Energy Bill [HL]

Debate between Lord Bourne of Aberystwyth and Lord Wallace of Tankerness

Tuesday 10th May 2016 Lords Chamber

[Lord Bourne of Aberystwyth]

My Lords, I am grateful to noble Lords who have participated in this debate. They are three of the most fluent and persuasive Peers on the other side and I quite understand their intent and the passion that drives them. I will come to the points in the order in which they were raised. First, the noble Lord, Lord Grantchester, very generously acknowledged that it was in the manifesto and that we have moved on grace periods to address radar/grid delays. In his words, he “applauded” the concessions we have made. We have also made some on the investment freeze. But he seemed to suggest that we were engaged in some kind of ideological and belligerent—I think those were his words—warfare against renewables in general and wind in particular.

The United Kingdom has a proven track record of growth in renewable electricity, which goes on. We will be spending more this year than we did last year, and in every year of this Parliament we will be spending more on renewables. Nearly £52 billion has been invested in renewables since 2010. More than half the total investment in the EU in 2015 occurred in the United Kingdom, and that was just another record year based on several earlier record years. So I hope the noble Lord will accept that that is not the case. We recognise the vast importance of renewables.

One reason for the action and for it being in the manifesto was that we were deploying at a far speedier rate than had been anticipated. It was not anticipated by the coalition Government that we would be well above the top range of what could be expected. We are not taking action for any ideological reason. We have massive deployment and that deployment goes on. But we are reaching the end of subsidies for solar and for onshore wind because they can be deployed without the subsidy. It is widely recognised, including by the general secretary of GMB Scotland, whom I quoted, that we do not need these subsidies any longer and that often we are subsidising people who do not need the subsidy. That is another reason for the action.

The noble and learned Lord, Lord Wallace, put the case very eloquently, as he always does. I think he accepted that we had moved on grace periods. He suggested, as did the noble Lord, Lord Grantchester, that the date we set was arbitrary. Well, it was—only in the sense that any date is arbitrary. The noble and learned Lord will know very well that dates are set and they are very often arbitrary and somebody will fall the other side of them; even if you move the date, somebody else will fall the other side of it. I do not accept that it was arbitrary in the sense that he seemed to be suggesting—that it was somehow capricious. That was not the case and it was not a question of it fitting in with the grid. It was the date that the Government chose to announce the policy that had been signalled in the manifesto. I hope he will accept that the case is borne out: we accepted many amendments on the Oil and Gas Authority as the legislation went through; and we have amended the position on onshore wind to take account of grace periods, appeals and radar grid delays. All these things we have done.

The noble Lord, Lord Foulkes, was very generous and spoke with great passion and very eloquently, as he always does. Yes, I accept that the intentions are benign but the will of the other place has been expressed now three times. Surely now is the time to recognise that this House should not keep overriding the will of the other place on an issue where it has expressed its position very clearly.

[Lord Wallace of Tankerness]

Can the Minister indicate any amendment to the grace period provisions, which have been there since they were first tabled when the Bill was recommitted to the Grand Committee?

[Lord Bourne of Aberystwyth]

As the noble and learned Lord knows, those provisions were not there when the Bill was introduced. They were introduced subsequently, after consultation with industry. I accept that they were not subsequently altered but there was consultation, as he will recall, about what was fair on the grace periods. I think many people recognise that these amendments from the original position were fairer and more just. That is the position. They were not amended subsequently—he is quite right on that.

We have been round the circuit on this so many times that I will not delay the House any further. The view of the other place is clear. We do not want to hold up this legislation with its vital Oil and Gas Authority provisions. I beg to move the original Motion.

Energy Bill [HL]

Debate between Lord Bourne of Aberystwyth and Lord Wallace of Tankerness

Tuesday 26th April 2016 Lords Chamber

[Lord Bourne of Aberystwyth]

My Lords, I thank noble Lords for participating in this debate and making their points as fluently and forcefully as they have in the past. I shall deal with the points in the order they were made during the debate, and will therefore refer first to the noble and learned Lord, Lord Wallace, who spoke about the grace periods and the timeliness of what we are doing, saying that this is the Government’s fault. The point I was seeking to make was not so much about the delay as the constant ping-pong, given that the other place has given a very clear view. This measure was passed there by a substantial majority—far larger than the Government’s overall majority; it was not just Conservative Members who voted for it.

