Offshore Wind Developments

Debate between David Mowat and Eilidh Whiteford

Tuesday 6th January 2015 Westminster Hall

[Dr Whiteford]

The hon. Gentleman’s views on these issues are well articulated and well known, but we have to be a lot more ambitious. I do not want be shoring up our coastline—I would rather be preventing it from falling down in the first place. One way we can do that, and gain economic advantage, is by developing new, innovative technologies, which will have tremendous commercial potential if we develop them properly.

In that light, I am deeply disappointed that no decarbonisation target has been set for 2030. That is a real missed opportunity, and it undermines confidence in the Government’s commitment to the offshore renewables sector. The Government initially seemed much more ambitious about the development of offshore wind, and that raised a lot of expectations, leading to considerable investment from industry. Companies were actively encouraged to make bids for offshore developments, and they have invested hundreds of millions of pounds in bringing projects to consent.

However, the smoke signals from the Government have changed, and the goalposts have shifted somewhat since Ministers embarked on this journey. The budget announced last October for contract for difference bids was substantially lower than expected. The £235 million allocated for group 2 will support an estimated 700 to 800 MW of offshore wind capacity, which is a lot less even than some of the individual projects aim to generate.

I am not questioning the principle of a competitive element to the process, but the money available will, realistically, support only one—and possibly only part of one—of the seven projects in the frame. Given that companies will each have invested tens of millions of pounds just to get to this stage, the support on offer simply does not present sufficient incentives or prospects of success to encourage further development in the sector. I fear that the prospect of offshore wind on the Scottish coast is in real danger of withering on the vine.

It is important to point out that, under contract for difference, offshore projects will compete against not just each other, but other renewables projects, including more evolved technologies, such as onshore wind on the islands, which are now much cheaper and lower risk. Again, that is likely to jeopardise the development of a strong domestic renewables sector and supply chain.

I am concerned that the shifting goalposts, the mixed signals and the interminable delays that have characterised energy market reform are doing the UK considerable reputational damage in international markets, which will deter future investment. Those who feel they may have been led up the garden path this time will be reluctant to venture into our orbit again, which is not where we need to be in attracting investment. The Government need to send a signal that they remain committed to the offshore wind sector—if they are—and to let the sector know that there will be future allocations under contract for difference to make further investment viable.

[David Mowat]

Will the hon. Lady give way?

[Dr Whiteford]

I will not, because I am conscious of the time, and I want to make a couple of points before I conclude.

I well recall how the Government made the same short-sighted mistakes in the 1980s, when early, first-generation renewable energy technologies being developed in Scottish universities were starved of funding. That simply meant that the research moved to Europe and beyond and that other countries created the manufacturing jobs that could and should have benefited our economy.

There is a grave danger that if we pull the rug out from under the fledgling UK industry before it has had a chance to establish itself, the chance we have will pass us by. Others will harness the technology and steal a march on us. We need not to be content with what we have, but to realise that there is more wind to be harnessed if we go out into deeper waters. However, that takes investment, and it means risk, and we need to take that seriously.

I represent an area that still has a lot of manufacturing, and we are keen to benefit from what is happening. That would have long-term benefits in terms of creating a stronger, more stable and more resilient economy.

There has been some mention of the Government’s direction of travel—the enthusiasm for fracking and the rush towards new nuclear. Others have spoken about the costs at Hinkley Point, but it is worth pointing out that EU experts have said that those costs are actually much higher—about £25 billion. Professor Peter Strachan of Robert Gordon university points out:

“The deal involves paying twice the current price for electricity, with UK taxpayers and electricity consumers locked into a binding contract for an extraordinary 35 years.”

If we also consider the massive decommissioning costs involved, those figures put into context the £235 million available for offshore wind through contract for difference in the current round. Offshore wind developers seem to be scrabbling around for the crumbs.

If it is possible to make a 35-year commitment to support the nuclear industry, it seems short-sighted to have the offshore renewables sector lurching from year to year and round to round. Obviously, we are not comparing like with like, but we simply will not have a renewables sector if we do not give it more certainty and security to develop these ambitious technologies. I would like the Minister to use this opportunity to indicate the Government’s ongoing commitment to the sector.

Renewable energy is an important part of our energy mix, but we need to think long term if we are to realise its full potential. The cost of new technologies is likely to reduce over time. Contract for difference helps to encourage that investment, but we will achieve the added benefits only if we remain in the vanguard. The point has been made already, but it is worth saying again that a native renewables industry is critical to our long-term energy security.

