Renewables Obligation Closure Etc. (Amendment) Order 2016

Debate between Lord Bourne of Aberystwyth and Lord Bishop of Salisbury

Wednesday 16th March 2016 Lords Chamber

[The Lord Bishop of Salisbury]

My Lords, it is curious to rehearse the same arguments so soon after the recent debate on feed-in tariffs. It is very disappointing in the wake of the success in Paris of COP 21, and the enthusiasm engendered from that about a new level of ambition in response to human-caused climate change. I feel as though the Minister is in a position of defending the indefensible. The noble Baroness, Lady Byford, made a very good point about the place of subsidies and pump-priming. Therefore, it is disappointing that the Government are not working more effectively with the renewable energy sector to build on the considerable success of that industry.

In its analysis of the impact of the changes to feed-in tariffs, DECC estimated that there could be a loss of 18,700 jobs. There is no equivalent analysis in relation to the impact of the withdrawal of renewable obligations, but going towards no subsidy will undermine a sector that is moving rapidly to a position of needing less subsidy. The House’s Secondary Legislation Scrutiny Committee has been critical of the analysis of this in the EM by not highlighting the level of opposition to, or the paucity of support for, the proposed changes, or acknowledging the concerns expressed by a large number of respondents about the methodology used by DECC to justify its proposals. The desire for increasingly competitive pricing would be a good deal more compelling if this were a feature of the whole electricity market, but last week the Government’s Competition and Markets Authority drew attention to the highly uncompetitive features of the market, dominated as it is by the big six companies.

The desire to cap the levy control framework has introduced two thought errors into the Government’s proposals. The first is that, if the costs of decarbonisation are not to fall on already hard-pressed consumers, further support will be needed in addition to the LCF. However, as has already been pointed out in this debate, the additional cost to the consumer is estimated to be less than £1 per annum. This does not feel like the right way to address this issue. The second point is something that I have referred to before. The desire not to exceed the LCF cap means that we are content with hitting mid-range targets, whereas we ought to be seeking to exceed them on renewable energy in order to escalate the process towards decarbonisation. Many Members of the House want the Government to go back and think about this again. The issue is one of creating a strategy for energy that addresses the need, which was identified in Paris, to move rapidly towards a low-carbon economy.

[Lord Bourne of Aberystwyth]

My Lords, I thank noble Lords for their participation in this debate. I will of course address some of the points that have been raised but, before doing so, perhaps I may just clarify one or two issues.

First, the Government are of course committed to combating climate change, as the right reverend Prelate kindly acknowledged, through our participation in Paris and the marvellous result achieved there. However, we want to do so in the most cost-effective way for bill payers.

The solar industry in the United Kingdom has been a success story and has seen significant cost reductions. The noble Baroness, in opening, did not talk about the Liberal Democrat position on subsidies. The noble Lord, Lord Teverson, sought to clarify that, but I think the opponents of what we are seeking to do need to set out what level of subsidy they regard as acceptable at this stage, because, crucially, the costs have come down: so much so that the largest solar developer in the United Kingdom, Lightsource Renewable Energy, has said publicly—it is on its website—that it will be building subsidy-free sites this year. This order does not end solar and, if we can get solar deployment without the subsidy, that raises the question of why we are subsidising it. This Government believe that when the costs of deploying come down—as they have—so should support. This statutory instrument is a necessary step to protect bill payers and to end subsidies where they are not needed.

Before looking at some of the specifics raised in the debate, I want to set out what the costs of the renewables obligation and indeed other renewable policies, such as feed-in tariffs and CFDs, will be over the lifetime of this Government. There seems to be a feeling that we are cutting off all renewable subsidies. That is not the case. The cost on the levy control framework goes up every single year in this Government, and that is after the action we are hoping will be taken today. The total cost in 2015-16 is £5.23 billion. Next year it will be more than £6 billion. In the succeeding year it will be more than £7 billion. In 2018-19 it will be over £8 billion. In 2019-20 it will be £10 billion, and in 2020-21 it will be nearly £11 billion. So to those who suggest that somehow we are turning our face against renewables and ending subsidies, I can say that that is not remotely the case.

I shall address some of the specific points that were raised. As I said, the noble Baroness, Lady Featherstone, did not talk about the position of the Liberal Democrats in relation to subsidy, but I remind the Liberal Democrats that the coalition Government—after all, it was a department led by a Liberal Democrat Minister—recognised the need to revisit the 5 megawatt and below solar subsidies if we had overdeployment, or if overdeployment were projected. Overdeployment is projected by a ratio of 1:4, so it really needs to be addressed, and this is quite consistent with what the Liberal Democrats said when they were in government. We are taking this action for two reasons. It is not just about the levy control framework; it is also about the subsidy. We do not believe that we should be paying subsidies where they are not needed. The evidence is— I quoted the largest developer—that they are not needed.

