Low Carbon Energy Generation

Albert Owen Excerpts

Thursday 26th February 2015 Westminster Hall

[Mr Yeo]

I apologise. I made the same mistake last time my hon. Friend was responding to such a debate, but I am delighted to see him and I know that he will give us a robust response to any points raised.

I stress that my commitment to low carbon energy goes back more than 20 years. When I served in John Major’s Government as a Minister in what was then the Department for the Environment, among other things I dealt with climate change, which in 1993 was much less understood or even talked about. If someone mentioned climate change at a social occasion, people would look at them as though they were slightly strange. However, it did not take me long to be convinced that climate change was occurring—the scientific evidence was powerful even then—and that the changes we were observing were caused at least in part, and in my view in substantial part, by the increased concentration of greenhouse gases in the atmosphere in the past 200 years, which was a result of man-made activity and the industrial revolution in particular.

As I recall, in the 1990s the scale of the problem was much less certain. Today, the need for substantial cuts in greenhouse gas emissions is widely, even if not universally, accepted. As we approach the Paris conference of parties at the end of the year, the world’s attention will be increasingly focused on how we can achieve a more rapid decarbonisation of our economies.

Last November we had the historic joint announcement in Beijing by President Obama and President Xi of China in which they committed to cut emissions. Such a commitment would have been completely unthinkable even three years ago: for the US President to say what he did and for the Chinese to say that their emissions would peak on a date not later than 2030 simply could not have happened. In my judgment and experience, for the Chinese to say publicly that something will happen not later than 2030 means that they are absolutely certain it will happen well before that. I warmly welcome the greater determination of the US Administration to engage with this issue, which is still extremely controversial in parts of the United States.

Here at home we had an historic announcement this month. The three leaders of the major parties united in a public joint commitment to continue to take action to tackle climate change. I do not recall any other major political issue being addressed in quite the same unanimous way just two months before an election. I welcome both those important political developments.

Equally important is the transformation in business’ attitude. Twenty years ago, much of industry was reluctant to acknowledge the need to engage in finding solutions to climate change. It felt that such demands for reduced dependence on fossil fuels were a threat to their business models. Today, by way of contrast, in many parts of the world business leaders are ahead of policy makers in recognising both the urgency and the scale of the need to move away from models that are dependent on fossil fuel consumption.

I warmly congratulate the Government on confirming the fourth carbon budget for the 2023-27 period. That challenging budget, which was set four years ago, was reviewed last year and, to the coalition’s enormous credit, it confirmed it. I am sure that in private, parts of Whitehall argued strongly for a dilution of those targets, but they were confirmed.

I also warmly congratulate the European Union. That is not something Conservative colleagues frequently do, but its recent, excellent decision, supported by the UK, to adopt a cut in greenhouse gas emissions of 40% for its 2020 target was at the upper end of aspirations. That is good for two reasons. First, it sets a challenging figure that will force businesses and consumers across the EU to think about how they can help achieve it.

Secondly, it is a rational target. By setting an overall target for a cut in emissions, the need for any subsidiary targets is largely removed. I have always been concerned about the artificial imposition of targets for the proportion of energy that comes from renewable sources. They are not the right way forward; it is up to member states to decide how much they want to use renewables and other technologies. The European Union achieved a good outcome.

Achieving the UK domestic target, which is enshrined in law, and the EU target will require in particular substantial decarbonisation of the electricity generation industry. We have the technology that makes that possible; the question is whether we are willing to adopt it. In effect, a transformation must take place in the energy industry in the next 15 to 20 years. Because it has one of the longest investment cycles of any industry, we cannot leave decisions for another five or 10 years.

The decisions we make in the next two or three years—before the end of this decade—will have a huge and material impact on what happens later on. In effect, those decisions will determine at what cost the decarbonisation of UK electricity generation will be achieved. If we get those decisions wrong and we lock ourselves into too much dependence on fossil fuels, we will be forced into making emergency, very expensive changes in the late-2020s and early-2030s.

This debate is about how to decarbonise electricity generation, and I want to start with the nuclear industry. I warmly welcome the fact that, broadly speaking, there is bipartisan political consensus that the UK needs a nuclear component in its energy industry. The latest figures from the Department of Energy and Climate Change show that even now, following the shutdown of a couple of EDF’s reactors, nuclear still provides roughly a fifth of our electricity, so it is a substantial component. Nuclear, as supporters such as me constantly remind people, provides reliable, base load, low carbon power.

I do not want to turn this into too partisan an occasion, but there was a slightly wasted decade under the previous Labour Government during which nothing much happened on nuclear. However, the bullet has now been bitten and the decision to go ahead first with Hinkley Point was supported in all parts of the House—even the Liberal Democrats supported that, which showed a welcome change of heart. Unfortunately, the implementation of the decision to go ahead with Hinkley Point is proving to be tortuous and slow. I therefore commend the Government’s willingness—in fact, they have been positively welcoming—to perhaps have a foreign investor as the minority partner in Hinkley. I trust that the final investment decision on Hinkley will not be delayed much further, and I hope the Minister will give us an update on progress because many of us have been getting concerned. The timetable for this project has already slipped considerably, and it would be a huge relief to many people if we thought that final investment decision would be signed off imminently.

