Renewables Obligation Certificate Scheme

Wednesday 5th March 2025 Westminster Hall

[Dr Andrew Murrison in the Chair]

14:30

[Terry Jermy (South West Norfolk) (Lab)]

I beg to move,

That this House has considered the Renewable Obligation Certificate scheme.

It is an honour to serve under your chairmanship, Dr Murrison. I rise for the first Westminster Hall debate in my name, to speak on an important issue in my constituency: the renewables obligation certificate scheme and the future of our biomass-fuelled power station, which is supported by it. This is an important issue, although I must confess that I had rather hoped that my first Westminster Hall debate would be on something more glamorous than the burning of chicken litter.

Thetford power station, in my constituency of South West Norfolk, is Europe’s largest poultry litter-fuelled power station and has successfully generated green energy for over 20 years. Being a proud Thetfordian, I remember the power station being built, back in 1999. Local people were concerned about the possible noise, about the smell—of course—and about traffic. Those concerns are long gone: the site is now a proud feature on the landscape and is important to our local economy. It produces home-grown electricity, contributing to our energy security, and it is crucial to the farming community across East Anglia.

There are 54 biomass sites in the UK. Were ROCs to expire with no replacement, around 50 of those sites would be forced to close. Critically, the sites at risk of closure are those that provide additional benefits beyond power generation, namely the safe and efficient disposal of waste wood and—as in our case—agricultural residues, preventing waste from being spread on the land or sent to landfill sites. Our power station also has an important role in supporting the environment and efforts to achieve net zero. The station’s output reduces CO₂ emissions by 85,000 tonnes each year by displacing the equivalent amount of generation from gas-fired plants. That is equivalent to taking 33,000 cars off the road.

Thetford power station provides an important source of renewable electricity by burning some half a million tonnes of poultry litter. It provides an income for farmers and, crucially, a means to deal with that waste without the environmental cost. Given its importance to the farming community, I was pleased to welcome the Minister for Food Security and Rural Affairs to the site just a few weeks ago. Farmers receive a fee for the waste that they provide and it is a welcome source of income for an industry with significant challenges. Importantly, it gives them a convenient means to dispose of a waste product without needing to spread it on the land. There is huge concern about the impact on rivers and streams if more such waste were to be spread in that way.

We have numerous sites of environmental significance across my South West Norfolk constituency, including sites of special scientific interest and special areas of conservation, but I am particularly proud that it has so many rare chalk streams. Sadly, they are all suffering from pollution and sewage discharge after years of inaction by the previous Conservative Government. We simply cannot risk the inevitable environmental consequences of further spreading of waste.

This Labour Government are undertaking some fantastic work, getting tough with the polluting water companies and addressing sewage discharge, but significant issues remain. Phosphate and nitrate pollution from agricultural operations is of particular concern. That includes poultry litter-related run-off from the numerous poultry farms across Norfolk and neighbouring Suffolk in particular. That pollution would increase if a key means of dealing with that waste was removed.

It is worth mentioning that biomass sites aid disease prevention by incinerating poultry litter, which is one of the primary vectors for transmission of avian flu. Norfolk is the county with the second greatest number of chickens in the country and we are No. 1 for turkeys. Bird flu is obviously a main concern, as we have seen over the past few months and years, so any methods to reduce transmission are to be warmly welcomed. The Government’s clean power 2030 action plan understands that sustainable biomass plants such as Thetford are key to helping to deliver those environmental goals and targets, decarbonising many sectors of the economy. I look forward to hearing from the Minister today about how sites such as Thetford fit into that plan.

In addition to its importance to farming and the environment, our local power station, underpinned by ROCs, is crucial to our local economy and is an important site for jobs. Up to 100 good, well-paid jobs are supported by the station, alongside a greater number of jobs in the associated supply chain, particularly in haulage. On a recent visit with the Minister for Food Security and Rural Affairs, I was thrilled to meet a number of apprentices on site and learn about their training programmes, growing the engineers of the future.

Why are we here today? The previous Conservative Government ran a consultation in July 2023 on ROCs, yet they did not publish an outcome or response, as confirmed by the House of Commons Library. That is a real shame, because the clock is ticking, with so many certificates set to begin expiring from 2027, at a time when we need to use all levers to produce electricity and achieve both energy security and net zero.

We know that renewables offer us security that fossil fuels cannot. Under the Labour Government in 2002, the renewables obligation was introduced as a support scheme for renewable electricity projects. The renewables obligation legislation placed a requirement on UK suppliers of electricity to get an increasing proportion of their electricity from renewable sources. Bioenergy is now the second largest source of renewable energy in the UK, generating 12.9% of the total electricity supply in 2021. When combined with carbon capture and storage, bioenergy may deliver negative emissions, which could contribute to the UK’s legal commitment to reach net zero carbon emissions by 2050. There has never been a more pertinent time to ensure that renewables are at the heart of tackling systemic problems.

To conclude, renewables obligation certificates, in some shape or form, are crucial to the continuation of the biomass-to-energy industry in the UK. In the case of Thetford power station, and indeed elsewhere, that industry underpins hundreds of jobs, and is important to local economies. For us, what happens to that biomass if it is not burned? That is of great concern. I urge the Minister to confirm whether the Government are committed to the renewables obligation certificate scheme, and therefore the future of not just Thetford power station, but other, similar biomass facilities across the UK.

