billion of private investment into the UK, with about 30,000 people employed across the new nuclear supply chain at the peak of construction.
The hon. Member for Newport West (Paul Flynn) rightly expressed concerns about the security of nuclear. I assure him that both our existing nuclear fleet, which produces around 19% to 20% of our electricity every day, and our new nuclear fleet will benefit from the most stringent regulation from our independent Office for Nuclear Regulation.
Andrea Leadsom
I will not. The hon. Member for Islwyn (Chris Evans) said we should be looking at thorium reactor research, and I assure him that we are doing so.
Mr Adrian Bailey (in the Chair)
Order. It is for the Minister to decide whether she gives way. There are obviously time constraints.
Andrea Leadsom
Mr Bailey, I am trying to respond to Members’ points. If I give way to each Member on their individual point, I will not be able to respond to them all. I do apologise, but there is no time to give way to lots of Members.
I turn to renewables. We have been very clear that they have an important part to play alongside other technologies in our clean energy mix. I am happy to agree to the request from the right hon. Member for Delyn (Mr Hanson) that I welcome the decarbonisation impact of renewables. We are of course all delighted at the enormous success of the industry, but that does not mean that subsidies can continue as they were. The costs of renewables have come down significantly, and as the technologies mature it is right that they stand on their own two feet. That is why we are taking action on subsidies for onshore wind and solar, technologies that will be cost-competitive through the next decade.
The hon. Members for Sunderland Central (Julie Elliott), for Paisley and Renfrewshire North (Gavin Newlands) and for Stalybridge and Hyde (Jonathan Reynolds) all mentioned the important issue of fuel poverty, on which there was a debate in this Chamber only yesterday. All Members must recognise that the subsidies for renewable technologies are paid for by precisely those people who are struggling with fuel poverty, so excess subsidies simply cannot be afforded.
Take onshore wind, a technology that has deployed very successfully to date—so much so that without action there would be a risk that it would deploy beyond the 11 GW to 13 GW range we set out for 2020, which would have added more to consumer bills. That is what our manifesto commitment set out to address. Even with action, we expect to deliver more than 12 GW by 2020, comfortably within our range and enough to meet our ambition to deliver 30% of the UK’s electricity with renewables by 2020.
Similarly, more than 8 GW of solar is already deployed and even with the cost controls we are proposing, we expect to have around 12 GW in place by 2020. Evidence-gathering on costs and deployment-monitoring suggested that action was needed right across the range in solar, including for below 5 MW. There was a risk of projects being over-compensated and of adding to the overspend that we were already projecting for the levy control framework. We have consulted on proposals to constrain solar further under the renewables obligation and on changes to the feed-in tariff scheme more broadly.
The hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) asked for more liaison with the Welsh Government on how we will meet our EU decarbonisation targets. We speak regularly with the devolved Governments, but I will ensure that those specific points are made. We are looking carefully at the more than 50,000 responses to the feed-in tariff review and will set out our final approach to all schemes by the end of the year.
On the future for renewable electricity, we are continuing to listen to ideas from the renewables sector about how we can best ensure a level playing field for established renewables to compete with other generation technologies. For example, some stakeholders have suggested the concept of a market-stabilising contract for difference. We would certainly welcome further industry views on that. Being tough on subsidies allows us not only to keep downward pressure on consumer bills, but to direct support where it is needed most: among the less established technologies. For example, it is right that we build on our world-leading position on offshore wind, with more than 5 GW already installed and plans for that to double by 2020.
Last week, the Secretary of State gave real certainty to the sector by setting a very clear challenge: continue to reduce costs quickly and we could support up to 10 GW of new offshore wind in the 2020s. If those conditions are met, we will make funding available for three auctions in this Parliament. We will set out more detailed plans in due course, but we plan to hold the first of these auctions, open to less established technologies, by the end of 2016. I acknowledge that the SNP spokesman, the hon. Member for Aberdeen South (Callum McCaig), said that he would like that auction to be sooner rather than later, but I have heard opposing views from industry. Some companies would like the time to get into a position to enter the first auction, so would like it to be delayed. There are always winners and losers.