Of course, the future of nuclear is not just about Hinkley. It is the first step, but other projects are within sight, and I believe that gives Britain the chance to lead a European nuclear renaissance. We have huge advantages in this country, such as the political consensus to which I have referred, and the fact that our regulator is probably best in class; it enjoys universal respect. One reason why the accident at Fukushima four years ago did not derail progress on nuclear power in this country was that people trust the Office for Nuclear Regulation. In the wake of Fukushima, Mike Weightman’s report reassured people that such an accident could not occur here and the circumstances of it could not be reproduced here. That has helped to create in the UK a public opinion that is more supportive of nuclear power than that in many other countries. Interestingly, people who live closest to nuclear power stations are often the strongest supporters; they recognise that nuclear is a clean, reliable and safe technology that provides a decent number of well-paid jobs.

The interest that other countries are showing in the UK market reflects those circumstances. We now have interest from the Chinese, South Koreans, Japanese, Americans and Russians; they would all like to be here in the UK nuclear market. Some of them see the UK as a good starting point for the rest of Europe. Many of them will feel that going through and getting approved by the UK’s generic design assessment process is an imprimatur—a mark of approval—that would be useful to their technologies in other markets. Britain should welcome and take advantage of that interest. There is something here we can exploit and perhaps even use to gain a bigger share of the supply chain, with resulting benefits for our economy.

Nuclear clearly ticks the security of supply and cutting carbon emissions boxes, but the industry still has some work to do on the third aim of energy policy: affordability. The questions about cost are a work in progress. I am confident that there are ways of cutting the cost of nuclear. The nuclear industry, rightly, has very demanding safety requirements imposed on it. If the same requirements were applied to some other energies, their impact would be enormous. If the coal industry, for example, had ever had to cope with the safety demands made on the nuclear industry, it would have struggled to survive in the way it has.

However, we must be mindful of the importance of value for money. In this country, we are often supportive of first-of-a-kind technology. It is interesting, because we have a great record and history of innovation and research. However, there is a question mark over whether first-of-a-kind technology will be the cheapest. If nuclear is to roll out extensively, as I hope it will, and continue to supply a significant proportion of UK electricity generation capacity, we have to consider whether technologies that have been tried and tested in other countries first—in a home market—may then be able to offer us something.

[Albert Owen (Ynys Môn) (Lab)]

The hon. Gentleman makes an important point. Hinkley, of course, is going with technology that has yet to be proven. In my constituency, the Hitachi project is using reactors that have worked elsewhere and have been upgraded. That is relatively new to this country, but a rigorous process has been gone through. The fact that we have two different types bodes well for the future; we cannot put all our eggs in one nuclear basket, so to speak.

[Mr Yeo]

I agree with the hon. Gentleman, and I am sure he will enlarge on that point when he speaks in the debate, should he catch your eye, Mr Brady—there does not appear to be overwhelming competition for that. However, it is an important point that we need to bring out in the debate about nuclear. I welcome the fact that there are competing technologies that want to get started in the UK, but in deciding which ones we might “go nap” on, we need to focus on value for money. There will perhaps be an opportunity to choose between a number of them, and those that have been tried and tested elsewhere first may have a cost advantage that we should not be afraid of identifying.

Let me move on to renewables, on which there has been excellent progress since 2010. In stimulating new investment in renewables, the regime established by the electricity market reform process and all the accompanying legislation, which some of us have laboured for many hours to improve, is now one of the best in the world from the point of view of investors. Today’s news about the contracts for difference allocations confirms that. There is a lot of interest in investment in renewables here in the UK, and I warmly welcome the success of the CfD regime.

There is, however, a clearly topical issue in this regard that relates directly to my concerns about value for money. The strike prices announced today remind us—much more clearly than the previous, somewhat opaque renewables obligation certificates system ever did, certainly to the layman—of the relative costs of different renewables technologies. Of course, it is great news for consumers that the cost of solar is falling and the strike price is now significantly lower. The rapid and considerable fall in the cost of solar is partly a reflection of the enormous expansion of the solar industry in China, and that has had direct benefits for British consumers. It is now clear that solar can reach grid parity before long, even in this climate.

I am also delighted that today’s announcement makes it clear that a significant amount of new capacity will be provided by onshore wind. I am aware that it is an extremely controversial technology, particularly among many of my hon. Friends, but as we can see today, the truth is that onshore wind offers good value for money, relatively speaking. Of course, there are some—perhaps many—places in which onshore wind turbines are simply unacceptable, for environmental and other reasons, but I would regret it very much if, as a matter of policy, we turned our back on onshore wind altogether. That would turn out to be an expensive mistake, because even with prices for offshore wind falling—again, I welcome the strike prices announced today—onshore wind remains substantially cheaper.

