Oral Answers to Questions
Debate between Alan Whitehead and Chris Huhne(12 years, 10 months ago)
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Dr Alan Whitehead (Southampton, Test) (Lab)
8. What steps he is taking to encourage households to improve their energy efficiency.
The Secretary of State for Energy and Climate Change (Chris Huhne)
The Government have established the energy efficiency deployment office to develop an overarching energy efficiency strategy. We will launch the green deal later this year, which will radically improve take-up of energy efficiency measures. We want every home to have a smart meter by 2019 so consumers have much greater control over their energy use.
Chris Huhne
The hon. Gentleman has clearly been hibernating over the past few months if he believes that we are not helping poor families. First, the warm home discount scheme, which is a statutory scheme for reducing costs, will disburse two thirds more money than was disbursed under the voluntary scheme operated by the Labour Government. Secondly, the affordable warmth obligation in the energy company obligation subsidy will take over from Warm Front. Thirdly, we have asked Professor John Hills to conduct a thorough review of fuel poverty, which will lead to some interesting and important recommendations.
Dr Whitehead
Does the Secretary of State accept that the ECO’s affordable warmth element, which comes to £325 million, is substantially less than the Warm Front commitment of £370 million and the CERT commitment of £600 million? Does he accept that that is a substantial reduction in affordable warmth for those on lower incomes? Even now, will he review the split in costs in relation to affordable warmth and those who can pay, or look for other methods of dealing with the issue?
Chris Huhne
It is important that the hon. Gentleman compares like with like. He should remember that what is available under the ECO subsidy helps holistically to improve the energy efficiency of the whole home and is not like the Warm Front, which was largely a boiler replacement scheme. That proposal is out for consultation and we are listening to responses.
Durban Climate Change Conference
Debate between Alan Whitehead and Chris Huhne
Dr Alan Whitehead (Southampton, Test) (Lab)
I congratulate the Secretary of State on the outcome of a conference that was widely regarded as unlikely to succeed, even in the objectives that have been set down now. It is substantially because of the EU’s negotiating position and the British role in it that that very good outcome was achieved, even though there is a great deal more to do.
Will the right hon. Gentleman expand on the role of Connie Hedegaard, the EU Commissioner for Climate Action, originally from the Danish Conservative People’s party, in careful negotiation, keeping the parties together and making sure that the EU presented a united front and that no one withdrew from that? Will he confirm that the EU position, which I hope will develop up to 2020, will have the full-hearted participation of the UK as the new treaty approaches a conclusion?
Chris Huhne
Yes, Connie Hedegaard led the European Union efforts very ably, drawing on her experience in Danish politics and then in Europe. That was a critical part of the success. I reiterate, however, that it is not merely a question of finding the right negotiating strategy, which is what the European Union did. The EU understood from the word go that it was crucial that we move pressure on to the big emitters, China in particular, from the other developing countries and that we establish that new relationship with a substantial number of developing countries. That was ably led by Connie Hedegaard.
The other thing that I would highlight is that when one gets into negotiations and has a number of essential asks, the negotiating counterparties have to believe that one is serious and not going to buckle. In the past it has been the case that some of the more herbivorous members of the European Union have been taken as willing to buckle. We did not do that on this occasion and as a result we got every single one of our asks.
Solar Power (Feed-in Tariff)
Debate between Alan Whitehead and Chris Huhne
Chris Huhne
My hon. Friend is correct. I wish the House had facilities to show a PowerPoint presentation at this point, as I am now holding up a chart showing what has been happening with the scheme. The rising curve represents the installation rate increase. The Opposition cite the Ofgem figure of £1, but that applies down in the foothills of the curve, and we are dealing with a rather different real world today. Installed capacity has doubled since August, and has increased by three times since June and by tenfold since the start of the year. The right hon. Member for Don Valley is laughing; she has obviously had no experience of attempting to manage a budget, because if she had, she would not be laughing at all. This adds real costs to the electricity bills of real people—people the Opposition claim to represent.
Dr Alan Whitehead (Southampton, Test) (Lab)
Will the Secretary of State provide the budget figures for the feed-in tariffs in the levy envelope up to 2015, along with the central analysis undertaken by his Department of how far over that budget we would be under present arrangements? Will he also explain the headroom his Department has for putting things right over that period, and compare that with how far over the budget his Department is according to its central impact assessments?
