Energy Generation
Debate between Barry Gardiner and Alan Whitehead(11 years, 7 months ago)
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Barry Gardiner
The hon. Gentleman makes a very interesting and worthwhile point, which I perfectly understand. I am sure that if I go into consumption emissions versus production emissions, you will call me to order from the Chair, Mr Gray, but we must not pat ourselves on the back for seeing our own production emissions drop if we are still driving the very consumption model that generates the emissions elsewhere around the globe.
The Committee on Climate Change estimates that in the absence of a 2030 target, offshore wind might cost as much as £140 per megawatt-hour. With such a target, the cost, under the committee’s scenario, drops to £100. The difference between the two costs is about the presence of a competitive supply chain in the UK. We do not have one, but what we do have is at risk.
Let us remember that the Government’s proposals are not that we should set a target in 2016, but that we may not set one until at least that date. Those are two very different propositions.
Dr Alan Whitehead (Southampton, Test) (Lab)
Would my hon. Friend also care to include the provision that not only can the Government not set a target before 2016, but that there is no level at which the target might be set after 2016?
Barry Gardiner
My hon. Friend is, as ever, thoroughly astute on these matters. He was a tremendous champion of the decarbonisation target when the Bill was in Committee, and he speaks with great knowledge on the subject. He is absolutely right. Only last night at a dinner, I heard the Secretary of State talking as if this was a great leap forward, that this would be the only Government who had legislated for a decarbonisation target. At that point I almost spluttered into my chicken, because we have not legislated for a decarbonisation target. [Interruption.] And it was beef anyway, says my hon. Friend the Member for Southampton, Test (Dr Whitehead). What we have done is make provision so that, at the appropriate moment, it would not be impossible to legislate.
Let me return to the key point that I wish to address, because I know that other Members want to enter the debate. Although it is good to have a debate and a real exchange of views through interventions, I fear that I must press on if other Members are to be able to speak. Siemens told us that if we wait till 2016 to set a decarbonisation target for 2030, it and many of its competitors are likely to delay or cancel planned investments in the UK.
In March, six of the largest supply chain investors wrote to the Chancellor, the Secretary of State for Business, Innovation and Skills and the Secretary of State for Energy and Climate Change to register their strong support for the decarbonisation amendment tabled by the hon. Member for South Suffolk (Mr Yeo) and me, which to date is supported by 41 Members from—I am pleased to say—all parties in the House. They wrote:
“Projects can take 4-6 years from investment decision to construction and operation. We are already close to the point where lack of a post-2020 market driver will seriously undermine project pipelines. Supply chain investment decisions depend on reasonable assurance for manufacturers that a production facility to be constructed during this decade, costing hundreds of millions of pounds, will have an adequate market for its products well into the 2020s.
Postponing the 2030 target decision until 2016 creates entirely avoidable political risk. This will slow growth in the low carbon sector, handicap the UK supply chain, reduce UK R&D and produce fewer new jobs. This is not in keeping with the Government’s aspirations for the UK to be the global leader in low carbon technologies such as offshore wind and marine.”
The amendment would require a 2030 decarbonisation target for the energy sector to be set by the Secretary of State, on the advice of the Committee on Climate Change, by next spring, which would ensure that the Energy Bill sent a coherent signal to investors. By securing investment in a competitive UK supply chain, the amendment would not only reduce the cost of decarbonising our energy infrastructure, but ensure that the investments that we are committed to make produced a significant growth multiplier and contributed to the essential rebalancing of the British economy.
Recent peer-reviewed studies from the London School of Economics and Berkeley have concluded that the fiscal multiplier for productive infrastructure investment in current economic conditions is likely to be about 2.5 in the UK. The amendment would ensure that the £7.6 billion produced secure investable propositions, creating significant numbers of construction jobs and long-term high-value jobs in communities around the UK, where both are scarce.
Electricity Market Reform
Debate between Barry Gardiner and Alan WhiteheadWestminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
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Dr Alan Whitehead (Southampton, Test) (Lab)
I will limit my remarks to one or two points. One disadvantage of having such a knowledgeable, far-sighted and competent Committee Chair is that after he has spoken there are few sensible contributions left to make. I will, therefore, confine my remarks to one or two less sensible points, which I hope will add something to the debate.
In the Green Paper, and certainly in the subsequent White Paper published after the Committee’s report, one must look a long way to find comments on electricity market reform. Although the White Paper addresses a range of topics, such as capacity, the carbon floor price and energy performance standards, its central oddity is that it leaves the electricity markets as they were designed 10 years ago under NETA—the new electricity trading arrangements. It leaves the electricity markets in pretty much the same place, with the same assumptions and mechanisms. However, it countenances a very different landscape as far as electricity trading is concerned.
