Albert Owen
Main Page: Albert Owen (Labour - Ynys Môn)Department Debates - View all Albert Owen's debates with the Wales Office
(7 years, 2 months ago)
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I beg to move,
That this House has considered energy in Wales.
It is always a pleasure to serve under your chairmanship, Mr Paisley.
I look forward to hearing the Minister’s response, though I am a tad disappointed that it is the Under-Secretary of State for Wales, the hon. Member for Aberconwy (Guto Bebb) who will respond on behalf of the Government. If the Department for Business, Energy and Industrial Strategy truly wanted to spread wealth across the whole of the United Kingdom, and if energy and the industrial strategy were the central plank of this Government’s approach, I would at least have expected an Energy Minister to come along today. However, the Under-Secretary is a very good friend of mine—he helped me with many projects even before he became a Member of Parliament—and I know that he understands the subject of energy in Wales.
The purpose of this debate is to take stock of energy in Wales, to press the reset button—that is a polite way of telling the Government to get their finger out on certain projects—and, although it might not sound like I am doing so, to recreate a consensus. I stress the word “recreate” and will come to that in a moment. My contribution will look fairly at the good, the bad and the frustrating in energy policy, including some very welcome consensus in the late 1990s and the noughties, right through until about 2012.
Wales has enormous potential in energy. It has the potential to drive the energy policy of the whole United Kingdom and, indeed, its industrial strategy. We have natural resources, human resources and skills in the energy sector; welcoming local communities to host many of the proposed projects; and a forward-looking Welsh Government.
Does my hon. Friend agree that we need the UK Government to commit to big projects? Whether we are talking about the electrification of the railway to Swansea or the tidal lagoon, such commitment to Wales has been missing from this Government.
We are at a crucial time with the UK Government. As I said in my opening remarks, if BEIS, in particular, and other Departments are serious about spreading wealth across the United Kingdom, they need to look at Wales in a more positive way.
Following on from the comments of my hon. Friend the Member for Torfaen (Nick Thomas-Symonds), if the Government were to invest in electrification and the lagoon projects, much-needed jobs would be delivered throughout south Wales, as well as in north Wales and Ynys Môn. Such commitment from the Government would help with some of the longer-term unemployment issues that some parts of Wales have had for a number of years. Ii would also improve the skills agenda in Wales.
My hon. Friend is absolutely right. When we talk about energy projects, we are talking about building infrastructure, helping the environment, climate change, jobs and skills. They are important and linked to the other projects he mentioned. Wales not only complements the United Kingdom, but can lead the United Kingdom and rekindle a pioneering spirit in many projects.
Since I entered this House, I have been interested in energy. I used to work in the energy sector. One of my first jobs was in the oil industry: for many years I was a galley boy on an oil tanker going around the middle east. During the 1970s I saw some of the big issues of the oil crisis at first hand, when people talked about developing renewable, solar and other technologies because of the crisis. Sometimes it takes a crisis to focus attention and to concentrate minds. Afterwards, however, we went back to oil and coal, carrying on as normal in many ways.
I am proud that we now have the Climate Change Act 2008. I was proud to vote for it and I think I am the only Member present in this Chamber who did so. It was a pioneering Act that showed that the United Kingdom was a lead nation in looking after the environment. To complement the Act, to ensure that we reduce carbon and improve the environment, we need low-carbon projects. There have been some good results.
As the Minister knows, I am pro-renewables, pro-nuclear and pro-energy efficiency, and I see no contradiction in taking all three views, if we are to achieve the targets we all want. Even ardent climate change deniers now acknowledge that the climate is changing and accept—humbly, some of them—that mankind is contributing to that. We need to dispel the idea that the climate is not changing and that we need do nothing. We have to do something for this and future generations.
I repeat that I was very proud that under the previous Labour Government, but with the support of all parties in the House, we passed the Climate Change Act. We need a rich mix of energy technologies, to ensure that we reach our targets. When I sat on the Select Committee on Welsh Affairs, we produced a number of reports on energy in Wales and they were very good platforms to build on. I have also been on the Select Committee on Energy and Climate Change and am now on the Business, Energy and Industrial Strategy Committee, and we are considering the issue. I have scrutinised Governments of both colours—of three colours if we include the coalition, which was a mix of Conservatives and Liberals—but, to be fair, in the early days there was a consensus on how to progress.
