Feed-in Tariffs (Closure, etc.) Order 2018
Debate between Lord Grantchester and Lord Bishop of Salisbury
The Lord Bishop of Salisbury
My Lords, I support the noble Baroness’s Motion of regret. It is almost inevitable that a debate such as this will range more widely than the specific issues that the noble Baroness is focused on. I hope your Lordships will forgive me for beginning in Salisbury, my cathedral city, on a day when there has been a considerable amount of reflection about events there a year ago and their significance for the city and internationally.
We were grateful for the Prime Minister’s visit earlier today. I particularly thank the council, Wiltshire Police and the fire and ambulance services, as well as the district hospital, Porton Down and the military, for their commitment through the year. Wiltshire Council has led a programme of recovery. Although business is still badly affected, we are making progress. We are grateful for the involvement of the noble Lord, Lord Henley.
From those ghastly events that began to unfold a year ago, we have learned not just about the need to recover but about using a crisis as an opportunity to rethink what sort of city Salisbury can be. The same is true of the environmental crisis we face. Wiltshire Council recognised last week that this climate emergency is such that it committed to make Wiltshire carbon neutral by 2030. There is a real sense of urgency locally about what this means. For the Lords spiritual, this is about the care of God’s creation and living out of reverence for life with a spirituality that addresses the issues of the day. Species depletion, pollution, soil degradation and climate change are all strongly caused by us—human beings.
The UK gave strong leadership at the Paris summit in 2015. There are areas where we have led strongly. There are huge business opportunities as we develop new technology to support a carbon-neutral future. Rather than seeing this as a burden, it is a much more attractive possibility to see that we are doing this for the love of creation and life. There are opportunities for development and growth within this. A different sort of future is being glimpsed. The urgency is such that we do not know whether we are too late. However, the implications are severe. We therefore sense the urgency of those who talk about extinction rebellion and the more apocalyptic scenarios presented to us on a regular basis.
The purpose of biblical apocalyptic is not to paralyse but to encourage a radical change of life. It draws on past experience to understand present circumstance, and reveals truth in such a way as to change behaviour: to encourage good action with faith, strong values and creative purpose. We need both vision and purpose. A task without a vision is a drudge, and a vision without a task is an illusion; but a vision with a task is the hope of the world. The task of this House is both to help envision the future and to work out practical policy, in reality. What steps do we need to take to move from where we are to where we need to be?
There is a huge amount happening. At the climate change summit in San Francisco in September, Christiana Figueres, who chaired the Paris summit, said that the response to climate change is happening at a pace that few of us could have hoped for 10 years ago. She said that we are making progress through good climate leadership, market forces and the digital revolution. At that summit the glass was very much half-full, but there are days when it feels less positive. By the Government’s own admission, the very sharp decline in feed-in tariffs last year removed 18,000 jobs from the economy. There is a very subtle balance between supporting new technology, enabling public engagement and creating a fair marketplace in which people who want to do the right thing are enabled to do so with some ease.
Energy is subsidised in a variety of ways. The noble Baroness said in her opening remarks that all energy sources are subsidised. We need to develop a range of resources, but we need to focus now on developing carbon-neutral, sustainable energy supplies in which solar, wind and tidal will play an increasing part. The development of solar energy still has some way to go.
The climate change committee is doing some work on what is needed for the UK to contribute to the global target of no more than 1.5 degrees centigrade warming on pre-industrial levels. A lot of quick wins need to be made. New houses should be built to the highest environmental standards; retrofitting them is more expensive and less satisfactory than building really energy-efficient homes with good insulation. Similarly, we need to develop micro solar projects: the sorts of things that have been developed on many houses. They depend on a simple relationship between consumption and production, and the feed-in tariffs recognised this. The gap that has opened between people producing solar energy in their homes and contributing to the national grid but not being paid for it seems quite extraordinary. We need to encourage people to do the right things with their own homes, and to develop good local micro-projects.
The purpose of this debate must be to point out the inconsistency of government approach between vision and reality. I am grateful to the noble Baroness for securing the debate. I add my voice to those who ask the Government to review their actions so as to connect vison and reality in ways that will encourage all of us to do the right thing at a local level.