So these points are relevant, and I hope that the noble and learned Lord will accept that the Liberal Democrats have no monopoly in determining what justice is. We have sought to be just in setting grace periods and allowing for an investment freeze, so although we differ on where we think justice lies, I will take no lessons from the Liberal Democrats—that this is the definition of justice that has been handed down from on high.

The difference between us is this. We feel—

[Lord Wallace of Tankerness]

I was not seeking to give the Minister a Liberal Democrat definition of fairness and justice: I quoted his honourable friend Andrea Leadsom on what fairness was, and himself when he defended the Government’s ending the renewables obligation for photovoltaics. It was a Conservative Minister’s definition of fairness, which the Government are not rising to in this case.

[Lord Bourne of Aberystwyth]

We Conservatives have put forward our own definition of justice, rather than seeking to put a gloss on it in a way that is helpful to the noble and learned Lord’s argument.

The essential difference is one of deployment. Every proposal put forward by the noble and learned Lord would increase deployment. We feel that we are doing the right thing in balancing the interests of investors with the wider interest, what was in the manifesto and votes in the other place.

The noble and learned Lord raised the issue of steel, suggesting that this measure would make a massive difference and therefore we have to adopt it. As is widely recognised, the Government are committed to doing everything they can on steel, and indeed are delivering—on procurement, on relief on energy costs, on action against dumping. I hope that we will have his support in those matters.

I turn to the noble Lord, Lord Foulkes, who, with his customary passion and fervour, put forward arguments in relation to an area that he knows well. I respect where he is coming from—of course, I understand that—but I do not think that there is any ambiguity in relation to Sorbie. I have checked this and do not want to give a running commentary on planning issues—I should not seek to do that and it would be unwise to do so—but it seems to us that it is very clear that Sorbie falls the other side of the line. I do not think that there is any ambiguity there but, as I said, I cannot really give a running commentary on it.

--- Later in debate ---

[Lord Bourne of Aberystwyth]

My Lords, I understand the point that the noble Baroness is making, and I thank her for her general support for what the Government are doing. Clearly, we need legal certainty. We feel that we have delivered on a grace period to take account of some of the difficulties that there are and the investment freeze position. We have made movement on grid delays and radar delays as well. I say to the noble Baroness that the line has to be drawn somewhere; as soon as you start to unpick it and make exceptions for one or two categories then one or two others come into play. I understand that there is great difficulty in drawing the line anywhere, but unless you draw that line, every case could be an exception. That is the point I am making.

I thank my noble friend the Duke of Wellington for some interesting insight on the situation. As for the noble Lord, Lord Foulkes, who said that my noble friend would not get his vote, I do not think any of us got his vote, so that was probably fair to all of us.

I turn to the points made by the noble Lord, Lord Grantchester. He talked rather uncharacteristically—I am not sure whether he really meant it—about vindictive and aggressive attitudes and the adoption of a UKIP stance. I hope he has evidence that that is what we have been doing because it does not cut the mustard with us. As the noble Lord well knows, we do not listen to UKIP on anything, thank goodness. There can be no suggestion that this is vindictive or aggressive. It was in the manifesto, which people voted for; it has been debated in the other place numerous times; and we were responding to views heard up and down the country. He might not like the policy but I do not think that he can characterise it as vindictive or aggressive.

We have the date of 18 June and I repeat to the noble Lord that that is not arbitrary: it is the date that the announcement was made. We believe that this is an unnecessary subsidy and that we have got justice by balancing issues such as the investment freeze and the grace period with the cut-off point. There is a very clear policy, which has been endorsed several times by the other place. I urge noble Lords to oppose any amendments and vote for the main Motion.

