Renewables Obligation Certificate Scheme

Angus MacDonald Excerpts

Wednesday 5th March 2025 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

It is a real pleasure to serve under your chairship, Dr Murrison. I thank the hon. Member for South West Norfolk (Terry Jermy) for setting the scene so well. He said he hoped his first debate would be more exciting, but this a practical debate. It is a debate that his constituents want him to focus on, and the reason he has secured it is because he is working on their behalf. I always found that I enjoy this particular type of debate because they really matter to people, and they can relate to them. There has been a focus on constitutional issues, war across the world, and all those things, in this last week—or 10 days, or two weeks, or even the last three years—but people back home in the hon. Member’s constituency will want him to pursue debates such as this one, so well done to him.

The hon. Member outlined the case for the renewables obligation in his introductory speech. I want to give a perspective from Northern Ireland. I am pleased to see the Minister in her place; before the election, she and I often sat on the Opposition Benches, and would have been alongside each other when it comes to asking for things. Today, I will be asking the Minister about some things in relation to discussions about the renewables scheme and the contracts for difference scheme, which we do not have in Northern Ireland.

There is a willingness in the Government approach to renewables, as there should be. It is important to do this as collectively as we can, to ensure that people can get the best value for money in their energy costs, so it is a pleasure to discuss these vital matters, and to consider the whole of the United Kingdom of Great Britain and Northern Ireland in this conversation.

The renewables obligation scheme was introduced in 2002 to incentivise large-scale renewable electricity generation in the United Kingdom. It was phased out or closed in 2017, in favour of the contracts for difference scheme. For me, that is the key issue, because currently the CfD scheme does not apply to Northern Ireland, although before the election I tried to encourage the previous Government to extend it. I know that this is a devolved matter, but will the Minister please initiate some conversations with the relevant Minister in Northern Ireland—I think it is Gordon Lyons—to see how we can work together to progress the CfD scheme and include Northern Ireland? There is some work for us to do here at Westminster to get this over the line, so it would be helpful if the Minister did that.

In the past, I have worked closely alongside colleagues on this issue and I hope to do so again in the future, particularly with the inspiration and help of the Minister, because it is important that Northern Ireland has the same opportunities as the rest of the United Kingdom in relation to renewable energy.

Renewable energy is a path that we must pursue, and there need to be targets for us to achieve—the hon. Member for South West Norfolk outlined that as well. Policy direction for Northern Ireland is important and there have been movements to ensure that companies there can benefit from renewable energy incentives. Agencies such as Invest Northern Ireland or the Department of Agriculture, Environment and Rural Affairs, and local councils, including my own, can apply for some smaller grants and loans. However, it is important to note that these grants and loans are not on the same scale as the renewables obligation certificates scheme. If we were part of that scheme, we would be in a much better position.

My constituency of Strangford has an important and, I believe, sustainable poultry sector. Throughout my life, there have been poultry houses all the way down the Ards peninsula, where I live, and indeed around Newtownards town as well. In his opening speech, the hon. Member for South West Norfolk focused on a project that could play a role for poultry farmers in Northern Ireland.

To be fair, at this moment in time avian flu has once again cast its shadow all across Northern Ireland. In every part of Northern Ireland, there is a shutdown; there is no movement of poultry, and poultry farms have to keep all their birds indoors as a result of the avian flu scare. That is the right thing to do. At the same time, if we are to look beyond the avian flu crisis in Northern Ireland, which is fairly acute, we have to consider using the hon. Member’s idea in Northern Ireland. Such projects have been discussed in the past, but never really got anywhere, so maybe it is time to encourage Northern Ireland’s Department for the Economy to do a wee bit more.

In 2023, the Department for the Economy consulted on a new energy strategy action plan, but nothing formal has come from that. I know that the Assembly has only just got up and running again—it is good that it is up and running again—but it is time to focus on the renewables obligation certificates scheme and on green energy, and on the potential benefits that we can achieve in the future.

Our renewables projects in Northern Ireland relied on funding and schemes in order to succeed. However, I find it very disheartening that Northern Ireland has not been able to adopt a new scheme since the closure of the prior one. We need a new emphasis and there is a real need for Ministers back home and for Departments back home to co-ordinate their strategy and the way forward with the Minister here in Westminster.