We need to push the case for new renewables, new nuclear and new opportunities for jobs and skills in the future. I welcome the initiatives of previous Governments. The renewables obligation was introduced to help kick-start solar and wind, the development of which is now producing lower-cost clean energy. That was because of subsidy, which is not a dirty word but an essential tool to get firsts of a kind going. We need the help and support of subsidy. We rightly subsidise our buses and trains; we should be subsidising the development of renewable and future generation technologies.
I repeat that I welcome the consensus between the two major parties that promoted and developed a low-carbon economy. In 2001 and 2003, during a review, I lobbied the Labour Government to introduce new nuclear and to push the wind agenda to offshore as well as onshore. The Conservatives adopted that policy and supported the Climate Change Act. There was a great period of continuity from when the Conservatives were in opposition and Labour in government, to when the coalition came to office and the stewardship of the then Energy Minister, Charles Hendry, to whose name we will no doubt return. That continuity gave essential certainty to investors, which is important because such projects are long term and cannot be done in a single parliamentary cycle. In many cases, we need to consider working over two or three Parliaments.
That was the good part. The bad part was the populism of the coalition, with some of the Conservatives dancing to the tune of The Daily Telegraph and many others, pulling projects because they were not popular. The wind industry was coming to the end of its subsidies anyway, but the Conservative-led coalition turning against it hampered investment in the sector. Offshore wind is now back on the agenda; many of the projects started in 2006 and 2007 are now coming to fruition and producing the wind energy the country needs. Wind is important. I know it has its critics, because it is intermittent, but that means it can be switched off when demand is at a certain level. We can have continuous demand and supply, but also demand when needed.
We moved from a good period to a frustrating period because of external factors—the global financial crisis—when external investment became difficult to obtain. I understand that, but we need a stimulus. We needed it then, and I argued that the stimulus could have come in the form of investment in the energy requirement. That would have created the jobs and skills necessary to boost a flat economy that is on its knees.
Does my hon. Friend agree that we should ask the Government to secure a price per unit for wind energy for a year, rather than price variation?
I will come to price mechanisms in a moment, but my hon. Friend is absolutely right that we need certainty. Investors need to know what the price will be and what return they will get in the long term. I think that everyone accepts that economies of scale enable lower-cost energy production, and that should be reflected in subsidies. The governance framework needs to be a little tighter. The contract for difference, which I will come to, is a good principle. Many people do not appreciate that with a strike price, if prices fluctuate, big developers do not get the money; it comes back and stays with the Government, so we get certainty about how much the Government spend. That is good.
Major energy policies are reserved. I appreciate that the Wales Act 2017 devolved control over projects up to 350 MW, which reflects the larger scale of projects, but we require a partnership between local communities, local businesses, devolved Administrations and the UK Government, within—remember that we are still in the European Union—the European framework.
I acknowledge that whoever won the 2010 general election would have had to reform the electricity market. I sat on the Committee that discussed the relevant legislation before it went through. I did not agree with everything in it, but I did agree with the principle of reforming the electricity market to ensure certainty for investors and value for money for the consumer. Energy Ministers have changed frequently—that has been a problem with both Labour and Conservative Governments —so we have perhaps not given energy the attention it deserves. I support the contract for difference principle and the need for a capacity market mechanism, but during the period of populism I referred to, the oil price and energy prices went up, and that became a big political issue. We were significantly reliant on oil and gas prices, because we were not developing the renewable, new nuclear and low-carbon technologies we should have been.
Wales is still heavily reliant on oil and gas as part of our mix, so we need to move forward. It is ironic that Wales and Scotland are huge producers of energy, yet household and business bills are higher in those areas than in the rest of the United Kingdom. It is totally unfair that a consumer in Wales pays extra for their energy. They might be close to a power station that generates energy for the grid but, because of the transmission and distribution mechanisms, they end up paying more for it. I would not say that the energy market is completely broken, but it is fractured and those issues need to be addressed. Wales is still reliant on gas and coal, and it needs to wean itself off them. I am disappointed that combined storage schemes for coal and for oil have not progressed in the past five to six years. We could have retrofitted many of our power stations so that we had clean coal and oil production as we transitioned to renewables, but we did not do so.