14:37

[Jim Shannon (Strangford) (DUP)]

It is a real pleasure to serve under your chairship, Dr Murrison. I thank the hon. Member for South West Norfolk (Terry Jermy) for setting the scene so well. He said he hoped his first debate would be more exciting, but this a practical debate. It is a debate that his constituents want him to focus on, and the reason he has secured it is because he is working on their behalf. I always found that I enjoy this particular type of debate because they really matter to people, and they can relate to them. There has been a focus on constitutional issues, war across the world, and all those things, in this last week—or 10 days, or two weeks, or even the last three years—but people back home in the hon. Member’s constituency will want him to pursue debates such as this one, so well done to him.

The hon. Member outlined the case for the renewables obligation in his introductory speech. I want to give a perspective from Northern Ireland. I am pleased to see the Minister in her place; before the election, she and I often sat on the Opposition Benches, and would have been alongside each other when it comes to asking for things. Today, I will be asking the Minister about some things in relation to discussions about the renewables scheme and the contracts for difference scheme, which we do not have in Northern Ireland.

There is a willingness in the Government approach to renewables, as there should be. It is important to do this as collectively as we can, to ensure that people can get the best value for money in their energy costs, so it is a pleasure to discuss these vital matters, and to consider the whole of the United Kingdom of Great Britain and Northern Ireland in this conversation.

The renewables obligation scheme was introduced in 2002 to incentivise large-scale renewable electricity generation in the United Kingdom. It was phased out or closed in 2017, in favour of the contracts for difference scheme. For me, that is the key issue, because currently the CfD scheme does not apply to Northern Ireland, although before the election I tried to encourage the previous Government to extend it. I know that this is a devolved matter, but will the Minister please initiate some conversations with the relevant Minister in Northern Ireland—I think it is Gordon Lyons—to see how we can work together to progress the CfD scheme and include Northern Ireland? There is some work for us to do here at Westminster to get this over the line, so it would be helpful if the Minister did that.

In the past, I have worked closely alongside colleagues on this issue and I hope to do so again in the future, particularly with the inspiration and help of the Minister, because it is important that Northern Ireland has the same opportunities as the rest of the United Kingdom in relation to renewable energy.

Renewable energy is a path that we must pursue, and there need to be targets for us to achieve—the hon. Member for South West Norfolk outlined that as well. Policy direction for Northern Ireland is important and there have been movements to ensure that companies there can benefit from renewable energy incentives. Agencies such as Invest Northern Ireland or the Department of Agriculture, Environment and Rural Affairs, and local councils, including my own, can apply for some smaller grants and loans. However, it is important to note that these grants and loans are not on the same scale as the renewables obligation certificates scheme. If we were part of that scheme, we would be in a much better position.

My constituency of Strangford has an important and, I believe, sustainable poultry sector. Throughout my life, there have been poultry houses all the way down the Ards peninsula, where I live, and indeed around Newtownards town as well. In his opening speech, the hon. Member for South West Norfolk focused on a project that could play a role for poultry farmers in Northern Ireland.

To be fair, at this moment in time avian flu has once again cast its shadow all across Northern Ireland. In every part of Northern Ireland, there is a shutdown; there is no movement of poultry, and poultry farms have to keep all their birds indoors as a result of the avian flu scare. That is the right thing to do. At the same time, if we are to look beyond the avian flu crisis in Northern Ireland, which is fairly acute, we have to consider using the hon. Member’s idea in Northern Ireland. Such projects have been discussed in the past, but never really got anywhere, so maybe it is time to encourage Northern Ireland’s Department for the Economy to do a wee bit more.

In 2023, the Department for the Economy consulted on a new energy strategy action plan, but nothing formal has come from that. I know that the Assembly has only just got up and running again—it is good that it is up and running again—but it is time to focus on the renewables obligation certificates scheme and on green energy, and on the potential benefits that we can achieve in the future.

Our renewables projects in Northern Ireland relied on funding and schemes in order to succeed. However, I find it very disheartening that Northern Ireland has not been able to adopt a new scheme since the closure of the prior one. We need a new emphasis and there is a real need for Ministers back home and for Departments back home to co-ordinate their strategy and the way forward with the Minister here in Westminster.

[Mr Angus MacDonald (Inverness, Skye and West Ross-shire) (LD)]

In rural Britain, particularly rural Scotland, the cost per kilowatt to heat a house is about 24p, whereas those on mains gas in the city pay about 6p, so those using renewable electricity to heat their houses pay four times as much as those using mains gas. The renewables obligation certificate scheme is an important part of all this. Basically, rural Britain is getting absolutely stuffed on the cost of energy, so anything we can do to help those in rural areas is important. Does the hon. Gentleman agree?

[Jim Shannon]

I certainly do, and I thank the hon. Gentleman for his intervention. I represent the rural constituency of Strangford; indeed, most of Northern Ireland is rural, although there are large population groups in the major towns across the Province. In terms of the price of energy in Northern Ireland, the price oil is the highest it has been for some time, although they said on the news this morning that it would drop. But 68% of households in Northern Ireland have oil as their major source of energy for heating and cooking, so when oil prices rise, energy prices rise—as I suspect they do in the hon. Gentleman’s constituency—which puts us under a bit more pressure than most.

Energy is devolved in Northern Ireland, unlike in Scotland. However, Northern Ireland is an integral part of the United Kingdom, so there must be greater discussion between Westminster and the Northern Ireland Assembly to ensure that we are able to contribute to the net zero 2050 goals. I am reminded by the hon. Gentleman’s intervention of the SeaGen project in my constituency about 20 or 25 years ago, which tried to harness the tidal flows of the narrows of Portaferry and Strangford. At that time, it was not sustainable because of the price of energy, but today it would be. There are many projects we could look towards when it comes to contracts for difference.