Chris Huhne
The hon. Gentleman is my neighbour in south Hampshire, so I was delighted to give way to him, and I wish we were able to address that fine granularity of detail, as he suggests. However, I shall place the graph I have been showing in the Library so that everybody can look at it. The situation is moving so swiftly that projections based on the current week’s figures would look rather more alarming than those for last week or the week before that. The real world is changing exceptionally rapidly. The impact assessment gives a clear statement of where we were at the point when the impact assessment was made. At that point, the figure was £26 on average energy bills for 2020 and the latest estimate is now up to £80—and at the high end of that if there is substantial growth. That takes me back to the point that if we do not deal with the issue quickly, we are not saving the industry, as the Opposition would like us to believe, but writing the death warrant for it. There would be a sudden cataclysmic fall in demand.
Oral Answers to Questions
Debate between Alan Whitehead and Chris Huhne(13 years, 1 month ago)
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Chris Huhne
I am grateful to my right hon. Friend for that question. Of course I am. I would be delighted to have discussions. I want to see jobs preserved both at Lynemouth and in the rest of the country. We hope that aluminium can continue to be produced in this country because, in our thrust towards low-carbon transition, we will need aluminium as part of the raw materials for that revolution.
Dr Alan Whitehead (Southampton, Test) (Lab)
Will the Minister urgently investigate the impediment that his Department is imposing on new entrants in the energy market by back-charging for levy obligations after a company has a certain number of customers in its roster? Will he make proposals to deal with that anomaly so that such entrants are not impeded?
Energy Prices
Debate between Alan Whitehead and Chris Huhne(13 years, 1 month ago)
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Chris Huhne
I certainly agree. We have been talking to Ofgem about this and we have been talking with the big six. I found it a very interesting proposal from Scottish and Southern that it was prepared to trade a substantial amount of its electricity in the wholesale market. Scottish and Southern said 100%—of course, that is 100% of the spot market; it does not mean that Scottish and Southern is prepared to trade 100% of its electricity. The devil is in the detail. We have to make sure that the forward market is also liquid.
I am absolutely committed. I am not in favour of the Opposition’s proposal that we should refer these matters to the Competition Commission, because for two to five years that would put a freeze on the whole market. None of the big six would need to do anything at all. They would be able to put their prices up with impunity, they would be able to cut their investment, they would be able to pay more dividends to shareholders, and we would have an awful long time to wait before we had any real reform. The reality is that we think that we understand enough about what is not right in the market, at the retail end and the wholesale end, and are working very hard with Ofgem to ensure that it is put right, which is exactly what we will do.
Chris Huhne
I am afraid that I have finished my speech, as delighted as I would have been to give way to my neighbour from Southampton.
Electricity Market Reform
Debate between Alan Whitehead and Chris Huhne
Chris Huhne
There is absolutely no doubt; my hon. Friend makes a very good point. Over the past year we have had a 30% increase in the price of gas, which has fed through exactly into consumers' gas prices and into electricity prices, too, because gas is such a significant part of how we generate electricity. By moving more towards low-carbon sources of electricity—renewables and nuclear—we will insulate ourselves against such price shocks. That is good news for the economy, good news for all businesses, whether they are in this area or not, and good news for jobs, and I hope that it will be welcomed in all parts of the House.
Dr Alan Whitehead (Southampton, Test) (Lab)
Does the Secretary of State agree that a targeted capacity mechanism almost inevitably becomes untargeted as it chases lagging investment? That inevitably also leads to overcapacity, at a high price. Does he accept that a representation market, coupled with interconnection, storage and demand reduction arrangements, goes with the grain of a low-carbon energy economy and the electricity market reform measures that he is proposing? If he does, why is he holding a further consultation on capacity mechanisms outside the time scale of his main proposals? Does he have no idea what a capacity mechanism might look like, and is someone twisting his arm in the whole process?
Nuclear Industry Safety
Debate between Alan Whitehead and Chris HuhneUrgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
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Chris Huhne
Dr Weightman makes clear in the report that he believes it will not.
Dr Alan Whitehead (Southampton, Test) (Lab)
Will the Secretary of State be considering the implications of the additional expense of new nuclear building as a consequence of the Weightman recommendations? Will he also be considering the present target of bringing one new nuclear power station on stream every nine months between 2018 and 2025 in the light of those additional costs? How fundable does he expect the programme to be?
Chris Huhne
As I said in my response to the question asked by the right hon. Member for Lewisham, Deptford (Joan Ruddock), the cost impact may well be limited by the fact that the programme is at the design stage. I can also tell the hon. Gentleman that the Government do not propose to subsidise nuclear reactors or to invest public money in them. The funding will be up to private investors, who have shown no lack of desire to finance a new nuclear programme.
