(10 months ago)
Commons ChamberI would like to speak to our amendments 17, 18, 19 and 20, to comment on other amendments before us today and then to place all this into the context of the Bill as a whole by way of what will effectively be a stand-part contribution. This Bill remains an ill-advised, pointless piece of political posturing—
That was the mild version.
As the right hon. Member for Reading West (Sir Alok Sharma) has informed us, the Bill legislates for something that happens anyway. It will make no difference to bills, according to the Secretary of State. It will make no difference to our energy security, according to the former chair of BP. It will undermine the independence of the North Sea Transition Authority, according to the NSTA’s own board, and it and will reinforce the perception around the world that the UK is rowing back from climate action, according to the former COP President, the right hon. Member for Reading West. We regret that this insubstantial and damaging Bill has proceeded this far, and we will vote against it on Third Reading.
We do not need this one-clause Bill. We need instead a strategy for managing the North sea that supports our energy security, meets our climate commitments and secures the economic and jobs benefits of the transition to a low-carbon economy. We would have liked to debate a new clause setting out a new principal objective for the North Sea Transition Authority that would have put such a strategy into effect. However, because the Bill is so short and tightly drawn around the narrow issue of mandatory licensing rounds, amendments to put a more sensible strategy into place are regrettably not in order. We must therefore take the Bill on its own terms, even if that means treating it with significantly more respect than the drafters have treated this House with in presenting such a trivial and nakedly political proposal.
We have in the Bill at present two tests that should be passed if the Oil and Gas Authority is to proceed with mandatory licence issuance, and we know that the two tests cannot be failed. It is a fact that if properly drafted—we might come to that in a moment—liquefied natural gas will always be more greenhouse gas-intensive in production than UK natural gas and we will always be in a position where gas and oil produced in the UK and in a declining North sea field will not meet our total demand for gas and oil.
I learned in my first year at university—as I think the Minister did, because he did a similar degree to me—that a proposition that cannot be falsified cannot stand as a valid proposition. Here we have two completely non-valid propositions in the Bill. They are bogus and cynically contrived to give the appearance that something has to be achieved before mandatory licencing takes place. At the very least we need a test or tests that can be failed and that produce a proper level of judgment into the advisability of proceeding with such mandatory licences. The best test surely has to be whether such action is compatible with our climate change goals. The Government had previously introduced climate change compatibility tests into production generally. It is strange that these appear nowhere in the Bill.
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I have listened very carefully to the debate and I congratulate the hon. Member for North Devon (Selaine Saxby) on securing it.
Overall, we have had a thoughtful debate about the difficult issues facing UK energy production, including what sources it is right or wrong to use, subsidies that might be put in place, and arrangements for the production of comparatively low-carbon energy that could provide power more cheaply and efficiently, as well as, most importantly, on a lower carbon basis.
As the hon. Member for Mid Derbyshire (Mrs Latham) mentioned, undoubtedly a while ago biomass was thought to be a simple proposition for power production that was fine in terms of the overall carbon cycle: it uses trees that grow again, thus balancing the CO2 put into the atmosphere through burning. Actually, the same is true of gas power, for example, only carbon has been sequestered in the ground over many millions of years and now we are putting it back into the atmosphere. It is all about cycles and the carbon replacement period, which is an important initial point to consider. The debate has moved on considerably, because people are thinking carefully about what those cycles mean for carbon replacement.
We need to question if it is ever right to use thermal means to produce power. We currently have 200 biomass generators in the UK, producing 88% of UK power. In addition, whether or not we regard burning wood waste and other materials for power as unacceptable, we have 54 energy and waste plants across the country that produce some power, half of which produce a lot of heat that can be used for district heating purposes. They ought to come into the carbon balance equation that we are trying to achieve.
We have heard today an incontrovertible point: taking whole trees, burning them for power and transporting the product of those trees across large parts of the world is clearly not the best use for them. That is particularly the case if those whole trees have not been grown in farmed or managed forests but in primeval ones, where they have captured carbon for many centuries, and are being clear felled and used to fill a hole in energy production.
