Jim Shannon
Main Page: Jim Shannon (Democratic Unionist Party - Strangford)
Mr Yeo
I am not sure that I completely follow my right hon. Friend’s concerns. Those points in the Bill will simply ensure that, in the event of an unexpected substantial change in economic circumstances or the emergence of a new technology, the Committee on Climate Change would have an opportunity to review its advice. Indeed, I would hope that it would want to do so in normal circumstances anyway. Moreover, investors are accustomed to having to adjust their decisions and expectations in the light of changing events.
I am seeking, through the amendment, to remove another element of uncertainty. I want to ensure that the Government’s current commitment to moving down a pathway of slowly decarbonising the British economy and reducing its dependence on fossil fuels, which is particularly relevant to the electricity generating industry, is reinforced by accepting an obligation to set the target in secondary legislation during the next 10 months. I believe that that would be wholly helpful to investors. It would give them a more secure and predictable framework in which to make their decisions, as well as having an effect on the returns that they might expect.
Jim Shannon (Strangford) (DUP)
In Northern Ireland, Airtricity’s electricity prices have gone up by 17.5%, and Northern Ireland Electricity’s prices have risen by 18%. What elements of the Bill will give consumers confidence that prices will not rise above affordable levels, given that prices are heading in the wrong direction at the moment?
Mr Yeo
On the wider point about future prices, it would be dishonest for anyone to suggest that we could protect consumers against the probability of higher energy prices. The world’s demand for energy is expanding very quickly, particularly in the Asian economies, and that will probably lead to higher prices. What the Government can do, and what the Bill is aiming to do, is at least to minimise those price rises. A number of measures can be taken to achieve that, including improving competition, ensuring that consumers are better informed and deploying various smart technologies on a large scale. Also, as I have said before, it would be helpful if Britain were able to go ahead and identify the scale of our recoverable shale gas reserves and then exploit them. That would certainly reduce our dependence on imports, and it might give us some protection against price fluctuations.
The amendment is not so revolutionary as some people seem to think. It seeks to bring forward by a couple of years something that the Government are contemplating doing anyway. If it is true, as the Secretary of State said yesterday, that we are heading for a substantial decarbonisation of electricity anyway—I am sure that, if he said it, it must be true—what possible objection could there be to the amendment? There is now widespread support for such a measure. Only two weeks ago, the Committee on Climate Change published a report recommending that a target for reducing carbon emissions from electricity generation by 50 grams per kWh to 2030 should be set in legislation, with the flexibility to adjust it in the light of new information. The amendment provides for precisely that.
A wide range of businesses and trade bodies have backed the proposal. The Aldersgate Group, whose members include Microsoft, Marks & Spencer, Aviva, Sky, Pepsico, British American Tobacco and many others, is a strong supporter. Many companies with an interest in the supply chain and with the potential to create jobs in Britain want to see the amendment accepted. A wide range of voluntary bodies is also campaigning for it, including the National Federation of Women’s Institutes, the Church of Scotland, the Methodist Church, the Baptist Union of Great Britain, the United Reform Church and the Quakers in Britain. I mention the Churches because, in the recent debate on gay marriage, I found myself on the opposite side from most of those organisations, and I am delighted to be allied with them on this issue.
Andy Sawford
It is a pleasure to follow the hon. Member for Brighton, Pavilion (Caroline Lucas) and my hon. Friend the Member for Southampton, Test (Dr Whitehead).
A year ago, my hon. Friend and I, along with my right hon. Friend the Member for Don Valley (Caroline Flint), wrote in a paper called “The Power Book” about the potential for community energy. We argued that as the new energy industrial revolution unfolds in this country, future technologies, new sources of renewables and low-carbon energy have huge scope to challenge the existing market, help reshape the relationships between people and power providers and create new agents of delivery. I pay particular tribute to my hon. Friend the Member for Southampton, Test, who has been pioneering such work for some years—for example, he has championed the district heating project in Southampton as an MP and former local council leader.
I also want to mention such projects as the Baywind energy co-op in the Lake District, Watchfield in south Oxfordshire and Brixton Energy. There are increasing numbers of inner-city providers of community energy.
However, we have to be honest. The scale of such projects in this country is small compared with other countries. We should look to America, for example. Some 42 million American citizens, the equivalent of two thirds of the population of this country, are members of energy co-ops. The German example is even more impressive. Since 1990, German citizens have had a legal right to be producers and suppliers of electricity to their grid system. The big step change came a decade ago when their Government introduced a system of preferential feed-in tariffs. That transformed an energy sector that once had only four major suppliers into one that now has over 2 million contributors. It also created 400,000 jobs and has lowered prices, year on year, over the past five years.
Across the UK, local councils are rising to the challenge of transforming the energy sector. I have followed community energy projects around the country and I have profiled projects in Stoke, Stevenage, Kirklees and Sheffield. I am particularly pleased to welcome Electric Corby, which was launched in my constituency on Friday. It is a not-for-profit community interest company formed with the support of the borough council to establish the UK’s leading practical community-scale test centre for future low-carbon living and transportation and to redistribute the benefits of its labours to the Corby community. As the Minister will know, Electric Corby is funded via DECC’s Cheaper Energy Together switching competition. We welcome that support, but it is very much a local initiative.
