Energy Generation

Andrew George Excerpts

Wednesday 17th April 2013 Westminster Hall

[Andrew George (St Ives) (LD)]

It is a pleasure, Mr Howarth, to perform under your chairmanship for the first time. I understand that the debate in the House is winding down to a possible vote. I am well aware that this debate, which I am delighted to have secured, has attracted a lot of support across all parties. There is tremendous interest in the matter. The Energy Bill will return to the House for debate, and my concern is whether we will have sufficient opportunity to discuss the matter then. This debate is not so much an early skirmish, but an opportunity to ensure that we begin the process of opening a parliamentary dialogue on a matter that is clearly vital as we take forward an excellent Bill, on which I congratulate the Government. It includes some significant stepping stones in setting out a clear agenda for energy generation in this country to achieve energy security. I am sure many hon. Members will want to contribute to this debate on decarbonisation and lowering carbon emissions from this country’s energy sources.

The debate is timely, today of all days, partly because of last night’s vote in the European Parliament on the European trading scheme. I would be interested in the Minister’s comments on whether he believes that that enhances or makes it more difficult to advance the case for a decarbonisation agenda in the UK. I would argue that it makes it even more urgent for the UK to ensure that we press the agenda firmly.

The debate is also timely because of a matter partly related to the way in which we do business in the House. Yesterday, I was significantly frustrated that we were unable to debate or divide the House on the Government’s proposed abolition, which is shortly to be enacted, of the Agricultural Wages Board. We will have further debates on the Energy Bill and the failure to debate abolition of the Agricultural Wages Board may be an example of how, despite the issue being deeply significant to many hon. Members, including me, we were unable to debate the matter. There was no mechanism by which to divide the House to establish what support exists for that abolition, which was introduced in another place. That worries me, and to ensure that today is not our only opportunity to debate the decarbonisation agenda, will the Minister ensure that when the Energy Bill returns to the House there will be protected time in the Chamber for a proper debate and votes? That is important.

I congratulate the Government, the Minister and my right hon. Friend the Secretary of State for Energy and Climate Change on their significant progress in advancing the case. My intention today is primarily to advance the economic case for green jobs and investment as the fundamental justification and raison d’être for advancing as quickly as possible a decarbonisation agenda in the UK. If we are to corner a growing global market, we must lead the way and ensure that future investment in the manufacture and production of green and decarbonised energy generation. The UK needs to be at the forefront.

The pinch point in the debate on decarbonisation and the setting of targets is that the industry looks in the long term against a political cycle that, by its very nature, is relatively short term—often five years at the most. I congratulate the Government on rightly looking at this vital agenda decades ahead, but the worry is that the political agenda might drive the basis on which decarbonisation targets are met.

[Mike Weatherley (Hove) (Con)]

The aim of a decarbonisation target is laudable, but does my hon. Friend agree that we should not rush forward with increased proposals for the nuclear option, which might be seen to be an easy option in the long term?

[Andrew George]

I entirely agree with my hon. Friend. Indeed, I have raised the issue on the Floor of the House with my right hon. Friend the Secretary of State that, in advancing this policy, we should stick to the Government’s stated aim of ensuring no public subsidy for nuclear power. Hon. Members know that the Liberal Democrats have made it clear that their stated policy is to oppose nuclear power, but in coalition compromises and concessions must often be made. The concession on nuclear power, which is shared by both coalition parties, is that it is vital to ensure that no back-door public subsidy underwrites the future costs of nuclear power.

[Caroline Lucas (Brighton, Pavilion) (Green)]

I congratulate the hon. Gentleman on securing this important debate. I am pleased to follow the hon. Member for Hove (Mike Weatherley), with whom I do not often agree, but on nuclear, I certainly do.

Does the hon. Member for St Ives agree that, although there seems to be widespread consensus, one of the fastest, cheapest and most effective ways to reduce our emissions is through energy efficiency and conservation and that we are still not putting enough into that? There is a lot of talk about energy sources, but not enough about demand reduction and energy efficiency. Does he also agree that one way to put in more resources would be to ring-fence the taxes from, for example, a new carbon floor price or the EU emissions trading system and to invest that money in energy efficiency?

[Andrew George]

The hon. Lady makes an excellent point. This debate is primarily about the decarbonisation of energy supply; conservation and reducing energy demand is a separate debate. To be fair, the Government have established a strong case through the green deal and the establishment of the green investment bank, which will support many measures to address energy conservation. The hon. Lady makes an excellent point, but this debate is about energy generation and supply, and I do not want it to stray too far.