[Lord Wallace of Tankerness]

My Lords, the Minister has given us a fairly predictable but disappointing reply. He will be aware that when we first dealt with grace periods, back in October, there was a considerable number of possible areas in which justice could be done—and I am talking about justice as defined by his ministerial colleagues and himself. We have whittled those down. Indeed, I am prepared to indicate that the “insist” Motion, which is whittled down even further by the Motion in the name of the noble Lord, Lord Grantchester, is one that we would be prepared to support. However, we are getting absolutely no response.

Scottish colleagues present will understand the phrase, “It is like arguing with Ailsa Craig”. I am afraid that that is the position we are in. I do not think that this is good governance. What we are doing is freezing potential developers in other areas, not just in onshore wind, who no longer can have the certainty that the developments they make and investments they put in will not one day be swept aside at the whim of government. However, I beg leave to withdraw Motion A1.

Energy Bill [HL]

Debate between Lord Bourne of Aberystwyth and Lord Wallace of Tankerness

Tuesday 12th April 2016 Lords Chamber

[Lord Bourne of Aberystwyth]

The noble Lord is wrong on the issue because, with the grace period and with the investment-freeze conditions, we have allowed for movement on these issues. I take the point that he is making but I do not agree with it.

I am just double-checking, but I hope that I have now done full justice to the comments that have been made.

[Lord Wallace of Tankerness]

My Lords, I do not think that the Minister has addressed two points, one of which is the investment-freeze conditions and green organisations such as Triodos, which do not appear to qualify. Even at this late stage, would he be prepared to look at this again? I also refer to the points made by the noble Earl, Lord Lindsay, and myself with regard to community investments. I do not think that the Minister has specifically addressed that issue as regards the Dalquhandy and West Douglas development.

[Lord Bourne of Aberystwyth]

Taking the latter point first, I think that I did so in response to the comments made by the noble Lord, Lord Bruce. We do not see any reason for distinguishing between community projects and others. That would only give rise to difficulties.

On the investment-freeze conditions, I think that the noble and learned Lord is pursuing the lenders point. There is no intention to alter the list. It is something that I think could be done in the future without primary legislation, but there is no proposal to change that. I apologise for not covering it earlier.

I think that I have covered all the main points, and with that, I ask noble Lords to withdraw their amendments.

Amendments 6A and 6B (as amendments to Commons Amendment 6)

Renewables Obligation Closure Etc. (Amendment) Order 2016

Debate between Lord Bourne of Aberystwyth and Lord Wallace of Tankerness

Wednesday 16th March 2016 Lords Chamber

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change and Wales Office (Lord Bourne of Aberystwyth) (Con)]

My Lords, the draft instrument closes the renewables obligation 12 months early to solar PV generating stations at 5 megawatts and below from 1 April 2016. It would apply both to new generating stations and to existing stations that wish to add additional capacity up to the 5 megawatts threshold.

Solar PV is an important part of the low-carbon energy portfolio. It has seen very strong growth in recent years, due in no small part to support from the renewables obligation and the feed-in tariff schemes. Almost 40% of the UK’s solar PV capacity over 3 gigawatts was installed during 2015 alone. Hand in hand, the costs of installing solar PV have reduced dramatically. According to data from Bloomberg, the capital cost of a ground-mounted PV system fell by about 60% between 2010 and 2015.

In many ways, this progress is good news, making a valuable contribution to our renewable electricity generation, but the amount of deployment has also raised concerns about its impact on the levy control framework—the budget which caps the amount of support paid for through consumers’ energy bills. I am sure that noble Lords will agree that there is a need for government to act responsibly when there is a risk of exceeding such a budget. That is why we have introduced a number of measures to deal with the projected over-allocation of renewable energy subsidies. In these measures, we have aimed to strike the right balance between the interests of consumers and those of developers.

This time last year, under the coalition Government, we were considering a similar order relating to the early closure of the renewables obligation scheme to large solar farms—those over 5 megawatts. Solar farms at this large scale were deploying much faster than previously expected, and we were rightly concerned about the impact this speed of deployment could have on the levy control framework. At the time, it was decided not to extend the closure to projects at 5 megawatts or below because the evidence suggested that these smaller schemes posed less of a risk to the costs of the levy control framework.