Would my hon. Friend also accept the distinction that a managed forest for production timber and biomass has nowhere near the biodiversity that there is in the primary forests that we have been talking about? It is a matter that we cannot look at simply in terms of carbon emissions; we have to look at it in terms of wider sustainability and the biodiversity of species.
Yes, indeed, we need to take careful account of the points my hon. Friend has made about wider biodiversity issues. However, we have sources of material—starting with the idea of managed forests, under certain circumstances, or energy crops, under other circumstances—that are much shorter in their use and carbon sequestration, such as miscanthus and short-rotation coppicing of willow. Those can be produced with a very short time of burning and resequestration. However, as my hon. Friend has said, there may be other environmental consequences attached to the practice.
(2 years, 2 months ago)
Commons ChamberI agree about the difficulties under clause 16. Does my hon. Friend share my suspicion that, actually, the designated companies are precisely those renewable and nuclear generators that have not previously entered a contract for difference? This is simply intended to be a stick to force them into a voluntary contract for difference with the Government.
My hon. Friend makes a good, if somewhat speculative, point. As the Bill mentions, the Government are seeking to regularise the status of various renewable generators into some form of CfD arrangement, but of course the “compensation” one might get varies according to the status of those particular generators that do not have a CfD and are getting their remuneration by other means.
Of course, there are generators in this particular area that are not making super-profits, and indeed are not making profits at all, because in most instances they are community-owned wind farms with a large number of shareholders. The purpose of those shareholdings is, among other things, to keep bills down by paying dividends from the wind farm. Such arrangements should clearly not be designated in the same way as other arrangements, even though these wind farms are perhaps not in receipt of a contract for difference and may look like a number of other arrangements.
My plea is that, first, the Government should define, as soon as possible, what is going to be designated and how it is going to be designated. That should go well beyond what is in this Bill and ensure that those generators that are designated really are those that should pay into a scheme. After reading the Bill, I think it is possible to make those changes so that designation is fair and equitable. I am sure that the Government will, very shortly, want to come out with a scheme that enables that to happen. I will certainly be on the phone to the Minister if it does not happen very quickly.
(8 years, 3 months ago)
Commons ChamberIndeed, yes. That is now two stabs to the heart of the Minister’s career.
In his responsibilities and those of his Secretary of State, the Minister has a problem arising from the flurry of policies over the past year on the long-term considerations relating to climate change effects. If his new Department lets those policy changes lie, or runs further with them, the problem will be exacerbated, and his problem of writing a low carbon programme will be magnified.
The new Department benefits from particularly good appointments in the form of Ministers who completely understand and are at ease with the question of what we need to do, where we need to do it, how we need to do it and what the effects will be. We need to identify where those effects may continue to be felt outside the new Department. We can point the finger at what happened with some of those changes under the previous Department of Energy and Climate Change, and we can point the finger in the direction of the Treasury. During the latter stages of the previous Government and in the first period of the present Government, we had the Treasury’s energy and climate change policy and the Department’s energy and climate change policy, and the two rarely coincided. Let us guess who came out on top in terms of policy direction.
My first plea, coupled with kindly advice to the Minister, is to get on top of the Treasury straight away. If Treasury domination of energy and climate change policy is allowed to continue, regardless of the long-term climate consequences, the writing of a new carbon policy will end in tears. To illustrate that, we can look at the previous carbon plan, which came out in December 2011. That plan not only contained some bright ideas, but set out where we were, where we wanted to be in 2050 and how the transition would be undertaken in each of a series of sectors, and that was analysed thoroughly for those sectors.
In the context of the 40% emissions cut that we are now looking at in the European INDCs, the assumptions underlying a low carbon plan are important. How effectively do they cover where we are now, where we are going to be in 2050, how we make that transition and how that transition works in 2030, which is the period that we are now considering? The carbon plan 2011 is clear about carbon saving, the green deal and ECO. It envisages that all practical cavity walls and lofts will be insulated by 2020 and up to 1.5 million solid walls will be insulated. We know that that has gone. There is no longer even a remote chance of such an achievement, particularly with respect to solid walls and probably also with respect to other forms of insulation, because the green deal has gone and ECO has morphed into a pretty restricted version of the original ECO. Yet, the Committee on Climate Change, in its preamble to the fourth carbon budget, suggested, as an assumption in that carbon budget, that by the early 2020s over 2 million treatments of solid-wall properties would have to be undertaken as a central contribution to carbon reduction. So that has gone.
