Energy BILL [ Lords ] (Fifth sitting)

James Cartlidge Excerpts

Tuesday 2nd February 2016 Public Bill Committees

[Clive Lewis]

I will push on. I have a few more of those chocolate sweets I might give away. If successful, the Government will be going back on their own legislation and closing the renewables obligation for onshore wind a year earlier on 1 April 2016, a date that will not be lost on any hon. Members here. If successful, the Government will have adversely singled out the most cost-effective, low-carbon technology available to us, at a time when the Secretary of State herself admits that the UK is on track to miss its legally blinding EU obligation on renewable energy by an estimated 50 TWh hours, a shortfall of almost 25%.

The Government’s answer is ever more reliance on the EU emissions trading scheme—a scheme, as we have already heard while discussing clause 80, we need less reliance on in coming years, if we are to attain the most cost-effective pathway to our carbon budget commitments. So why is there an almost obsessive compulsion to attack one of the country’s most successful renewable forms of energy?

The only answer I can glean from the debate so far is that it boils down to a few ambiguous lines in the Tory party manifesto which it is fair to question. It says:

“We will end any new public subsidy for onshore wind.”

First, these are not public subsidies. Strictly speaking, the payments come out of bills, not the public purse. While the word “new” is also open to a broad interpretation, let us not forget that this is an existing, not a new subsidy—a subsidy that was already closing as part of the Energy Act 2013.

The Minister will also be aware of the huge amount of consensus and engagement with industry, proper consultation and pre-legislative scrutiny, that arrived at the 2017 wind-up day for the renewables obligation.

[James Cartlidge (South Suffolk) (Con)]

Will the hon. Gentleman, my fellow East Anglian MP, give way?

[Clive Lewis]

Yes.

[James Cartlidge]

Is the hon. Gentleman suggesting that billpayers are volunteering that extra per cent?

[Clive Lewis]

I will come to the point about the cost to billpayers later in my speech. Even with the retrospective grace period the Government have announced, many renewables companies will be adversely affected. Michael Rieley, senior policy manager for Scottish Renewables, said:

“However, many of our members will be bitterly disappointed that ministers are not going to allow projects which have submitted planning applications to be given a grace period.”

More importantly, as I have mentioned already, this retrospective chop-and-change approach by Government is damaging investor confidence in the wider energy sector.

--- Later in debate ---

[Philip Boswell]

I assure the hon. Gentleman that this is merely an attempt to clarify or articulate the position from a legislative perspective. It remains our firm intention that the decision remains, as per policy, with local authorities and local people.

Although statements from Ministers in the House of Lords have indicated that the Government intend for modified consents to remain eligible, clarity on this in the Bill would remove any doubt and allow investments to proceed. Amendment (l) provides for cases where a planning permission was granted on or before 18 June 2015, but where that planning permission has been varied under the provisions recorded in sub-paragraph (ii). Permissions under section 73 of the 1990 Act or section 42 of the 1997 Act are in law new permissions, and without this provision such further approvals based on permission granted before 18 June would be shut out from receiving a ROC. Deemed planning permission issued with section 36 consents can be varied under section 73 or 42, but there is a need to refer to section 90 of the 1990 Act and section 57 of the 1997 Act because they will be engaged on an application to vary section 36 consent under section 36C of the 1989 Act.

Amendment (m) ensures that applications to vary an existing 1990 Act or 1997 Act permission that was granted on or before 18 June, that may result in an increased capacity which takes the total generating capacity of the station above 50MW and must therefore be done by way of an application for a section 36 consent rather than by way of a variation of the 1990 Act or 1997 Act permission, will still qualify for the grace period. Amendment (n) ensures that a project is still eligible for the grace period where a planning permission granted on or before 18 June 2015 is superseded by a subsequent permission granted after 18 June 2015 for a generating station of the same or lower capacity on the same site.

Amendment (o) is a new amendment to cover judicial review and statutory challenges relating to planning permissions granted on or before 18 June 2015. It envisages that the planning permission which is ultimately granted or confirmed following court proceedings can be accredited under the RO. How much capacity may come through the door as a result of the amendment that can be easily quantified by reference to any proceedings now in the court.