Lord Grantchester (Lab)
I thank the noble Baroness, Lady Jones of Moulsecoomb, for bringing the attention of the House to this negative SI. I have always found the designation of instruments as affirmative or negative rather arcane, and either can be the case following substantial changes in government policy. I thank your Lordships’ Secondary Legislation Scrutiny Committee for recommending that the order be brought to the public interest; otherwise, it would have become operable without comment or scrutiny under the negative procedure. It certainly follows the Conservative Government’s pattern of behaviour to cut, curtail, restrain and restrict sensible, positive climate change policies.
In 2015 the new Conservative Government announced that they were going to scrap green taxes and levies in general, and in particular that the tariff for the generation of renewable energy to new entrants under the FIT scheme would end in March 2019. With so many policy swings, the result is that the UK is no longer on course to meet the fourth and fifth carbon budgets recommended by the Committee on Climate Change; wind and solar deployment have been severely curtailed, resulting in a severe recession in the industry; and policy reversals have shattered investor confidence. Many important projects, such as CCS, have also been cancelled and scrapped. All this is at a time when the Intergovernmental Panel on Climate Change has come forward with updated warnings about global temperatures by 2050.
The order takes advantage of the timed scrapping of the tariff for the generation of renewable energy under the FiT scheme and adds to it by scrapping the export tariff on surplus small-scale generated electricity to the grid, so that both coincide. The Government knew there would be serious concerns about this decision because they consulted on it, with the result that a massive 91% of responses opposed the plans, but they carried on anyway. That such a large proportion of representations against the change were ignored raises the question of why industry and the public should bother engaging with the Government. What can the Minister say to convince the public that it is worth their while to engage in consultations in future? Will their expertise be listened to?
As the Motion points out, future entrants to small-scale generation will have to provide surplus electricity to the grid for free. Respondents to the consultation are correct that this change of policy is incompatible with the Government’s climate change targets and responsibilities. It can have only a destabilising effect on the renewables sector and jobs. It denies a route to market for small-scale generators that encourages everyone to do their bit to alleviate climate change. Of course, as technology develops the costs of low-carbon generation decline and over time there will be less of a need for support, but it must also be pointed out that this is consumer support, not government support. Of course costs on households must be kept to a minimum, but what are these costs? The impact assessment points to an estimated cost saving from scrapping this scheme of £45 million a year from 2021—a whole £1 per year to the average household. Is that material for this disruption?
Yet the Government admit that there is still a need for a scheme to encourage small-scale generation. It is indeed still necessary. The Minister for Energy and Clean Growth, Claire Perry, recently said that,
“nobody should be providing energy to the grid for free”.—[Official Report, Commons, 8/1/19; col. 159.]
The Government agree that new entrants will still be needed but they have no replacement. They are consulting on their new scheme—the smart exports guarantee, or SEG—in recognition that the small-scale low-carbon generation electricity market is not yet fully developed and support is still required. It is still a fledgling market and a scheme is still needed but the Government admit that they have not got it ready, so why scrap the existing scheme prematurely? The scheme could continue with less disruption, still with value for money, while the consultation was completed and a new scheme drawn up. How long do the Government expect to take between the end of this consultation and having a smart exports guarantee scheme ready?
The order includes an element of levelisation—charges on suppliers for costs—and the Government would wish to build on suppliers providing remuneration to small-scale low-carbon generators under their new SEG scheme. However, the Solar Trade Association is lobbying for a minimum floor price set at a fair market rate. What guarantee can the Minister give that small-scale generators will not be left in a vulnerable position under these government plans and will be provided with a fair and competitive price? Why not gain experience of this levelisation scheme, continue with the current policies to prevent a clear gap opening up in the market and withdraw the order? Why rush to close the FiT scheme?
The consultation has been damaging to the reputation of the Minister’s department. Yes, cost-control measures need to be developed to be effective and proportionate from an administrative perspective, but the scheme has not run its course. The simple question to the Government is: why do you want to do this now?
The noble Lord, Lord Teverson, reminded the House of the Smart Meters Act, which highlighted the Government’s turmoil on that matter. We offered the Government more time to get it right. He will remember that the Government foolishly rejected that offer. The turmoil continues.