My anxiety about offshore wind is that I do not see the potential for the huge fall in cost that occurred with solar. A large part of the cost of offshore wind is in the installation process of planting and anchoring a turbine in deep and rough waters. There may be a limited number of days on which the process can even be carried out, and the cost of the equipment needed on site is very high. That places a limit on the potential further reduction in the cost of offshore wind. I hope it will come down somewhat—I am sure it will—but I do not envisage a dramatic collapse in cost.

[Mr Yeo]

I accept the hon. Gentleman’s point. I am not suggesting that we should rule out offshore wind, but I am suggesting that we should be mindful of the fact that at the moment it requires a much bigger subsidy than some of the other renewable technologies, and we need to be hard-headed about what proportion of our available resource we devote to it.

Britain is of course the leader on offshore wind worldwide, so we have already achieved a great deal. Interestingly, there are some relatively shallow waters in Guangdong province in south-eastern China, and quite a big push is being made on offshore wind there as well. That may help the process of bringing the price down. Offshore wind will remain an important part of the energy mix, but I am concerned to ensure that we do not allocate too much of the resource available through the levy control framework to offshore wind.

Last year, we had an announcement about the final investment decision enabling contracts, which I think were announced last April and used up just over half the available resource under the levy control framework. A large chunk of that was allocated under contracts that were at higher prices than those today. Things are always easier with the benefit of hindsight, but looking back, I think that in our anxiety to get the process under way, we may have gone a bit further than we needed to at that early stage and are locked into some relatively expensive contracts. Be that as it may, the benefits of competition and the continuing fall in costs are reflected in today’s strike prices. I therefore urge the Government to be as technology-blind as possible in the future. They should leave local objections to individual proposals or projects to be resolved through the planning system, and try to help the best value for money technologies to continue to cut costs and to flourish.

I have already mentioned that I think that solar will reach grid parity. I think that onshore wind also has the potential to reach grid parity, and if that happens and a local community are happy to see some turbines in their neighbourhood, why should they not be allowed to construct them?

Let me move on to gas, which is not everyone’s idea of a low carbon technology, although compared with unabated coal, it certainly is a lower carbon technology. The problem for Britain with gas is that our reserves are running down, so we are importing a great deal of gas. Luckily, a lot of it comes from our friendly neighbour, Norway, and we are not dependent to any meaningful extent on Russian gas for our consumption. However, we are importing a lot of liquefied natural gas. Interestingly—this came out in the debate that we had a few weeks ago on what was then the Infrastructure Bill—David MacKay’s report in September 2013 pointed out that net greenhouse gas emissions from imported LNG are actually higher than those from shale gas extracted by fracking, so if we continue to use large amounts of imported LNG instead of exploiting what may be significant domestic reserves in the form of shale gas, using fracking, which my Select Committee has reported on twice and regards as potentially a safe technology, we are locking ourselves into a slightly higher emission pattern.

I believe that, no matter what, in the next 15 to 20 years gas will remain an important part of our energy mix. It is completely unrealistic for people to assume that we can get by without consuming a great deal of gas, so we should now press on with exploiting our shale gas reserves. To do that, or even to determine how great those reserves may be, we need to start drilling. I regret the fact that there appears to be continued delay, caused in part by local opposition, to embracing that opportunity.

Britain could be the leader in Europe on shale gas. If we get on with it now, we could write the European rulebook on shale gas. There would be benefits for contractors, supply chain companies and others. There would be an economic advantage for the UK if we delayed no further and pressed on with shale gas, as other countries would then follow our lead. They would overcome their current caution and follow us down the shale gas route. I therefore hope that we will not miss that opportunity. It is just as unrealistic to assume that we can do without lots of gas in the next 15 years as it is to assume that if we close down all our nuclear power stations, they can be replaced by low carbon renewables.

Of course, the lowest carbon energy of all is the energy that we do not use. In this context, I again urge the Government to promote demand-side response. There is still a great deal of misunderstanding about demand-side response. Many people think that it means imposing power cuts on consumers without notice and against their will. It means nothing of the sort. Demand-side response today involves harnessing the latest technology to facilitate voluntary cuts in consumption at peak periods by consumers who are paid for their ability to switch off their power at very short notice. The prize, if we embrace demand-side response, is enormous. It means that we can cut the total electricity generating capacity that has to be maintained. At the moment, we have to have high levels of capacity available even though it might be used only for a few days in the whole year. That is an incredibly wasteful arrangement. If we have a vibrant demand-side response sector, we will not have to have so much capacity. Every consumer will benefit from that, because at the moment every consumer is subsidising capacity that is scarcely ever used.

[Albert Owen]

The hon. Gentleman makes a very interesting point. Of course, marine technology is underdeveloped. If we had tidal, we could have greater control. In different parts of the country, the tides would be producing different types of electricity. We on the Committee on Energy and Climate Change looked at that, but not in enough detail. The Government need to look seriously at developing not just offshore wind, but the marine technology of tide and wave.

