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The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Michael Shanks)
I am tempted to say that, although this debate has been great, it has gone on for so long that Ms Jardine has turned into Mr Betts, so I did not get the chance to congratulate her on her new job.
Mr Clive Betts (in the Chair)
I ask the Minister not to comment on the benefits of that.
Michael Shanks
I won’t. Hopefully, it was not the upcoming speeches from me and the shadow Minister that drove her from Chamber. In any event, it is a delight to be here.
I thank the right hon. Member for Orkney and Shetland (Mr Carmichael) not just for securing this debate and the customary way that he introduced it, but for the engagement we have had since I came into this post on this issue and many others. He is a great champion not just of marine renewables, but of Orkney and Shetland. In fact, in the last debate we had in this Chamber, he declared that God came from Orkney and Shetland. I am glad that we did not get into the theological nature of the debate this afternoon.
I thank all hon. Members for their contributions to this wide-ranging debate. I pay tribute to the various policy teams and organisations that have clearly done a very effective job of getting a consistent set of lines out to Members of Parliament; they have certainly earned their salary this week. Those are important points, and I will address each of them.
As hon. Members have said, the sector has enormous potential relating not just to energy outcomes, but to the many positive opportunities in skills, supply chains and innovation. The UK can export that innovation to the rest of the world. I will say at the very beginning that the Government are hugely supportive of marine energy, and we want to do what we can to support it.
I will start by giving some context on the Government’s position. As Members will be aware—many have raised it today—we published the “Clean Power 2030” action plan just before Christmas. That was an important step in providing some considerable detail on how the Government will deliver on our mission of clean power by 2030, which is hugely ambitious but achievable. It picks up on some of the strands that Members have raised this afternoon, including how we will deliver more effective grid connections and connections reform, as well as look at the planning system and consenting. It is about all the various things that Members have raised that hold back so much of the delivery of such projects across the country.
Clean power by 2030 is not some ideological project, as the shadow Minister, the hon. Member for West Aberdeenshire and Kincardine (Andrew Bowie), and others in the Conservative party might like to suggest. It is a critical pathway for how we deliver energy security in the long term; all our constituents have been facing a considerable cost of living crisis as a result of us not having home-grown energy security. The clean power mission is about ensuring that we not only have that energy security but tackle the climate crisis and deliver economic growth. I make no apologies for the fact that we are a Government moving at pace, because it is important that we grasp the opportunities for the implementation of both marine technologies and the many other innovative technologies that Britain can be a world leader in delivering. It is also our best opportunity to deliver cheaper energy for people across the country.
I want to pick up specifically on the point made by the hon. Member for South Devon (Caroline Voaden) and the shadow Minister on the clean power action plan. It is right to say that marine renewables are not in the top lines of the pathways to clean power by 2030, because we do not think that that technology is quite at the point where it will be deployed at scale to help us to achieve that mission. That does not mean that we do not hope that projects will come onstream before 2030.
Although we are sprinting to deliver clean power by 2030, that will not be the end of the journey. By 2050, we estimate that the electricity demand in this country will have doubled, so this journey will require us to harness all possible technologies to continue to expand our energy supply over the coming decades. That is where I think marine renewables will start to play more of an important role, as they get past the commercialisation challenges and their price comes down, and as we have some more confidence in the technology.
Liz Saville Roberts
I do not know whether the Minister will touch on the Crown Estate, so I am taking the opportunity now. On the point about electricity demand doubling, there is such potential in areas such as Wales and Cornwall, if it so wishes. The concept that the Crown Estate should be so centralised in the United Kingdom works badly in the interests of not only Wales but areas such as Cornwall. What does the Minister tell his Welsh Labour colleagues about why that issue cannot be devolved, when it would make such a difference to our local economies?
Michael Shanks
I will touch on the Crown Estate later in my speech. On that specific point, I am afraid that I fundamentally disagree with the idea that devolving the Crown Estate is the answer, and I take issue with the suggestion that the Crown Estate’s considerations in Wales somehow come from Whitehall. I have met a number of representatives of the Crown Estate, and they are in engaged with the Welsh Government and with communities in Wales. If we can do more on that, I am very happy to reach out to the Crown Estate, although I am not directly responsible for it and it is not accountable to me. Of course, it has published a number of strategies recently and there is more coming on the long-term vision for the Celtic sea and other parts of the Crown Estate in Wales. It is about partnership work, which includes not just bringing together the Crown Estate but how we look at the planning system and consenting, as well as the strategic spatial energy plan more broadly to plan for the long term. I will come back to some of those points later.
Although marine renewables are not at the centre of that clean power action plan to 2030, they will hugely benefit from the actions that we will deliver through it, not least on grid connections. Grid connections are all about future-proofing the grid in this country so that it can meet the demand of the future, and prioritising a grid queue that has got out of control with over 700 GW waiting to connect, which is simply not deliverable.
