Biomass Power Generation

Guy Opperman Excerpts

Wednesday 20th March 2013 Westminster Hall

[Jackie Doyle-Price]

I thank the Minister for those comments. I agree that we need to take the wood panel industry with us. I suspect that, with more understanding and dialogue, it will come with us, because the case has been made that we can supply the demand for biomass without impacting the industry’s supply unduly.

[Guy Opperman (Hexham) (Con)]

I apologise for arriving late for the debate, Mrs Main. I congratulate my hon. Friend the Member for Selby and Ainsty (Nigel Adams) on securing it, and thank my hon. Friend the Member for Thurrock (Jackie Doyle-Price) for taking my intervention. I should declare an interest as a member of the all-party group for the wood panel industry, and I have an employer in the industry in my constituency. I absolutely endorse all the points that have been made thus far, but I would make two points to my hon. Friend. The first is that the timber price has gone up by well over half—

[Mrs Anne Main (in the Chair)]

Order. I remind the hon. Gentleman that interventions must be brief.

[Guy Opperman]

Will my hon. Friend comment on the fact that the timber price has gone up by at least half since we have had the domestic subsidy?

[Jackie Doyle-Price]

All I can say is that RWE is planning on making a significant investment, and it has invested in its supply chain. The issue that my hon. Friend raises really will not impact on its ability to run the dedicated biomass facility in Tilbury. I would also point out that timber is not the only commodity that has gone up in price in recent years. I really do not think, therefore, that the issue that my hon. Friend raises will be any impediment to further exploitation of this technology.

I look forward to Tilbury rising again and reopening with new permissions and with a brand-new facility. I hope the Minister will look at coming to visit in due course to see how plans are progressing. I am really pleased that RWE remains committed to Tilbury and that, despite having to close its existing facility, it still wants to invest in power generation on the site.

I know the Minister does not require too much encouragement in this regard, but I would like to highlight how much this issue illustrates what happens when Governments fail to fight our corner in Europe. I can see a situation coming down the track very quickly where we will be forced to buy more and more electricity from France, in particular, because the regulatory system has favoured nuclear over coal. We all want cleaner, greener energy, but we need to keep the lights on, and we need to make sure that people can afford to heat their homes. For our own energy security, therefore, we need to make the most of the potential of biomass as an energy source, given its generating potential, and given how much more of our domestic demand we will be able to supply.

I implore the Minister to make every effort to ensure that rapidly deployable capacity, in the form of biomass conversion, comes on stream as quickly as possible. In that respect, I cannot add much more to what my hon. Friend the Member for Selby and Ainsty said in his opening remarks.

I want to make a final point about investment. As a country we rely heavily on private capital to achieve the investment in power generation that we need to meet our energy needs after 2015. As my hon. Friend the Member for Redcar said, to achieve that, industry needs long-term certainty to encourage investment, particularly in a world where capital is finite and the market environment very competitive. In addition, we are dealing with energy companies that are global in their reach, and they can easily go and invest their capital elsewhere.

It is telling that coal-fired power stations are being built in Germany, when we have made coal completely uneconomic in this country. When we are dealing with private investors and expecting them to invest billions of pounds so that we can keep our lights on, we must recognise that they are not in it for charity, and we must enable them to facilitate that investment in the best way we can. To put it bluntly, the Department has, hitherto, been not enough about energy and rather too much about climate change. I believe that really has to change, and I know that if anybody will facilitate that change, it is my hon. Friend the Minister.

--- Later in debate ---

[Guy Opperman (Hexham) (Con)]

Everyone here would agree that the fundamental concept of biomass is a good thing. There can be no objection by any Member of Parliament or any constituent to the fundamental principle and support for it. However, as always with Government policy, including in the three years that I have been in the House, the consequences are not always what we would wish to see. I am faced with a situation—this is the third Minister in three years whom I have addressed in relation to biomass subsidy—whereby, on the one hand, the standard person who is buying timber, whether it is a furniture maker, someone doing wood panelling, a caravan maker or any other person using timber in any way, shape or form in this country to run any kind of business whatever, buys at a price that is unsubsidised by the Government. On the other hand, energy companies that wish to purchase timber in this country for use in a biomass energy plant are subsidised to a large and significant degree by the Government.

