Renewable Energy

Baroness Featherstone Excerpts

Tuesday 28th June 2016 Lords Chamber

Asked by

[Baroness Featherstone]

To ask Her Majesty’s Government what plans they have to move the United Kingdom towards an energy infrastructure that is based on renewable energy.

[Baroness Featherstone (LD)]

My Lords, this is a most timely debate and I thank all noble Lords who will contribute this evening. With the United Kingdom cast into a maelstrom of uncertainty and turmoil, this is a moment when we look to Her Majesty’s Government to stand by their commitments on climate change. Therefore, I hope and trust that, in responding to this debate, the Minister will take the opportunity to clearly reaffirm our commitments to the Paris agreement; to the EU target to reduce emissions by “at least 40%” by 2030—a target driven by the United Kingdom; to the renewable energy directive; and to our commitments in the Climate Change Act.

Moreover, will Her Majesty’s Government draft a UK-only climate plan to replace the one jointly submitted with other EU nations? Will it be stronger or weaker than the EU plan? I understand that the climate change deniers in this House are already on manoeuvres. Will the Government approve the fifth carbon budget at the level that the Committee on Climate Change has recommended—57% below 1990 levels? What now happens to the EU emissions trading scheme? I am sure that the Minister can see that last week’s events threw up a great deal of uncertainty and that we need clear answers.

The threat of climate change is severe. We have almost reached peak fossil fuels for electricity. Moving towards an energy infrastructure based on renewables is vital. We signed up to the Paris agreement. To meet that commitment we will need to make changes in this country to ensure that we deliver on those commitments.

I will make the Liberal Democrat position clear. We want to see net zero greenhouse gas emissions from the UK economy by 2050. Our vision is called Zero Carbon Britain and we set this out in the Liberal Democrat alternative Queen’s Speech 2016. We want to see renewable energy prioritised for government investment. We want to see greater investment in electric vehicles and low-carbon technologies. We believe that the United Kingdom should continue to work with our allies, regardless of being outside the EU, to ensure that ambitious international carbon emission reduction targets are met. For as we feel the reverberations of the insecurity created by the leave vote, we can already see clearly what uncertainty does to a country.

I trust that Her Majesty’s Government also understand what uncertainty on commitments to climate change does to investor confidence in the renewables industry. This Government, by changing at a stroke the assumptions on which renewables industries based their business models, have already shaken that confidence. This Government have ended support for new onshore wind power; sharply reduced support for other renewable technologies, including solar PV and anaerobic digestion; ended the exemption of renewable energy companies from the climate change levy; reduced the incentives to purchase low-emission cars; announced plans to privatise the Green Investment Bank; scrapped the Green Deal with no replacement; weakened the zero-carbon homes standard; added community energy to the list of sectors excluded from receiving tax relief; ditched the £1 billion budget for pioneering carbon capture and storage; ended the renewables obligation early—and on and on and on. The message that this sends out has become deeply concerning not just to Liberal Democrats but to environmentalists, the renewables sector and members of the public across the United Kingdom.

No doubt the Minister will point to the trajectory of renewable energy over the past 12 months to demonstrate that everything is on track, with UK renewable investments increasing by 25% in 2015, but I say to him that that trajectory gives a falsely positive position. We are still benefiting from the good work done by the coalition to set renewables on a strong growth path, and the impact of the Conservative-only Government’s decisions have yet to be felt. The total effects of the change to feed-in tariffs, for example, will not be available until the figures for the fiscal year ending in 2017 are published. While there has been a welcome surge in uptake for solar in recent months, this will also prove to be part of the false positive as it is a result of people rushing desperately to get their projects in before the subsidy is terminated. A crash in uptake will inevitably follow.

The outlook for the renewables sector is bleak, with job losses in solar alone predicted to be nearly 19,000 according to the Government’s own impact assessment, no forward plan whatever and the undermining of investor confidence. Can the Minister explain how, given their recent actions, the Government intend to meet their climate change and renewables targets—both domestic and EU—and confirm that they will retain those EU targets even though we are to leave the EU?

