Oral Answers to Questions
Debate between Carolyn Harris and Andrea Leadsom
Andrea Leadsom
The industry is vital for the UK, and we will continue to support it in every way we can. I have already mentioned some of the measures. Perhaps I will just reiterate that, in setting up the Oil and Gas Authority on Sir Ian Wood’s recommendations, we are establishing an authority that is welcome by the industry, that will improve the economic recovery of the sector, and that will ensure that we do not move to early decommissioning, which is all very good news for the North sea sector.
Carolyn Harris (Swansea East) (Lab)
16. What progress has been made on the independent review on tidal lagoon energy announced in February 2016.
Swansea Tidal Lagoon
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Andrea Leadsom
I will answer the hon. Gentleman’s point, which I know he has made twice already. I will come to it in a moment.
There is speculation, following recent announcements, that this Government have kicked the project into the long grass. The simple truth is that the developer’s current proposal for a 35-year contract is too expensive for consumers to support, and the deliverability of the wider lagoon programme is too uncertain at this point. The developer is seeking a very significant amount of financial support for the project from consumers, and its most recent proposals for a longer contract would be a significant deviation from where Government policy is just now.
For that reason, it is only right that we take more time to consider the proposals. As I have said, the Government cannot support the technology at whatever cost to the consumer. It must represent good value for money and be affordable. We have told the developer that Department of Energy and Climate Change and Treasury officials stand ready to continue discussions. In parallel, there will be an independent review to assess the strategic case for tidal lagoons and whether they could represent good value for consumers.
The independent strategic review was mentioned by my hon. Friends the Members for Gower (Byron Davies), for Eddisbury and for Montgomeryshire (Glyn Davies), as well as the hon. Member for Ceredigion (Mr Williams). It will consider a number of issues, including the potential scale of the opportunity in the UK and internationally, including, importantly, supply chain opportunities.
Shortly, we will set out more details about the review, including the name of the person who will lead it. I hope that it will be possible to complete the review by the autumn. It will help us to consider further what role tidal lagoons could have as part of our plans to secure clean and affordable energy for families and businesses across the country.
Carolyn Harris
Can the Minister confirm that there will be somebody from Wales on that committee?
Andrea Leadsom
As I say, the make-up of the committee is being discussed right now, and I will certainly take that point away. I am quite sure that there will be someone from Wales on it, but I cannot say for certain because we have not got the names of individual members yet. I am grateful to the hon. Lady for making that point. As I was saying, we will not be able to make a decision about whether to award a CfD to Swansea bay until the review has been completed.
My hon. Friend the Member for Carmarthen West and South Pembrokeshire suggested an intergenerational CfD for up to 90 years, as did the hon. Member for Aberavon (Stephen Kinnock). We will consider this and other means of financing this type of project as part of the review. However, hon. Members will appreciate that a 90-year CfD, or a CfD for even longer, is a very, very long-term intergenerational funding commitment that is not something that the Government have looked at so far. It requires further review; it is not something that we can simply pick up.
One of the very important reasons for the widespread interest in the proposed Swansea bay tidal lagoon and of course the wider lagoon programme is the potential for significant economic growth and job creation. We are taking this opportunity very seriously. If a decision is taken to award a CfD to this project, the Government will look to maximise the potential economic benefits as far as humanly possible. I can tell hon. Members that consideration of the supply chain is always a key part of a CfD negotiation, and the Government have already requested a supply chain plan and map from the developer. We are very pleased that the UK content of the project is likely to be up to 65% and that the Welsh content is likely to be about 50%.
That is good news, but hon. Members—in particular, my hon. Friend the Member for Carmarthen West and South Pembrokeshire, and the hon. Members for Aberavon, for Salford and Eccles and for Swansea East (Carolyn Harris), and my hon. Friend the Member for Gower—asked, “What do we get from this, especially for the steel industry and so on?” I can tell all hon. Members that in the context of offshore wind, where there is a very clear commitment to further growth, I am pushing extremely hard to maximise the opportunity for the UK supply chain, and if this tidal project goes ahead I will be like a Rottweiler and absolutely fighting for as much UK content as possible. That is a very important point to make to all hon. Members.