To conclude, I look forward to working with colleagues to find a way forward that can benefit us all. The world is progressing, and climate change is a huge issue of major importance to many. The hon. Member for South West Norfolk referred to a project that is critically important for his constituency and that could be replicated across this great United Kingdom. Ensuring that we have a replacement strategy that we can take advantage of would be a positive step forward in achieving our goals. I look forward to the Minister’s contribution and hearing about her commitment. Through further discussion and integration and by working better together, Northern Ireland will not be left behind. Thank you so much, Sir Andrew.

[Dr Andrew Murrison (in the Chair)]

I am grateful to the hon. Member for Strangford for the accolade. Maybe he knows something that I do not.

14:46

[Leigh Ingham (Stafford) (Lab)]

It is an honour to serve under your chairship, Dr Murrison. I thank my hon. Friend the Member for South West Norfolk (Terry Jermy) for securing this debate on a subject that is significantly important to him.

This discussion goes far beyond economic concerns; it is about the future of our energy security, our workforce and our commitment to achieving net zero emissions. The UK has been a pioneer in renewable energy and must continue to lead by example. That means ensuring that the transition to net zero is not just a slogan but a reality backed by practical policies that sustain and expand our low-carbon energy infrastructure.

Stafford is a critical hub for the production of clean energy technologies, supporting local and overseas energy needs. I am proud to have GE Vernova’s largest site based in Stafford, providing more than 1,700 jobs—an incredible investment in my constituency. Last Friday, I met representatives of GE Vernova, whose skilled engineers and craftsmen are dedicated to building the infrastructure needed for a cleaner, more sustainable future. Their work directly supports our crucial transition to net zero, and the decisions we make determine whether companies such as that continue to thrive.

That shift requires clear, stable policies from the Government to ensure that the technologies that companies develop—whether wind, biomass or carbon capture—have a long-term place in the UK energy mix. That is why today’s debate is so important. The renewables obligation has been crucial in expanding our clean energy sector but, as it winds down, we need to plan, to ensure that key renewable power sources, such as biomass, do not fall through the cracks.

As my hon. Friend mentioned, the previous Government never published the outcome of their call for evidence on the end of the renewables obligation contracts, leaving the industry high and dry. I urge this Government to provide certainty for the sector, to ensure that those facilities can continue to operate and contribute to our net zero ambitions. If we fail to support this transition effectively, we risk losing a secure energy source and thousands of jobs that depend on it. I look forward to the Minister’s response on how we can secure a stable and sustainable future for our energy industry.

14:49

[Jenny Riddell-Carpenter (Suffolk Coastal) (Lab)]

It is a pleasure to serve under your chairmanship, Dr Murrison. I congratulate my hon. Friend the Member for South West Norfolk (Terry Jermy) on securing this important debate.

My hon. Friend told us about the role biomass that plays in delivering energy in the UK and specifically in the east of England. I will not repeat what he said, but I will emphasise the valuable role that biomass energy production plays in the UK’s poultry and agriculture sectors, particularly from the perspective of my constituency of Suffolk Coastal. Biomass energy production not only helps to support farms and food security, but plays a crucial role in environmental protection, helping to manage farm waste, preventing the spread of avian diseases and preventing toxic pollution from entering our rivers.

In Suffolk Coastal, our rivers are the jewel in our crown. If biomass energy production were to cease, poultry litter would otherwise be sent to landfill or spread on the land. If it is spread on the land, it causes significant nitrogen run-off into fragile local waterways. That is already happening across the country and is responsible for much of the pollution in our rivers today. In the River Deben, phosphates and nitrates are already a cause for real concern about the river’s water quality, and those nitrates emanate largely from agricultural run-off. If we reduce nitrogen, we reduce the impact of eutrophication, which is visible each summer in the excess growth of algae such as duckweed. Therefore, although biomass energy production plays a role in the UK’s energy creation and in helping to prevent avian diseases, it also plays a critical role in improving the water quality in our rivers.

Biomass operations rely on the ROC scheme, which starts expiring in 2027. It is critical that we support the continuation of biomass energy production to ensure that we not only deliver on our net zero ambitions, but continue to support water quality improvement in our rivers in Suffolk by tackling nitrate run-off.

14:51

[Tim Farron (Westmorland and Lonsdale) (LD)]

It is a great pleasure to serve under your guidance, Mr Murrison. It is also a great pleasure to follow four excellent speeches. I pay particular tribute to the hon. Member for South West Norfolk (Terry Jermy) for his excellent contribution and for securing this important debate. He said it felt somewhat less glamorous to be here talking about chicken poop, but people will say that I have been talking poop for the last 20 years; certainly, as my party’s water spokesperson, I spend half my life in this place talking about the human variety, so chickens makes a nice change. I also belatedly congratulate the hon. Gentleman on his elevation to this place, not least because it has allowed us to deploy Liz Truss elsewhere, in our battle to take down the forces of reaction across the world.

On the renewables obligation certificate scheme, we are right to think about what happens next. The scheme is being phased out by the current Government, with the contracts for difference scheme being its principal successor. For what it is worth, I am proud of the role the Liberal Democrats played in the coalition in trying to move on to a better scheme.

That said, hon. Members have rightly pointed out that letting ROCs disappear without being replaced is a particular problem for biomass. All four Members referred to the impact on their constituencies if that was to happen, and they talked about the jobs the scheme has created in Stafford, Suffolk, Norfolk and in Strangford, in Northern Ireland. They recognised that biomass plays an important part in providing diversification of income for farmers and others, and in using organic waste that might otherwise find itself on the land. Indeed, when I am in this place talking about water quality, we are principally talking about the failings of the water companies, but agricultural run-off is clearly part of the issue, so if we can deal with that in a positive way, that will be a good thing. It would be an unintended consequence of moving on to new and better schemes if we allowed important plants such as the one in Thetford to close, with the impact that that would have on the local economy, because we had not thought through the transition and managed it in an efficient way.