[Mr Yeo]

I agree, and I am glad that Britain is at least a world leader in research on some of the marine technologies. It is welcome that we are also, I believe, going to go ahead with experimental tidal lagoons in the west country. The potential from those is enormous, but it would be greatly facilitated if we embraced more demand-side response. It would also, of course, be greatly enhanced if our research on storage were successful in finding cheaper ways of storing electricity. That is another very urgent and hitherto somewhat overlooked area.

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[Albert Owen (Ynys Môn) (Lab)]

It is always a pleasure to serve under your chairmanship, Mr Brady. It is also a pleasure to follow the hon. Member for South Suffolk (Mr Yeo), the Chair of the Energy and Climate Change Committee, of which I am a member. I was impressed by his very competent speech, and equally impressed by the fact that he delivered it from the modern technology of an iPad. He is the moderniser of the Conservative party, in many ways. I am pleased to have a quality Front-Bench team on both sides of the Chamber; the Minister and shadow Minister certainly know their brief. In addition, the Minister knows my constituency, so he is familiar with the places that I will talk about. I look forward to knowledgeable winding-up speeches from them.

I come to the debate from a similar background to that of the Chair of the Select Committee, who has just spoken eloquently about energy matters. Energy security and food security are issues that successive Governments have taken seriously, and which they must take even more seriously. In the first Queen’s Speech debate of this Parliament, I indicated that I would concentrate on two subjects during this Parliament: energy and energy security, and food farming and food security. I think that they will be dominant features of future debates.

On climate change, there are various similarities between my views and the hon. Gentleman’s. I have studied the matter for some time. The first job I ever had was to be a galley boy on an oil tanker, just after the middle east crisis. I remember the debates that took place at the time about oil sanctions and the conflict in Israel, and their global impact. We have learned nothing since then. At the time, we were talking about greater security, but when we had a windfall of oil and gas we more or less squandered it. We did not invest in some of the technologies that we are about to invest in, and that we have invested in during recent years. I believe that that was a wasted opportunity.

I disagree with the hon. Gentleman that this Government are the greenest ever. For many of the things that the Government have delivered, the consents were arranged by the previous Government. A lot of the hard work was done in the Climate Change Act 2008, and things such as the renewables obligation and the feed-in tariffs were the work of the previous Government. It is important to note that a consensus was built between the main parties at the time so that we could deliver continuity on such long-term projects.

There have been problems. I remember that when I arrived in the House in 2001, we had energy review after energy review, and nuclear was the big issue that split the Labour Government. It split the Opposition as well, and I remember the current Prime Minister hugging huskies in one of the colder regions of the world, trying to embrace Greenpeace and being very anti-nuclear, to the extent of thinking that it would be the last resort. Nuclear is now the Government’s flagship, and I am pleased about that change. The Secretary of State for Energy and Climate Change is another convert to the cause, which I welcome. I remember debating the subject with him when I first came to the House, and not only was he against nuclear but his party was never going to go down that road, yet we are now moving in the right direction and building consensus.

The low carbon economy has great potential for creating jobs, boosting GDP and making us a world leader in many technologies. I am pleased that there is now common ground for an energy mix. I say this in most energy debates, but I am unashamedly pro-nuclear, pro-renewable and pro-energy efficiency. I see absolutely no contradiction in holding those three views. We need the base load that nuclear can provide, along with clean coal and gas, and we need the flexibility that renewables give us. The hon. Member for South Suffolk mentioned peak demand. When we come down from peak demand, we must be able to switch off some of our technologies so that the right supply goes through the grid transmission system. We need that balance and, of course, we need to reduce use through energy efficiency measures to curb emissions. I welcome the progress on that over the past 10 or 15 years.

I am a member of the Energy and Climate Change Committee. In this Parliament, we have made an important contribution to shaping the debate on energy. The Committee has held inquiries into various energy sources, from marine technology to shale gas. As the Committee’s Chair indicated, we held an inquiry into shale gas early in the Parliament, and in 2011 encouraged the Government to make progress. I am afraid that the Government’s initial response was not positive, and here we are again saying that nuclear is a flagship and the way forward. We are shaping the debate in many ways. We have considered prices and the future affordability of energy for domestic consumers and businesses. We have scrutinised the profits of the energy companies, which was positive. We also considered the issues of fuel poverty. We have done a good job. All those inquiries have been topical and interesting, and the public understand their importance.

All parties in the House can agree on the need for stability and certainty on energy policy. That is what businesses and consumers want, and politicians need to shape a policy whereby we can offer such certainty for investors, whatever technology we are talking about. We can benefit from creating a thriving low carbon economy through energy generation. A low carbon economy will go through a number of phases. Importantly, today we are talking about energy generation, but there is also the phase of surface transport, of cars and trains, which are hugely important for the future. How will we carry goods and people across the United Kingdom efficiently not only in terms of speed and time but in terms of energy? We will need to move away from diesel and petrol towards electricity, which is a huge task. We also need to consider sea transport and the built environment. This is phase 1 of a long-term plan to decarbonise our economy, and there will be important economic decisions that create benefits.