It is worth reminding ourselves that the Government have made a commitment to be the greenest Government ever, which does not set the bar very high. However, beyond that, as they said in the coalition agreement, they believe

“that climate change is one of the gravest threats we face”

and that

“We need to use a wide range of levers to cut carbon emissions, decarbonise the economy and support the creation of new green jobs and technologies. We will implement a full programme of measures to fulfil our joint ambitions for a low carbon and eco-friendly economy.”

The coalition agreement then sets out how the Government intend to do so, but I will not have time to go through that.

[Kerry McCarthy (Bristol East) (Lab)]

Does the hon. Gentleman share my frustration that it is three years since the coalition came to power, and to drive the agenda forward, we need things such as targets to create the impetus for some of the measures to be put in place and to create a situation where investors have confidence? At the moment, so much is uncertain about the future of Government energy policy. We have the Treasury driving fracking forward, a lack of targets and the Secretary of State for Energy and Climate Change criticising the general thrust of energy policy that is being imposed on him by the Treasury. Does the hon. Gentleman agree that certainty is important and that decarbonisation targets are an essential part of that?

[Andrew George]

The hon. Lady is absolutely right. In fact, that is the nub of the debate. It has taken me 10 minutes to get to that point—perhaps I will get to it now—but it is fundamental to this debate. Investors are clear in the messages that they are sending out at present. This is not purely a green campaigning issue for non-governmental organisations. It is an area in which very substantial pension funds and other investors are looking to invest. Looking forward decades, they want certainty and confidence, and they see this as a sector where they believe that certainty can be demonstrated with a target set sooner rather than later. Not only has this part of the economy performed by generating a large number of jobs and significant growth—far higher growth than in almost all other sectors of the British economy—but it is an area in which significant investors in the British economy want investment to take place.

[Mr Tim Yeo (South Suffolk) (Con)]

I congratulate the hon. Gentleman on securing the debate, and I add my strong support for the intervention made by the hon. Member for Brighton, Pavilion (Caroline Lucas). On the point that the hon. Gentleman just mentioned, one of the most significant factors is that the need for a focus on reducing the carbon intensity of electricity generation is supported not only by what one might call the usual suspects from the green world, but very strongly by the business world, including a large number of industries that have no direct interest in the issue whatever. That concern is perhaps reinforced by last night’s vote in the European Parliament, which is clearly a setback for achieving more effectiveness in the EU emissions trading system.

[Mr George Howarth (in the Chair)]

Before the hon. Member for St Ives (Andrew George)resumes, I realise that there is a very strong temptation in such a debate, where a lot of people wish to get in, to make an intervention, but hon. Members need to be reminded that interventions must be short and not mini-speeches.

[Andrew George]

I am grateful for your guidance on that, Mr Howarth, and I am particularly grateful to the Chairman of the Select Committee on Energy and Climate Change, my hon. Friend the Member for South Suffolk (Mr Yeo), for his telling intervention. As he rightly said, this is an issue of hard-headed financial decision-making and not one that is driven purely by eco-warriors. This matter is all about ensuring that we have a strong economy, and in terms of the hundreds of thousands of jobs that will be created through the green economy, Britain must lead the world. It has an opportunity now, but that opportunity will not exist for many years, and if we miss it, we may be dragged behind other places. We will be importing their technologies into this country, and the cost to the economy will be very significant. My hon. Friend is engaged in an excellent campaign on that issue, and I congratulate him for his contribution.

I have written to the Secretary of State, as I know many others have in recent months as the debate has developed. He kindly responded to me this week, saying that he agrees that

“a decarbonisation target for the electricity sector could increase certainty for investors in large and long term low carbon energy projects like renewables, new nuclear and Carbon Capture and Storage. That is why, last year, I worked for and achieved Government agreement to set a 2030 decarbonisation target range”—

--- Later in debate ---

On resuming—

[Andrew George]

It is a pleasure to serve under your chairmanship, Mr Gray. I was reading from a letter that I received from the Secretary of State this week in which he also justifies the option of setting a target in 2016. He refers to the other decisions that the Government need to make. I am sure that the Minister will outline those in a moment, so I shall not take up time describing them. The Secretary of State says that

“a target would not be set in isolation but in the context of considering the pathway of the whole economy towards our 2050 target, and making sure we do that in a way that minimises costs both to the economy as a whole and to bill payers.”