Noble Lords will recall, however, that in the debate last year—under the coalition Government—it was made clear that the deployment of smaller-scale projects would be closely monitored. If deployment was shown to be growing more rapidly than could be afforded, measures would be considered to protect the integrity of the levy control framework. That monitoring revealed that, if we did not act, up to four times more new solar capacity would be eligible for support this year and next under the renewables obligation than we previously estimated—within a range of 2.4 to 3.8 gigawatts, compared to the 600 megawatts to 1 gigawatt that had been estimated. I am sure that noble Lords will agree that in such circumstances, the need for further action is essential.

In taking this action to complete the early closure of the renewables obligation to solar, we have aimed to strike the right balance between protecting bill payers and protecting developers who have made significant investments, while being conscious of the need to decarbonise our energy infrastructure. That is why the order makes provision for a number of grace periods, which mirror those offered last year as part of the large-scale closure. Stakeholders have welcomed this consistency. One respondent to our consultation said:

“Technologies must be treated equally as far as possible and the requirements outlined are in line with those proposed for early closure of the RO to solar above 5 megawatts”.

One of the grace periods was designed to protect developers who could show that a significant financial commitment had been made on or before the date on which the proposals were announced. This required evidence that a planning application had been made, among other things, as a proxy for the financial commitment.

Following the consultation, we are changing the criteria to clarify that we intended to protect projects that had made a valid planning application, in line with planning legislation across Great Britain. This is because we received evidence during the consultation from many planning authorities that some developers were submitting incomplete planning applications just to meet the cut-off for eligibility for the grace period.

[Lord Wallace of Tankerness (LD)]

I am interested in what the noble Lord is saying. He seems to be saying that if there is clear evidence of a significant financial investment being made before a planning decision was made, developers will qualify for the grace period. Why is he not currently doing the same for onshore wind, where the cut-off seems to be far more arbitrary?

[Lord Bourne of Aberystwyth]

The parallel here is with the schemes above 5 megawatts and the undertakings then given to look at this in the same way in the light of increased deployment, which has certainly happened. I appreciate the point—it is different, there is no doubting that—but this is a continuation of what happened with schemes above 5 megawatts. That is the reason for the treatment we are going for.

When we closed the renewables obligation early to large-scale solar farms last year, we saw a rush of projects accrediting to beat the closure date. More than 1.5 gigawatts of solar were accredited in March 2015 alone. That is equivalent to around 5,000 football pitches. This time round, we had evidence to suggest that costs of solar PV had fallen further and faster than previously anticipated. I have already mentioned the steep fall that there has been. We have therefore proposed excluding new solar projects at 5 megawatts and below from our grandfathering policy if they do not meet the significant financial commitment criteria. This has been necessary to avoid locking in possible overcompensation in the event of a similar rush of projects accrediting before 31 March 2016. This change in policy would mean that projects which are not grandfathered would not maintain their support level if a banding review determined a lower level of support. This proposal was necessary as a cost control measure. We confirmed this change in policy last December, and at the same time started to consult on the results of the banding review. We are currently considering the consultation responses; the consultation finished at the end of January. Subject to the outcome of that process, changes would be implemented through a separate amendment to the renewables obligation order 2015 later this year.

On the impact of the order, our analysis indicates that the early closure proposed in it will save between £60 million and £100 million per year from consumer bills: over the 20-year period of the obligation, that is £1.2 billion to £2 billion in real terms over the lifetime of the projects. Over 8 gigawatts of solar is already deployed and we estimate total solar deployment under the levy control framework subsidy regimes will reach 12.8 gigawatts by 2020, following this closure, taking account of what we are doing today and the action taken in the recent feed-in tariff review. Without this intervention, we estimate that it would be very close to 20 gigawatts, or some 8 gigawatts above what we projected. The electricity market reform delivery plan is our best estimate of what we need to hit the renewables 2020 target, which set out an intention to deploy between 10 and 12 gigawatts at the upper end. In fact, even with these changes, we are on track to exceed that range. This further underlines the need to take action now to prevent further solar deployment under this scheme.