Let me turn to some of the technologies. I will start with marine technology, which is important. We have a history in Wales of small hydro schemes. The Dinorwig pumping station in many ways revolutionised storage. We need to consider storage, and here is a scheme that was developed in Wales many years ago that pumps electricity up at night, when energy prices are low, and stores it.
I echo the hon. Gentleman’s comments about the potential in Wales for hydro schemes. Dinorwig is a fantastic example of a larger hydro scheme. Does he agree that smaller hydro schemes—the potential of which we perhaps have not fully realised—are just as important for our energy mix in Wales? He also talks about the UK and Welsh Governments working in partnership. We desperately need to look at the revaluation of business rates, which is affecting many hydro energy schemes, particularly community energy schemes. Does he agree that we have an opportunity to fully realise the potential of hydro in Wales by addressing that revaluation?
Order. I remind Members to keep their interventions as short as possible.
I welcome the hon. Member for Ceredigion (Ben Lake) to the House—this is the first opportunity I have had to do so. He is a new Member and he will get used to making shorter interventions as he gets going.
The hon. Gentleman is absolutely right: we need to look at barriers and at whether the rates system deters such schemes. We are going back to basics with some of these smaller hydro projects. Many farms and small communities had their own hydro projects many years ago. We get an awful lot of wind and rain in west Wales and the west of the United Kingdom, and we need to harness that. Many of the windmills that produced food in the past were driven by both hydro and wind; we are only returning to that.
Wales and the UK’s west coast have enormous marine energy potential. Their tidal ranges are some of the best in the world. The Welsh Government and the UK Government have done numerous studies in Scotland, west Wales and the west of England, yet although prototypes have been set up, many have not been developed. Indeed, I visited Strangford lough in Northern Ireland to see some of the pioneering schemes there, but those have not reached the necessary commercial scale because of a lack of investment. There is a blockage, and it is in all our interests to undo that blockage and ensure that such schemes are successful.
Minesto, a Swedish company in my constituency, is moving forward a project, which the Minister knows about, 8 km off the coast of Holyhead that links with the port of Holyhead. Not-for-profit organisation Menter Môn, which the Minister also knows about, is involved in the grid connection there and will benefit from that. That project is up and going.
This Parliament and the Welsh and Scottish Governments have talked for some time about tidal lagoons; we now need to move forward with them. We could have a cluster in Wales because of the tidal range from Colwyn Bay to Swansea Bay—the potential is absolutely there. I am sure that colleagues will want to elaborate on the Swansea Bay tidal lagoon, but I mention it because it has been identified as a first-of-a-kind project that could go forward. The Government have taken it seriously and a lot of development work has been done on it.
This Government set up the electricity market review and capacity mechanisms that I talked about, and they also set up the Hendry review, which reported at the beginning of this year. Reports take time, and I understand the Government’s frustration when they get external issues. Brexit is dominant, and we had a two-month election period that everyone wanted—apart from the Conservatives themselves, when they saw the results. That election cost the taxpayer £140 million, excluding the figure for Northern Ireland, which we have not yet seen. That money could have been invested in some of these projects, which could have been moving forward as I speak.
Tidal lagoons could generate 250 MW to 350 MW of electricity. The tidal range allows some 14 hours of generation per day—it is huge. That would enhance the area, since it could be used for tourism as well as for producing much-needed low-carbon energy. Of course, we need great connections, which are controversial. I will come to connections for transmission and distribution; we need to handle them properly and have them underground so they are not unsightly.
