Energy Trilemma

Debate between Alistair Carmichael and Alan Brown

Thursday 23rd March 2023 Commons Chamber

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

I, too, congratulate the right hon. Member for South Northamptonshire (Dame Andrea Leadsom) on securing the debate. I must admit that I did not realise when she secured the debate that I would effectively be responding to a Tory Back-Bench 1922 committee report. It comes as an even greater surprise to me that I agree with the recommendations she has raised. She did say that there were 30-odd recommendations, though. She did not go through them all—I thank her for that—but I suspect that I would find some among them that I disagree with.

As I say, I agree with the right hon. Lady on the points that she brought forward. We really do have to unlock renewables, and I agree about the need to reduce demand. One way to do that is to increase energy efficiency installations; the Government must really ramp up action on that. One thing I would say to the Minister is that I am now getting feedback that the roll-out through ECO4 is not going as quickly as suppliers would like it to go; they are already behind on progress this year, so maybe we need to look at ways to target the right homes for energy efficiency upgrading.

The right hon. Member for South Northamptonshire obviously took credit for the creation of the new stand-alone Department for Energy Security and Net Zero. I welcome that new Department; to be honest, it was long overdue, but at least it now seems to have the right priority within Government. I also completely agree about the number of grid upgrades that will be required. We need much better forward planning, and it was certainly an eye-opener when she said that we had seven times the amount of infrastructure still to be built. There is no doubt that Ofgem has failed on that. National Grid ESO confirmed two weeks ago to the Business, Energy and Industrial Strategy Committee that it paid £4 billion in constraint payments last year. That is effectively £4 billion wasted that could have gone towards grid upgrades, storage or other mechanisms, and it shows how Ofgem needs to get a grip on the issue and allow anticipatory investment.

We need to imagine what the grid will be required to look like in 2050 and start planning for that now. I am concerned at the piecemeal approach that has been taken; even when the grid has been upgraded, we are building in future constraints already instead of putting in the right capacity. That will cost more money in the long run and block renewables from coming online.

I must say I also welcome the right hon. Lady’s conversion to referendums. She will find that on the SNP side we completely agree with the need for referendums, and I look forward to her support on that matter. I was also glad to hear her compliment the independent advice body Home Energy Scotland, and it would be good to see a completely independent body set up in England to give free and impartial advice and help people to get the measures required.

It is no surprise that I agree with the points my right hon. Friend the Member for Ross, Skye and Lochaber (Ian Blackford) made. He is right that the IPCC report highlights the urgency to take action now, before it is too late. He also highlighted the fact that investment is relocating to the United States where there is momentum because of the Inflation Reduction Act. Meanwhile, here we have the electricity generator levy, but no renewables investment allowance. We really need to look at some form of that. My right hon. Friend obviously mentioned the Skilling report, the opportunity potentially to scale up to 80 GW of green electricity generation in Scotland and how important that could be in a just transition, creating 300,000-plus new jobs.

I also agree with my right hon. Friend on tidal stream. I have been trying to highlight the issues with the funding pot announced for AR5—it is definitely not enough money, especially with inflationary pressures. MeyGen in the Pentland Firth is the biggest tidal stream site in the world, but it has confirmed that it now faces inflation pressures of +50% on the AR4 strike rate that it bid against. The only way that that project can grow is if it gets to scale up through a bigger proportion agreed in AR5, and for that there needs to be a much bigger budget. I am pleased to say that the Exchequer Secretary to the Treasury has agreed to meet me next week, and I will certainly make the case for at least £40 million, which is what I have been asking for.

In a real twist, I agreed with the points made by the hon. Member for Banff and Buchan (David Duguid). There is no doubt that we will still be using oil and gas in 2050 and will still need to utilise them as an asset. As he rightly said, Scotland is a net exporter of oil and gas. In fact, it supplied almost 50% of the UK’s gas consumption last year and 75% of the oil.

When we talk about energy security, though, we must be realistic and accept that, while even a lower percentage increase in production for the North sea increases energy security, that oil and gas can be traded on the international market and does not necessarily come directly into the UK market. There has been a 30% reduction in oil refinery capacity in the UK since 2010, so even a lot of the oil for use in end products here has to go abroad to be refined and then come back. The security issue is not quite straightforward, but I agree that that is an asset we must continue to utilise.

[Mr Carmichael]

Will the hon. Gentleman give way?

[Alan Brown]

It will need to be very brief.

[Mr Carmichael]

What view does the hon. Gentleman take, then, of the Scottish Government’s current consultation on presumption against future development?

[Alan Brown]

There is no harm in consulting. We need to look at that and have proper climate compatibility checks—I think that is the right way to go about it.

I agree with the hon. Member for Banff and Buchan about direct air capture, which could, of course, play a role as part of the wider Acorn cluster, but I repeat that, with £20 billion announced for carbon capture and storage, it is disappointing that we are still waiting to hear any firm commitments on Acorn. The Budget mentioned a possible track 1 expansion, so can the Minister advise me on whether Acorn might be included in that this year, or will it rely on track 2? If so, when will we hear an announcement about the track 2 process?