I want to say a few words about how ROCs fit in with the nation’s energy security and about the extent to which they sometimes have perverse incentives. Drax power station in Yorkshire enjoyed just over 9 million renewables obligation certificates last year, at a value of £548 million. The material burned at that site includes biomass that has been imported into the UK, which is often wood pellets, mostly from America and Canada. Drax has previously admitted that some of the wood is from primary or old-growth forests—ancient forests of incalculable value in terms of biodiversity and beauty that would be vital in the fight against climate change if they were not felled. The new contract, I am pleased to say, states that 100% of those pellets must be sustainably sourced, which is something. But it is not organic waste, and there is still something not very sustainable about wood imported from across the oceans and then burned. We want to ensure that we invest in renewable power, so that 90% of the UK’s electricity is generated from renewables by the end of this decade. To do that, we will need to call in all our available resources; we do not want a situation where we are meeting our targets by having renewables in name only.

Members have talked about energy security and the importance of getting to net zero, which is vital. In the last few days—hopefully it is longer than that—we have been waking up to our need to protect our national security on a military footing. Yesterday, in Treasury questions, I raised the issue of our failure to step up to the mark when it comes to food security. Only 55% of Britain’s food is produced in Britain; that is a deep threat to the United Kingdom’s food security, and we need to take action quickly to tackle that by undoing the basic payments cut and scrapping the family farm tax.

We also need to look at energy security. It troubles me that some of those who claim to be very patriotic seem to pour cold water on and be sceptical about the environmental imperative. Even if I cannot convince people of the reality of climate change, and of the need to produce renewable energy for that reason, if we care about our energy security, we should surely care about net zero, which is a way of achieving it. To put it bluntly, Vladimir Putin cannot turn off the wind, the waves or the sunshine in this country.

[Mr Angus MacDonald]

Does my hon. Friend recognise the fact that we have major issues with environmental tariffs being placed on renewable energy but not on the carbon fuel of mains gas? That is really hitting the renewable energy industry and the cost for consumers.

[Tim Farron]

I completely agree. We are talking about incentives that we give to renewable energy generators and providers, but we have an energy market that essentially advantages not just fossil fuels but ones that, to some degree, are in the hands of potentially hostile powers. That is ludicrous for both the environment and our security.

I was pleased to hear Members on all sides of the debate talk about the importance of farmers and farming to the battle against climate change and to clean energy generation. We would love to see a recognition that farmers are primarily food producers but that diversification of businesses and cross-subsidy within them is a good thing. It is right that farmers should be incentivised and encouraged to use their land—for example, by putting solar panels on buildings and land that is not good for food production—so long as that is not displacing good-quality agricultural land.

I want to draw attention to a site near Barrow, which is not in my constituency but next door, in the Westmorland and Furness council area. The council now has a solar farm on unproductive former agricultural land, with the full support of the local farming community. Let us look at the ways in which we can support farmers to do that. I live in a very wet part of the United Kingdom with 1,500 farms within it. Pretty much every farmer has fast-flowing becks and rivers on their land, so why are we not incentivising them to build small but nevertheless powerful hydro schemes? That would be great for the environment and the local economy, and it would ensure that farmers can continue farming.

I sound like a broken record given how regularly I talk about this, but it continues to astound me that the United Kingdom, which has a higher tidal range than any country on planet Earth apart from Canada, does next to nothing with the latent tidal power around our islands. I encourage the Minister to come up with schemes to reward that.

I also want to say a word about grid capacity. A huge barrier to progress with this scheme and those that follow is the fact that 75% of energy sector insiders find timely grid connections to be the biggest single obstacle to growing renewable energy in the UK. To give a sense of the size of the queue, there are £200 billion-worth of projects waiting to be connected to the national grid, and that delays all the benefit that would come with that. We would seek to expand the grid network and unlock those billions of pounds of renewable energy projects through a land and sea use framework that has statutory weight in the planning and infrastructure Bill. That would help us to balance the many competing demands on our land, and the competing priorities of security and self-sufficiency that I mentioned earlier.

Those priorities also include local communities’ experiences, which are important to understand when we are trying to tackle the climate imperative. It is no good building huge energy infrastructure near communities if there is no clear, tangible benefit to them. For example, customers in communities local to such projects should receive energy at a discounted rate. If we build renewable energy schemes on the River Kent or the River Crake, the people of Kendal, Staveley, Windermere and Coniston should benefit from them, at least to a degree. We also want to empower local authorities to develop local renewable electricity generation and storage strategies, because they are best placed to understand where the most and least appropriate sites to place them are.

I return to the issues raised by the hon. Member for South West Norfolk. It is important that ROCs have played a significant part in the transition from fossil fuels to new and renewable forms of energy. I recognise that they have had a big impact on his constituency by creating jobs and ensuring that farmers have additional sources of income. They are part of a range of actions—our arsenal—for tackling water pollution. We must not throw out the good things that ROCs have achieved when we move on to new schemes, which hopefully will make even more progress in our move towards a society run entirely on renewable energy.

[Dr Andrew Murrison (in the Chair)]

I call Opposition spokesman Nick Timothy.

15:02

[Nick Timothy (West Suffolk) (Con)]

Thank you, Dr Murrison—I shan’t promote you any further than that just yet.