The 2011 programme says carbon capture and storage will
“make a significant contribution by 2030”.
In the scenarios modelled, it is estimated that CCS will contribute as much as 10 GW. Well, that has gone. The Treasury managed to bundle CCS into a cupboard very neatly just a little while ago. Personally, I thought that was one of the biggest enviro-crimes committed by the Treasury, in terms of its policies of cutting off the fundamental route to decarbonisation of remaining baseload power over the period and apparently not worrying about the consequences.
The 2011 carbon plan says:
“From 2030 onwards, a major role for gas as a baseload source of electricity is only realistic with large numbers of gas CCS plants.”
We have committed ourselves to close down coal by 2025, although we have yet to see the consultation on that, but that is to be undertaken, it is stated in the relevant consultation, only if the progress on building new gas plants is sufficient to allow that to happen—that is, the commitment is to phase out coal, but to replace it with a new dash for gas. Yet, the carbon plan and, indeed, the Committee on Climate Change indicate very clearly that gas itself can be maintained as a baseload only if it has a substantial amount of CCS attached to it. We are apparently going ahead with the dash for gas over the next period without any thought that in the reasonable future CCS may come in as far as gas itself is concerned. That has a substantial impact on our ability to meet the fourth and fifth carbon budgets over the next period.
The low carbon plan says:
“Looking to the future, between 21% and 45% of heat supply to our buildings will need to be low carbon by 2030”,
but the then Secretary of State warned last year that we are failing badly on our 2020 heat targets and there is no chance at present of getting to our 2030 target, so that contribution has also gone.
Finally, let me just pick out some of a larger number changes from the 2011 report. The report said
“all new homes from 2016”
will “be zero carbon”, which would make a considerable contribution to the fourth and fifth carbon budgets. Well, of course, those homes will not be zero carbon, because the zero-carbon homes plan has also been pulled.
My hon. Friend always speaks with such authority on these matters. In relation to CCS, is he as concerned as I am that the cross-Yorkshire and Humber pipeline has just had its planning deadline extended by the Secretary of State? It looks as if, yet again, these projects are being put into cold storage.
There is perhaps an irony in the words “put into storage”, because the whole purpose of the exercise in the first place is storage. However, my hon. Friend is absolutely right that the whole question of what will happen with not only CCS pilot projects but the infrastructure and the prospects for CCS as a whole appears to have been put into the long grass, and that is a profound problem as far as our future climate change commitments are concerned.
It is going to be hard to write a convincing new low carbon programme in the light of just some of these things unless the Department gets to work very rapidly and unpicks the damage to the long-term low carbon prospects that have been underlined by the savage changes of the past year. I know that the new Minister is committed personally to making sure that the consequences are right, so that is perhaps an early task on his desk. Let us turn this round so that we can put into the low carbon programme positive consequences for the future rather than the negative consequences that there are at the moment.
These two issues go very closely together. We have to get on, very soon, with doing our bit on ratification. I am encouraged to hear from the Minister that if the documentation is not imminent, perhaps it is pretty imminent.
(11 years, 8 months ago)
Westminster HallWestminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
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The hon. Gentleman makes a very interesting and worthwhile point, which I perfectly understand. I am sure that if I go into consumption emissions versus production emissions, you will call me to order from the Chair, Mr Gray, but we must not pat ourselves on the back for seeing our own production emissions drop if we are still driving the very consumption model that generates the emissions elsewhere around the globe.
The Committee on Climate Change estimates that in the absence of a 2030 target, offshore wind might cost as much as £140 per megawatt-hour. With such a target, the cost, under the committee’s scenario, drops to £100. The difference between the two costs is about the presence of a competitive supply chain in the UK. We do not have one, but what we do have is at risk.
Let us remember that the Government’s proposals are not that we should set a target in 2016, but that we may not set one until at least that date. Those are two very different propositions.
Would my hon. Friend also care to include the provision that not only can the Government not set a target before 2016, but that there is no level at which the target might be set after 2016?