The noble Baroness raised the issue of roof-top solar. We do not accept that the feed-in tariffs have been set too low to support commercial roof-top solar. Almost 8 megawatts of installations over 50 kilowatts have secured a feed-in tariff since the scheme reopened in February. That is significant and demonstrates that there is ample opportunity under the existing FIT scheme to do just that.

Paris Climate Change Conference

Debate between Lord Bourne of Aberystwyth and Lord Bishop of Salisbury

Tuesday 15th December 2015 Lords Chamber

[Lord Bourne of Aberystwyth]

I thank the noble Lord, Lord Stern, for his kind words, and I am certainly happy to accept the compliment. I welcome very much the role he has played. Indeed, when I last saw him on the television, he was featured not only with the French delegation but also with the former Vice-President of the United States, Al Gore. The noble Lord has done seminal work which demonstrates that we can have falling emissions and economic growth, and I think that that is now widely accepted. It was an absolutely prescient report.

It is true that the position we play in relation to overseas aid is crucial. It gives us a powerful means of talking to many other countries and seeking to be as helpful as possible. I mentioned earlier the small island developing states and the particular challenges they face. The legal framework we work within is also important. Finally, the last point he made about private sector leadership is vitally important. The Governor of the Bank of England spoke powerfully at the Paris conference, which is not something that has happened previously. The private sector demonstrated leadership, particularly when Michael Bloomberg, Paul Polman and many others said that this is an agreement which they warmly welcome. It is not just about non-governmental organisations and politicians, it is very much about the business world as well. Again, I thank the noble Lord for the role he played at the conference, which I know was considerable.

[The Lord Bishop of Salisbury]

My Lords, I, too, congratulate the Minister on the achievements in Paris and the part that the UK Government played. The faith communities organised, among those from the wider public sphere, to gather in Paris. Forty-four pilgrims walked from London; seven walked from the Danish-German border; and 22 cycled from Copenhagen. As they travelled on the journey to Paris, they gathered with them the support of the communities through which they travelled and in which meetings were held. This culminated last week with the presentation of a petition, with signatures from 1.83 million people, to Christiana Figueres and President Hollande by 20 of us in the faith communities. This is a deal that many people wanted. Ban Ki-moon, Secretary-General of the UN, said that it was the most complex and largest talks he had ever been part of. The sense of achievement is therefore very great in having pulled off the Paris agreement. The UK’s contribution through climate finance was particularly significant.

However, over these last months, the Government have given mixed signals about the commitment to renewable energy. Therefore, there is a question about how the Paris agreement will be implemented domestically. That which was hard fought and hard won now needs to be hard wired. I would like to ask the Minister how, over these next few months, he sees the Government acting across the areas of public policy in order to make sure that this agreement is hard wired into all our thinking and acting across the whole area, not just within DECC and those involved in the environment and climate change. What steps will be taken to ratchet up the UK’s ambition in the way that the Paris agreement envisages so that we become more ambitious about what we are trying to achieve?

[Lord Bourne of Aberystwyth]

I thank the right reverend Prelate very much for his kind words and note, in particular, the lead that he has given through the Lambeth declaration and the fact that that pulled together people of many faiths. There was also a massive role of the Muslim climate group in supporting this. The participation of faith in all this, not least from His Holiness the Pope, was significant. I thank him also for what he said about climate finance. The contribution that this was able to make to the debate, and speaking to people, certainly was significant. Obviously, it is important for developing countries, particularly the most vulnerable countries, because there are degrees, as we are all aware, of poverty. Some small island states in particular need an awful lot of assistance on adaptation as well as mitigation.

The right reverend Prelate asked about the domestic agenda. Again, I refer him to what I said previously about falling costs, which is certainly true. The costs, particularly of solar, are spiralling down very quickly. Given the very clear signal that has been sent out worldwide, we can expect that to continue. The Paris agreement is significant in many respects. It is significant that the world has come together in the positive way in which it did but, on the specific, it is very important that it signals the end of the carbon economy. It is only a question of when. That message going out worldwide to business and being welcomed by business will mean that costs fall.

What are we doing within DECC? First, many DECC officials are taking a little bit of a break, having been up around the clock for the past couple of weeks. That said, work is already going on to see how this is delivered but, of course, the work had started before. We are already looking across government at what we need to do on cars and housing to meet our carbon targets. That work will continue but it is important that this is not just a one-nation issue; this is across the whole world. Hence, the importance of the five-year stock takes and the five-year reviews.