Fourth Carbon Budget
Debate between Alan Whitehead and Chris Huhne
Chris Huhne
We are determined that there should be enormous growth opportunities for low-carbon goods and services in the UK, and I would like to highlight two things that our Department can deliver. The first is the certainty required to enable investment in the replacement of ageing power plant that we will need over the next 10 years. Ofgem has estimated a figure of £200 billion, which is roughly double the normal level of investment in the UK, so this will be important in powering the recovery over the next few years. The second is the provisions in the Energy Bill, the Second Reading of which took place last week. The green deal, which is set out in the Bill, will provide the opportunity for an enormous number of new jobs. We calculate that we will move up from the present figure of 27,000 jobs in the insulation sector to 100,000 by 2015 and that, at its peak, the policy will result in 250,000 jobs right across the industry, which will have to retrofit every home in the country. My hon. Friend is absolutely right to highlight the enormous job-creating potential for these industries, and we will keep that matter very much in the forefront of our minds.
Dr Alan Whitehead (Southampton, Test) (Lab)
I congratulate the right hon. Gentleman on coming out on the right side of the scrap in Cabinet over the fourth carbon budget. Does he accept, however, that according to the Climate Change Act 2008, a fourth carbon budget with a review in 2014 will not really be a fourth carbon budget in law? Can he confirm that a review in 2014 would not change the law as far as the fourth carbon budget was concerned? If that is the case, why should there be a review?
Chris Huhne
The key point of having a review is to make sure that in the tradeable sector, where we have industries exposed to international competition—and we want them to thrive—industries are not exposed to unique costs that will not be imposed on the competition in the EU. That is what the review is designed to achieve. Under the Act, any review will have to be preceded by a recommendation from the Climate Change Commission—and we have absolutely no plans to change that, so it will depend on recommendations from that commission.
Energy Bill [Lords]
Debate between Alan Whitehead and Chris Huhne
Chris Huhne
I do not agree with the hon. Lady’s assessment. It is important to deal with people in fuel poverty. The energy company obligation, as she pointed out, will enable us to fund green deal measures for those in fuel poverty. The ECO will ensure that people, such as the stereotypical little old lady in her extremely draughty home who could suffer from hypothermia, can enjoy more comfort and do not have to generate energy savings to install insulation. The hon. Lady is right that we want such people to have more comfort and to enjoy a higher temperature, because we do not want to see our fellow citizens dying from hypothermia. Providing more comfort is explicitly allowed for in the Bill, and we have just introduced legislative measures for the warm home discount. We want to ensure that there are means through the green deal to tackle the root of the problem of fuel poverty, and to deal with fuel poverty problems for those who have not benefited from that.
Dr Alan Whitehead (Southampton, Test) (Lab)
On the ECO, does the right hon. Gentleman regret agreeing with the Treasury cap on Department of Energy and Climate Change levy-based spending over the current funding cycle, under which any new levy spending—if it is so defined by the Office for National Statistics—would come within the levy cap? Under that scenario, what present levies does he intend to carve out in order to carve in the ECO?
Oral Answers to Questions
Debate between Alan Whitehead and Chris Huhne(13 years, 8 months ago)
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Chris Huhne
We are very keen to listen to Tata’s concerns, and both myself and the Secretary of State for Business have been very aware of energy-intensive industries. It is important to recognise that the costs of a move to the low-carbon economy depend on what we think the costs of staying with the fossil fuel economy are, and judging by recent moves in the oil market we may find that that is a volatile source of supply—and a rather costly one.
Dr Alan Whitehead (Southampton, Test) (Lab)
T1. If he will make a statement on his departmental responsibilities.
The Secretary of State for Energy and Climate Change (Chris Huhne)
In addition to my normal departmental responsibilities, we have commissioned a report from the chief nuclear inspector on the implications of the situation in Japan and the lessons to be learned. We have launched the renewable heat incentive to provide long-term guaranteed financial support for renewable heat technologies, and the Energy Bill has now been introduced to the Commons from the Lords.
Dr Whitehead
Can the Secretary of State clarify whether the carbon floor price that starts in 2013 will be £16 per tonne, as the Chancellor suggested yesterday, or £4.94 per tonne plus the European Union emissions trading scheme amount, as the accompanying Treasury document sets out? If the latter is the case, does the Secretary of State think that it will produce a considerable differential between electricity imported through interconnectors and electricity produced domestically, and what are his plans to deal with that?