Jim Shannon
The hon. Gentleman is energetically outlining the case for the community initiatives that are taking place across the whole United Kingdom. Does he feel that these community initiatives will enable people to see that this is not being foisted on them because they have an opportunity to control the situation? That is why they are good, and they should have had a great start.
Andy Sawford
I absolutely agree with the hon. Gentleman, who hits on the key point that this is about shifting the power in energy supply to give ordinary people a chance to say to the big six, “If you won’t give us a fair deal we can do this for ourselves in our local communities.”
Electric Corby is partly about enabling people to switch their energy provider, but it is wider and more ambitious than that. For example, it will involve an electric vehicle charging point infrastructure. I recently welcomed the shadow Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for Streatham (Mr Umunna), to Corby to see those electric charging points and other innovations in my constituency. In Priors Hall, a major development of 5,000 new homes has just begun, and there is smart metering and electric charging points across the whole development.
We are trying to lead in Corby, but I am concerned about the potential impact of this Bill. I particularly support amendment 1, which has been ably championed by my hon. Friend the shadow Minister. In Committee, the Government indicated that they were supportive of the amendment. That was welcome, and it was on that basis that it was withdrawn at that stage. We have heard some very warm words from the Minister today. He and I have previously spoken in the Chamber about energy policy. I know that he tries to listen and respond to good debate, as in Committee, but it is disappointing to find that he cannot offer something more substantive to the House in respect of amendment 1.
The purpose of amendment 1 is to raise the feed-in tariff threshold to benefit co-operative and community energy suppliers. Currently, the feed-in tariff is for projects of under 5 MW. That means that renewable developments of over 5 MW have to participate in the new contracts for difference. I share the concern that contracts for difference will raise the barriers to entry for the community energy projects that Members in all parts of the House have said that they support. The need for a higher degree of technical knowledge is one such barrier to entry. The contracts will mean that smaller generators will receive lower market prices for their power. With the end of the renewables obligation, there will no longer be an incentive for suppliers to purchase renewable energy from independent suppliers.
For those reasons, the feed-in tariff threshold should be raised to above 5 MW. I agree with the hon. Member for Brighton, Pavilion that we should be ambitious and raise it further, but the amendment would allow us to raise it to apply to schemes of above 10 MW. That would give smaller renewables projects a clear and certain route to market and enable us to promote the community-owned renewables sector.
Mr Weir
I said at the outset that SNP Members did not oppose this Bill on Second Reading and we will not oppose it tonight. We recognise the need for electricity market reform and support much in the Bill. I understand the Minister’s point—I understand that contracts for difference could well be a good way forward—but I remain concerned about the lack of much of the detail, and I say that for two reasons.
In Committee, I raised the issue of the closure of the renewables obligation system in 2017 and whether that could have an impact on investment in the meantime. Many companies that are considering investment are still unsure about how the CFD system will work and are concerned about the changeover. More thought should have been given to how the interim period could be dealt with, perhaps by extending the RO system. Regrettably, the Minister was not prepared to accept that.
The other point about CFDs is that we still do not know what is being negotiated between the Government and EDF in respect of Hinkley. Whether or not I am anti-nuclear, that is important, because whatever those details are they will inevitably become the template for future CFDs in the nuclear industry. If the price is set too high and the contract is too long, that could have huge implications for the public purse in the future. None of those details are available. We are told that they will be available in July, presumably when the House is in recess, but we have no opportunity to look at these things, and that is a shame.
Late in the proceedings, the Government introduced amendments on consumers, including the Prime Minister’s promise to put them on the lowest tariffs. I do not think they were strong enough and I tabled amendments on Report that, unfortunately, were not reached because of the time available.
I also tabled an amendment to deal with a question that I have often raised about winter fuel allowances and the need to provide small-scale practical help for consumers, but it fell into the last group tonight.
Jim Shannon
On that subject, statistics show that in the past year 24,000 people died from cold-related causes. That was due in a big way to the inability of the system to address people’s needs early. Does the hon. Gentleman feel that it is not too late for the Government to take that on board and that ensuring the early payment of such money at a time when oil is cheap would be a good way forward?
Mr Weir
That is an excellent way forward. The Minister of State, Department of Energy and Climate Change, the right hon. Member for Sevenoaks (Michael Fallon), has convened a round table on oil-fired heating. The first meeting was held in May and I welcomed that. It was a useful meeting and might perhaps be a way of dealing with that industry, but we need small-scale help as electricity market reform is not the only way of dealing with energy markets. Small-scale things can be done that make a real difference and the Government must grasp some of those issues, rather than simply considering massive measures such as this Bill.
There is a decarbonisation target. We fully support it; I spoke in the debate on it and gave the reasons why. If Governments north and south of the border want a true, green, sustainable manufacturing base, a decarbonisation target will give companies the assurance that will allow them to invest for the future. It will enable them to be sure that they have a market as they push towards it. It could also provide a huge amount of sustainable, highly skilled jobs. As I pointed out earlier, growth in the Scottish economy has come largely from the energy industry and such development could be a huge boost for the future, so it is unfortunate that we do not have that target.
There are defects in the Bill, but there are some good things. We will not oppose the Bill on Third Reading, but I hope that when it gets to the other place the Government will reconsider some of the issues.