My hon. Friend is, as ever, thoroughly astute on these matters. He was a tremendous champion of the decarbonisation target when the Bill was in Committee, and he speaks with great knowledge on the subject. He is absolutely right. Only last night at a dinner, I heard the Secretary of State talking as if this was a great leap forward, that this would be the only Government who had legislated for a decarbonisation target. At that point I almost spluttered into my chicken, because we have not legislated for a decarbonisation target. [Interruption.] And it was beef anyway, says my hon. Friend the Member for Southampton, Test (Dr Whitehead). What we have done is make provision so that, at the appropriate moment, it would not be impossible to legislate.
Let me return to the key point that I wish to address, because I know that other Members want to enter the debate. Although it is good to have a debate and a real exchange of views through interventions, I fear that I must press on if other Members are to be able to speak. Siemens told us that if we wait till 2016 to set a decarbonisation target for 2030, it and many of its competitors are likely to delay or cancel planned investments in the UK.
In March, six of the largest supply chain investors wrote to the Chancellor, the Secretary of State for Business, Innovation and Skills and the Secretary of State for Energy and Climate Change to register their strong support for the decarbonisation amendment tabled by the hon. Member for South Suffolk (Mr Yeo) and me, which to date is supported by 41 Members from—I am pleased to say—all parties in the House. They wrote:
“Projects can take 4-6 years from investment decision to construction and operation. We are already close to the point where lack of a post-2020 market driver will seriously undermine project pipelines. Supply chain investment decisions depend on reasonable assurance for manufacturers that a production facility to be constructed during this decade, costing hundreds of millions of pounds, will have an adequate market for its products well into the 2020s.
Postponing the 2030 target decision until 2016 creates entirely avoidable political risk. This will slow growth in the low carbon sector, handicap the UK supply chain, reduce UK R&D and produce fewer new jobs. This is not in keeping with the Government’s aspirations for the UK to be the global leader in low carbon technologies such as offshore wind and marine.”
The amendment would require a 2030 decarbonisation target for the energy sector to be set by the Secretary of State, on the advice of the Committee on Climate Change, by next spring, which would ensure that the Energy Bill sent a coherent signal to investors. By securing investment in a competitive UK supply chain, the amendment would not only reduce the cost of decarbonising our energy infrastructure, but ensure that the investments that we are committed to make produced a significant growth multiplier and contributed to the essential rebalancing of the British economy.
Recent peer-reviewed studies from the London School of Economics and Berkeley have concluded that the fiscal multiplier for productive infrastructure investment in current economic conditions is likely to be about 2.5 in the UK. The amendment would ensure that the £7.6 billion produced secure investable propositions, creating significant numbers of construction jobs and long-term high-value jobs in communities around the UK, where both are scarce.
(13 years, 1 month ago)
Westminster HallWestminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
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I will limit my remarks to one or two points. One disadvantage of having such a knowledgeable, far-sighted and competent Committee Chair is that after he has spoken there are few sensible contributions left to make. I will, therefore, confine my remarks to one or two less sensible points, which I hope will add something to the debate.
In the Green Paper, and certainly in the subsequent White Paper published after the Committee’s report, one must look a long way to find comments on electricity market reform. Although the White Paper addresses a range of topics, such as capacity, the carbon floor price and energy performance standards, its central oddity is that it leaves the electricity markets as they were designed 10 years ago under NETA—the new electricity trading arrangements. It leaves the electricity markets in pretty much the same place, with the same assumptions and mechanisms. However, it countenances a very different landscape as far as electricity trading is concerned.
When NETA was set up, there was a substantial number of wholesalers selling and retailers buying. That is no longer remotely the case—not by conspiracy, but through the accretion of suppliers, generators and retailers into the big six. By accident, what has come about is, in effect, a cartel—we have to say that—that essentially hedges, using the strategies that my hon. Friend the Member for Brent North (Barry Gardiner) mentioned: it buys on the futures market and sells to itself, using the same market mechanisms, and therefore pretty much bypasses most of the things that NETA was originally set up to do.