[Mr Angus MacDonald (Inverness, Skye and West Ross-shire) (LD)]

In rural Britain, particularly rural Scotland, the cost per kilowatt to heat a house is about 24p, whereas those on mains gas in the city pay about 6p, so those using renewable electricity to heat their houses pay four times as much as those using mains gas. The renewables obligation certificate scheme is an important part of all this. Basically, rural Britain is getting absolutely stuffed on the cost of energy, so anything we can do to help those in rural areas is important. Does the hon. Gentleman agree?

[Jim Shannon]

I certainly do, and I thank the hon. Gentleman for his intervention. I represent the rural constituency of Strangford; indeed, most of Northern Ireland is rural, although there are large population groups in the major towns across the Province. In terms of the price of energy in Northern Ireland, the price oil is the highest it has been for some time, although they said on the news this morning that it would drop. But 68% of households in Northern Ireland have oil as their major source of energy for heating and cooking, so when oil prices rise, energy prices rise—as I suspect they do in the hon. Gentleman’s constituency—which puts us under a bit more pressure than most.

Energy is devolved in Northern Ireland, unlike in Scotland. However, Northern Ireland is an integral part of the United Kingdom, so there must be greater discussion between Westminster and the Northern Ireland Assembly to ensure that we are able to contribute to the net zero 2050 goals. I am reminded by the hon. Gentleman’s intervention of the SeaGen project in my constituency about 20 or 25 years ago, which tried to harness the tidal flows of the narrows of Portaferry and Strangford. At that time, it was not sustainable because of the price of energy, but today it would be. There are many projects we could look towards when it comes to contracts for difference.

To conclude, I look forward to working with colleagues to find a way forward that can benefit us all. The world is progressing, and climate change is a huge issue of major importance to many. The hon. Member for South West Norfolk referred to a project that is critically important for his constituency and that could be replicated across this great United Kingdom. Ensuring that we have a replacement strategy that we can take advantage of would be a positive step forward in achieving our goals. I look forward to the Minister’s contribution and hearing about her commitment. Through further discussion and integration and by working better together, Northern Ireland will not be left behind. Thank you so much, Sir Andrew.

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[Tim Farron (Westmorland and Lonsdale) (LD)]

It is a great pleasure to serve under your guidance, Mr Murrison. It is also a great pleasure to follow four excellent speeches. I pay particular tribute to the hon. Member for South West Norfolk (Terry Jermy) for his excellent contribution and for securing this important debate. He said it felt somewhat less glamorous to be here talking about chicken poop, but people will say that I have been talking poop for the last 20 years; certainly, as my party’s water spokesperson, I spend half my life in this place talking about the human variety, so chickens makes a nice change. I also belatedly congratulate the hon. Gentleman on his elevation to this place, not least because it has allowed us to deploy Liz Truss elsewhere, in our battle to take down the forces of reaction across the world.

On the renewables obligation certificate scheme, we are right to think about what happens next. The scheme is being phased out by the current Government, with the contracts for difference scheme being its principal successor. For what it is worth, I am proud of the role the Liberal Democrats played in the coalition in trying to move on to a better scheme.

That said, hon. Members have rightly pointed out that letting ROCs disappear without being replaced is a particular problem for biomass. All four Members referred to the impact on their constituencies if that was to happen, and they talked about the jobs the scheme has created in Stafford, Suffolk, Norfolk and in Strangford, in Northern Ireland. They recognised that biomass plays an important part in providing diversification of income for farmers and others, and in using organic waste that might otherwise find itself on the land. Indeed, when I am in this place talking about water quality, we are principally talking about the failings of the water companies, but agricultural run-off is clearly part of the issue, so if we can deal with that in a positive way, that will be a good thing. It would be an unintended consequence of moving on to new and better schemes if we allowed important plants such as the one in Thetford to close, with the impact that that would have on the local economy, because we had not thought through the transition and managed it in an efficient way.

I want to say a few words about how ROCs fit in with the nation’s energy security and about the extent to which they sometimes have perverse incentives. Drax power station in Yorkshire enjoyed just over 9 million renewables obligation certificates last year, at a value of £548 million. The material burned at that site includes biomass that has been imported into the UK, which is often wood pellets, mostly from America and Canada. Drax has previously admitted that some of the wood is from primary or old-growth forests—ancient forests of incalculable value in terms of biodiversity and beauty that would be vital in the fight against climate change if they were not felled. The new contract, I am pleased to say, states that 100% of those pellets must be sustainably sourced, which is something. But it is not organic waste, and there is still something not very sustainable about wood imported from across the oceans and then burned. We want to ensure that we invest in renewable power, so that 90% of the UK’s electricity is generated from renewables by the end of this decade. To do that, we will need to call in all our available resources; we do not want a situation where we are meeting our targets by having renewables in name only.