I am pleased to respond to this important debate on the renewables obligation certificate scheme. Although the scheme was closed in 2017, its costs remain with us and are a reminder of how difficult it can be to unwind long Government contracts. I congratulate my constituency neighbour, the hon. Member for South West Norfolk (Terry Jermy), on securing this debate, which I believe is his first in Westminster Hall. I am sure he will get to debate more glamorous issues than chicken litter in the future.

Like South West Norfolk, my constituency of West Suffolk has chicken farmers grappling with many of the issues raised by Members, including avian flu, which the hon. Member for Strangford (Jim Shannon) mentioned. I echo what the hon. Member for Inverness, Skye and West Ross-shire (Mr MacDonald) said about the cost of energy in rural areas, which is very often overlooked.

I will not join the commentary from the hon. Member for Westmorland and Lonsdale (Tim Farron) about the predecessor of the hon. Member for South West Norfolk. I did plenty of that in The Daily Telegraph before I was a Member of Parliament. It is pleasing that Suffolk and East Anglia are so well represented today.

We must always be very careful when considering how public money is spent, especially when it comes to subsidies. There are lots of reasons why the Government might sometimes provide public support towards outcomes that are not necessarily the most narrowly efficient, but promote a wider social or local economic good, but they must always guarantee value for money for the families who ultimately foot the bill. Renewals obligation subsidies have fallen short of that standard. Originally introduced in 2002 by the last Labour Government, and closed to new entrants in 2017 by the last Conservative Government, the renewals obligation remains a significant drain on the public finances, providing a fixed rate of financial support through 20-year-long contracts.

[Melanie Onn (Great Grimsby and Cleethorpes) (Lab)]

By the time that the new renewables obligation closed, the cost of large-scale offshore wind had come down by half, allowing contracts for difference to be introduced, which have seen it grow at scale. It has enabled a brand-new industry to start and progress in this country, has it not?

[Nick Timothy]

I will turn to contracts for difference in a moment. We may discuss them in this debate, or perhaps in other fora, but it is important that we are honest with ourselves about the full costs of some of the renewable technologies upon which we have come to depend. With the hidden costs that apply to wind farms, I do not think that we have been quite so honest. That is not a party political point but something that has been true across the party divide. In 2023-24 the scheme cost £7.6 billion, and it will remain high, at £6.9 billion in 2028-29, according to the Office for Budget Responsibility. That proves how dangerous it can be to lock in subsidy schemes under lengthy contracts, with the cost passed on to people’s energy bills.

That is not the only zombie renewables subsidy scheme. Introduced in April 2010, feed-in tariffs were made available for schemes with capacity for 5 MW or less as an alternative for smaller projects, such as rooftop solar panels. Closed to new entrants in 2019, the scheme still sustains 20-year-long contracts, and £1.84 billion of feed-in tariff payments were made last year. Far from saving money, renewables subsidies have come with significant long-term costs.

The phasing out of the renewables obligation and feed-in tariffs is being used by the Government in their efforts to hoodwink the public on the true costs of their net zero policies. The National Energy System Operator’s 2030 report made several highly questionable assumptions about how the Government’s goal of decarbonising the grid will cut energy bills. One of the points made by NESO was that energy bills would fall due to the expiration of the renewables obligation and feed-in tariff contracts, but those contracts will expire regardless of the speed of decarbonisation, so it is misleading to include that as a benefit of the Government’s deeply flawed clean energy plan. We will see costs increase significantly elsewhere, thanks to Government policies.

The renewables obligation and feed-in tariff schemes should be a warning. The Government are consulting on substantial changes to the next round of contracts for difference, which replace the previous subsidy schemes. They include easing eligibility criteria for fixed-bottom offshore wind, as well as extending the lifetime of contracts subsidising renewables from 15 years to 20 years. We are at risk of wasting billions of pounds of taxpayers’ money in a race to meet the unrealistic clean power target.

[Melanie Onn]

The hon. Gentleman is being very generous. What he says is very interesting, but I am not entirely clear where he is headed. Is this a shift in Conservative policy on green industry and the renewables industry, which they have previously championed, or is this just an attack on Labour’s plans because he does not like them?

[Nick Timothy]

I would never suggest that the hon. Lady has tracked everything that I have written through my career, but I have been making these arguments for a number of years. The Leader of the Opposition has made the point that one of the things our party did not get right in government was setting ambitious goals on things such as energy policy without having a clear enough plan to deliver them. My concern, and the concern of the Conservative Front Benchers, is that this Government are making not only a similar mistake but a graver mistake because of the speed and unilateralism of their energy policies. [Interruption.] I can see the hon. Lady smiling, and I hope that is in approval of what I said.

[Leigh Ingham]

To clarify, is the Opposition’s position on the energy transition and energy security that the Government are moving too quickly for our country? Would they rather see a different approach? I am interested in what the suggested approach is, given that we face an imperative in the international context, as others rightly pointed out.

[Nick Timothy]

It is absolutely our position that the Energy Secretary is trying to move too quickly. The plan to decarbonise the grid by 2030 is deemed by many experts to be unrealistic. It is predicated on a report produced by NESO, which itself says that the plan will lead to higher bills, and on calculations based on the carbon price increasing to £147 per tonne. It would be interesting to hear from the Minister whether the Government’s policy is to ensure that Britain’s carbon price should remain lower than the European carbon price for the duration of this Parliament, because the Secretary of State has so far refused to say that.