The problem with that is that the bulk of industry interested in energy generation and the bulk of investors interested in the future of the energy generation economy do not take the same view. I, of course, have tremendous respect for my right hon. Friend the Secretary of State; he acknowledges that it is Liberal Democrat policy to set a decarbonisation target now, rather than in 2016. That target has to be the result of a compromise, and as in any coalition Government in the world, between two coalition parties, we sometimes do not get the outcome that we desire. That is why a large number of interested companies have written to the Chancellor, rather than the Secretary of State, to move the agenda forward, which indicates the target at which the debate needs to be directed.

[Mr Mike Weir (Angus) (SNP)]

Does the hon. Gentleman not accept that one reason why companies are doing so is that they are looking now at investments into the 2020s? They want to be sure that past 2016 there will be a target and that their investment will be secure.

[Andrew George]

Absolutely. We are talking about multi-billion-pound investors who, as the hon. Gentleman rightly says, are looking decades ahead.

The UK green economy has continued to grow, even while broader economic activity remains relatively subdued. The CBI has demonstrated that more than one third of UK economic growth last year is likely to have come from green businesses. Renewable and low-carbon energy businesses are the segment of the green economy with the most stake in the 2013 decarbonisation target. Cumulatively, they generate more than £98 billion in sales and employ more than 735,000 people—more jobs than the entire UK automotive and telecoms sectors combined.

Figures from the Department for Business, Innovation and Skills demonstrate an average growth rate of 6% each year for that portion of the economy, which equates to some £7 billion of additional sales for UK plc or 6,000 new jobs each year, based on today’s figures. That growth is now placed at risk by a lack of investor certainty and confidence, which a 2030 decarbonisation target would certainly remedy and remove. Setting the target sooner, rather than later, would provide the certainty and confidence that such investors require.

I have an inkling that I am preaching to the converted, including the Minister, who has to follow the Government’s policies as a whole. The fact is that the decision has to be made across the Government as a whole. People are looking at the challenges as we go forward, and I know that he is seized of the issue. The green economy is a significant source of growth in UK plc and it needs confidence and certainty going forward. The letter of 8 October 2012 to the Chancellor from 52 leading businesses in the sector sets out a strong case. They sought a meeting with Ministers, which they have not yet secured. They say:

“Failure to act at sufficient scale and pace will undermine our prosperity; and cause us to miss out on the huge commercial opportunities associated with the global shift to a low carbon, resource efficient economy.”

Although the Energy Bill makes significant advances, for which the Government should be congratulated, the difficult compromise that they have come to needs to be teased out and debated further than we have been able to so far. I do not know how we will do it, but we should have a debate with the Department of Energy and Climate Change that includes the Department for Business, Innovation and Skills and the Chancellor of the Exchequer and the Treasury. When we debate the Bill in the Commons in the coming weeks, it will be a pity that we will not have the opportunity for a full debate with all the Departments on which it will have an impact. I hope the Minister will address my earlier question on the impact of last night’s vote.

I shall add a couple of words on an exciting source of energy generation in my constituency and plug the west Cornwall wave hub, which I raised with the Minister in questions in the House on 14 March, when he gave me an encouraging response. He went to RenewableUK’s annual wave and tidal conference in February, where he told the industry:

“Now is the time for bold next steps—moving from individual projects to large-scale arrays.”

That is vital. I welcome that the Government are supporting the wave hub. The Department for Business, Innovation and Skills is clearly taking a significant role in the future management of the project, which has been handed on from the South West of England Regional Development Agency. It is difficult to scale up to a commercial level from the prototype machines at the demonstration project in Orkney. The Government need to provide the wave hub project with more certainty and address some of the long-term investment issues, some of which feed and bleed into the decarbonisation agenda. I hope that the Minister will visit the wave hub, talk to those involved and address the funding gap, which still exists, to bring the wave devices on to the site.

[Dan Byles (North Warwickshire) (Con)]

How does my hon. Friend respond to the statements that, in the 2050 target, the UK has the toughest legally binding emission reduction target in the world and that no other nation on the planet has a 2030 decarbonisation target?

[Andrew George]

The UK is setting the standard for the rest of the world, and the rest of the world will move in that direction in due course. It is important that there is cross-party agreement that we want to be the greenest Government ever, which is I think part of the coalition agreement that my hon. Friend signed up to. We also want to ensure that the decarbonisation targets that we set will put the UK economy at the forefront of green jobs and investment.

[The Minister of State, Department of Energy and Climate Change (Gregory Barker)]

Just for the record, being the greenest Government ever is not part of the coalition agreement, but the personal pledge of the Prime Minister.

