Energy Bill

Alex Cunningham Excerpts

Wednesday 19th December 2012 Commons Chamber

[Ian Swales]

I thank the Minister for that clarification; that was my understanding too.

I raise this issue because of the importance of the proposed Teesside carbon capture and storage network to my constituency, the local economy and, I truly believe, to the national economy. I was delighted by the recent announcement that placed the project in the UK shortlist of two for the European competition and the shortlist of four for the UK competition. I am obviously disappointed that it seems that the UK projects will not be supported in round 1 of the European competition. It was notable that the UK announcements—and, indeed, the European ones—simply listed the technology and electrical output of each project, whereas the Teesside project included the potential to bring back International Power’s mothballed 1.8 GW power station at Wilton. However, power is not the main driver of the project. Teesside has 18 of the top 30 carbon emitters in the country, excluding power stations.

[Alex Cunningham (Stockton North) (Lab)]

Will the hon. Gentleman give way?

[Ian Swales]

I will, although I am now in my own time.

[Alex Cunningham]

I am grateful to my Teesside neighbour for giving way. He talks about carbon capture. Does he share my concern about the lack of detail in the Bill on which companies will be exempt from the cost of contracts for difference? For example, it would appear that the Sahaviriya Steel Industries works in his constituency were not operating throughout the 2005 to 2011 period to quality for an exemption. What will happen to them? Will we need amendments to protect the steel works on Teesside?

[Ian Swales]

The hon. Gentleman makes a good point. There are issues about how some of the calculations have been made, given that companies were coming and going through the reference period, and he raises an obvious example.

The SSI steel works in Redcar alone account for around 1% of the UK’s carbon emissions. Supporting the Teesside project with an oversized network will therefore not only be good for decarbonising energy generation, but have the potential to decarbonise energy-intensive industry. In doing so, the project will protect existing industry—that includes steel, fertilisers and petrochemicals—and make it more competitive, and also make the area a magnet for future investment in both energy generation and industry. May I therefore gently remind Ministers that their Department is responsible not just for energy, but—the clue is in the name—for climate change? I also ask that the definition of CCS be reworded to ensure that it covers the wider opportunities that the technology represents. Meeting our carbon reduction goals requires action on all major emissions.

The Energy Bill and the move to a low-carbon economy are welcome on Teesside. In fact, the area is already something of a Disneyland for green technology. We have Ensus running Europe’s largest bioethanol plant, a £60 million anaerobic digestion power-generation unit run by Northumbrian Water, SembCorp’s Wilton biomass power station, SITA’s waste-to-energy plants, the pyrolysis of waste plants being constructed by Air Products, and 27 wind turbines being constructed just off Redcar by EDF, which I can see from my bedroom window.

The Energi Coast consortium in the north-east, consisting of more than 20 companies, has already invested £400 million, and is ready to exploit the offshore wind and marine energy sectors. I should also mention Redcar and Cleveland college, one of the first colleges in the country to be accredited for the provision of green deal training. Future plans include a biomass power station at Teesport, which has attracted Korean investment; a new community power station based on aeroplane engines; a plant for the pyrolysis of tyres, generating energy and fuel oil; more anaerobic digestion plants, one of which received money from round 3 of the regional growth fund; and sub-stations to deal with half the output of the proposed giant offshore wind farm at Dogger Bank, which are likely to be in my constituency.

I am pleased that we appear to have reached the end of the consultation period, and that there seems to have been an outbreak of agreement between DECC and the Treasury, because it is important for us to move quickly. There are many opportunities for business growth and technical leadership, but the rest of the world is not standing still. It is time to be bold and clear, and to get going. I welcome the Bill, and I hope that the Minister will note my comments on the clauses relating to carbon capture and storage.

--- Later in debate ---

[Alex Cunningham (Stockton North) (Lab)]

The need for reform of the energy market could hardly be more pressing, with rocketing prices from the big six. They have a stranglehold over the market, and yet are content to make billions in profits between them while millions of people cannot afford to heat their homes. The Bill rightly tries to deal with the lofty issues of investment contracts, capacity agreements, barriers to market, access for new investors, low-carbon generation, and countless rules and regulations, but not one of them will mean much to consumers if they do not provide an answer to the crisis that has plunged millions of people back into fuel poverty, leaving many with the decision of whether to eat or heat.

The prices crisis extends to industry, and particularly to energy-intensive industries, of which I have many in my Stockton North constituency. We need to build confidence in our country’s energy policy and reverse the coalition Government’s failure to grow our economy. We know the UK renewable energy market has suffered under the weight of mixed and inconsistent messages from the Government. While we have dilly-dallied in Britain, other countries have simply got on with it. The EU contribution of renewables to total energy is around 13.4%, but we are third bottom of the EU renewable energy league table, and our renewables contribution is just 3.3%.

Other countries have built the capacity for manufacturing wind turbines and solar panels, so much so that Germany and Holland in particular are picking up billion-pound contracts for British offshore wind farms while British companies are excluded by the foreign-owned energy generators. That is very bad news for constituencies such as mine, where many of us saw the wind and solar industries as the future for thousands of jobs and as major manufacturing activities that could prove to be the saviour for our faltering economy. If the Government will not listen to industry, maybe they will take note of Roseberry primary school in Billingham in my constituency. It is engaged in the solar schools project because it recognises the environmental and financial benefits of solar power, and it is raising funds to install it.

The consensus among campaign groups seems to be that the Bill will not do enough for consumers. Which? recommends that rather than placing customers on the lowest tariff, the new regulations should ensure that all tariffs are structured with a simple, consistent unit price that allows people to compare and immediately identify cheaper alternatives, as they do with petrol prices. When even the lowest price in an uncompetitive market is too high, the Government must make it work better for ordinary people. Requiring generators to pool their power to create a genuine market would ensure that decreases in wholesale prices are passed on to consumers, not just the increases, which happens at present. Gas from around our coast is largely used up and we are now at the mercy of overseas prices. We need alternatives and cannot be totally dependent on other countries for our long-term energy needs.

During my career, I was involved in setting up fuel poverty campaigns, in partnership with energy suppliers, to develop projects that rescued tens of thousands of people from fuel poverty, to add to the several million others who benefited from similar schemes under the previous Labour Government. Stockton Warm Zone took thousands out of fuel poverty. Sadly, a large proportion of those people, and people across the country who benefited from efficient boilers and loft and cavity wall insulation, have now seen a reverse in their prospects. I am sad to say that more than 20% of households once again count as fuel poor. That is bad enough, but what saddens me further is the way in which the Government plan to take energy efficiency schemes forward, because it means that the kind of benefits enjoyed from schemes across the country can no longer be replicated effectively on a scale that will make a real difference. They should rethink the energy efficiency measures policy and maximise the sums invested by ensuring that every penny raised from consumers is spent on such measures.

From April 2008 to December 2012, the Department of Energy and Climate Change estimated that the carbon emissions reduction target and community energy saving programme cost the energy supply companies £5.5 billion, but it does not know how much each energy company paid per tonne of carbon saved. There is no clear audit trail of what happened to the money. Energy companies must be compelled to be transparent in their approach to how that money is invested—after all, it is a tax raised for the specific purpose of reducing fuel poverty and tackling carbon emissions.

I mentioned earlier that our energy-intensive industries are worried about the limited detail in the Bill about exactly which companies will be exempt from the cost of contracts for difference. For example, what would happen to SSI steelworks, which recently reopened at Redcar? It was not operating during the 2005 to 2011 window to qualify for an exemption. I hope the Minister will address that point, and tell us whether it will be protected.