On the question of security, the Government are in such a rush with offshore wind farms that they are sourcing the turbines from China, and there are big questions about whether the technology in the turbines will continue to be controlled by the Chinese. We are having a debate right now about security and the threats presented by Russia; we could equally be talking about the same kinds of threats from China, and how our dependence on technologies produced by China and energy that is generated using those technologies leaves us exposed to Chinese influence.

By NESO’s own admission,

“Unprecedented volumes of clean energy infrastructure projects are needed to meet the Government’s energy ambitions.”

As long as policy races ahead of technology, costs will inevitably increase for taxpayers and consumers, and that is before we even consider the consequences of the Climate Change Committee’s seventh carbon budget. The committee has recommended a limit on the UK’s greenhouse gas emissions of 535 million tonnes of carbon dioxide, which represents an 87% reduction by 2040 compared with 1990 levels. That is an ambitious goal, but it is one that the committee’s own data shows will come at a net cost of £319 billion over the next 15 years. If we are to debate this, the Government should be honest and open about that fact.

No Government have ever rejected a carbon budget, and the Energy Secretary has so far refused to come to the House to make a statement on the publication of that budget, so perhaps the Minister can tell us whether the Government intend to accept the carbon budget in full. The Climate Change Committee believes that we will need a sixfold increase in offshore wind power, a doubling of onshore wind power and a fivefold increase in solar panels by 2040. To accelerate the growth of renewables at such a pace would require a huge increase in public subsidy.

How do the Government intend to address these climate and energy goals? Can the Government rule out increasing public subsidy under contracts for difference of any kind to reach these goals? By how much will public spending have to rise as a result? By how much will bills have to rise? Will the Minister guarantee that Britain will continue to have a lower carbon price than Europe, and can she still guarantee that energy bills will be £300 lower by the end of this Parliament, as her party promised in opposition?

There are so many questions left unanswered, and so far only silence from the Energy Secretary. That is not because the Government do not understand the scale of the challenge they have set themselves. The Energy Secretary understands it all too well, but he will not admit publicly what his ideological attachment to net zero and his net zero policies mean for us all: nothing less than a revolution in how we live our lives, and the massive expansion of public spending for a system of energy that is less reliable and more expensive in generating power. We need complete clarity, so that the mistakes of the renewables obligation are not repeated. Failure to do so will leave us poorer and exposed to risk and instability in the world.

15:14

[The Parliamentary Under-Secretary of State for Energy Security and Net Zero (Kerry McCarthy)]

It is a pleasure to see you in the Chair, Dr Murrison, as always. I thank my hon. Friend the Member for South West Norfolk (Terry Jermy) for securing this important debate. I think it is a marker of an MP who is going to achieve things for their constituents that they show persistence and an imaginative approach to lobbying on issues that are important to their constituents. The fact that he has already had the farming Minister down to visit the site and that, having dealt with one Government Department, he has now also secured this 90-minute debate in Parliament, his first Westminster Hall debate, is a sign of somebody who I know will be persistent in all the right ways. I pay tribute to him for that.

I will deal with some of the contributions from hon. Members before I address the more general questions. Some of the issues raised today are the responsibility of the Department for Environment, Food and Rural Affairs, as shown by the farming Minister’s visit, but it is important to look at that circularity and my hon. Friend the Member for South West Norfolk spoke very eloquently about the co-benefits of the site: it is not just about energy production. I can tell him and my hon. Friend the Member for Suffolk Coastal (Jenny Riddell-Carpenter) that we are acting at pace to try to deal with issues such as pollution of our waterways, and agricultural run-off, protection of our chalk streams and so on are very much part of that. While that is not a matter for me directly, when we look at energy projects we always look at the co-benefits.

We have had a number of debates on this issue. When I was shadow Minister I replied to a debate—I am sure the hon. Member for Strangford (Jim Shannon) was there, because he always is—led by a Lib Dem colleague of the hon. Member for Inverness, Skye and West Ross-shire (Mr MacDonald), on consumer energy prices in the highlands and islands. Point were made then about the difference in pricing and how expensive it can be to heat homes there. I am pretty sure that the Minister for Energy has replied to debates on similar subjects since we got into Government, but the hon. Member raises a valid point.

I can give the hon. Member for Strangford, who has raised the question of the CfD regime before, the assurance that the Lords Minister from the Department for Energy Security and Net Zero met his Northern Ireland counterpart before Christmas to discuss it; I am told that that dialogue continues. The hon. Gentleman will also, I am sure, be pleased to know that the Minister for Energy will be in Belfast tomorrow—we have an inter-ministerial group from the devolved Administrations that moves around. I discussed the agenda with the Minister for Energy last week and the Department of Agriculture, Environment and Rural Affairs will be very much involved in those discussions. I can assure the hon. Gentleman that we are not ignoring Northern Ireland; it is very much on our radar.

[Jim Shannon]

Not for one second did I think the Minister was ignoring Northern Ireland—that was never the case. I just wanted to ensure that the relationship we have within this great United Kingdom of Great Britain and Northern Ireland played a clear part. I was aware that the Minister for Energy is coming to Northern Ireland tomorrow and that he has regular discussions with the regional Administration, and that tells me why we are better off as part of this great United Kingdom of Great Britain and Northern Ireland—always better together.

[Kerry McCarthy]

I should have known the hon. Gentleman would be on top of things and would be aware of the Minister for Energy’s visit, but it is important that we have that continual dialogue and that the hon. Gentleman comes along to these debates to ensure that the Northern Ireland voice is heard.

