Energy Generation

Ian Swales Excerpts

Wednesday 17th April 2013 Westminster Hall

[Barry Gardiner]

I am happy to allow the hon. Gentleman to get what he wishes on the record. He is at perfect liberty to make his own remarks later, and I trust he will do so, but I point out that Germany, by going away from nuclear generation, will see a significant rise in emissions—not only there, but in neighbouring countries. Germany has been a net exporter of low-carbon electricity to its neighbours, and that also is going and will create substantial problems for Europe as a whole in meeting its emissions reduction targets. It will also present severe problems for Europe’s response to the challenge of global warming. Ultimately, I think Germany will move through that transition, away from coal.

[Ian Swales (Redcar) (LD)]

Does the hon. Gentleman not think that the exchange we are having demonstrates the fallacy of counting carbon on a production basis? Germany is a heavy exporter of manufactured goods—cars, for example. Whose carbon is it? Is it Germany’s, or that of the person who buys the car?

[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.

--- Later in debate ---

[Ian Swales (Redcar) (LD)]

I will cut my remarks short, Mr Gray. I was going to speak about the beneficial effects of all this for the Teesside economy and mention a number of projects, but I do not have time.

Although there is good news for the local economy, not everything in the garden is rosy. The bioethanol plant in my constituency, set up in February 2010, shut down for more than a year. Having restarted, it has recently shut again, because of Government dithering over renewable transport fuel. We do not have full clarity from the Department about a biomass power station at Teesport, which three Korean companies have formed a consortium to build. We are getting mixed messages from the Department on that.

As other hon. Members have said, we need local purchasing. A wind farm is being built offshore, literally outside my house. Although that is good news, I have seen the ships transporting all the materials coming past my house. We must act urgently to ensure that we have supply chain and local purchasing.

I heard this week for the first time that there are concerns in the north-east about the national grid capacity not being in line with the Department’s various energy generation plans. I hope that the Minister will provide clarity on that. Other hon. Members have spoken about the need for long-term certainty. That is not just about long-term targets, but about the grandfathering arrangements that the Department makes. The omens are not good. The retrospective change in combined heat and power has been bad for companies that thought they had a regime lasting until 2027.

There have been seven Energy Acts since 2003. I hope that we are getting to the end of this and that the Minister will think about standing down the policy factory, or at least part of it, that has been working for 10 years, so that we can get on with all the investment that is required.

--- Later in debate ---

[Tom Greatrex]

The hon. Gentleman is right to make that point, as he did in his speech and as other hon. Members have. My remark about his colleague was just to make it clear to those who were not on the Energy Bill Committee that there was an opportunity to put that target in the legislation, but sadly it was missed. That could have been done, but those with the opportunity chose not to do so. I hope that, on reflection, we will get to a better position and a better decision on Report.

Members of the Energy Bill Committee have dealt with a number of similar issues that the hon. Member for North Warwickshire (Dan Byles) touched on. He mentioned targets, including in other countries. I am sure that he is as aware as I am of the targets in Denmark—the 2035 target for all electricity and heating production to be fossil fuel free; in Austria, in relation to low-carbon energy by 2050; and in Germany, in relation to 50% of electricity generation in 2030.

It is not strictly accurate to suggest that there are not targets elsewhere in Europe and across the world, because those countries are seized of the growth and job opportunities that come with the imperative to decarbonise the power sector. Those of us on the Energy Bill Committee heard repeatedly—others will have heard this in subsequent letters—that business is seeking clarity of purpose beyond the scope of this Government and of this Parliament and the next, towards 2030.

My hon. Friend the Member for Brent North was right to address the levy control framework, but the hon. Member for Angus (Mr Weir) was also right to mention the time it takes to make some of those decisions. There are serious, big decisions that have not yet been made, such as on the memorandums of understanding that have been signed on siting offshore wind fabrication facilities in the UK. Part of the reason why the final decision has not yet been taken on that is the fact that the global companies involved, which have to make a case to their international boards, are not convinced that they have the clarity to be able to say that there will be a market. The only way we will bring down the cost of offshore wind is by having scale, and the way to do that is through manufacturing. There are strong business threads throughout the debate.

[Ian Swales]

Does the shadow Minister agree that it is not just climate that companies are interested in? Although climate is obviously an important overall consideration, the companies want their specific arrangements to be grandfathered when they decide to invest.

[Tom Greatrex]

I agree. We are grappling with the legislation because we do not know the detail of how that will operate. Again, in Committee we received assurance from the then Minister of State, Department of Energy and Climate Change, the right hon. Member for South Holland and The Deepings (Mr Hayes), that that will be forthcoming, but it has not yet emerged. Not only can we not scrutinise it, but the companies, to which the hon. Member for Redcar (Ian Swales) was going to refer before he had to truncate his speech, cannot.

Finally, Ministers speak about setting a decarbonisation target, as the Deputy Prime Minister did on the very afternoon that we moved amendments in Committee that the Liberal Democrats failed to support, but that is not to say that this is about setting a target. As others have said, it is about the power perhaps to set a target. The Government may set a target, but they might not. The longer this goes on, all we are doing is storing up lack of certainty, which means that the costs will not necessarily come down as fast as they might and that we cannot get the benefit of jobs and growth from the shift to the green economy that is happening—and it will have to happen in any case.