Several Members have said that we lead on offshore renewables. If we want to stay in the lead, we need to harness the stronger winds further offshore. Let us not abandon our initial ambition, and let us ensure that we give our offshore wind energy sector the kick-start it needs to achieve real economic benefits for us.

Finance (No. 4) Bill

Debate between David Mowat and Eilidh Whiteford

Thursday 19th April 2012 Commons Chamber

[Dr Whiteford]

The hon. Member for Leeds West pointed out that nobody on an income of more than £25,500 a year will be affected by this measure. Frankly, with average earnings above that, I do think that most of those pensioners are living in what most people would consider to be quite modest circumstances, particularly when, as I have already argued, they have to pay much greater heating costs. Their lifestyles are not without particular burdens that they have to bear, and they do not have a chance to improve them.

[David Mowat (Warrington South) (Con)]

rose—

[Dr Whiteford]

I shall not take another intervention; I am trying to conclude my remarks.

The Government had a chance to regain the confidence of pensioners after a long hiatus and much erosion of the position of pensioners over a number of decades, but they have squandered that opportunity. They are sneaking through these proposals in the fine print, claiming that they are for simplification. That undermines whatever confidence pensioners had left in them. On the streets of my constituency, people have been angry to see that what has been given with one hand as a modest increase in the state pension has been taken away from their occupational pension with the other hand.

We are leaving pensioners without any real incentive to save. We are not going to tackle the challenges of our changing demographics with that kind of attitude because people will question whether it is worth their while putting money aside for their retirement. I do not think that is a way forward, and I hope the Government will step back from this very regressive measure.

Carbon Capture and Storage (Scotland)

Debate between David Mowat and Eilidh Whiteford

Tuesday 17th January 2012 Westminster Hall

[Dr Whiteford]

I agree with the hon. Gentleman that energy security is crucial, but the point about gas is that I do not think we have a choice any more, and the reason why we will have to use gas, wherever it comes from, is the previous Government’s indecisiveness. They refused to make decisions, for example, on whether to have new coal at Kingsnorth. After 13 years in government, it is very easy for the previous Government to put pressure on the new Government, but they need to take some responsibility for their own decisions when they were in office and their failures, which have made us very dependent on external gas at present.

That, however, does not negate the argument for a CCS gas demonstrator project at Peterhead. We are where we are and we are dependent on gas, but the proposed Peterhead site fits in extremely well with both the UK’s strategic objectives and the EU’s strategic priorities. It is also very well located for old oilfields in the North sea. We are in a good position to use them—it is probably a better position than that of anywhere else in Europe at present.

[David Mowat]

I agree with the hon. Lady that gas is the default solution to energy where decisions have not been made. On gas from overseas, I think I am right in saying that the majority of our coal also comes from overseas at the moment, but we can rest assured that, from 2015, Europe is likely to be flooded with cheap shale gas from the US, so I think our concerns about that particular fuel source are misplaced.

[Dr Whiteford]

I am grateful to the hon. Gentleman, who has considerable expertise in this area, for making the important point that it is not just gas but coal that comes from overseas. The point about CCS technology is that it is extremely marketable and the UK has a comparative advantage in that market. A number of coal demonstrator projects are taking place elsewhere in Europe, whereas gas is not being explored to anything like the same extent internationally. That could give us a proper comparative advantage in gas CCS technology. It is about not just our domestic markets but international marketability.

The key issue is funding. There is no doubt that the collapse of the Longannet project and the Treasury’s announcement that it would reallocate the underspend has created a great deal of anxiety and uncertainty. However, Shell and SSE have made it clear that they would require funding in the next two to three years to make the project viable, and revenue support during the operational period. In that respect, the energy companies have argued that spreading the finance too thinly over too many projects risks jeopardising all of them.

What proportion of the funding will the Government make available during this Parliament? What discussions have been had about the prospects of levering in further investment from sources other than those in the public sector? What is the Government’s response to the argument that the UK needs to focus its efforts on funding and risk management? The Government have published a timeline for implementation. How likely is that timeline to be met and how is it progressing?

We have to recognise that this is a demonstrator plant. It carries investment risks and might not go smoothly and completely according to plan, but that is why it is so important for it to have Government backing. I hope the Peterhead project will progress apace.