I urge the Minister to give us a response to the Hendry review. It is no good the Government saying, “We’re looking at it”—they have been looking at it for many months. The civil servants were not involved in the election campaign; they were diligently doing their work in the BEIS office. They should come up with recommendations for Ministers, and Ministers should have the grace to make their mind up and come back to the House to say where they are going. Investors need certainty; they do not need the Government to abandon decisions after setting up a review. In my humble opinion, the only thing holding the project back, having looked at the potential mechanisms and the price—the first of its kind will be expensive—is the political will of the Government. It will be the job of the Minister to convince the House that that is not the case. The only way he will be able to do that is by announcing the date of an announcement. The Government should stop prevaricating and do that immediately. The Orkney isles, the west coast of England and south Wales have the potential for marine technology.
Let me turn to new nuclear, because it is important that we keep these projects on track. Again, this is older technology that has been modernised for the 21st century. In my constituency, the Wylfa power station site generated safe nuclear power for a record number of years, which created jobs for many decades. In fact, it is the only industry I know where classmates who left school at the same time as me worked in the same high-quality, high-paid jobs in one industry, thereby contributing to the local economy. The supply chain is huge and the technical skills are high.
We need to move forward. The project that started in 2007 to 2009 is on track. We now have new developers in Hitachi with proven technology and capacity, and I know that, working with the Welsh Government, the local community, local government and the UK Government, we can move forward on the project and produce high-quality jobs. There is some £12 billion of investment, which I remind Members—I have raised this enough times—is the equivalent of the London Olympics being invested in north-west Wales. There is huge potential to develop the economies of Anglesey, Conwy, Gwynedd and the whole of north Wales. Indeed, it is the biggest project in Wales in terms of jobs—construction jobs and ongoing jobs as well.
The Minister is aware of this, but I also want to talk about small module reactors and the potential for them. I met with the Advanced Manufacturing Research Centre in Sheffield and have also visited. It has got all these companies together so that we can forge the modules for nuclear reactors with British steel in the United Kingdom and deliver the kits to different locations. Trawsfynydd is ideally located for that. It has a welcoming community that would play host, and it has the infrastructure in place. What we need, once again, is for BEIS to stop sitting on reports and papers and to start making announcements. That is what the business world and local communities want to hear: the trade unions and business working together to develop these high-skilled jobs.
I could also talk about many other projects. Orthios wants to develop an eco-park in my constituency. It was not successful in the auctions—the auctions are cumbersome, and it did not meet the criteria. We need to simplify those criteria. The threshold of 299 MW has, I think, been reduced to 150 MW, so it did not qualify.
We also have great offshore wind projects. My hon. Friend the Member for Vale of Clwyd (Chris Ruane) may interject, or he may wait—he is now a patient Front Bencher and statesman—and respond in his speech. Many people opposed the offshore project, including the previous Secretary of State, the right hon. Member for Clwyd West (Mr Jones), who I remember lobbying the Welsh Affairs Committee when we went to north Wales, saying, “Save our shore,” because the project was not wanted. It has now developed and was a flagship of the Conservative-led coalition Government in which he served. He suddenly changed his mind on that and then flew the flag for wind farm development. My point is that sometimes these projects are controversial and appear costly when looked at, but they are a worthwhile investment because they produce low-carbon energy off stream and jobs in localities. Celtic Array Rhiannon, just off my constituency, would have been the biggest offshore wind farm. That was aborted in many ways because of the mechanism as well as technology developments, but the potential is still there.
I am conscious that I have taken a lot of time, but I want to talk about distribution and transmission. Hon. Members will be aware that British Gas hiked its gas prices and that many other companies, including Scottish Power, have highlighted that the high cost of distribution and transmission has pushed bills up. I am sure, Mr Paisley, that you are diligent and look at your bill either online or in paper form, like I do. When we look at it, we see that 25% is for distribution and transmission costs. That is a huge amount of the bill.
If we are serious about reducing and capping energy prices, we need to look at distribution costs. The national grid is a monopoly—there is no competition in it—and it almost holds developers at ransom. I know it is regulated, but it does not work. Had there been a different result in the general election, the Labour party would have nationalised it or introduced a not-for-profit model, like we have for water in Wales. We are used to not-for-profit organisations, which reinvest all their money into infrastructure. Welsh Water—Dŵr Cymru—is an excellent example of that. Instead of paying directors in the United States of America and shareholders, it puts the money back into the communities in which it works.