I do not want to go too far off piste from the subject of the debate, but to respond to what the Lib Dem spokesperson, the hon. Member for Westmorland and Lonsdale (Tim Farron), had to say, I am an MP from Bristol, so the Severn estuary, the Severn barrage, the Severn tidal lagoons or whatever are very much on my radar. I went up to the Orkneys last summer to look at what they are doing on harnessing wave energy there, and it was very interesting.

On grid capacity, we know that grid capacity is a real issue, in terms of both our ambition for clean power by 2030 and our wider industrial decarbonisation. The Secretary of State likes to talk about the “four horsemen” standing in the way of us getting there, and grid is very much one of those. We have brought in Chris Stark, the former chief executive of the Climate Change Committee, to head up mission control on that issue, and he is working daily on how we can unblock and accelerate projects within the grid.

To the hon. Member’s point on farmers, I agree with giving farmers support to diversify, and energy from waste or anaerobic digestion and so on is part of that. I met two of the DEFRA Ministers earlier this week—although it might have been last week; it all becomes a bit of a blur—and I am in constant conversation with them about how we can work together on that and on our local power plan, which will be part of GB Energy. Hopefully there will be pots of money available for some of those community projects in rural areas, possibly on farms that he has talked about.

I understand that the company that my hon. Friend the Member for Stafford (Leigh Ingham) mentioned, GE Vernova, is doing innovative things on grid solutions. That is the sort of high-tech new approach that we need if we are to solve the problems that we have talked about, and I congratulate her on speaking up on behalf of a company in her constituency.

Turning to the actual debate, the experience of recent years has reinforced what we already knew: we cannot rely on fossil fuels. We need clean power to reduce vulnerability to volatile global fossil fuel markets, to give us energy security and reduce the cost of energy, and to tackle the climate crisis. That is why one of the Prime Minister’s five missions is to make Britain a clean energy superpower by delivering clean power by 2030 and accelerating to net zero. Electricity generated by renewables and nuclear power will be the backbone of a clean electricity system by 2030.

I have told the hon. Member for West Suffolk (Nick Timothy) how disappointed I am with the Opposition’s U-turn on this issue. I understand the position they are coming from and that there has been a change from the stance that they adopted in Government, but I have not heard from him what the answer is for our future energy security. What is the answer to dealing with the global fossil fuel markets? What is the answer to tackling the climate crisis? What is the answer to bringing down bills in the long term?

[Mr Angus MacDonald]

I wonder if the Minister could put herself in the position of somebody from the island of Skye who wakes up in the morning, opens his windows, and sees beautiful mountains in the background —it is always sunny there and there are no midges. He sees the wind turbines, but then he goes and looks at his heating and realises he is paying four times as much to get energy from those turbines. Meanwhile, there is negligible community benefit coming to that area. Can she position herself in that person’s or that household’s shoes?

[Kerry McCarthy]

As I said to the hon. Member, that issue that has been debated numerous times here, and it is not really the subject of today’s debate—but nice try on getting it in there. He might want to secure his own Westminster Hall or Adjournment debate on it. As I said, it is very much on our radar to look at the fairness in the system and to make sure that energy is affordable for everybody and that there are community benefits as we roll out that clean power ambition. All those issues are talked about in the Department on a daily basis.

Before I move on from the hon. Member for West Suffolk, I will say that the urgent question on carbon budget 7 was not granted because there is a process for the Government to respond to the analysis given to us from carbon budgets, and we will follow that process. First, though, we have to deal with the carbon budget delivery plan. Before looking to CB7, we must look at how we meet the obligations contained in current carbon budgets.

The previous Government were taken to court because their plan was not deemed adequate. They presented another plan, and the courts again found that it was not adequate, so we now have a deadline from the courts to produce our carbon budget delivery plan this year to show that we are back on track. That is very much our first priority. I am sure that once that is published, we will debate that and then carbon budget 7 as well, but we have to show that we are back on track before we start looking into the future.

[Melanie Onn]

The Opposition’s new-found position is apparently anti-ideological, but I have just read the article in the Telegraph—not my usual source of news—and it is in fact deeply ideological. Furthermore, it now sets the Opposition against the reality of industry in coastal and remote communities that has been generating the jobs, apprenticeships and investment that have long been requested and needed by those communities.

[Kerry McCarthy]

My hon. Friend makes a valid point. I wonder whether the Opposition spokesperson has spoken to businesses on this matter because, in all my conversations with businesses, both in opposition and now in government, it is clear that they want certainty. They need a stable investment environment if they are to make long-term decisions. They cannot invest in renewable energy, in industrial decarbonisation or in the economic growth this country needs without certainty. We know that one reason why we are in the economic situation we are is the lack of stability and the economic chaos at times under the previous Administration, particularly under the predecessor of my hon. Friend the Member for South West Norfolk. Therefore, certainty is what we need to have. Business is crying out for that.

In places such as Grimsby, it is particularly important to have a place-based solution to the current situation, showing what the energy transition would look like in such places. I urge the hon. Member for West Suffolk to take a bit of a tour, to talk to businesses and people who are trying to get much-needed investment into places such as Grimsby, and to see—I am not quite sure what his proposals are—what he can say to them on how to get long-term investment.

[Nick Timothy]

Of course we talk to business all the time. I talk to businesses in my constituency and we have been talking to businesses and organisations representing the more energy-intensive manufacturing businesses in this country. They are clear that energy costs have been too high, partly because of issues such as high carbon prices. They are very concerned about the prospect of the carbon price rising under this Government. The hon. Lady talked about global fossil fuel markets—I have heard the Energy Secretary say that a lot when he has referred to global gas markets. There is no single global gas market in the way he describes. Prices for fossil fuels are so much higher in Europe than America, which is much more dependent on fossil fuels than we are, because of policy choices. Therefore, can she guarantee that we will have a lower carbon price than the rest of Europe by the end of this Parliament?