When NETA was set up, there was a substantial number of wholesalers selling and retailers buying. That is no longer remotely the case—not by conspiracy, but through the accretion of suppliers, generators and retailers into the big six. By accident, what has come about is, in effect, a cartel—we have to say that—that essentially hedges, using the strategies that my hon. Friend the Member for Brent North (Barry Gardiner) mentioned: it buys on the futures market and sells to itself, using the same market mechanisms, and therefore pretty much bypasses most of the things that NETA was originally set up to do.
When NETA was set up 10 years ago, it was carbon-blind. Its purpose was to secure, among other things, the cheapest price between wholesale and retail. In the early stages, it looked as though it was substantially succeeding in doing that, until other factors took over. However, there was the emergence of what one might call the other things that are central to the electricity market reform White Paper. To some extent, they were mechanisms that mediated that central electricity market. The renewables obligation, for example, was a mechanism attached to the original NETA/BETTA system to bring renewables to market; to underpin emerging technologies; and, in an echo of the recent debate on feed-in tariffs for solar photovoltaics, to recognise that over time the obligations may change as the technologies come to market. Nevertheless, the aim was to underpin those technologies in the first place.
Now, as hon. Members have said, we need to decarbonise our electricity market rapidly and invest substantially, not just in replacing capacity but in providing additional capacity, because of the nature of the capacity that we are bringing on board as far as the low-carbon market is concerned. We are talking about perhaps £200 billion in investment. All but two of the big six companies have pretty much borrowed up to the limit of their balance sheets, so we need important mechanisms to secure not just the good running of the market, but low-carbon investment on the basis of good value for customers. I do not underestimate at all the breadth of the challenge implied by the electricity market reforms.
There are various things in the reform. The central electricity market remaining must have a substantial question mark against it, with regard to whether it is fit for purpose as one of the central mechanisms driving all the demands forward. I think—evidence was submitted to the Select Committee on this—that a single purchaser pool of some description is a necessary way of dealing with the issues of cartelisation and the lack of transparency in the wholesale market that has emerged. There must also be a question mark against the contract for difference as set out in the White Paper.
Barry Gardiner
I absolutely agree with what my hon. Friend is saying. Will he say something about liquidity and the ability of smaller companies to enter the market with regard to the changes that he is discussing?
Dr Whitehead
My hon. Friend has just stressed that point. Given that I have about one minute left, expatiating on liquidity to any great extent is probably beyond my abilities. However, he is absolutely right to raise the question of liquidity in the market and the fact that as a result of the lack of liquidity, small companies are pretty much shut out from gaining a foothold in the market. Whatever is done about the big six, that is a very important issue.
Finally, I want to emphasise two things. First, the contract for difference as currently proposed conflates mature technology, the overall costs of which will not change, with emerging technology, where costs may well change. That is to say, it rewards, and particularly in the future will reward, old nuclear technology, as well as new nuclear power stations, for their output. That seems—the Committee alluded to this—a considerable concern, given the pronouncements that continue to be made that the Government are in favour of new nuclear but with no public subsidy. It is necessary at this stage to say either that there will be no public subsidy—that nuclear will not be rewarded for being a mature technology in the way that emerging technologies are, but will take its chance in the market—or that we need to do something about public subsidies for nuclear, for reasons that may be perfectly honourable to consider, and we must be up front and deal with that. Electricity market reform continues to fudge that essential choice that we have to make.
Secondly, we have to enter into capacity payments with a clear understanding of demand-side analysis, which is substantially missing from the proposals in the electricity market reform White Paper. We need to consider capacity payments for energy efficiency and reduction in output, and in relation to things such as interconnectors and electricity storage, which will be an essential part of a balanced, very low carbon economy that takes serious account of the demand side as well as the supply side.
Trying to deal with the entire landscape of electricity market reform in eight minutes flat was a difficult challenge. I hope that I have contributed a few thoughts to the debate, and I look forward to the Minister’s response to a number of issues that hon. Members and I have raised.
Localism Bill
Debate between Barry Gardiner and Alan Whitehead(13 years, 10 months ago)
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Dr Whitehead
I do agree with that difference. Also, however, if the agency is not there in order to make those changes, if there is not the necessary financial devolution, and if there is the current extent of cuts to local government services, then many of the aims and wishes for devolution of power to local government are meaningless. The Bill provides for no financial devolution away from the current system of considerable centralism as regards council tax raising, and the Secretary of State has the power to change any figures that the local authority comes up with in the way that it defines council tax.