Before I close, I should mention that we have taken the opportunity in this order to remove an inconsistency between the renewables obligation closure order 2014 and Article 91 of the renewables obligation order 2015. This had been drawn to our attention by stakeholders. This technical amendment makes it clear that an operator of an offshore wind station benefiting from a closure grace period can apply to Ofgem for registration of offshore wind turbines until 31 March 2018. I do not think that that is controversial.

This Government are committed to combating climate change, but in the most cost-effective way for bill payers. In tackling climate change at home, British families and businesses are better off inside the European Union. It provides a more stable and long-term framework to attract investment in UK clean energy projects, helping to keep bills down, create new jobs and boosting our energy security. Accordingly, the costs of solar are continuing to fall, and we expect solar to be delivered without subsidy over the coming years. However, since solar PV has been such a success in the United Kingdom, by summer 2015 the costs imposed on bill payers associated with support for renewable and low carbon electricity generation were forecast to reach £9.1 billion in 2020-21, significantly above the target of £7.6 billion. These costs, if they reached that level, would lead to increases in consumer bills. It is therefore only right that we have looked at ways to protect value for money and affordability under the levy control framework.

I hope that noble Lords will agree with me that on balance, the approach we have taken is the right one, closing a demand-led scheme and taking action on overcompensation while still allowing solar to deploy under the revised feed-in tariff scheme. This will ensure that solar PV is supported in a way that offers better value for money for consumers. I commend this draft instrument to the House.

Amendment to the Motion

--- Later in debate ---

[Lord Wallace of Tankerness]

My noble friend Lady Featherstone mentioned investor confidence. My noble friend Lord Teverson and the noble Lord, Lord Grantchester, referred to the Energy and Climate Change Committee in the other place and its deep concerns about the cumulative effect of government policy on investor confidence, not just in solar or onshore wind but generally. Will the Minister please address the points that were very effectively made about investor confidence?

[Lord Bourne of Aberystwyth]

My Lords, of course investor confidence is an issue. In the department we meet the industry on a frequent basis—I met representatives of the solar industry just this week. Some of the concerns that are being expressed tonight were not expressed to me on that occasion. Of course there is a healthy dialogue, but I do not recognise some of the wilder statements being made about the lack of investor confidence. Industry will always take a particular view, and there will be some in industry who will not want to see an end to subsidies—I understand that; why would they? However, as a Government, we have to see how money can be well spent.

It has been a good debate, but I urge noble Lords to reject the amendment and support the order, which is a necessary part of ensuring that we get value for money, do not overdeploy in this area and end subsidies that are not needed.

Energy Bill [HL]

Debate between Lord Bourne of Aberystwyth and Lord Wallace of Tankerness

Wednesday 4th November 2015 Lords Chamber

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change and Wales Office (Lord Bourne of Aberystwyth) (Con)]

My Lords, before I address the government amendments, I thank the Bill team, my Whip, my noble friend Lord Younger, and the ministerial team in the department for their help and support. I also thank all those who have scrutinised the Bill. I am extremely grateful to noble Lords for their participation in our proceedings in discussions in the Chamber and indeed outside the Chamber, which have been very helpful.

Although I know that there are points on which some of us do not agree, the debate on the content of this Bill has greatly benefited from the wisdom, experience and insight that a number of noble Lords, sitting on all Benches, have brought to deliberations. I also thank specifically the noble Baroness, Lady Worthington, for her contribution to the debate and wish her well in her future endeavours as she steps down from the Opposition Front Bench. She has shown incredible commitment and great brio and has made many very valid points, and I am sure that she will continue to do so from the opposition Benches.

This is an important Bill and although, as I say, we have not agreed on key elements—particularly the early closure of the renewables obligation for onshore wind—we have agreed on many issues, including the need to tackle the threat that climate change constitutes to the environment, our security and our economic prosperity. The Government will decarbonise the economy and will do so cost-effectively.