It is common practice within the sector for grid agreements to be varied by parties after initial agreement. Amendment (p) will clarifies that, provided a grid connection agreement is in place by 18 June, eligibility for grace periods will not be affected by any subsequent variations of that agreement. So far, Ministers have been unable to provide sufficient clarity that subsequent alterations or replacement of agreements would be eligible for the grace period. If the Government intend projects in those circumstances to proceed with construction and be accredited under the RO, that should be made clear in the Bill, for the avoidance of any further doubt and further delays. Amendments (q) and (r) are intended to make it clear that deemed planning permission is included within the definition of permission in the 1990 Act and the 1997 Act, and thus fall within the definition of planning permission.

Our amendments (s), (t) and (u) relate to new section 32LK of the Electricity Act 1989, inserted by Government new clause 2, which sets out the criteria for projects that would be eligible to meet the investment freezing condition. This condition is necessary—I thank the Minister for her stated intention of respect—because the way that the Government have chosen to close the RO a year earlier than planned through primary legislation has caused so much uncertainty that some investors cannot have stopped investment in onshore wind projects until the Energy Bill receives Royal Assent.

Amendment (s) addresses an illogicality within new section 32LK(4)(a)(i). The Government-drafted amendment envisages a developer requiring funding from a recognised lender, a term which is defined in subsection (5). However, it must have been intended that the only condition should be that the relevant developer required funding from any source, hence the proposed deletion of the reference to a recognised lender in this clause.

Amendment (t) deletes certain words as they unnecessarily narrow the definition of “recognised lender”. If the words proposed for deletion were included, they could exclude lenders who are new to the market and who have not previously given loans to onshore wind developers. Amendment (u) is consequential on amendment (t). The change proposed by amendment (t) removes the terms defined in subsection (6) from the definition of “recognised lender” so there is no longer any need to define those terms, making subsection (6) unnecessary.

I move on to new clause 3, and again I thank the Minister for her efforts and intents on new Northern Irish onshore wind. The new clause covers the development of wind generating stations in Northern Ireland. When the Energy Bill provisions were published, they related only to projects in Great Britain, because energy policy is devolved to Northern Ireland. Subsequently, Northern Ireland Ministers consulted on equivalent changes to the Northern Ireland renewables obligation, with cut-off dates for planning consent proportionate to this later consultation and notification date. Northern Ireland Ministers proposed setting two closure dates which related to different sizes of projects, and to the manner of connection to the Northern Ireland electricity market of these different project types. Smaller projects which connect at 33 kV to the Northern Ireland grid network would have to have been consented to by 30 September 2015. Larger projects which connect as clusters of projects would have to be consented to by 31 October 2015.

Northern Ireland Ministers have yet to announce their decision on Northern Ireland closure, as agreement between the Northern Ireland Executive and the UK Government has yet to be reached. This means that any subsequent Northern Ireland legislation cannot be enacted via the Northern Ireland Assembly until after the Bill is enacted. It is therefore necessary that the Bill is clear as to the limits of the application of the provision to Northern Ireland and that it respects timescales proportionate to the Northern Ireland generating stations. Failure to do this would mean that generating stations in Northern Ireland could be penalised because of a misalignment of timescales between reserved and devolved powers in the UK. I urge the Minister to seriously consider these amendments.

New clause 15 would,

“return to the Scottish Ministers the power to close the renewables obligation in relation to electricity generated by onshore wind generating stations in Scotland”.

Before the Energy Act 2013 was passed, Scottish Ministers had full control over renewables obligations in line with the Scotland Act 1998, which devolved powers to the Scottish Government regarding the supply of electricity from renewable sources. The Energy Act 2013 took back this control through a UK Government amendment tabled in the House of Lords that gave the Secretary of State the power to close the RO, including in Scotland. The justification for this change in the law was that it would facilitate a coherent and transparent closure across the UK and move toward the new contract for difference system. Those powers were taken back to Westminster under the previous Energy Act on the clear understanding and promise from the Government that there would be no policy implications; it was said to be just a technical change that would not affect any policy decisions.

At the time, the move was condemned by the Scottish Government’s Fergus Ewing, who said that the UK Government produced the amendment in the House of Lords with “no consultation or explanation”. He said:

“We are deeply concerned about this summary removal of the Scottish Government’s discretion in an area of such vital importance to our people and economy.”

Clearly, the original justification for stripping Scotland of a power devolved in 1998 no longer holds water. There has been a policy change by the UK Government, and it is one to which the Scottish Government dissent.

[James Cartlidge]

Is the hon. Gentleman suggesting that if the amendment were implemented, the Scottish Government would take over the expenditure associated with the RO?

[Philip Boswell]

We would be willing to discuss that, depending on the benefits. The RO was developed and evolved for good reason.