The debate over the past five or six years has been interesting to say the least. Unfortunately, it has been hijacked by certain newspapers and different wings of the print media, which have shaped and coloured some of the political debate in the House. That is unfortunate because the consensus between the previous Government and the then Opposition, and between the current Opposition and the coalition, has been good for providing the stability and certainty that is needed. We tend to react, and it is easy to be anti something. I represent a constituency that has nuclear energy, early onshore wind and the potential for biomass and marine technology. People write to me who are anti each of those things, which it is very easy to be. We have to be sensible and have a balanced, mixed energy policy.

We need to take the public with us, and the House needs to show leadership and send the right signals to business and consumers. As we build, energy security will build a better economy with high-skilled jobs. My constituency is an island, and we have run on the “energy island” label. We have done many proactive things. The nuclear power station, which has been operable since 1971, is the core. Before that, there was a huge construction phase on which my father worked. He was very much in favour of nuclear power because, in the 1960s and 1970s, he was given the impression that, as we had cheap gas, oil and nuclear energy, electricity would be so cheap that it would be difficult to meter. That has not come to fruition, of course, but nuclear has provided a stable base load. Nuclear has been important in providing safe generation, jobs and skills. We were once the world leader, but we have let that slip.

I slightly disagree with the hon. Gentleman, who said that the previous Government did nothing. Very little was done in the 1980s and 1990s, and that continued into the noughties, too. Privatisation was framed on gas and electricity, and nuclear was difficult for the Government to sell. There was a lack of enthusiasm for reinvesting in and updating the technology. Because the technologies, such as magnox, were bespoke, it was difficult to move forward, so there was a phase when there was little investment. The planning system was problematic, too. We have resolved many of those things and, again, much of the spadework was done by the previous Government. I applaud this Government for proceeding with large infrastructure. There is a good planning system for such large projects.

On the island of Anglesey, the energy island, we not only have nuclear. We have a plan for an eco-park, at the core of which will be a 300 MW biomass generator. The vast majority of that electricity will go into the national grid, with the waste from the generator and from a fish farm being used to grow plants. The eco-park, which will be self-contained, will also have a distribution centre. There will be an opportunity for local direct grid investment, too. Exciting ideas are coming from low carbon energy development.

The Horizon nuclear project at Wylfa Newydd, or Wylfa B, is exciting. Investors, including Hitachi, have proceeded with that project, and I recently went to the site with the shadow Secretary of State for Energy and Climate Change, my right hon. Friend the Member for Don Valley (Caroline Flint). The site is vast and has created 1,000 permanent jobs. Importantly, there will be indirect jobs in the supply chain, too. The Leader of the Opposition also went to the site when he was Secretary of State for Energy and Climate Change—the project started in 2008-09.

The shadow Secretary of State and I also visited the energy centre, which is training and upskilling young people. We saw local apprentices between the ages of 17 and 20 who have an opportunity to use their skills in the local energy sector. Bringing and keeping prosperity in the area is something that we should add to this debate, because young people are important to our economy. The skills they are learning are not only usable in the nuclear sector; they are transferable, high-quality engineering skills. In the construction phase of Wylfa Newydd there is talk of some 6,000 to 8,000 construction jobs, which will be high-skilled in many cases. There will be opportunities for local businesses and individuals to work in the environment. There is cross-party recognition of the importance of vocational skills, which in the future will have parity with academic skills.

The energy island concept is more than just nuclear; it involves biomass as well, and there are opportunities for offshore wind. The Celtic array has been shelved for now, but Centrica was talking of huge investment. That potential not only benefits energy companies but the marine sector. In my constituency, we have an excellent company, Holyhead Boatyard, which runs tugs around the world and has moved into facilitating the offshore wind sector around the world with purpose-built boats. Its turbine transfer skill base ranges from apprentices to master mariners, with top engineering jobs in between. It builds crafts in the United Kingdom and maintains offshore wind. There is huge potential for low carbon energy sources such as offshore wind to benefit the United Kingdom, its ports and the maritime industries. That local company has an international reputation and employs people locally who also have the opportunity to travel.

As the hon. Member for South Suffolk mentioned, solar energy is a huge success story for the United Kingdom, although many parts are imported and assembled here. Onshore wind is controversial—I remind the House that Anglesey was an early pioneer of many early wind farms. I must say that I am not a fan of onshore wind farms due to their sheer scale. They are four or five times the size of the original ones on Anglesey. We should be developing offshore, and not just for aesthetic reasons of how they look on the landscape; the wind resource is better offshore, and as wind technology develops, they will be of greater benefit offshore. I agree that we can get down to grid parity in the future, as has been indicated, if we invest long-term in offshore wind.