We have had a substantial measure of agreement on carbon capture and storage. If nothing else, I think I can take great credit for bringing together my noble friends Lord Ridley and Lord Deben and Members of all sides of the House on the importance of carbon capture and storage. I am most grateful in particular to the noble Lord, Lord Oxburgh, for agreeing to head a parliamentary advisory group on carbon capture and storage. This will provide advice to my right honourable friend the Secretary of State for Energy and Climate Change, Amber Rudd, within 12 months of the Act coming into force. I would feel less guilty if I did not know that if I am taking him away from anything, it is from orienteering with his family in his spare time. I know just how busy and able he is, so I am most grateful for that.

Government Amendment 1 is a minor and technical amendment to Clause 7, which reflects an error that has occurred as a result of other government amendments made on Report. The purpose of Clause 7 is to ensure that where functions are contracted out to the Oil and Gas Authority by relying on Section 69 of the Deregulation and Contracting Out Act 1994, they may be contracted out for a period exceeding 10 years. Clause 7 also provides that Welsh Ministers may enter into a contract with the Oil and Gas Authority, authorising that body to exercise the functions of Welsh Ministers.

Clause 7(1) limits the effect of the rest of the clause to circumstances where the Deregulation and Contracting Out Act 1994 has conferred functions on the Oil and Gas Authority. However, the subsections inserted by our amendments on Report are intended to deal with a set of circumstances where that Act does not apply—that is, a power for Welsh Ministers to enter into an agreement with the Oil and Gas Authority authorising that body to exercise the functions of Welsh Ministers. With that in mind, subsection (1) should apply only to subsection (2) rather than to the whole of the clause. This amendment corrects that error.

Government Amendment 2 is a minor and technical amendment to ensure that the levy to fund the Oil and Gas Authority is not payable in respect of functions that it carries out under agreement with Welsh Ministers. This is achieved by inserting wording into the list of matters in Clause 14 that the Secretary of State must ensure are not covered when making regulations on the levy. This provides consistency with the current provision which excludes the levy from being charged in respect of functions carried out under Section 69 of the Deregulation and Contracting Out Act 1994, for example on behalf of Scottish Ministers. It is also consistent with the approach taken towards fees under Clause 13, where the Oil and Gas Authority will not be able to charge fees for the exercise of functions that it is authorised to exercise either on behalf of the Scottish Government or by virtue of an agreement with Welsh Ministers.

Government Amendment 4 updates the Bill’s Long Title to ensure that it complies with the parliamentary convention that Bills should leave this House and move to the other place in a proper state. I beg to move.

[Lord Wallace of Tankerness (LD)]

My Lords, I do not wish to detain the House other than to respond to the opening remarks of the noble Lord, Lord Bourne, and to express gratitude and appreciation for his willingness to engage during the passage of the Bill. On many occasions he was left in an unfortunate position which was not of his own doing—for example, amendments coming in late and assessments not being available—but he has engaged, certainly with my party, in a most courteous manner. Although we were not able to agree on the earlier closure of the onshore wind renewables obligation, our discussions were nevertheless very useful and have no doubt paved the way for further discussions when the Bill reaches another place and comes back to your Lordships’ House.

The amendments the Minister has just moved are technical and sensible updating measures, but very much appreciated. The first Part of the Bill implements the proposals of the review by Sir Ian Wood, which we were committed to doing when in coalition government. I welcome the fact that this is now taking shape in statutory form, and thank the Minister for his engagement with the Bill.

Energy Bill [HL]

Debate between Lord Bourne of Aberystwyth and Lord Wallace of Tankerness

Wednesday 21st October 2015 Lords Chamber

[Lord Bourne of Aberystwyth]

My Lords, I do not know the proportion, but I know that the upper end of the limit is £270 million over the period. That might seem like a small amount, but it is not a small amount to me and I am not sure it would be to anyone else. We have this basic difference, and with that I oppose these amendments.

