Lord Whitty
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Lord Whitty Excerpts
Lord Whitty
My Lords, the only interest I declare is that I was a member of the campaign that persuaded the previous Government to adopt feed-in tariffs in the face of some reluctance in Whitehall. I think it was in November 2008 that my noble friend Lord Hunt of Kings Heath—a most enlightened Energy Minister—reacted positively to a Motion which had been tabled by no less a person than the noble Baroness, Lady Wilcox, then the Conservative spokesperson on DECC, to whose Motion was added no less a person’s name than my own.
The original amendment had no limit but led to the Government proposing the 5 megawatt limit, which dealt with the majority of schemes that we had in mind to benefit from that. The terrible thing is that that policy has worked. The decision, which was welcomed at the time by the parties which became the coalition, was also welcomed by and large by the industry. As the noble Lord, Lord Lucas, has said, it led to plans being brought forward, investment funds being found, schemes being established and many more schemes being proposed. However, the new Government decided that they would have a review just as the policy was getting off the ground. The review took a bit of time. They then got round to announcing the new rates. The initial rates were perhaps not entirely susceptible to rational justification but provoked the desired result. As noble Lords have said, investment has been stopped in its tracks by the 70 per cent cut in the feed-in tariff subsidy provided for schemes of between 50 kilowatts and 5 megawatts.
Other noble Lords will no doubt also have received representations from firms and organisations saying that this decision stopped well advanced plans in several parts of the country. Certainly, firms in Somerset, Cornwall, Yorkshire, the West Midlands and Scotland have approached me, and all say that plans which would otherwise have come forward have been stopped in their tracks. The whole point of this policy was to bring forward such investment. It was pump-priming in the sense that it drove down the price of solar energy. According to the Government’s own impact assessment, the price of solar energy came down by 30 per cent. In other words, as I say, the policy was working. That is rare enough in energy policy; to stop it after a few months because it is working seems to me bizarre in the extreme. The idea which is occasionally put about by the Government or other commentators that originally the policy was intended only to encourage domestic solar panels on housing, or small groups of housing, is absurd.
The reason why we wanted to move beyond 50 kilowatts was precisely because we were looking to semi-commercial or larger activities. For once, I cite myself, seconding the Motion of the noble Baroness, Lady Wilcox. We were talking about single-site operators; we were talking about farmers; we were talking about all-district heating schemes; we were talking about individual large buildings, schools, university campuses, community projects and small industrial estates. Those were exactly the sites on both the public and community side and the commercial side which we were attempting to encourage to adopt solar energy by extending the limit to 5 megawatts. The idea that it has been a distortion that the benefit has gone to farmers and industrial operators is quite wrong.
One reason we proposed that was that most such schemes would involve single-site operators who would not be that interested in the ROCs market, that ROCs were an inadequate incentive for them and that feed-in tariffs would be a much better way of mobilising that market. So it proved, as it has in other countries. Two or three days ago, I had an e-mail from one of my friends, who has no particular interest in the field, who was driving through Germany, remarking on the farms that he was visiting and passing, many of which ran on solar energy, and the solar panels on public buildings, flats and so forth. Germany has made a major investment in solar energy and, as a result, there are about 100,000 jobs in Germany in the solar and related installation industries. It was working elsewhere; it was beginning to work here; but the Government stopped it in its tracks.
I must address one other issue which was touched on by the noble Lord, Lord Lucas. Other noble Lords will have received a representation from Which?. I have often acted as consumer champion in this House, as has the noble Baroness, Lady Wilcox, who proposed the policy. We have to counter that argument. It is true that the cost eventually falls on the consumer, but that is true of every proposition to try to change the energy mix. The cost of ROCs eventually falls on the consumer. The cost of CERTs eventually falls on the consumer. The cost of various other schemes has all fallen on the consumer. That is an argument not for changing one bit of the green energy incentive plan but for looking at it in its totality.
I would have understood if the Government said: “We are looking at this in the light of trying to get a more rational system whereby, instead of different forms of subsidy employing dramatically different implied prices of carbon, we get something more consistent”. I would have understood if this had been part of a policy to ensure that the burden on the consumer was more fairly distributed than under the present system, which is almost a poll tax on energy consumers. That is not what is being said. The Government are not even saying that they are looking at the feed-in tariff consistently across the range of applications. Instead, we have hit a particularly promising and successful policy before it has really got off the ground.
The Minister’s colleague, Greg Barker, has spoken movingly and convincingly about his commitment to decentralised energy. As the noble Lord, Lord Lucas, said, this is the ultimate in decentralised energy in that it is very local, does not require a huge amount of connections and can operate without a huge burden on the grid. I do not understand why the Government have done this—or perhaps I do. Within the Minister’s department—which, generally speaking, I think is one of the better Whitehall departments—there was resistance even when the previous Government were trying to change the position. It took a lot of overturning. I was very grateful to my noble friend Lord Hunt of Kings Heath, who was able to face out that opposition. More importantly, it faced opposition from the Treasury.