Baroness Clark of Kilwinning
Main Page: Baroness Clark of Kilwinning (Labour - Life peer)
Katy Clark (North Ayrshire and Arran) (Lab)
I congratulate my hon. Friend on the points he is making, which are not often made in this place. In my constituency, we do not produce coal, but we import it, mainly from Colombia, through Hunterston. There was a proposal to build a new coal plant at Hunterston, but that might not be going ahead now. It would probably have been a carbon capture plan using predominantly imported coal, because, I understand, the types of coal produced in Scotland probably would not have been suitable. I know that he is a strong supporter of carbon capture. How do we ensure that we use indigenous coal?
Ian Lavery
That is an excellent and important point that I will come to shortly. We have understood for generations that we closed profitable coal mines the length and breadth of the country, knowing full well that carbon capture was in the background. We have done nothing to protect the British deep-mining coal industry, and that has cost thousands and thousands of jobs. We have dillied and we have dallied with carbon capture and storage, including over the past three or four years. The first announcement was made by the previous Labour Government, who committed themselves to carbon capture and storage in 2007. Where is it? It is not here. It has been kicked into the long grass.
My view is simple. We should look to exploit the coal reserves up and down the country, with carbon capture and storage onsite and with clean coal power stations. That would decarbonise the electricity sector and go a long way to ensuring that we can meet the targets. It might even mean that we could reach 50 grams of CO2 per kWh. I am not too sure about that, but it is the answer. The demand for coal is significant here. Electricity consumption is set to increase, as is the consumption of coal, but as mentioned by several Members on both sides of the House, by 2015 approximately 9,000 MW of coal-fired plant is to be closed down, as a result of the large combustion plant directive, so the UK will become increasingly dependent on imported gas for electricity and domestic heating purposes.
What impact will the burning of gas have on our ability to meet our targets? People do not want to recognise that gas is a fossil fuel—coal is not the only fossil fuel—and emits just less than the suggested emissions performance standard of 450 grams per kWh, so when we talk about allowing gas to be burnt unabated, we must think of the consequences. It will mean that we will be unable to achieve any of our decarbonisation targets for 2030 or 2050.
Do people in this Chamber believe that shale gas will be the answer to our problems? Too many questions need to be asked about shale gas, although we need the general public to support it before anything else. There are a lot of problems with fracking. What is the cost of exploitation? We do not know what it is. Is it safe?
Katy Clark
I am extremely interested in what the Minister is saying. Is not one of the problems, however, that we do not have the infrastructure to do what he suggests? A few weeks ago, the Isle of Arran, in my constituency, was without electricity for a week. Even if it had its own generators, the substation is one-way traffic, and I understand that it would need a smart grid to use any energy created on the island. How will the Energy Bill help that island?
Gregory Barker
We are already embarked on a massive programme of grid renewal. The National Grid has published at length its proposals for how to roll it out. Obviously it cannot be done overnight, but we have made it clear that we are looking to build, with billions of pounds of investment, overwhelmingly from the private sector, a completely new grid that will do exactly as the hon. Lady says and permit a new relationship—a two-way, more equal one—between the consumer and the producer, and allow for the adoption of these diffuse new technologies. She is right that while the old grid is still there, there are certain barriers, but wherever possible and wherever it makes economic sense, we are keen to work with local communities and district network operators to help them overcome those barriers and to see what can be done within a reasonable economic cost. She is right that there are still barriers, but my Department is working proactively to try to overcome them.
I hope that the House appreciates that I am sympathetic to the intention behind amendment 47 to create a green power auction market—bringing onboard these disruptive new entrants is the key aim. GPAM is a means to an end, however, rather than an end itself. No one solution is inherently good; what matters is what it can deliver, and there are several ways of delivering the agreed outcome while navigating in slightly different directions. Our concerns stem from the fact that GPAM is effectively a fixed feed-in tariff, as it provides the generator with a guaranteed price for all the power it generates. As a result, the generator would have no incentive to manage its imbalance risks, as these would be taken away from it, which could work out more expensively for the consumer.
Although I welcome and fully appreciate the aims of GPAM, we have to be careful, despite having all the right motives, not to create an expensive, long-term solution to what might turn out to be a short-term problem. CFDs will undoubtedly improve conditions, which I know have been challenging, in the market for power purchase agreements, enabling independent renewables projects to get off the ground much more easily. They should not only help the smaller independents out there now and doing a great job, but attract—I hope—new entrepreneurs into the market. Although I have issues with GPAM, therefore, I want to make it clear to the House that I am not complacent and am not saying that we have all the answers.