[Lord Wallace of Tankerness]

First, I did not raise the issue of the definition of the recognised lenders because the noble Lord did not deal with it when he moved his own amendment. Did he give a commitment to go away and come back with a better definition that included, for example, organisations such as the Green Investment Bank? My second point, although there are many others that I could make, is this: does he accept that with regard to radar issues, what the Government give the Government might also take away? Will he undertake to talk to the Ministry of Defence to see if it can ensure that whatever provision is made by this grace period for radar is not actually defeated by the tardiness of the MoD?

[Lord Bourne of Aberystwyth]

My Lords, on his last point first, I am very happy to speak to the MoD in the way that the noble and learned Lord suggests. On the former of the two points that he raised relating to the recognised lenders, I have indicated that we will look at this issue. I have not made any commitment about what the result of looking at it will be but I recognise, based on information given by the noble and learned Lord and others, that there is a case to look at it. I hope that is helpful.

--- Later in debate ---

[Lord Wallace of Tankerness]

My Lords, we have already debated this. I think that Amendment 78RA would improve Amendment 78R, so I would wish to test the opinion of the House, but perhaps the Minister would clarify. Is he still insisting on his Amendment 78R, or is our amendment otiose?

[Lord Bourne of Aberystwyth]

Perhaps the noble and learned Lord can tell me what it is about.

[Lord Wallace of Tankerness]

My understanding is that Amendment 78R contains the new clause to embrace the grace periods. As Clause 66 has fallen, I am not sure whether he wants to insist on it. If he does, I will want to press our Amendment 78RA, but I want clarification, because there is no point dividing the House if he does not insist on his new clause, which incorporates the grace periods.

[Lord Bourne of Aberystwyth]

I am certainly not pushing this amendment.

Energy Bill [HL]

Debate between Lord Bourne of Aberystwyth and Lord Wallace of Tankerness

Monday 14th September 2015 Lords Chamber

[Lord Wallace of Tankerness]

The Minister has indicated that a justification for the position is to reduce domestic consumer bills. That is not an unreasonable thing to try to do. However, I just want to make sure that I understand the impact assessment. On the second page, it says:

“Reduced risk to LCF from over-allocation of renewable energy subsidies, and benefit to consumers from reductions in consumer energy bills (in 2016/17 average household electricity bills could be up to £3.40 (0.6%) lower, with a central estimate of around £0.30 (0.05%), compared to the Do Nothing option) (2014 prices)”.

I am more than ready to stand corrected, but am I right in thinking that the central estimate of the Government in this is that this measure will save 30p in an annual domestic electricity bill?

[Lord Bourne of Aberystwyth]

The noble and learned Lord has correctly identified the part of the impact assessment that deals with this. It could be a saving of up to £3.40. I accept that that is not a massive amount, but it has to be taken account of in the context of the fact that we are seeking to keep within the deployment estimates that we put forward. I do not think it should be sniffed at: this does not appear, on the face of it, to be a massive amount, but it makes quite a considerable difference to some consumers that we are reducing bills by that amount. That is what we are seeking to do and I make no apology for it. However, that is only part of the consideration.

[Lord Bourne of Aberystwyth]

I accept that obviously there is a question about what is used instead. However, I remind the noble Baroness and the House that, even with this action, we are well above the deployment estimates that were made in relation to onshore wind.

[Lord Wallace of Tankerness]

My Lords, I am very grateful to all noble Lords who took part in this debate and, indeed, to the Minister for his response. He has set out the position that the Government are coming from.

It is important that we look at this clause in detail. Like the noble Baroness, Lady Worthington, when I saw that there would be no new public subsidy, I took it to mean that there would be no “new” subsidy, as opposed to an old one—ROCs are certainly quite old. However, I hear the interpretation that the Minister and his Conservative colleagues place on it. One can only speculate as to whether they ever thought they would have to deliver this policy.

The noble Lord, Lord Howell, with wonderful understatement, thanked the Minister because he thought that we were hearing an evolution in government thinking. The noble Baroness, Lady Worthington, said that it was like building an aeroplane as it was taking off along the runway. Some might say that it is making it up as you go along. The lack of clarity in some areas of the impact assessment and the fact that we do not yet know what will happen with the grace periods gives some indication that perhaps this was a policy that had not quite been fully thought through, if I can just leave it at that. However, some concerns continue.