Members have talked about energy security and the importance of getting to net zero, which is vital. In the last few days—hopefully it is longer than that—we have been waking up to our need to protect our national security on a military footing. Yesterday, in Treasury questions, I raised the issue of our failure to step up to the mark when it comes to food security. Only 55% of Britain’s food is produced in Britain; that is a deep threat to the United Kingdom’s food security, and we need to take action quickly to tackle that by undoing the basic payments cut and scrapping the family farm tax.

We also need to look at energy security. It troubles me that some of those who claim to be very patriotic seem to pour cold water on and be sceptical about the environmental imperative. Even if I cannot convince people of the reality of climate change, and of the need to produce renewable energy for that reason, if we care about our energy security, we should surely care about net zero, which is a way of achieving it. To put it bluntly, Vladimir Putin cannot turn off the wind, the waves or the sunshine in this country.

[Mr Angus MacDonald]

Does my hon. Friend recognise the fact that we have major issues with environmental tariffs being placed on renewable energy but not on the carbon fuel of mains gas? That is really hitting the renewable energy industry and the cost for consumers.

[Tim Farron]

I completely agree. We are talking about incentives that we give to renewable energy generators and providers, but we have an energy market that essentially advantages not just fossil fuels but ones that, to some degree, are in the hands of potentially hostile powers. That is ludicrous for both the environment and our security.

I was pleased to hear Members on all sides of the debate talk about the importance of farmers and farming to the battle against climate change and to clean energy generation. We would love to see a recognition that farmers are primarily food producers but that diversification of businesses and cross-subsidy within them is a good thing. It is right that farmers should be incentivised and encouraged to use their land—for example, by putting solar panels on buildings and land that is not good for food production—so long as that is not displacing good-quality agricultural land.

I want to draw attention to a site near Barrow, which is not in my constituency but next door, in the Westmorland and Furness council area. The council now has a solar farm on unproductive former agricultural land, with the full support of the local farming community. Let us look at the ways in which we can support farmers to do that. I live in a very wet part of the United Kingdom with 1,500 farms within it. Pretty much every farmer has fast-flowing becks and rivers on their land, so why are we not incentivising them to build small but nevertheless powerful hydro schemes? That would be great for the environment and the local economy, and it would ensure that farmers can continue farming.

I sound like a broken record given how regularly I talk about this, but it continues to astound me that the United Kingdom, which has a higher tidal range than any country on planet Earth apart from Canada, does next to nothing with the latent tidal power around our islands. I encourage the Minister to come up with schemes to reward that.

I also want to say a word about grid capacity. A huge barrier to progress with this scheme and those that follow is the fact that 75% of energy sector insiders find timely grid connections to be the biggest single obstacle to growing renewable energy in the UK. To give a sense of the size of the queue, there are £200 billion-worth of projects waiting to be connected to the national grid, and that delays all the benefit that would come with that. We would seek to expand the grid network and unlock those billions of pounds of renewable energy projects through a land and sea use framework that has statutory weight in the planning and infrastructure Bill. That would help us to balance the many competing demands on our land, and the competing priorities of security and self-sufficiency that I mentioned earlier.

Those priorities also include local communities’ experiences, which are important to understand when we are trying to tackle the climate imperative. It is no good building huge energy infrastructure near communities if there is no clear, tangible benefit to them. For example, customers in communities local to such projects should receive energy at a discounted rate. If we build renewable energy schemes on the River Kent or the River Crake, the people of Kendal, Staveley, Windermere and Coniston should benefit from them, at least to a degree. We also want to empower local authorities to develop local renewable electricity generation and storage strategies, because they are best placed to understand where the most and least appropriate sites to place them are.

I return to the issues raised by the hon. Member for South West Norfolk. It is important that ROCs have played a significant part in the transition from fossil fuels to new and renewable forms of energy. I recognise that they have had a big impact on his constituency by creating jobs and ensuring that farmers have additional sources of income. They are part of a range of actions—our arsenal—for tackling water pollution. We must not throw out the good things that ROCs have achieved when we move on to new schemes, which hopefully will make even more progress in our move towards a society run entirely on renewable energy.