Chris Huhne
The Chancellor is absolutely correct, because there is a carbon floor price, and it is designed to ensure that the price, which is composed of the emissions trading scheme and the carbon floor price, is as applied to electricity generators. He is very well aware, I know, of the potential implications of the carbon floor price for interconnection, and that has been taken into account in the Treasury’s decision.
Electricity Market Reform
Debate between Alan Whitehead and Chris Huhne(13 years, 11 months ago)
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Chris Huhne
I absolutely agree that we require long-term regulatory stability. That is one reason why we have been at pains to say that we will not change the terms on which investors relied when they made past investments. We want them to believe that when we put this framework in place they will be able to rely on a similar assurance of stability.
Dr Alan Whitehead (Southampton, Test) (Lab)
I strongly welcome the content of the statement on the future construction of energy markets and how they will underpin the move towards a low-carbon energy economy. The Secretary of State has said that there is currently a bias towards low-cost, low-risk fossil fuel generation, but it is more than a bias. The present build and planning permissions suggest that there is more gas in the pipeline than would cover the gap for reserve generation over the next period. The third of the four pillars he has mentioned involves capacity payments: how does he intend to fund those payments, and will he be able to direct them to ensure that reserve capacity is not overwhelmingly gas, as appears to be the case currently?
Chris Huhne
Clearly we want to have low carbon sources of supply, but I have made it clear that we are intending one of the three remaining demonstration projects on carbon capture and storage to be a gas project. Given the development of unconventional gas, there is a possibility that gas will provide a much more sustainable long-term source of supply than people had thought until recently. In those circumstances—carbon capture and storage applied to gas—gas may have a very important role in the long term, not just in the short term. Otherwise, I entirely agree. Capacity payments will be made on the basis of encouraging peaking plant, to deal with the ad break in “Coronation Street” when we all turn on our kettles, and to offset the intermittency problems that occasionally arise—the nightmare of the four or five cold still days in February when the wind turbines are not going and we need back-up capacity. The capacity payments will inevitably be made by consumers from their payments, but they will provide us with the assurance of supply that we have been proud to have in this country for a long time.
Oral Answers to Questions
Debate between Alan Whitehead and Chris Huhne(14 years, 2 months ago)
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Chris Huhne
I am a great believer in the virtues of the market and of the price mechanism, and I am sure that my hon. Friend is, too. It is fairly well established that if the price of something goes up, the supply of it tends to follow. If we provide a carbon price floor, as we intend to do, we anticipate that that will send precisely the sort of price signals to suppliers that will bring forward the capacity that we need to provide us with energy security in a low-carbon way.
Dr Alan Whitehead (Southampton, Test) (Lab)
When the right hon. Gentleman has discussed the matter of a carbon floor with the Treasury, has he raised the possible intervention contingency that might be necessary for a UK carbon floor? If he has, have they directed him to talk to the EU about common border-based carbon taxes?
Chris Huhne
The discussion with the Treasury will get under way later, after the comprehensive spending review. The hon. Gentleman will understand that the Treasury is otherwise engaged in a very serious mopping up of the legacy problems that we have already discussed. Later in the year, as part of the public consultation, we will go through all those issues, including the issues that impact on our EU partners.
Dr Alan Whitehead (Southampton, Test) (Lab)
In view of reports that the ambition of the green deal is shrinking to the extent of residual interventions in loft and wall insulation, does the Secretary of State agree that now would be a good time to review the idea that microgeneration should be outside the green deal? In view of the programmes that have already introduced stuff without cost to the taxpayer, will he now think again about putting those arrangements inside the green deal?
Chris Huhne
I am grateful to the hon. Gentleman for his question, especially given his impressive track record in this area. I can assure him that the premise of his question is incorrect. There is no scaling back of ambition on the green deal. Far from it, we are proceeding with what I believe will be a model of how to have comprehensive retrofitting of energy efficiency measures. On whether microgeneration should be incorporated in the green deal, I anticipate that providers of the green deal will want to provide microgeneration as well, precisely because of the substantial price incentives that we have introduced in order to make that happen. I do not think that it is necessary to incorporate microgeneration into the green deal, because it is an insulation package, but I have no doubt that householders—
Annual Energy Statement
Debate between Alan Whitehead and Chris Huhne
Chris Huhne
I am very grateful to my hon. Friend for that question. Nobody who has visited his part of the world can fail to be impressed by the professionalism and expertise in the area. Interestingly, such skills not only exist in oil and gas exploration, where it started, but are extending right the way across the piece. For example, companies that were involved in building rigs for oil and gas exploration are now involved in building bases for wind turbines. I can assure my hon. Friend that we in the Department are very conscious of the extremely valuable resource that we have in north-east Scotland among all those energy sectors.