Research and development are important—we have also taken the lead there—as are links between the energy industry, electricity generation and low carbon, and colleges and universities. The university of Bangor in my constituency has a faculty on Anglesey, the School of Ocean Sciences, which has been pioneering climate change research not just on UK and European shores but in the south Atlantic, where it has been doing excellent work on climate change. We can give individuals career paths not only in the operation of energy generation and low carbon, but also in research and development, software technologies and all the things that I have seen that faculty use on Anglesey. There is great potential for jobs in construction, engineering, mechanics, security, catering and supplies in the area. All those downstream jobs help build a more prosperous economy in areas where energy development is going forward.

This is an important debate. The United Kingdom is leading in many such technologies. If we have a proper long-term plan for energy with consensus and certainty, we can benefit GDP. I call Anglesey the energy island, and we are going forward with that concept, but of course Britain is an island, and Anglesey could be a microcosm for the whole of Britain. Britain could be a leader on the European continent. As an island, we could be self-sufficient using new technologies, but we could also be pioneers in the development of many of those technologies, showing the way for the rest of Europe.

Energy security will still be on the agenda for decades to come. The decisions made by the previous Government and carried forward by this one—I welcome many of the things that this Government have done—need to move forward to give the stability and certainty that I have discussed, so that investors, whether indigenous or foreign, can look to the United Kingdom and say, “This is the place where we want to invest in new and low carbon technologies to generate the electricity that companies need and domestic consumers want, at affordable prices for consumers.” We need to create top-quality jobs so that we can be a world leader and the United Kingdom can move forward.

This is not just a debate at the fag end of a zombie Parliament; it is a restatement of the fact that we as a United Kingdom are forward-looking when it comes to climate change and low carbon energy, and that we will create the quality jobs, education, training and transferable skills that are needed to make UK plc and Anglesey energy island world leaders.

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[Mr Ben Wallace (Wyre and Preston North) (Con)]

I am delighted to serve under your Chairmanship, Mr Brady. I pay tribute to my hon. Friend the Member for South Suffolk (Mr Yeo). I am not sure if this will be the last time we debate and listen to his contributions, but I pay tribute to his work for his constituents and for his party in serving the Government over the years, and to his work for the Committee on Energy and Climate Change.

The Committee has done an amazing job, not only in building the consensus that the hon. Member for Rutherglen and Hamilton West (Tom Greatrex) mentioned, but in demonstrating to someone like me that people do not have to live in a tepee to be green and do not have to switch off the lights and go backwards. To roll out a proper, successful, renewables-based energy policy, people have not only to understand targets for carbon reduction and the pressure of global warming; they have to understand the real world as it is, including finance, investment, risk and technologies. My hon. Friend has done a tremendous job as Committee Chair in bringing along both sceptic and enthusiast with the policy of renewables, and with an energy policy that has satisfied many of the historical splits across the parties that we have seen over the past 20 or 30 years.

Ministers could do a lot more listening to Select Committees, especially my hon. Friend’s, which has genuinely helped policy makers and has brought together the main parties in reaching a proper, grown-up solution to providing energy security and meeting our carbon reduction targets. My hon. Friend’s Committee marks a refreshing change. Members present will have spent time in other sectors of Government such as the Ministry of Justice, where constant party politicking goes on, or disagreement is often more important than consensus. I pay tribute to my hon. Friend’s work. He will be missed, as will the sensible way the reports have been presented to the Government.

There are only 19 sitting days left in this Parliament. That is a rather scary number for all of us. I noted the kind comments made by the hon. Member for Rutherglen and Hamilton West. I am not sure who will be the Energy Minister in 70 days. He will certainly make a fine Energy Minister—if he is successful. I cannot wish him that success; I would not do that. I would certainly not want Russell Brand or Alex Salmond as Energy Minister. The main parties are all in a good place, engaging in grown-up politics in working towards a proper energy policy. It is important to note that among the most vocal opponents of the Infrastructure Bill was the Scottish National party, whose Members have failed to turn up for today’s debate. They are no doubt posturing on some other subject this week. They are not even here to claim credit for some of the successful CfD contracts that have been offered today. We should not forget that we will only solve Britain’s energy crisis as Britain. We will only keep the lights on as Britain, not as separate countries focusing on what divides us, rather than what unites us.

Today’s debate is timely, because the CfD auction results have just been published. We have offered contracts—they obviously have not been accepted yet—to 27 projects. The good news is that the CfD auction showed that, amongst other things, competition has worked. We have had a good result from our focus on trying to ensure that we provide value for money for the bill payer, and on increasing energy generation. The auction price for solar, for example, was 58% less than the administrative strike price. It was 18% less for offshore wind and 17% less for onshore wind. The value for money that that represents helped lever in £45 billion of investment into the energy market between 2010 and 2013. I am always trying to explain to people in different sectors that there is only so much money in this world chasing only so much investment. We have to make investment attractive to money or it will go elsewhere—not just domestically, but internationally.