The proposal for pylons across Anglesey and north-west Wales is controversial: 1950s-style pylons are to be attached to 21st-century nuclear power. National Grid needs to listen to the communities it is working with and look at undergrounding and subsea rather than pylons.
Finally, we need to deal with energy prices. As I have said, Wales has high bills compared with the rest of the United Kingdom. Transmission is cited as one of the reasons for that. There are also higher levels of fuel poverty in Wales and pockets of fuel poverty. I know there are issues elsewhere in the United Kingdom, but we do need to address that. When we invest properly in new technology, we are creating a better country and high-skilled jobs. If I had more time, I would go into energy poverty issues, but we do need to deal with them.
The coalition Government changed the criteria for measuring fuel poverty. They were archaic in many ways—the Queen was in fuel poverty because a high percentage of Buckingham Palace’s outgoings were on energy—but the serious point is that many people in Wales, in areas that produce a lot of energy, are paying a higher price and are in fuel poverty. The Welsh Assembly and devolved Administrations have done good work in that area, and I hope that the Government are listening. There needs to be more work on that as we go forwards.
I called for the debate because I believe there is huge potential for Wales to be a huge contributor to the United Kingdom’s industrial strategy when it comes to energy and manufacturing. We have successful projects going forward, which is good for Wales, for the United Kingdom, for Welsh businesses and for the consumer. They will reduce carbon emissions into the environment and help to deal with climate change. The skills issue, raised by my hon. Friend the Member for Ogmore (Chris Elmore), is essential. These projects create clusters of high-skilled science parks and faculties for research and development, which link into higher and further education institutes. This is a win-win situation.
I support the Government’s principle of an industrial strategy. They talked about nuclear and energy as being part of that. Electric cars are a good thing, but we need to get on with it. We need to press the reset button and get these projects going. We need to invest in them and work together to produce the low-carbon economy that the Minister, the Department for Business, Energy and Industrial Strategy and everyone in the Chamber wants to see. Wales can be the pioneer, creating the jobs, the technology and the energy that the country needs.
I hope that the Minister is in listening mode and that he has some answers for us. If he does not, I hope he will pass these points on to the BEIS Minister, who may have the grace to come to the next debate with “energy” in the title. Wales is part of the United Kingdom and part of the industrial strategy, and Ministers need to be aware of that. Wales is a forward-looking country when it comes to many things, including energy. We want the best for the people we come here to represent and we want a better, clean environment, clean air, and climate change to be dealt with. We want to play a leading part in that.
It is a pleasure to serve under your chairmanship, Mr Paisley. I congratulate my hon. Friend the Member for Ynys Môn (Albert Owen) on securing the debate. In March last year, I stood in the main Chamber and spoke in the St David’s day debate about how accustomed to waiting for things we are in Wales. We waited so long for rail electrification, which is now merely another broken promise from the Government, and we waited for the Welsh national team to reach the European championships. That one was worth waiting for.
No comment. We were also waiting for Charles Hendry’s review on the Swansea bay tidal lagoon, which was published 10 months later. It was conclusive, and it provided the assurance that the Government sought on whether tidal lagoons could play a cost-effective role in the UK energy mix. It recommended moving forward with a pathfinder lagoon in Swansea bay
“as soon as is reasonably practicable”.
That was eight months ago, and once again we are still waiting.
Since the review’s publication, the Government have made no concerted effort to proceed. The Conservative party’s manifesto for the 2017 general election merely touched on renewable energy in Wales, with a promise to
“explore ways to harness Welsh natural resources for the generation of power”,
but failed to make any commitment to the Swansea bay tidal lagoon. By comparison, all other major political parties committed in their manifestos that it should happen as a priority. Since the election, we have heard nothing more from the Government about any plans to develop the project.
We all know that the tidal lagoon is the way forward; it harnesses natural power from the rise and fall of the tides, so offers an entirely predictable year-round supply. It is a guaranteed power source for generations to come, and the long-term cost benefits speak for themselves. The Welsh Labour Government, local councils and city regions all support a tidal lagoon in Swansea. Welsh businesses, community leaders and the people of Wales and Swansea support it. Swansea is ready for this now.