When NETA was set up 10 years ago, it was carbon-blind. Its purpose was to secure, among other things, the cheapest price between wholesale and retail. In the early stages, it looked as though it was substantially succeeding in doing that, until other factors took over. However, there was the emergence of what one might call the other things that are central to the electricity market reform White Paper. To some extent, they were mechanisms that mediated that central electricity market. The renewables obligation, for example, was a mechanism attached to the original NETA/BETTA system to bring renewables to market; to underpin emerging technologies; and, in an echo of the recent debate on feed-in tariffs for solar photovoltaics, to recognise that over time the obligations may change as the technologies come to market. Nevertheless, the aim was to underpin those technologies in the first place.
Now, as hon. Members have said, we need to decarbonise our electricity market rapidly and invest substantially, not just in replacing capacity but in providing additional capacity, because of the nature of the capacity that we are bringing on board as far as the low-carbon market is concerned. We are talking about perhaps £200 billion in investment. All but two of the big six companies have pretty much borrowed up to the limit of their balance sheets, so we need important mechanisms to secure not just the good running of the market, but low-carbon investment on the basis of good value for customers. I do not underestimate at all the breadth of the challenge implied by the electricity market reforms.
There are various things in the reform. The central electricity market remaining must have a substantial question mark against it, with regard to whether it is fit for purpose as one of the central mechanisms driving all the demands forward. I think—evidence was submitted to the Select Committee on this—that a single purchaser pool of some description is a necessary way of dealing with the issues of cartelisation and the lack of transparency in the wholesale market that has emerged. There must also be a question mark against the contract for difference as set out in the White Paper.
I absolutely agree with what my hon. Friend is saying. Will he say something about liquidity and the ability of smaller companies to enter the market with regard to the changes that he is discussing?
My hon. Friend has just stressed that point. Given that I have about one minute left, expatiating on liquidity to any great extent is probably beyond my abilities. However, he is absolutely right to raise the question of liquidity in the market and the fact that as a result of the lack of liquidity, small companies are pretty much shut out from gaining a foothold in the market. Whatever is done about the big six, that is a very important issue.
Finally, I want to emphasise two things. First, the contract for difference as currently proposed conflates mature technology, the overall costs of which will not change, with emerging technology, where costs may well change. That is to say, it rewards, and particularly in the future will reward, old nuclear technology, as well as new nuclear power stations, for their output. That seems—the Committee alluded to this—a considerable concern, given the pronouncements that continue to be made that the Government are in favour of new nuclear but with no public subsidy. It is necessary at this stage to say either that there will be no public subsidy—that nuclear will not be rewarded for being a mature technology in the way that emerging technologies are, but will take its chance in the market—or that we need to do something about public subsidies for nuclear, for reasons that may be perfectly honourable to consider, and we must be up front and deal with that. Electricity market reform continues to fudge that essential choice that we have to make.
Secondly, we have to enter into capacity payments with a clear understanding of demand-side analysis, which is substantially missing from the proposals in the electricity market reform White Paper. We need to consider capacity payments for energy efficiency and reduction in output, and in relation to things such as interconnectors and electricity storage, which will be an essential part of a balanced, very low carbon economy that takes serious account of the demand side as well as the supply side.
Trying to deal with the entire landscape of electricity market reform in eight minutes flat was a difficult challenge. I hope that I have contributed a few thoughts to the debate, and I look forward to the Minister’s response to a number of issues that hon. Members and I have raised.
(13 years, 11 months ago)
Commons ChamberI do agree with that difference. Also, however, if the agency is not there in order to make those changes, if there is not the necessary financial devolution, and if there is the current extent of cuts to local government services, then many of the aims and wishes for devolution of power to local government are meaningless. The Bill provides for no financial devolution away from the current system of considerable centralism as regards council tax raising, and the Secretary of State has the power to change any figures that the local authority comes up with in the way that it defines council tax.