The consequences are very clear. First, the timber price goes up. Secondly, the energy companies have a competitive price advantage, which allows them to purchase timber at a cheaper rate than all other purchasers in the country. Every single person, save for an energy company, gets a different price. That, from a Conservative coalition, I find illogical and hard to believe, given that we are meant to be a free-market-based organisation. The reality is that the subsidy is distorting the market, raising the price of timber and, I regret to say to my hon. Friend the Minister, posing a severe threat not just to the wood panel industries, but to any utiliser of wood in this country.

[Nigel Adams]

I have the utmost respect for my hon. Friend. I just wonder whether he can tell me of a significant power generator in the country that is buying its timber to be pelletised from sources within this country.

[Guy Opperman]

In accordance with the time-honoured traditions of the House, I shall be delighted to write to my hon. Friend and give him chapter and verse. The honest reality is this: I cannot give him chapter and verse right now. However, he will be fully aware that there are only two places where a biomass energy company can purchase its timber product. It can come from this country—we have 12 million tonnes of timber, and a large proportion is going to British-based energy companies—or it can be obtained from overseas. My hon. Friend is making faces from a sedentary position along the lines that he disagrees with me. I manifestly do not accept that. In fact, I will definitely make the case—I would be interested if the Minister could comment, because he is very informed—that if there is in reality no energy company in this country creating biomass that is utilising—

[Nigel Adams]

rose—

[Guy Opperman]

I will not give way any more. The situation surely is this. On any interpretation, if there is no energy company in this country that is utilising domestic wood—

[Nigel Adams]

Significant.

[Guy Opperman]

If there is none or no significant one, why is a subsidy needed? If there is no utilisation, that is all the more reason why the Minister should take the dramatic point of view that we should get rid of the subsidy. With no disrespect, the energy companies cannot have it both ways. They cannot say, “We need a subsidy to buy timber in this country; that subsidy is to help us,” and, alternatively, “We don’t use it, so we don’t need the subsidy.”

[Julian Sturdy (York Outer) (Con)]

Will my hon. Friend give way?

[Guy Opperman]

On this occasion, I will.

[Julian Sturdy]

Can my hon. Friend say where this Government energy policy or renewable energy policy generally would be without subsidy? I am struggling to understand, because surely all energy policies attract subsidy. The question is whether it is good or bad and how far it goes. Renewable energy policy attracts subsidy across the board.

[Guy Opperman]

I accept that. We all understand that to kick-start energy policy, there must be subsidy—no one disputes that—and there has been, in a multitude of different energy fields over a long time, under successive Governments, that process. However, just as the Government have reviewed the subsidy that exists in relation to solar or other types of energy production, so the Government have an obligation to review the extent to which they subsidise domestic wood. I shall go further than that and say this. In this context, it is having an impact on jobs. There is no question in my mind about that. It is also having an impact on the consumer, because as with all energy, there is a degree of subsidy, and that subsidy is coming from the consumer. The consumer is paying, through Government subsidy, for the consequences of the energy production. Therefore, to say that it is without any adverse consequences whatever would be simply wrong.

[Jackie Doyle-Price]

The area that my hon. Friend is opening up now—the impact on consumers—is a very important one across the wider perspective of energy policy. The reality is that we need to invest in generating capacity, and biomass will be an important ingredient of that. If we do not do that, the price of energy for consumers will go up, because we will be having to buy that power on the open market.

[Mrs Anne Main (in the Chair)]

Order. I remind the hon. Gentleman that the winding-up speeches will start in just under four minutes.

[Guy Opperman]

Mrs Main, I take everything that you say very seriously and most particularly the fact that I have two minutes and 54 seconds in which to finish. It comes down to this. The Minister is a free-market economics guru. He is a robust embracer of his brief. However, I remain to be convinced of why we subsidise one item for one particular organisation, while we do not subsidise on the other hand. I am told by my hon. Friend the Member for Selby and Ainsty (Nigel Adams), who is both a friend of mine and very eloquent in the way he puts his case, that there is no effectual usage of domestic wood in this country—yet we still subsidise it. With respect, that is totally illogical. Either the subsidy is required to continue for domestic wood, or it is not. Mrs Main, I thank you.