Energy in Wales

Debate between Albert Owen and Tonia Antoniazzi

Thursday 14th September 2017 Westminster Hall

[Albert Owen]

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.

[Tonia Antoniazzi (Gower) (Lab)]

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?

[Albert Owen]

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.