I can understand why the Minister said at the outset of his remarks that, on the one hand, people say it is just a year but, on the other hand, people say it is the end of civilisation as we know it. I take the political point that the Government won an election, but to change an important policy less than a year—just over 10 months—from when it will come into effect is causing considerable concern in the industry and calls into question whether such a change could take place in other spheres of renewable policy.

I have always supported the idea that there should be a balance; a mix of different renewable sources. If one source is seriously challenged because there is a sudden change of policy, it begs the question as to whether others will follow.

I cannot quite yet get my head round the cost. I do not quibble with the fact that, for some people, 30p a year, or just over half a penny a week, might make all the difference—although I find it difficult to buy that. However, the other part of the equation that I cannot quite follow is this: if renewable onshore electricity generation is not going to qualify and therefore its future is more under question, and the others, including nuclear, are going to be more expensive, how can that lead to benefits in the longer term for the domestic consumer? The noble Baroness made that point in her final intervention. That has not yet been explained to us, and perhaps a reworking of part of the impact assessment might highlight some of these issues.

The noble Viscount, Lord Ridley, asked whether any use of onshore wind had led to carbon emissions. I just look at the Government’s impact assessment—I may have been slightly critical of it but I will now use it. Paragraph 4.26, on environmental issues, says that option 2, which is the proposal,

“will lead to lower levels of onshore wind deployment and hence increased carbon emissions within the UK power sector relative to the Do Nothing option”.

So the Government themselves believe that it will lead to increased carbon emissions by having lower levels. The impact assessment goes on to say that,

“these will be offset by decreases in emissions elsewhere in the EU within the capped EU-ETS traded emissions sector”.

We must polish up this sentence. Here, the Government say that what they are doing will actually increase carbon emissions but that Europe is going to come to their aid. It is not very often we see a Conservative document saying that the European Union is going to come to our aid. It is probably worth it just for that.

I will share with the noble Viscount, Lord Ridley, figures that come, I think, from a briefing by the RSPB and which make reference to this. I saw this only this afternoon and have not had a chance to check out the reference, but it suggests that a modern wind turbine has a capacity of 2 megawatts and is expected to avoid emissions of over 1,880 tonnes of carbon dioxide in an average year. I will share that reference with him and, as with all these things, we will trade statistics. However, that and the Government’s own impact assessment suggest that there will be a reduction.

I am not going to press this, but it has been useful to flush out some of the Government’s thinking on this. No doubt we will return to some of these issues when we come to look at periods of grace.

Energy Bill [HL]

Debate between Lord Bourne of Aberystwyth and Lord Wallace of Tankerness

Wednesday 9th September 2015 Lords Chamber

[Lord Wallace of Tankerness (LD)]

My Lords, when we return on Monday for the third day of Committee, we know that we will be dealing with some of the more controversial parts of the Bill, not least on Clause 60. The Government have announced that a grace period will be incorporated into the legislation, and have been seeking views on the draft proposals. Can the Minister indicate to the Committee that, before the next Motion that the House do resolve itself into a Committee upon the Bill, we will have an opportunity to see the amendments? They are important, of course, not only to the industry but to your Lordships’ House if we are to carry out our proper job of scrutiny.

[Lord Bourne of Aberystwyth]

I am grateful for prior notice of this question from the noble and learned Lord, Lord Wallace. I can update the Committee on this. I have been chasing the impact assessments over the last period. As things stand, and I think I probably indicated this in passing in the debate on Monday, we are carefully reviewing the feedback and evidence provided during the engagement exercise to ensure that the final policy strikes the right balance between public interest and the interests of developers and the wider industry. I am sure noble Lords appreciate the importance of that. I will aim to bring forward any government amendments in relation to this policy as soon as possible. If I have any more information on the dates when that will happen, I will share it with noble Lords, but I do not think that that will be ahead of the debate on Monday.