I fully recognise that there is an issue at stake, which the GPAM amendment endeavours to address, but the route-to-market issue is complex. It is such a technical issue that we perhaps cannot do justice to it in a debate on the Floor of the House. However, it is an issue that my officials, with all their skill and expertise, are absolutely committed to tackling. At a political level, I am personally committed to finding a solution to it, albeit a solution that must be workable and not lead to greater costs for consumers.
Luciana Berger
I thank the Minister for his intervention, and hope he will lay before the House the rules governing those auctions so that we can properly scrutinise them. We hope they will be forthcoming.
I was disappointed by the Minister’s response to the amendment proposed by my hon. Friend the Member for Southampton, Test (Dr Whitehead). I echo the Minister’s words that my hon. Friend, as the whole House will know, has long-standing expertise and considerable experience in this area. His amendment 35 would require the Secretary of State to establish
“a scheme…to make payments for the purpose of rewarding…energy saving measures”
and to do so “within one year” of this Bill becoming law. That would introduce clear, simple payments for households and businesses, and it could start immediately, with no wait for a capacity crunch to trigger an auction. I understand that the majority of respondents to the Government’s consultation favoured a premium payment option along those very lines, but we did not hear from the Minister the rationale behind the Government’s decision to reject that option and favour instead incentivising demand reduction through the capacity market.
Let me touch briefly on amendment 47, also proposed by my hon. Friend the Member for Southampton, Test, which would establish a green power auction market, or GPAM. This would combat a significant issue. The UK needs to invest £75 billion in new renewable generation by 2020. Analysis of DECC’s own figures has shown that the Government are currently relying on 35% to 50% of this investment being delivered by independent renewable energy generators, or the “disruptive new entrants”, as the Minister referred to them on a number of occasions. Their current route to market is dependent on long-term purchase power agreements with the big six. A green power auction market of the kind my hon. Friend proposes could open up the market to new suppliers, increase competition and potentially deliver a cash saving to consumers of £2 billion. Although I welcome the Minister’s saying that he wants to address this sector and that a real issue is at stake, I sincerely hope that a viable solution, which he said would be forthcoming, is in place in time for the allocation of the first CFDs in 2014.
I conclude by dealing with our amendment 1 on community energy, which stands in my name and those of my right hon. Friend the Member for Don Valley (Caroline Flint) and my hon. Friend the Member for Rutherglen and Hamilton West (Tom Greatrex). Speaking as a Labour and Co-operative Member, I am very proud to speak to this amendment. It would appear that the Minister and I agree that community energy schemes deliver enormous benefits to our country. They bring diversity, resilience and security to the energy market. They boost our economy by attracting new sources of investment, and they help to tackle fuel poverty through a strategy for generating and saving energy that is owned by local people.
I recently saw that first hand when I visited Brixton Energy, an award-winning solar project run by Repowering South London. It is the UK’s first inner-city co-operatively-owned energy project, and I urge hon. Members to pay it a visit if they have not already had the pleasure. As well as offsetting 28 tonnes of carbon every year, the project is providing invaluable work experience opportunities for young people. There are many other fantastic community energy projects throughout the country: Westmill wind farm co-operative in Oxfordshire, Neilston community wind farm near Glasgow and the Lochcarnan community wind farm—the list goes on. There is a risk, however, that as drafted the Bill could stop these types of larger community schemes ever happening again. That is why we need to amend it today.
The Secretary of State has said that he
“wants nothing less than a community energy revolution”,
but those words ring rather hollow when we examine how this Bill fails to address how community energy schemes can compete with large-scale commercial generation. The issues have been well summarised by Cornwall Energy, when it said that the high degree of technical knowledge needed to participate in the system is a barrier for many smaller generators, and that the proposed CFD system does not compensate smaller generators for the lower market prices they receive for their power. With the end of the renewables obligation, the Bill provides no incentive for suppliers to purchase renewable electricity from independent generators.
Katy Clark
I congratulate my hon. Friend on the way in which she is putting forward her case. She will be aware that many of the successful community generation projects—those that really laid down the way forward—were in Scotland, and particularly in the island communities where there is a very strong sense of community and a wish to have a sustainable future. If we look around Europe, we find that this is also very common—in Germany, Scandinavia and Greece, for example. Does my hon. Friend agree that we have fallen behind in this area?
Luciana Berger
We need to see urgent action in this regard. Other countries are forging ahead with numerous locally generated schemes, and we ought to have as many, if not more.