Energy Bill
Debate between Alan Whitehead and Mike Crockart
Mike Crockart
I have been told not to deal with it; I think the direction I was given is quite clear.
Of course I would like a decarbonisation target, but that was not in my party’s manifesto; indeed, it was not in any party’s manifesto. Nor was it in the coalition agreement. In fact, there is only anything about it in the Bill at all because of the efforts of a Liberal Democrat Secretary of State, ably backed up by the present incumbent. Of course I would like more, but as 15% of the coalition Government we cannot always get exactly what we want. [Interruption.] It is 15.5%, in actual fact.
I came to this place from business: a place where making a contract and signing up to it really means something. If one side reneges on that contract along the way, they can expect there to be consequences. We have already seen examples of that in this Parliament. It would be great to see much more of the processes, attitudes and behaviours seen in business than the opportunism, time-wasting and theatrics that we see far too often in this Chamber. Again, however, we cannot always get everything we want.
There are many things I would like to have seen in the Bill, but many more are included that all sorts of organisations want us to get right. For the Minister’s perusal, here is my Christmas list: an easier route to market for independent generators, a strike price that provides certainty in the market, simplification of energy tariffs, the levy control framework to be implemented in a controlled way, an increase in the small-scale feed-in tariffs threshold for community energy schemes, credible counter-party and contract terms that are fit for purpose, and a binding EU-wide emissions reductions target of 50% by 2030. It is not a long list.
Last year—I thank the Secretary of State for this—I got a green deal that is set to support 60,000 installation jobs this year, up from 26,000 in 2012, and a green investment bank investing £635 million in green infrastructure projects. If, at the end of this legislative process, I get everything on my list, I will say thank you again. I am damn sure that I do not intend to be the spoilt child stamping my feet and whining, “But I didn’t get my decarbonisation target,” because, after all, if I got everything I wanted this year, what would I ask for next year?
Dr Whitehead
I trust the hon. Member for Edinburgh West (Mike Crockart) will support a number of later amendments on demand-side reduction and routes to market for independent generators and community energy. He put his finger on some of the problems that several people have been grappling with as the Bill has made its way through the House.
It is very odd that when the Bill first made its way to this House in draft form it had no target in it, and yet it was all about low-carbon electricity, routes to market for low-carbon energy generators, the future of large-scale low-carbon energy and how that might be supported to play a much increased role in our energy mix over the next few years, and how the whole electricity market would be decarbonised over the next period in line with what DECC had previously published as its plans for a radical decarbonisation of the electricity market over that period. The Bill was the embodiment of how those changes would be made—how, over the next period, our energy markets, particularly our electricity market, would radically change how they move forward and how they supply energy to us. The Bill also contains emissions performance standards that reduce the emissions that plant may make, also in line with the decarbonisation of our energy over the coming years.
It is blindingly obvious that a Bill of that kind should have a target at the front in order to underpin all the other things that it is doing. Not having that target is rather like someone carefully strapping a belt around their waist and then sallying forth having forgotten to put on the trousers that the belt was supposed to be supporting in the first place. When the Bill first arrived, the lack of a target was a puzzle to a large number of people. In a sense, the hon. Member for Edinburgh West has started to unpick some of that puzzle. As my hon. Friend the Member for Rutherglen and Hamilton West (Tom Greatrex) outlined, we know from what the Secretary of State has said to the Energy and Climate Change Committee on more than one occasion that he was very keen on having a target in a Bill and was engaged in work on that target, the details of which he could not yet vouchsafe to the Committee.
In fact, the Secretary of State was engaged in discussions with the Treasury about what might go at one end of the Bill and what might be negotiated away at the other end to secure the things that he thought were quite important, relating particularly to supporting low-carbon energy in the way that I have described. The result, as we discovered fairly recently, is the announcement of the extension of the levy control framework from 2015 to 2020, with a figure increasing from the current amount of £2.3 billion to, allegedly, the whopping figure of £7.5 billion in 2020.
We need to be rather careful about immediately jumping for joy about that aspect of the negotiation, because as soon as we unpack the figures we realise that each year the levy control framework takes along with it the accumulated underwriting of whatever has been commissioned in the year before. That means that by the time we get to 2020, the accumulated contracts for difference, or ongoing renewables obligation certificates, that are caught up in the £7.5 billion make up a good proportion of the total. The actual amount of support contained in the levy control framework up until 2020, per year for new entrants—that is the key thing to look at in terms of the development of low-carbon energy, particularly round 3 offshore wind and the like—turns out to be not much more than is being undertaken at the moment. The idea of its ending up at twice the current level is rather belied by the figures in the levy control framework. Nevertheless, the Secretary of State felt that he had got a good deal.
It is not, however, a particularly good deal and it is clear that the inclusion of a target in the Bill was sacrificed. A belt and trousers had not previously been available, but on 5 February—halfway through the Committee stage—the Secretary of State came along with the belt that had resulted from the discussions. As hon. Members have said, as a result of the discussions, although the Secretary of State could not set a target before 2016, he could set a target at various levels that could be considered then. Indeed, the Minister has made great play of the argument that we will need to have all the facts at our disposal with regard to the future state of the universe in order to decide how we might set a target.
A couple of important things need to be considered during the intervening period. First, the gas strategy set out by the Department of Energy and Climate Change over a number of years assumes a relatively low level of gas over the long term and, while it views gas as essential, it sees it as a back up for other, renewable forms of generation. The recent gas strategy includes an option to reverse that approach and puts gas at the centre of a future strategy. It includes gas plants running at maximum capacity, grandfathered for a long period and playing the main role—not the back-up role suggested by the low-carbon strategy exemplified by the Bill—in energy generation.
Explicit within that gas strategy is the need to take a decision in 2014. The strategy specifically says that, depending on what happens in Europe, a decision will have to be made as to whether to increase the carbon target. Accommodating the strategy could therefore result in a target of about 200 grams of emissions per kWh by 2030, rather than the 100 to 150 grams envisaged previously by the Department and endorsed by the Committee on Climate Change. A significant decision might be taken in 2014—way before 2016—which could blow the potential 2016 target out of the water.
Secondly, regardless of the negotiated outcome, the levy control framework has been extended to 2020, but we have not heard what will happen beyond then. There has been no indication of what support might be given to low-carbon energy after 2020. There is a cliff face.