I would like to turn to the issue of funding, but first I wish a happy birthday to the hon. Member for Taunton and Wellington (Gideon Amos), who does not look a day over 21—but that is the last time I will pander to the Lib Dems. He raised a point about Great British Energy, as did a number of other hon. Members, many of whom I cannot help but notice did not vote for it, but now want it to be headquartered in their constituencies and deliver significant amounts of funding. Great British Energy will play a role in this space. It is our first publicly owned energy champion, and it will deliver and deploy clean power across the country and help with some of the innovation and development work.
Marine renewables are exactly the kind of technology that Great British Energy might invest in at an early stage and have a significant impact on, rather than technologies that are at a more confident stage. Hon. Members may not have had the opportunity to reach out to Great British Energy—the Bill is still going through the House of Lords, so it does not technically exist yet—but the start-up chair, Jürgen Maier, has had a number of meetings across the UK, has engaged on questions about a whole range of technologies and is keen to continue to do so. It will be for Great British Energy, as an independent company, to make its own investment decisions based on a whole range of factors, including the return on investment potential, but I see marine renewable technology as a potential benefit for it.
We think that tidal stream energy will play a significant role, particularly beyond 2030. As many Members raised, tidal stream will bring balancing benefits to a future electricity system that will have renewables at its heart. The balancing role that tidal can play—as a baseload, in the traditional way of thinking about the electricity system—would be important. Currently over half of the world’s tidal stream deployment is situated in UK waters. However, this Government want to go further and faster, as the technology has huge potential.
Aside from having one of the world’s best tidal resources, the UK also hosts world-leading marine energy hubs. Many hon. Members spoke about the EMEC. I have been pleased to speak to the EMEC over the last few months; the Minister for Climate, my hon. Friend the Member for Bristol East (Kerry McCarthy), visited recently and I hope to get to Orkney to do the same at some point.
When we came into power, the Government took the contracts for difference option that had been started by the previous Government and increased the budget to try to get as many projects as we could over the line. That led to a 50% increase in the ringfence for tidal stream to £15 million in the last allocation round. That demonstrated our commitment to the technology and ensured that 28 MW of tidal stream was secured in allocation round 6, including 9 MW for projects based in Orkney.
Mr Carmichael
The creation of the ringfence in AR4 had an absolutely transformative impact, so my sense is that meeting the industry’s request for a much bigger ringfence in AR7 could do similar. I am not expecting the Minister to tell us today whether that is the direction of travel that the Government are intending to take—although he is welcome to—but could he at least tell us when we might get an answer on that?
Michael Shanks
The right hon. Gentleman makes an extremely important point. One of the things we announced before Christmas in the clean power action plan was the broad outline of where we see allocation round 7 progressing this year, alongside the clean industry bonus. We will be saying more about that in the weeks ahead when we launch the initial information on what it will look like, but I am glad that the right hon. Gentleman is not surprised that I cannot announce anything today about what ringfences might be in place.
It is a tricky balance. The aim of the CfD and the reason that it is effective at what we want it to do is that it has to balance the deployment targets that we want to see with the critical role of delivering value for money for those who will end up paying for it—the consumers and all our constituents. Ringfences have an important role to play, but there is a danger that a ringfence could lead to us paying significantly more for a particular technology than we might want to.
Mr Carmichael
The Minister is being very generous. Actually, the setting of the ringfence is a process that could be significantly improved by the taskforce being set up, as that would allow the Government to understand what is going on in the industry, which improved understanding could inform decisions such as the setting of the ringfence.
Michael Shanks
The right hon. Gentleman is determined to move me more quickly through my speech; I promise that I will come on to the taskforce. He is right that the more visibility we have of projects that might bid, the more aware we can be of what the sizes of ringfences and budgets for each pot in the CfD might look like. A range of factors makes that complex, such as whether projects are at final investment decision stage, or whether planning and consent are in place to allow them to bid into the auctions. There are many factors, but the visibility point is well made. On ringfencing, I hear what hon. Members have said and what has been passed to our Department over the past few months, but we will seek to balance the needs to deliver deployment and to ensure value for money when making these decisions.
A number of hon. Members raised the issues of licensing and consenting, which are at the heart of our aims for reform of the planning system. We want to continue to have a robust planning system in which communities have a voice, but we also want to move much faster in making decisions, so that projects are not held up for years on end.
Andrew Bowie
The Minister is being very generous, and I apologise for taking his time, given that I have just spoken. He talks about reforming the planning system so that projects can be built faster. Obviously, a lot of the projects we are speaking about are in Scotland. Can he update us on discussions with the Scottish Government about reform of the planning and consenting provisions in the Electricity Act 1989, which are seen by some—not by all—as an additional burden for companies seeking to develop such projects north of the border?