There are many benefits that will have immediate impacts on the economy and the community. The lagoon will bring an estimated 2,000 new jobs to the region, and there will be a demand for approximately 100,000 tonnes of locally sourced steel. The tidal lagoon already has 1,300 British businesses registered on its supply chain database. This is a golden opportunity to use British resources to develop British industry in Wales. Why are we stalling?
In his review, Sir Charles Hendry said:
“We can either stand back and watch other countries take the lead…or we can decide that we should do what the UK has done so well in the past—spotting an opportunity, developing the technology and creating an industry.”
As Britain moves into a post-Brexit world, we need to ask whether we want to be leaders or followers. Today, I ask the Minister that very question. Are we ready to be world leaders and develop this new energy source in south Wales, or are we going to be left behind waiting, this time for someone else to steal our lead? We cannot afford to let this slip through our fingers. We need an answer. We need the lagoon, and we need it now.
The big difference between what occurred under Labour and under the Conservatives is that the communities were left high and dry under the Conservatives. It was a political decision to close those mines. It was spite because of the industrial action by the miners. That was the big difference, and those communities are still suffering today. I want to move on to more modern times, but I thought I would just give the historical perspective.
I hear this argument from the Conservatives about closures under the Wilson and Callaghan Governments. Those mines were exhausted; there was no coal left—that was one reason why they closed them —or they were dangerous and flooding. That was why they closed them down; it was not for political reasons, but for economic reasons.
I will move on now, Mr Paisley.
We now live in greener, cleaner times, but the Conservative Government’s attitude to energy, and especially renewable energy, in Wales has not changed. I was privileged to open Wales’s first offshore wind farm—in fact, according to Wikipedia, it was the UK’s first major renewable power project—which was located off the coast of my constituency, off Rhyl and Prestatyn. North Hoyle was a pilot, test-bed project for this new industry in the UK. It had the full support of the Welsh Government, the UK Labour Government, the local MP—me—and Ann Jones, the Assembly Member. Can I ask the Minister whether he supported that project—the wind farms off north Wales—when it was proposed?
I believe that it was the hon. Member for Swansea West (Geraint Davies) who commented that good things are worth waiting for; that was certainly the case with the Welsh football team’s appearance at the European championships last year. I would rather have a good decision made in time than a rushed decision. This debate has highlighted the previous Labour Government’s decisions to invest in all sorts of concepts in Wales, but it is fair to say that by the time the coalition came into government, we were paying the price for how the Labour Government dealt with public money. It is much better to have a decision made on sound grounds, which is what we will provide, than an early decision.
The Minister is engaging in the knockabout that he said earlier he did not like. What I was arguing in my contribution was that we must make difficult decisions and investments in first-of-a-kind technology, to get that technology going. We did it in solar and wind, and we are reaping the benefits; I believe that we can do it in tidal as well, and the review says so. We have a competent Minister in Charles Hendry, who delivered it. He knows his onions. What we are getting from this Government is prevarication and pushback.
I am sorry, but I need to establish this. I have been trying to tie this issue into the electricity market reform and the mechanisms set up by this Government. The Hendry review fits into that. We have cost-effective mechanisms and capacity mechanisms. For joined-up thinking, we now need a decision from Government.
I will not take two minutes, because Members who are here for the next debate missed my opening remarks; they would be at a loss if I came to a lengthy conclusion.
Welsh Members of Parliament are passionate about energy in Wales. We have a good record; we pioneered many technologies in the past, and we want to do so in the future. I take on board what the Minister said about the continuation of renewables policy, but the heavy lifting was done by the previous Government. This is the time and the opportunity for the Government to show their credentials. They started the Hendry review; it is time for them to respond positively to that review and to move forward.
I give the Government nine out of 10 on new nuclear. We need to move forward on small module reactors. We need to be pioneers. I want Wales to be central to the industrial strategy, which it can and will be if the Wales Office, BEIS and others work with the Welsh Government, with business and with the community, so that Wales is at the forefront of energy in the United Kingdom.
Question put and agreed to.
Resolved,
That this House has considered energy in Wales.