The right hon. Member for Orkney and Shetland (Mr Carmichael) rightly mentioned the fantastic EMEC facility. I urge the Government to come forward with funding to replace EU funding and keep EMEC going. He said that he was not too sure about nuclear. My views on nuclear are well known, but I repeat that I am completely against it. Hinkley is costing £33 billion; Sizewell C will cost something like £35 billion. Think what we could do with that money in energy storage, energy efficiency and even grid upgrades. That £35 billion is just a waste of money. Sizewell C will not be constructed for 12 to 15 years, and there is not even one successful EPR project in the world. SMRs are being promoted, but there is not even an approved SMR design in the UK. Rolls-Royce tells us that it will somehow get them up and running by 2029, but that is a fallacy when the regulator has not even approved the design yet. At £2 billion a time, SMRs are not exactly cheap, and that money could be better spent elsewhere.

The hon. Member for Crewe and Nantwich (Dr Mullan) made a good point about the potential for geothermal, and I agree with him. We have a lot of former mineworking areas in Scotland and other areas of the UK, and they could be a place to start on the potential for geothermal. It would be good to see Government support for that.

The hon. Member for North Devon (Selaine Saxby) mentioned community energy, an effective Local Electricity Bill, and amendments to the Energy Bill. Certainly, I have been a supporter of the Local Electricity Bill. I would be happy to consider that on a cross-party basis when the Energy Bill comes to the House of Commons.

The hon. Member for Stoke-on-Trent Central (Jo Gideon) mentioned intermittency issues. Yes, we need to deal with them, but that can be done with pumped-storage hydro, which my right hon. Friend the Member for Ross, Skye and Lochaber mentioned. All that is required to get Coire Glas over the finishing line for final investment and approval is a green cap and floor mechanism for revenue stabilisation. Some £1.5 billion will be fully funded by SSE Renewables—no subsidy or Government guarantees have been asked for; just the revenue stabilisation mechanism.

The right hon. Member for South Northamptonshire made a good analogy, which everyone picked up on, and I agree with her, but although we are calling it the energy trilemma, we also need to look at it as an opportunity —the opportunity that comes with decarbonisation, green energy, new jobs, just transition and by bringing bills down in the long run. We have to grasp that opportunity to have a truly green renewable energy grid supplying homes across the UK.

Marine Renewables: Government Support

Debate between Alistair Carmichael and Alan Brown

Wednesday 7th December 2022 Westminster Hall

[Mr Carmichael]

I very much agree, and I should acknowledge the support that the hon. Lady has given to EMEC over the years. I am grateful for the support from across the political spectrum, all parties and none, and I will come on to talk quite a lot about EMEC later on.

It is worth reflecting for a second on how we have reached this point. Despite the fact that these are significant commercial enterprises—essentially competitors—the companies working in the sector have presented a united and strategic case to Government and investors. That has been enormously important, and since we still have some way to go, I hope that approach will continue. Trade bodies RenewableUK and the UK Marine Energy Council have also been critical in maintaining that unity of purpose and message, as has, in our own small way, the all-party parliamentary group on marine energy, under the chairmanship of the hon. Member for Gloucester (Richard Graham), who I am delighted to see in his place.

It is invidious to single out individuals when the story is one of team success, but the leadership that Neil Kermode has given as director of the European Marine Energy Centre in Stromness in Orkney has allowed that body to fulfil the role it was set up for almost 20 years ago. I do not think the Minister has yet visited EMEC, but he may wish to make his way there once we are through the winter and the days are slightly longer again, so that he can see for himself the work that has been done and continues to be done not just at EMEC but on the Heriot-Watt campus at the International Centre for Island Technology and the full range of private companies that have been established as spin-offs from these bodies.

I mention EMEC, and am keen for the Minister to visit, not just to give it the recognition it has earned, but to engage the Minister’s attention in the issue of funding. EMEC’s success has been built on Interreg funding, which was a dependable source of funding for as long as long as we were part of the European Union; it was an easy fit. Since we left the European Union, however, the shape of future support that replaces what came through Interreg is still not clear, and for EMEC that could soon become critical. My first ask of the Minister, therefore, is whether he will meet me and a delegation from EMEC so that we may identify future sources of funding.

The Government have now made a significant commitment to marine renewables through the fourth allocation round, and EMEC remains central to delivering the full potential of the Government’s commitment. That may be in the Department for Business, Energy and Industrial Strategy or the Department for Levelling Up, Housing and Communities, or it may fall within the remit of the Scottish Government—perhaps it is some combination of them all—but having come so far we cannot now allow that critical operation to fall between the gaps of Government.

I hope this morning’s debate will be an opportunity for us to stop and take stock of where we have got to, to explore some barriers that remain on the road to development and commercialisation, and to look forward to where we go from here—in particular, to what decisions we need to see made as we move towards the next round of contracts for difference allocation round 5.