Localism means ensuring that decisions are made at the right level. Under the Bill, there appear to be two types of decision on planning—the neighbourhood decision or the national decision, with nothing in between. The truth about localism is that decisions do not always have to be taken at the very lowest level, but they should be taken at the appropriate level. I, for one, want to live in a sustainable community. I want my waste to be dealt with efficiently and my transport to be run efficiently. All those things involve decisions planning and operation that are larger than local. Bearing in mind that the regional spatial plans and the national plans have been removed for everything but national infrastructure proposals, unless the Bill contains effective measures that enable effective co-operation to take place between local authorities, that gap will exist, and I am afraid that people will come to regret it in future years.
Does my hon. Friend agree that in order to resolve that issue it is important that the Bill should have a presumption in favour of sustainable development within the national planning framework?
Indeed, I completely agree. There should be such a presumption in the Bill and there should be considerable strengthening of the requirement to co-operate between local authorities, because the requirement in the Bill merely means that people have to talk to each other a bit.
If we are really localists in what we are doing, it is essential to get the different levels of planning right. It is not just about a neighbourhood decision or a national decision, but about getting the decision right in terms of what it means. If we come back to this House in a few years’ time having not built the houses and not given ourselves sufficient capacity to deal with this new era of waste and resource management, and if we have found that some of the decisions that we have taken at very local level mean that we have moved away from our climate change targets instead of making the necessary concerted effort to move towards them, we will seriously live to regret that gap in the Bill.
At the very least, we should ensure that this Bill is not enacted until a national planning framework is in place and the national planning statements have been discussed and sorted out by this House. The Bill must sit in a proper framework that means that local, regional and national planning work together for the benefit of the people who stand to gain most at local level.
The Bill draws two important aspirations of the Government into conflict. The Government have said that they want to be the most decentralising Government ever, and that they want to be the greenest. Those two aspirations are difficult to reconcile. To meet the renewables obligation and keep the lights on in the United Kingdom, the Government will have to deliver £200 billion of investment in energy infrastructure in just nine years. To meet their obligations under the waste directive, they will have to deliver up to £20 billion of investment in plant and equipment for new waste and recycling infrastructure in the same period.
Of course, it is right that local people have a say in local planning issues. However, the flaw in the Bill is that it peddles a myth that thousands of decisions taken by atomised local communities up and down the country will somehow amount to a coherent vision for the national and regional infrastructure that we all require. There is a false parallel between the responsibilities of elected parish councillors and Government Ministers. Parish councillors and the people who may constitute neighbourhood forums have an obligation to secure the best outcomes for their local community. Their vision is rightly limited to the immediate boundaries of their neighbourhood; so should be also their powers. Clause 90 specifies a duty on local councils to co-operate on the planning of sustainable development. I welcome that, but there is no obligation on them to co-operate positively to bring about sustainable development infrastructure.
The Government must take a wider purview. To relinquish that responsibility is not to devolve decisions about strategic infrastructure to local neighbourhoods, but to ensure that no one takes those decisions. It is not devolution of power, but abrogation of responsibility. My hon. Friend the Member for Islington North (Jeremy Corbyn) spoke eloquently of the inequalities that may result in housing and the provision of other services across the country as a result of the Bill.
Does my hon. Friend accept that the cumulative impact of the proposals on sustainability must inevitably be considered outside particular areas? Does he propose that a mechanism be placed in the Bill to reconcile local decision making, the duty to co-operate and the cumulative impact of the developments on sustainability?
That is exactly what I propose.
My hon. Friend the Member for Islington North made a powerful point about the inequalities that will accrue across the country, but my point is different. The failure of Government to take strategic decisions will not simply result in inequality, but will be to the detriment of us all. Regional strategies were abolished by the Secretary of State. A duty to co-operate is no substitute.
The national planning framework must provide a clear direction to councils to enable a network of energy and waste management sites and facilities. Such a direction should not be left to secondary legislation. The Government should introduce in the Bill a presumption in favour of sustainable development that accords with the national planning framework. The Bill will create uncertainty in the business plans of those who want to invest in our country’s infrastructure. That will be as devastating a block on development as the increased voice for those whom outsiders sometimes call nimbys.
The Bill suggests that a neighbourhood forum could be constituted by as few as three individuals, and that such individuals need not live in the area. Does the Secretary of State not think that giving membership to those who merely want to live in the area is, even by his standards, a rather slack criterion?
(14 years, 5 months ago)
Commons Chamber