Both this Government and the previous Government have done a good job in recognising that we have to create the conditions to get investment into high-risk areas and those with maturing technology. The CfD process has been a real success. Let us remember that the aim is to reduce carbon emissions. The UK will emit 4 million fewer tonnes of CO₂ emissions a year as a result of the auction. No one can say that that is a bad result. It puts us on the right path to meeting our aim of reducing carbon emissions. At the same time, we have shown that, if we seek a stable framework, people want to come forward and share the risk. The overall cost of production will reduce over that period, and I hope that by the end of the first 15 years—or whatever the time scale is—the actual production costs of many of these generators will be even lower. I hope the Government of the day will remain attuned to when a technology moves from “maturing” to “mature”, when they need to incentivise newer technologies further down the path, and when they perhaps need to let go of more mature technologies that have run their course over many years.

I again make the point that 11 of the 27 projects are in Scotland. That is a good news story for Scotland. I pay tribute to Scottish Labour Members who have lobbied hard on behalf of the Scottish renewables industry and their constituents. That would not have happened in such an easy way if we were two separate countries. All our bill payers will be sharing the burden of electricity generation. As the shadow Minister said, when there was not much wind blowing in parts of Scotland or when Scotland had to rely on our market in England, it was just a formality; there was no artificial barrier to that happening. People who are attracted by the Scottish nationalists or the agenda of separation should remember that independence would fundamentally undermine and damage Britain’s ability to provide electricity for all its citizens across all the isles. That needs to be fully taken on board.

Given the competitive drive to reduce the cost or strike price, which has been a good thing, we think the CfD auction will result in average annual savings of £41 per family bill. The hon. Member for Ynys Môn (Albert Owen) is right: I love Anglesey. When we go on holiday there, I can look out the window and see the red light shining on what used to be the Rio Tinto tower. I am happy, as are the Government, to work to ensure that any barriers to biomass are addressed in the next round of CfDs. That could include help to reduce risks for biomass investment. By working together, we can ensure that biomass has a better showing in the next round. Personally, I would like that project to be successful. I know how important energy is to the island of Anglesey and the pragmatic approach it takes. It would be good news for Holyhead if that project were successful. I am always happy to help ensure that biomass is embraced.

On the subject of the capacity market, securing our energy security is incredibly important. It is all very well encouraging generation, but if the lights go out and we have not worked together to ensure that there is always some capacity, that is almost for nothing. The auction for the capacity market recently completed. We secured 49.3 GW at a clearing price of £19.40 per kW for delivery in 2018-19, which is good news. Consumers and the public can be sure that, alongside our commitment to develop renewables, we have also achieved more security and secured more capacity.

I know that my hon. Friend the Member for South Suffolk is a keen supporter of demand-side response. I asked officials to see an example of DSR, because how we use electricity efficiently and how we reduce demand are as important as how we cater for demand at other times. I urge Members to look at the example of ExCel, the big London exhibition site, which uses Flexitricity and has a genuinely good case model in how it uses diesel generators that switch on and off as demand requires. Flexitricity can control some of the generation remotely, reducing waste on the grid, and I hope to see more of that. The Department and I have certainly heard loud and clear my hon. Friend and his recommendation of and enthusiasm for DSR, which I hope is given a more prominent role in the next few years.

Other Ministers might get home or to their offices to find that the locks have been changed, because this is the second debate I have been at where Members have clearly demanded a future levy control framework and said that it is required. We hear that urgency. It is no comfort, but with only 19 sitting days to go, I anticipate that the Secretary of State will not be revealing that framework any time soon. We will certainly recognise that urgency in the near future. Whoever is in government, we will all be working to ensure that that long-term indication is in place. I hear with open heart and open mind the recommendation for a rolling seven-year framework to ensure that we keep things up to date. In my opinion, that would help to reflect advances in technologies as they develop. If we understand the impact that technologies have as they roll through, we might understand how much influence they will have on levies and everything else.

There is obviously a long list of renewables that we could talk about. The Government have clearly been happy to encourage offshore wind farm developments. We hear the fears about the high strike price and expense of offshore wind, but the CfD auction has shown that the direction is downwards. As the technologies have developed and competition has been brought in, we have started to reduce the offshore price, which I hope in the medium to long term will converge to be not so different from the onshore price, or near enough.

The Government are obviously committed to onshore projects as a way of generating energy. We are at a stage where many of us who see applications in our constituencies should and can say—the Government have shown this with where they have chosen not to support onshore wind farms—that investors should think carefully about whether they bring forward planning applications for a well-sited, well-researched location, or indulge in the speculative, lazy applications that we see in our constituencies. Out of the blue, a speculative application happens, and that is often what upsets and surprises constituents, coming as it does without any indication of logic or anything else. In those cases, the message should be loud and clear: “Do your research and work. Make sure that you are not speculating and trying to garner profit for profit’s sake rather than trying to fit into the community.”

[Sandra Osborne in the Chair]

The biggest drop in price in the CfD auction was solar’s 58% drop. The Government support solar at all levels, including below 5 MW, and with the feed-in tariffs. It has been encouraging to see how the solar industry has been imaginative in finding new sites that get the sun—for example, by renting roofs. The Government are certainly committed in the long term to ensuring that solar is part of the mix. We want it to be successful, and I hope to see more bids in the next CfD round.