It is worth reminding ourselves what is at stake. The United Kingdom has the potential to develop about 1 GW of tidal stream energy by 2035 and up to 11.5 GW by 2050. That is equivalent to over three times the generation capacity of Hinkley Point C. The costs of technology have fallen significantly in recent years. Analysis published by the Offshore Renewable Energy Catapult this autumn showed that that tidal stream can become not only a significant part of our future energy mix, but a cost-competitive one. If the sector is supported, by 2035 tidal stream could provide power at £78 per megawatt-hour; compare that to Hinkley Point C at £92.50 per megawatt-hour. By 2042 that figure could be £60 and by 2047 we could be looking at something in the region of £50. That is about £10 per megawatt-hour more than wind and solar today but, importantly, without the challenges of unpredictability.

The real opportunity that comes from the development of tidal stream power in particular is the chance to develop the baseload capacity that will be so important and to remove the intermittency of renewables. For so long the missing link has been the funding that would give wave and tidal energy the chance to develop commercially, and, as we know from other renewable technologies, once the process of the commercial roll-out is under way, the costs fall like a stone.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

I thank the right hon. Member for bringing forward this debate. He rightly makes the comparison with nuclear strike rates, but in doing so we should remember that the £92.50 strike price for Hinkley Point C is a 35-year contract, whereas tidal stream is a 15-year concession so it is even better value for money. Does he agree?

[Mr Carmichael]

That is a perfectly fair point. I make the comparisons, but I do not want to set one technology off against another; that is not in the interests of the industry. It is important that the figures are taken in the round when we look at getting value for money for the taxpayer.

Marine renewables is an industry that has the potential to support thousands of jobs across the United Kingdom—good-quality manufacturing jobs that bring with them the opportunities to grow an export industry, which would be an obvious route towards a just transition for many of those currently working in oil and gas. The oil and gas industry has been a critical part of the economy of the Northern Isles for the last 40 years, and I believe it will be a critical part of getting to net zero. Indeed, it is difficult to see how we could get there without having an industry on the UK continental shelf. The industry has a number of excellent apprenticeship programmes. When I talk to the young men and women who are undertaking those apprenticeships now, at the start of their career, I am struck by the fact that they tell me they believe that by the end of their working lives they will be working not in oil and gas, but in marine renewables.

--- Later in debate ---

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. Like everybody else, I congratulate the right hon. Member for Orkney and Shetland (Mr Carmichael) on bringing forward this debate. As with many Westminster Hall debates, the main thrust is clearly one that all contributors agree with—in this case, it is support for marine energy.

The right hon. Member for Orkney and Shetland is lucky to have the European Marine Energy Centre in his constituency, a facility I have visited. This world-leading facility came about partly due to the EU. As the right hon. Gentleman said, the EU funding scheme must be replaced by the UK Government to keep the centre going. The UK Government want to talk about levelling up, so there should be no ambiguity about providing replacement funding for the EMEC.

The right hon. Gentleman rightly highlighted the success of the fourth allocation round of CfDs, with Orbital Marine Power awarded 7.2 MW, SIMEC Atlantis awarded 28 MW through the further development of the MeyGen site—the world’s largest—and Magallanes, in Wales, awarded 5.6 MW. It was a pleasure last week to hear at a meeting of the marine energy APPG that all those projects are on track to deliver their AR4 commitments.

As the right hon. Gentleman said, the crucial things about tidal stream development are the jobs and manufacturing it creates in the UK, the export opportunities it provides, and that it forms part of the just transition for the oil and gas sector.

[Mr Carmichael]

The hon. Gentleman is absolutely right to draw attention to the fact that all these projects are on track with their timescale. However, the timescale we heard about at the briefing at the APPG meeting will still see the earliest device going into the water in 2027. That shows the problem with the pace of deployment.

[Alan Brown]

I agree with the right hon. Gentleman, and that is why further support is needed. In many ways, though, that also shows the pace of deployment to deliver these projects in the next few years. Looking at the Government’s overall renewable energy targets, it is really important that they back many sectors, particularly tidal stream.

I agree with the key asks mentioned by the right hon. Gentleman, including continuing the ring-fenced pots, reforming CfDs to continue to incentivise supply chain development, the 1 GW target for 2035 and, importantly, section 36 consent reform. I ask the Minister to work with the Scottish Government on that, because the regulations are reserved to Westminster.

I commend the hon. Member for Gloucester (Richard Graham), who chairs the marine energy APPG and does a lot of good work with it. It was good to hear him rightly commend the Scottish Government for our commitment to support in the 2022-23 programme for government and, although he did not say it, initiatives such as the Wave Energy Scotland technology programme, which committed £50 million for development of these technologies. It is not often that I say this in a debate, but I welcome and support the hon. Gentleman’s call for further investment in England, because that will help develop the supply chain right across the UK. Importantly, I agree with what he said about the need to support companies such as Nova Innovation to stay in Scotland and the UK.