As well as action on electricity, it is vital that we change how we use heat to warm our homes and buildings, and how it is used for industrial processes. Heat accounts for about 45% of our energy consumption and a third of all carbon emissions, so different approaches need to be tested. There are technologies with great potential—such as district heating, biogas, hydrogen and heat pumps—but it is not yet clear which will work at scale.
We have to develop a long-term plan that will keep down costs for consumers. We will set out our approach next year as part of our strategy to meet our carbon budgets. The hon. Member for Linlithgow and East Falkirk (Martyn Day) mentioned the value of the renewable heat incentive, and I entirely agree that it has been a valuable policy. As he knows, we will be setting out our plans later today in the spending review.
Looking further forward to innovation, we need to keep an eye on the horizon for promising future developments. Some of the solutions to the challenges we face may right now be just an idea on a drawing board or not yet even exist. There are technologies with great potential, such as nuclear, offshore wind, demand response and storage. In some areas, the UK is a world player in the development of technologies; in others, the challenges we face will require technical solutions specific to the UK, so we remain committed to supporting innovation.
Department of Energy and Climate Change funding is already helping to develop exciting new technologies with great potential, in areas such as energy storage, low-carbon transport fuels and more efficient lighting. Those and many more examples point to the creation of new industries and new jobs in the UK, so it is right that we remove the barriers to their development. The hon. Member for Falkirk (John Mc Nally) mentioned the importance of storage, and I completely agree with him that it could transform the intermittency of some renewables.
To conclude, investors need clarity on our strategy for clean energy, and that is what we have now given them. New nuclear, new gas, existing and new renewable technologies will all help us to meet the challenge of decarbonisation in the power sector. We will set out our approach to heat next year as part of our wider strategy on carbon budgets, and we will continue to lead the way on innovation by pioneering the discovery of clean and cheap technologies for the future. We have a plan, and it is to deliver affordable, secure, low carbon energy for today and for generations well into the future.
Caroline Flint
We have certainly heard from all those who participated in this debate what a breadth of knowledge there is throughout the House. Everyone who spoke focused on the opportunities for jobs, skills and investment in their communities. When it comes to debates on climate change, it can too often be the usual suspects from the various green groups who take part. I have to say that I was saddened to hear the Secretary of State refer to some of those people as some sort of anti-capitalist pressure group arguing on these matters. The truth is that we are here today to stand up for British jobs and British investment.
It has been a bit like being in a comeback band, what with my hon. Friends the Members for Sunderland Central (Julie Elliott) and for Stalybridge and Hyde (Jonathan Reynolds) being present, although I am afraid we are missing that very good former Member, Tom Greatrex. There was a great contribution from my right hon. Friend the Member for Delyn (Mr Hanson), as well as from my hon. Friends the Members for Islwyn (Chris Evans) and for Newport West (Paul Flynn), although I might disagree with the latter on nuclear. I am also glad to have the support of the hon. Member for Warrington South (David Mowat); I actually agree with some of what he said about Europe and the decarbonisation target, but the EU submission for the Paris conference sets a target for the reduction in emissions of at least 40%.
What is today about? It is about jobs. Over the past few years I was helped greatly by my hon. Friend the Member for Southampton, Test (Dr Whitehead), who supported me in my previous role. Who said this:
“We want the words: ‘Made in Britain’, ‘Created in Britain’, ‘Designed in Britain’ and ‘Invented in Britain’ to drive our nation forward—a Britain carried aloft by the march of the makers”?—[Official Report, 23 March 2011; Vol. 525, c. 966.]
It was the Chancellor of the Exchequer. I could not agree more, but instead we have seen fragmented and retrograde policies that have harmed this important sector. What is so wonderful about the clean energy sector? It is a one nation industrial sector. It reaches out beyond London and the south-east. It is a contributor to balancing our economy, and investment in it is more evenly distributed compared with other sectors.
Motion lapsed (Standing Order No. 10(6)).