[Kerry McCarthy]

I understand that the hon. Member asked the Secretary of State that question at the last DESNZ orals and I think he also raised it when we were opposite each other in a statutory instrument Committee. I refer him to the answers that were given then. I think we should get on—I am going to try to talk about the renewables obligation for a while and not be distracted.

The scheme played a fundamental role, as already noted, in getting the UK to where we are now on renewable energy generation. Combined, the UK-wide RO schemes support nearly 32% of the UK’s electricity supply, providing millions of UK households and businesses with a secure supply of clean energy. The scheme is now closed to new capacity, for reasons I will come on to.

Thetford power station, in the constituency of my hon. Friend the Member for South West Norfolk, has been accredited since the first day of the RO, back in April 2002, so it has so far received Government support for nearly 23 years. Over that time, it has generated more than 5.8 TWh of low-carbon baseload generation. That has been a valuable contribution to our transition to net zero. It has also increased our security of supply by generating home-grown energy. As he said, the station has provided 100 jobs in his constituency and co-benefits in handling poultry litter.

The station has another two years of support before its time under the RO ends, in March 2027. We are aware of the concerns about the future of the station once that support ends and my hon. Friend has done an excellent job in outlining those concerns today. My officials have repeatedly engaged both with the owners of the Thetford plant, Melton Renewable Energy, and with DEFRA officials to discuss those concerns.

To explain the overall context, as I have said, the RO has done sterling service in bringing forward the successful large-scale renewable energy sector that we see in the UK today. That has paved the way, as my hon. Friend the Member for Great Grimsby and Cleethorpes (Melanie Onn) said, for the cost reductions that we have seen over the last few years under the contracts for difference scheme, but its time has passed. The energy landscape has evolved since the scheme was launched in 2002 and it no longer provides the market incentives or the value for money that the transition to clean power requires.

The RO was designed to support renewable energy-generating stations during the early stages of development and generation, and to allow the recovery of high capital costs. For that reason, RO support is often significantly higher than that provided under successor policies such as contracts for difference. We must always bear in mind that consumers pay for the scheme through their electricity bills, and delivering value for money for them is essential. For that reason, we do not plan to extend RO support.

As I said, support under the RO for the early adopters, such as Thetford power station, lasts for 25 years. Stations accredited later in the RO’s life receive support for up to 20 years. All support will end in March 2027, when the last assets fall off the scheme and the RO finally closes, so Thetford—as I am very aware—has two years to run. The limits on the length of support were imposed to balance the need to provide investors with important long-term certainty—for 25 and then for 20 years—with the impact on consumers.

Although we do not consider extending the RO to be a viable option, I assure my hon. Friends that I understand their concerns. In some cases, generating stations may be able to continue generating electricity on merchant terms once their RO support ends, and continue until the end of their operational life. However, some generators have told us that their stations will not be economically viable without Government support.

We are conducting further analysis and assessment to better understand the issue, including the implications for consumer bills and the clean power mission. My officials are working with DEFRA to consider whether there is a case for intervention for biomass-fuelled stations, taking into account the electricity system and the supplementary environmental benefits that some stations provide. That work is in addition to the robust value for money assessments that we undertake to ensure any possible support is in the interests of bill payers.

I appreciate that Melton Renewable Energy and my hon. Friend the Member for South West Norfolk are looking for early answers, but I must stress that no decisions have yet been made and we are happy to continue the conversation with him.

[Jenny Riddell-Carpenter]

Is a potential bridging loan being considered by the Department for the replacement of the ROC?

[Kerry McCarthy]

I am not aware of the detail of what has been discussed as an option, so I am afraid cannot comment on that. I think it would be wrong to speculate on what the solution will be, but those conversations will continue.

To conclude, renewable energy is critical to our mission to make the UK a clean energy superpower. We understand the concerns of some generators coming to the end of support under the RO and we are looking at ways to maximise the output and potential of those RO sites, while also considering the impact on consumer bills.

I again thank my hon. Friend the Member for South West Norfolk for securing this important debate. I am happy to continue the conversation in the weeks and months to come.

15:33

[Terry Jermy]

I am grateful to all hon. Members who have contributed to this debate. It is right and proper that we have had contributions from Scotland, Northern Ireland and Stafford, as well as a strong representation from Suffolk—I am outnumbered, from a Norfolk perspective, but very grateful for their contributions. I am also pleased that a number of hon. Members picked up on concerns specifically about avian flu, which we have debated in this Chamber a number of times.

The Liberal Democrat spokesperson, the hon. Member for Westmorland and Lonsdale (Tim Farron), spoke about Putin not being able to control wind and solar. I suggest that he cannot control our chickens either, and I am particularly pleased about that.

The variety of biomass sources is key. If we were to have a conversation about other forms of burning, I might have a different view but, frankly, chicken waste will keep coming whether we burn it or not—unless of course our chickens disappear, which I hope is highly unlikely—so this is an important conversation. I am grateful to the Minister for recognising that this is a time-critical issue and that it interlinks with other Departments.

The Liberal Democrat spokesperson made reference to my predecessor, who was, of course, synonymous with cheese, pork and lettuce. I very much hope that I am not synonymous with chicken litter, but I will continue to raise this important issue on behalf of residents, and I am grateful for everyone’s contributions to this debate.

Question put and agreed to.

Resolved,

That this House has considered the Renewable Obligation Certificate scheme.

15:34

Sitting suspended.