[Andrew George]

I am grateful to the Minister for that clarification. It is true; I looked through the coalition agreement and could not find a reference to the slogan. Nevertheless, it is a commitment of the Prime Minister on behalf of the Government that everyone who supports the Government is aware of and supports.

I am sorry that my hon. Friend the Member for Camborne and Redruth (George Eustice) is not here. He strongly supports the west Cornwall wave hub, which makes landfall in Hayle, a former part of my constituency. I hope that Ministers will come to look at the project and give it the additional support that it needs in terms of wave energy and floating offshore wind energy.

[David Mowat (Warrington South) (Con)]

Will the hon. Gentleman give way?

[Andrew George]

I am afraid that I will not give way, because I am coming to a close. The primary issue is that when the Energy Bill returns to the Floor of the House, I hope that the Minister will give us an opportunity to reflect properly on the economic case for the early setting of a decarbonisation target.

--- Later in debate ---

[Tom Greatrex]

I am glad that I gave way, because the hon. Gentleman is right on that point. Significant time needs to be given to these matters, because a range of issues must be discussed, and this is just one. He has talked previously about other issues covered in aspects of the Energy Bill—not directly on this point—and I am sure that he would want to contribute. I hope that the Minister and the usual channels have heard his concern.

I have mentioned the other responsibilities of the new Energy Minister. The hon. Member for St Ives rightly focused on the business case, and the jobs and growth case, for the decarbonisation target, but there are other strong arguments. My hon. Friends the Members for Brent North (Barry Gardiner) and for Southampton, Test (Dr Whitehead) made the climate arguments. There are also important security-of-supply arguments about why this is sensible.

The hon. Member for St Austell and Newquay (Stephen Gilbert), the close geographical colleague of the hon. Member for St Ives, is sitting slightly apart from the rest of the Liberal Democrat Members today, and he is the only Liberal Democrat in the Chamber who had the opportunity to ensure that this target was in the Bill. We debated the matter in the Energy Bill Committee and he and another colleague chose not to vote for his party’s policy. I hope that the number of Liberal Democrats who are here this afternoon is indicative of the fact that those who are not encumbered by ministerial or Parliamentary Private Secretary posts will support that policy when the opportunity to support the cross-party amendment comes in due course, although their party’s policy was not in the manifesto, but was agreed at their party conference in October, when the Bill was under way and under discussion in pre-legislative scrutiny.

[Andrew George]

Neither was it in the Labour party manifesto. Rather than trading points, I want to speak on behalf of my hon. Friend the Member for St Austell and Newquay (Stephen Gilbert), because he cannot speak in this debate, and say that we should ensure that this agenda is shared across all parties. It is led, as the hon. Member for Rutherglen and Hamilton West (Tom Greatrex) knows, by a Conservative Member. Although I cannot speak for the Conservatives, there is an economic agenda in favour of decarbonisation. That needs to be emphasised at this stage and we need cross-party consensus for it.

[Tom Greatrex]

The hon. Gentleman is right to make that point, as he did in his speech and as other hon. Members have. My remark about his colleague was just to make it clear to those who were not on the Energy Bill Committee that there was an opportunity to put that target in the legislation, but sadly it was missed. That could have been done, but those with the opportunity chose not to do so. I hope that, on reflection, we will get to a better position and a better decision on Report.

Members of the Energy Bill Committee have dealt with a number of similar issues that the hon. Member for North Warwickshire (Dan Byles) touched on. He mentioned targets, including in other countries. I am sure that he is as aware as I am of the targets in Denmark—the 2035 target for all electricity and heating production to be fossil fuel free; in Austria, in relation to low-carbon energy by 2050; and in Germany, in relation to 50% of electricity generation in 2030.

It is not strictly accurate to suggest that there are not targets elsewhere in Europe and across the world, because those countries are seized of the growth and job opportunities that come with the imperative to decarbonise the power sector. Those of us on the Energy Bill Committee heard repeatedly—others will have heard this in subsequent letters—that business is seeking clarity of purpose beyond the scope of this Government and of this Parliament and the next, towards 2030.

My hon. Friend the Member for Brent North was right to address the levy control framework, but the hon. Member for Angus (Mr Weir) was also right to mention the time it takes to make some of those decisions. There are serious, big decisions that have not yet been made, such as on the memorandums of understanding that have been signed on siting offshore wind fabrication facilities in the UK. Part of the reason why the final decision has not yet been taken on that is the fact that the global companies involved, which have to make a case to their international boards, are not convinced that they have the clarity to be able to say that there will be a market. The only way we will bring down the cost of offshore wind is by having scale, and the way to do that is through manufacturing. There are strong business threads throughout the debate.