Dr Alan Whitehead (Southampton, Test) (Lab)
I note the right hon. Gentleman’s reference to the ambition of the green deal that he is going to bring forward shortly. However, the Minister of State, Department of Energy and Climate Change, the hon. Member for Bexhill and Battle (Gregory Barker) recently ruled out the inclusion of microgeneration in green deal offers for homes. Does the right hon. Gentleman accept that, therefore, the green deal will effectively prove to be a small mouse rather than a mighty change? Does he accept also that, based on securitisation, bodies such as Eaga already use the feed-in tariff to offer home improvements, including solar photovoltaic cells, at no up-front cost? Why cannot he do that in the green deal?
Budget Resolutions and Economic Situation
Debate between Alan Whitehead and Chris Huhne(14 years, 5 months ago)
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Chris Huhne
The right hon. Gentleman mutters from a sedentary position that that was not mentioned in the Budget speech, but the Budget documents contain a clear commitment in that regard. It is very clearly something that we are proceeding with rather dramatically.
The point that I want to make is that this will be the first genuinely comprehensive attempt to make sure that all of our housing stock is retrofitted. We know that most of the homes that we will be using in 2050 have been built already, so we need a comprehensive way to get carbon emissions from our residential housing sector way down if we are to meet our 80% overall reduction targets.
Chris Huhne
Before I give way, let me make a couple of points about the economic significance of that approach. First, the potential increase in demand as a result of the creation of new industry will be absolutely enormous if we can get the Bill, the framework and the pay-as-you-save measures right. By way of indication, we would be talking, in practical terms, of 14 million homes that could be insulated with the support of the green deal. Purely arithmetically, if the average cost were £6,500, for example, we would be talking about a market worth literally tens of billions of pounds—£90 billion over a substantial period.
We are talking about creating a new industry that would be genuinely jobs-rich, as it would use skills already present in the construction sector and need unskilled labour as well.
Dr Whitehead
I thank the right hon. Gentleman for giving way. He envisages that his green deal will involve insulating and raising the energy rating of 14 million homes in the UK. The previous low-carbon transition plan envisaged that that would be done through the provision of subsidised loft, cavity-wall and other forms of insulation. Has he succeeded in defending the money set aside in his Department for subsidising that, or will he rely on Tesco to do the job instead?
Energy and Environment, Food and Rural Affairs
Debate between Alan Whitehead and Chris Huhne(14 years, 6 months ago)
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Chris Huhne
I am grateful to my honourable colleague for that question. The coalition agreement states very clearly that the fundamental objective is as he has described, and the Department will examine the best way in which we can deliver it, taking account of the administrative costs.
We know that many people want to take steps to make their homes more energy efficient, but the up-front cost can be prohibitive and there can be uncertainty about the results of measures. Our green deal will enable householders to benefit from energy efficiency and to repay the cost of the work over time, through savings on their energy bills.
Dr Alan Whitehead (Southampton, Test) (Lab)
I, too, congratulate the Secretary of State on his elevation to his new post. He will be aware that energy efficiency in the home particularly relates to the ability of that home to operate efficiently, and the emergence of a feed-in tariff and the renewable heat incentive is an important part of that process. Will he tell the House whether he is prepared to stand by the feed-in tariff and its financial implications, and the renewable heat incentive? Will he guarantee the finance that will accompany that, in order to ensure energy efficiency and the development of small-scale generation in the domestic sector?
Chris Huhne
I am always pleased to hear questions from the hon. Gentleman, because he is a neighbour in Hampshire and has followed this agenda closely, with great passion and commitment, for many years. The issues that he raises are key. He will note that the coalition Government agreement contains a firm commitment to feed-in tariffs, and we will take that forward. Renewable heat is an important issue and we want to ensure that we make progress on that. The Department will have to come up with the exact ways in which we do that, but this is a crucial part of the whole package. Broadly speaking, a quarter of our carbon emissions come from our housing stock, much of which will still be there in 2050; people will still be living in it. Given that, what we are trying to do, particularly with the green deal, is move to a situation where we can retrofit that stock with insulating measures that will make a dramatic difference. Our Bill is designed to do that, and I very much look forward to working with people from across the House, including those on the Opposition Benches, whose substantial commitment to this agenda over many years I recognise, to make this a really effective, long-term piece of legislation. We want it to be something that we can all take pride in, that will be on the statute book for many years and that will stand the test of time.