Localism means ensuring that decisions are made at the right level. Under the Bill, there appear to be two types of decision on planning—the neighbourhood decision or the national decision, with nothing in between. The truth about localism is that decisions do not always have to be taken at the very lowest level, but they should be taken at the appropriate level. I, for one, want to live in a sustainable community. I want my waste to be dealt with efficiently and my transport to be run efficiently. All those things involve decisions planning and operation that are larger than local. Bearing in mind that the regional spatial plans and the national plans have been removed for everything but national infrastructure proposals, unless the Bill contains effective measures that enable effective co-operation to take place between local authorities, that gap will exist, and I am afraid that people will come to regret it in future years.
Barry Gardiner
Does my hon. Friend agree that in order to resolve that issue it is important that the Bill should have a presumption in favour of sustainable development within the national planning framework?
Dr Whitehead
Indeed, I completely agree. There should be such a presumption in the Bill and there should be considerable strengthening of the requirement to co-operate between local authorities, because the requirement in the Bill merely means that people have to talk to each other a bit.
If we are really localists in what we are doing, it is essential to get the different levels of planning right. It is not just about a neighbourhood decision or a national decision, but about getting the decision right in terms of what it means. If we come back to this House in a few years’ time having not built the houses and not given ourselves sufficient capacity to deal with this new era of waste and resource management, and if we have found that some of the decisions that we have taken at very local level mean that we have moved away from our climate change targets instead of making the necessary concerted effort to move towards them, we will seriously live to regret that gap in the Bill.
At the very least, we should ensure that this Bill is not enacted until a national planning framework is in place and the national planning statements have been discussed and sorted out by this House. The Bill must sit in a proper framework that means that local, regional and national planning work together for the benefit of the people who stand to gain most at local level.
Barry Gardiner (Brent North) (Lab)
The Bill draws two important aspirations of the Government into conflict. The Government have said that they want to be the most decentralising Government ever, and that they want to be the greenest. Those two aspirations are difficult to reconcile. To meet the renewables obligation and keep the lights on in the United Kingdom, the Government will have to deliver £200 billion of investment in energy infrastructure in just nine years. To meet their obligations under the waste directive, they will have to deliver up to £20 billion of investment in plant and equipment for new waste and recycling infrastructure in the same period.
Of course, it is right that local people have a say in local planning issues. However, the flaw in the Bill is that it peddles a myth that thousands of decisions taken by atomised local communities up and down the country will somehow amount to a coherent vision for the national and regional infrastructure that we all require. There is a false parallel between the responsibilities of elected parish councillors and Government Ministers. Parish councillors and the people who may constitute neighbourhood forums have an obligation to secure the best outcomes for their local community. Their vision is rightly limited to the immediate boundaries of their neighbourhood; so should be also their powers. Clause 90 specifies a duty on local councils to co-operate on the planning of sustainable development. I welcome that, but there is no obligation on them to co-operate positively to bring about sustainable development infrastructure.
The Government must take a wider purview. To relinquish that responsibility is not to devolve decisions about strategic infrastructure to local neighbourhoods, but to ensure that no one takes those decisions. It is not devolution of power, but abrogation of responsibility. My hon. Friend the Member for Islington North (Jeremy Corbyn) spoke eloquently of the inequalities that may result in housing and the provision of other services across the country as a result of the Bill.
Dr Whitehead
Does my hon. Friend accept that the cumulative impact of the proposals on sustainability must inevitably be considered outside particular areas? Does he propose that a mechanism be placed in the Bill to reconcile local decision making, the duty to co-operate and the cumulative impact of the developments on sustainability?
Barry Gardiner
That is exactly what I propose.
My hon. Friend the Member for Islington North made a powerful point about the inequalities that will accrue across the country, but my point is different. The failure of Government to take strategic decisions will not simply result in inequality, but will be to the detriment of us all. Regional strategies were abolished by the Secretary of State. A duty to co-operate is no substitute.
The national planning framework must provide a clear direction to councils to enable a network of energy and waste management sites and facilities. Such a direction should not be left to secondary legislation. The Government should introduce in the Bill a presumption in favour of sustainable development that accords with the national planning framework. The Bill will create uncertainty in the business plans of those who want to invest in our country’s infrastructure. That will be as devastating a block on development as the increased voice for those whom outsiders sometimes call nimbys.
The Bill suggests that a neighbourhood forum could be constituted by as few as three individuals, and that such individuals need not live in the area. Does the Secretary of State not think that giving membership to those who merely want to live in the area is, even by his standards, a rather slack criterion?
Budget Resolutions and Economic Situation
Debate between Barry Gardiner and Alan Whitehead(14 years, 5 months ago)
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