The capacity deployed by small solar power installations has fallen by 74% compared with the same period last year—so, to avert another axe falling on small solar PV, we need the Government to help the small solar industry by continuing to exempt renewable systems below 50 kilowatts from having to pay business rates from 2017. Will the Minister confirm that this exemption will not be altered? While we may be on track to deliver on power, we are certainly struggling to get anywhere near our targets in renewable heat and renewable transport. I hope that the Minister will say when we might see the plan for meeting all those targets.

I turn to wave power. When we Liberal Democrats were in government, we began talks to create the world’s first tidal lagoon energy project in Swansea Bay. Tidal power has huge potential for the UK and could eventually provide us with 8% of our energy needs. The Government have delayed the decision on the amount of subsidy to be offered to investors in the Swansea Bay tidal lagoon, again creating unnecessary uncertainty. In Scotland, the coalition proposed introducing a remote islands contract for difference as a mechanism to allow renewable generation to go ahead on the islands. This policy has since been repeated a number of times by a number of Ministers, including Energy Minister Andrea Leadsom in the House of Commons on 17 September 2015, but there was no mention of the island CfDs in the Budget. Will the Minister make it clear whether they are continuing to support the introduction of the remote island contract for difference and whether there is enough time to obtain state aid notification so that island projects can be included in the next allocation round, starting in the fourth quarter of 2016?

Scotland arguably has the most advanced wave and tidal industry in the world. But with the announcement of the second levy control framework period from 2021, it appears that there is no CfD support for any projects intending to be commissioned before April 2021. That in itself will lead to a slowdown of activity in a number of key areas, especially in the wave and tidal sectors where a number of flagship developments, including future phases of the world’s largest tidal stream project—MeyGen, in the inner Pentland Firth—would be put at risk. Moreover, there is no clarity on whether and how the second levy control framework will support the wave and tidal sectors—or indeed what decision has been taken on the second auction for contracts for difference, programmed for December. I would be grateful if the Minister would address those points in his response.

Lastly, I will move on to the economics of the renewables industry. The clean energy industry is reckoned to be worth trillions over the next couple of decades. In terms of employment and economic opportunity, we want to be seen as relentlessly pro-renewables and we need to demonstrate that commitment. From a position where Britain is already a world leader in offshore wind and could become a world leader in other areas such as tidal, we are now falling away in the global race. Countries around the world are starting to increase their investment in renewables—not surprisingly, due to the global political pressure to tackle climate change and internal pressure to improve air quality. This gives us huge economic opportunities to export. I suppose that if there is any silver lining this week, it is that our exports will be cheaper.

We should be seizing the opportunity to invest more now while we have a comparative advantage, rather than giving others the chance to get ahead of us. The Renewables 2016 report by REN21 says that about £196.5 billion was spent globally on renewable power and renewable fuels, making 2016 a record year. As a wake-up call, I have to say that the majority of that expenditure—more than £107 billion—was spent in countries such as China, India and Brazil. The speed with which the renewables sector is developing and becoming cheaper is incredible and we do not know what is just around the corner. The level of subsidies needed is shrinking and, as soon as ways are found to store energy cheaply, there will be a radical shift. It is happening and change is coming. According to a new forecast by Bloomberg New Energy Finance, it is coming not just because coal and gas are running out but because cheaper alternatives are already arriving apace. We should be nurturing this and becoming ready for it. In fact, we should be at the cutting edge and ahead of the curve.

On interconnection, storage and demand-side response, we need to stop thinking of energy supply as needing to be centralised. We need policy framework certainty; we must know the direction of travel; we need to encourage and allow innovation. All this is not just for ourselves but for the amazing impact that this innovation could have on the lives of those in developing countries. The ability to generate and store solar power, for example, would be a total life-changer for millions in the world’s poorest nations, providing huge possibilities for addressing global poverty and mass migration.

We need a Government demonstrably committed to the renewables agenda. We need a Government to come forward and state loudly and proudly their continued commitment to that agenda. As the UK departs from the EU, we need to hear loud and clarion clear that Her Majesty’s Government are committed to doing equal or better on all our commitments, whenever and with whomever they were made. I therefore very much look forward to the Minister’s response.