Michael Shanks
I am grateful for the shadow Minister’s raising that point, because that is an important piece of work that we have been moving forward. With the Scottish Government, we launched a consultation, which ran for four weeks, on how the consenting process could be reformed, so that we can change the 1989 Act in a number of key areas. I think the consultation closed a couple of weeks ago; the responses are now being analysed, and we will bring forward legislation in due course.
That is a good example of partnership working with the Scottish Government on attempts to deal with some long-running issues. Across the UK, the key point is that the aim is not somehow to reduce the burden of planning where there are still opportunities for affected communities to contribute; it is about saying that it does not serve communities, developers or the Government well when decisions are held up for years on end. That is part of how we will speed these things up.
Other hon. Members mentioned the supply chain, which is incredibly important. That is why we as a Government have said that we are not agnostic about industrial policy in this country; we want manufacturing to come to these shores. It is encouraging to see that there is already significantly more UK content in tidal stream projects than in some other technologies that we have in this country. That is a real positive. I hope that we can continue that and learn from it for offshore wind and other technologies that we want to expand.
The right hon. Member for Orkney and Shetland and many others asked about setting up a taskforce. I am very open minded about that, and when I met the Marine Energy Council just before Christmas to discuss this and a number of other matters, I said that. I cannot quite remember how many taskforces I am currently chairing—we do like a taskforce, and they are important —and I am extremely grateful for the expertise of those who give up their time to come into Government, to help us to shape action plans and route maps and to understand what the challenges are. I am open to the suggestion, but if we set up something like that it must have a clear purpose, and at end of it we want a set of actions that Government and others can drive forward. That is what my officials are working on, and I am happy to speak to the right hon. Gentleman more about it.
On the technology point, the Government’s position is that overall the wave energy industry is at research and design phase. That is a key step on the journey to potentially achieving commercial viability, but we do not think it is quite there yet. We are aware that it has huge potential, given the nature of this country, and significant strides are being made to take it forward. My officials are regularly in touch with those in the sector and are being kept up to date on the latest developments. We hope that all these technologies will become extremely successful and the Government are happy to do whatever we can to support that.
The hon. Member for Strangford (Jim Shannon) said that he had not had time to write a speech but then, as always, he made a very eloquent contribution. I think that he and the hon. Member for South Devon made the same point about partnership, which is critical to all of this. The coast around this country offers enormous potential in our energy future, in floating offshore wind, in which we are already a world leader in so many ways—I hope we will continue to be so—and marine renewables, in the economic programme that we have already, and particularly in fishing. The point was strongly made that this is not about competing priorities, although it might seem like that; it is about how we can bring industries together to ensure that they co-exist. We can get real strength from that.
Jim Shannon
I thank the Minister for his comprehensive reply to everyone who has spoken in the debate. If he is not able to reply to this question right away, I am happy for him to come back to me in writing. I know he is keen to engage with all the regional Administrations, and I wish to make a plea for the Northern Ireland Assembly. I know it was difficult because the Assembly was not meeting, but the Assembly is back and playing the game again. Has he had the opportunity to talk to the Department for the Economy, to see how we can move forward collectively and in partnership?
Michael Shanks
That is an incredibly important point. I told the hon. Gentleman the last time we spoke on this topic that I am going to Northern Ireland soon for the next inter-ministerial working group for Energy Ministers from around the UK; I think that is in March. I hope that while I am there I have the chance to meet different organisations, because I am keen to understand how the energy system in Northern Ireland works, given the separate grid. I do not have responsibility for energy policy in Northern Ireland but I want us to work together and learn from each other.
To conclude my remarks, I am, first of all, grateful—I thought that this debate might finish at 3 o’clock and I was going to have to sum it all up in 30 seconds, but I have a little more time. I thank right hon. and hon. Members again for their contributions. I have come away from every energy policy debate in this place enthused by the real cross-party consensus on so much of this. There is much on which we do not agree, but on a lot of this we do. We need to hold on to that consensus because achieving the future economic and energy benefits of marine renewables will require them to outlive any particular Government. That consensus has been a strength over the past few decades and I hope it can continue. I have always said that I do not have any monopoly on wisdom on these questions and I am keen to hear and learn from projects in constituencies across the country.
It is clear that there is huge excitement in the sector. I hope that we can harness that and drive forward the development of these technologies in the future, and remove the barriers there at the moment. Those barriers will be removed even if they are not specifically barriers to marine projects, although I think marine projects will be affected by many things, such as planning and grid reform, to unlock the immense potential that we have across this country. I thank the right hon. Member for Orkney and Shetland. I hope to return to his constituency soon to see many of these projects and learn more about them. Together we can drive far more marine renewables in the UK, delivering value for money for households and harnessing the abundance of clean energy in this country.