[Albert Owen]

Before the Minister moves on from renewable energy, I am not making a partisan point, but does he share my frustration at the lack of development of commercial-scale marine energy? There have been a lot of good demonstrations of it that have not moved forward. What more does he think can be done to make it happen? Everyone agrees on the potential of wave and tidal energy, but it has not increased in scale. Since I have been a Member of this House—I was interested in energy from day one—it has always been three or four years hence, but it has not happened. What can be done so that we can get good commercial projects up and running in order to get the predictable energy supply that we need?

[Mr Wallace]

I am grateful to the hon. Gentleman for that question, because I too remember the grander schemes, such as the Severn barrage and the Wyre barrage in my constituency. They were quite large-scale, ambitious schemes. I checked before I came to the debate, and one of the Department’s priorities is the Swansea lagoon barrage. If we can get that up and running successfully, it is the kind of thing that will quickly trigger a roll-out elsewhere. As he says, wave and tidal energy have been just over the horizon for as long as I have been involved in such issues, but we are getting to a stage where the scale is right and not over-ambitious. From what I can tell, local businesses and people are supportive of the scheme in Swansea, so we should all try to help it to become a reality and sing its praises far and wide, should it be a success.

[Albert Owen]

I fully support the plans for Swansea. In my area, where there is good tidal flow, we have had a demonstration from Marine Current Turbines and Siemens, and we have seen the technology working in Strangford lough. Siemens did not take it to the next stage. The Government have done what they can. There are good renewable obligations and support in Scotland and other places, but schemes have just not gone far enough. I understand what the Minister says about scale, but I am not talking about a large-scale project; it could have developed in sections and become bigger. There is something missing. Will he consider that so that we can move forward with tidal energy?

[Mr Wallace]

I am happy to ask the Department about its observations on why Siemens did not choose to go forward, because we can learn from that. It may have been a commercial decision or there may have been an internal conflict of interest because the company wanted to focus on another technology, but it would be good to find out and move forward.

My constituency borders the two current shale gas sites. I want to put the Government’s position on the record: we are absolutely clear that we are not determined to rush for gas or to throw everything out just to get fracking going. The Government are in favour of fracking, but we want to be its arbitrator. We want to listen to the science behind it. We do not want to be in the pocket of the oil and gas companies or the green movement. The Government’s role is to take a pragmatic approach and ensure that shale gas proceeds, learning from all the experience around the world and from all the environmental studies and impacts that have happened, and use our position to ensure that we set a gold standard. We must move forward where we can, mitigating the effects on local communities through sovereign wealth funds and local community funding, but also through the planning conditions that can be set by mineral rights authorities.

Shale gas will and must be in the mix at some stage. I would rather buy my gas from Britain than from Mr Putin, so if people have objections on human rights grounds, there is one reason. I would rather not compress gas in big ships and take it around the sea if it is possible to get it from Britain. The Government’s position is not simply to progress recklessly on shale gas at any cost. Opponents of shale gas often paint it as if the rush for gas is true, but that is not the case. As we saw recently in the debates on the Infrastructure Bill—the Government accepted Opposition amendments—we will work to ensure that the industry is safe, that constituents are not affected unnecessarily, and that we all benefit from the process.

The last thing mentioned by the hon. Member for Rutherglen and Hamilton West was carbon capture and storage. We cannot avoid the fact that it will be part of an ability in which we must invest, and which we must develop to complement our energy generation over the next 20, 30 or 40 years. We cannot just pretend and have it as a tokenistic thing. It is going to be a fact and we must invest in it. The Government are doing what they can to help investment in the process. As with the barrage and tidal schemes, I look forward to the day when we start the process and get the pipelines and everything else in place. Whoever is in government, it is worth monitoring and investing in carbon capture and storage.

I hope that colleagues have felt that today’s debate has cemented the view that the current energy policy is travelling in the right direction for this country. It is based on reducing carbon emissions, encouraging different technologies and getting value for money for the bill payer. We cannot pretend that those issues are separate; they have to be hand in hand. We have to carry the public with us if we are going to develop energy policy successfully. We should be not pleased, but happy that the CfD auction proved that things are going in the right direction.

The economic benefits are clear. Since 2010, we estimate that more than £30 billion has been invested in electricity generation, principally in renewable technologies. In previous years, it might not have been the case, but that money has gone principally on renewable technologies, and £30 billion does not grow on trees. If we cannot get investment from the markets and the private sector, in the end we will have to get it from the taxpayer. It is a good thing that we have helped to change not only Government policy but investment policy and thinking in this country. As someone who, to some extent, came late to the energy debate, I am grateful for the work of the Select Committee and for its reports. I find them incredibly educational and I know that the Department finds them very useful in helping to create and shape new policy for the years to come.

Before finishing, I repeat my tribute to my hon. Friend the Member for South Suffolk. I thank him for his work with the Select Committee and for his work for the whole House as well.