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[Kerry McCarthy]

I should have known the hon. Gentleman would be on top of things and would be aware of the Minister for Energy’s visit, but it is important that we have that continual dialogue and that the hon. Gentleman comes along to these debates to ensure that the Northern Ireland voice is heard.

I do not want to go too far off piste from the subject of the debate, but to respond to what the Lib Dem spokesperson, the hon. Member for Westmorland and Lonsdale (Tim Farron), had to say, I am an MP from Bristol, so the Severn estuary, the Severn barrage, the Severn tidal lagoons or whatever are very much on my radar. I went up to the Orkneys last summer to look at what they are doing on harnessing wave energy there, and it was very interesting.

On grid capacity, we know that grid capacity is a real issue, in terms of both our ambition for clean power by 2030 and our wider industrial decarbonisation. The Secretary of State likes to talk about the “four horsemen” standing in the way of us getting there, and grid is very much one of those. We have brought in Chris Stark, the former chief executive of the Climate Change Committee, to head up mission control on that issue, and he is working daily on how we can unblock and accelerate projects within the grid.

To the hon. Member’s point on farmers, I agree with giving farmers support to diversify, and energy from waste or anaerobic digestion and so on is part of that. I met two of the DEFRA Ministers earlier this week—although it might have been last week; it all becomes a bit of a blur—and I am in constant conversation with them about how we can work together on that and on our local power plan, which will be part of GB Energy. Hopefully there will be pots of money available for some of those community projects in rural areas, possibly on farms that he has talked about.

I understand that the company that my hon. Friend the Member for Stafford (Leigh Ingham) mentioned, GE Vernova, is doing innovative things on grid solutions. That is the sort of high-tech new approach that we need if we are to solve the problems that we have talked about, and I congratulate her on speaking up on behalf of a company in her constituency.

Turning to the actual debate, the experience of recent years has reinforced what we already knew: we cannot rely on fossil fuels. We need clean power to reduce vulnerability to volatile global fossil fuel markets, to give us energy security and reduce the cost of energy, and to tackle the climate crisis. That is why one of the Prime Minister’s five missions is to make Britain a clean energy superpower by delivering clean power by 2030 and accelerating to net zero. Electricity generated by renewables and nuclear power will be the backbone of a clean electricity system by 2030.

I have told the hon. Member for West Suffolk (Nick Timothy) how disappointed I am with the Opposition’s U-turn on this issue. I understand the position they are coming from and that there has been a change from the stance that they adopted in Government, but I have not heard from him what the answer is for our future energy security. What is the answer to dealing with the global fossil fuel markets? What is the answer to tackling the climate crisis? What is the answer to bringing down bills in the long term?

[Mr Angus MacDonald]

I wonder if the Minister could put herself in the position of somebody from the island of Skye who wakes up in the morning, opens his windows, and sees beautiful mountains in the background —it is always sunny there and there are no midges. He sees the wind turbines, but then he goes and looks at his heating and realises he is paying four times as much to get energy from those turbines. Meanwhile, there is negligible community benefit coming to that area. Can she position herself in that person’s or that household’s shoes?

[Kerry McCarthy]

As I said to the hon. Member, that issue that has been debated numerous times here, and it is not really the subject of today’s debate—but nice try on getting it in there. He might want to secure his own Westminster Hall or Adjournment debate on it. As I said, it is very much on our radar to look at the fairness in the system and to make sure that energy is affordable for everybody and that there are community benefits as we roll out that clean power ambition. All those issues are talked about in the Department on a daily basis.

Before I move on from the hon. Member for West Suffolk, I will say that the urgent question on carbon budget 7 was not granted because there is a process for the Government to respond to the analysis given to us from carbon budgets, and we will follow that process. First, though, we have to deal with the carbon budget delivery plan. Before looking to CB7, we must look at how we meet the obligations contained in current carbon budgets.

The previous Government were taken to court because their plan was not deemed adequate. They presented another plan, and the courts again found that it was not adequate, so we now have a deadline from the courts to produce our carbon budget delivery plan this year to show that we are back on track. That is very much our first priority. I am sure that once that is published, we will debate that and then carbon budget 7 as well, but we have to show that we are back on track before we start looking into the future.