Clean Energy Investment

Debate between John McNally and Alan Whitehead

Wednesday 25th November 2015 Westminster Hall

[Dr Alan Whitehead (Southampton, Test) (Lab)]

It is a pleasure to serve under your chairmanship this morning, Mr Bailey. I congratulate my right hon. Friend the Member for Don Valley (Caroline Flint) on obtaining this important debate and on how she put forward the case that, so far as the future of this country is concerned, the recent attacks on renewable and low-carbon energy have created a difficult set of circumstances for future investment and have reduced Britain’s standing in the world as a good place for renewable investment. That is an extremely important point to make, because renewable energy has enormous potential, and the recent investment in it has started to release that, particularly with solar photovoltaics and onshore wind. As a result of support and assistance, those technologies are coming close to market parity, but the rug is being pulled from under them. The subsidy was not permanent and was decreasing, but, as my hon. Friend the Member for Sunderland Central (Julie Elliott) said, the Government have made it a cliff edge. At the very least, that is being extremely reckless with future investment in renewables in this country.

My right hon. Friend the Member for Don Valley set out a number of the changes that have taken place, and it might be useful to set them out again briefly. We have had the early closure of the renewables obligation to onshore and large-scale solar; planning rules changed to restrict the deployment of onshore wind; the announcement of the end of the feed-in tariff for small-scale solar; the scrapping of pre-accreditation for small-scale renewables; investment tax relief removed for community renewables; the scrapping of the zero-carbon homes target; future rounds of the contracts for difference under the levy control framework delayed; the scrapping of the green deal, as my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) mentioned; and the extending of the climate change levy to renewable energy, effectively placing an additional carbon tax on the purchase of renewable electricity.

My right hon. Friend the Member for Don Valley said that the ending of that exemption represented a grab by the Treasury. Indeed, it can be described no less starkly than that. It also comes close to retrospectivity, as those who benefited from the exemption for the climate change levy expected it to be phased out by the early 2020s. As my right hon. Friend set out, the sudden change now has led to serious difficulties for a number of the companies involved, including Drax and Infinis.

Just the ending of the exemption may have been sufficient evidence for investors to decide that it was probably not a good idea to continue investing in the UK. However, when that measure is combined with all the other measures that I mentioned, it cannot fail but produce a bleak outlook for investors in renewable energy in the UK. As we know, because we are enjoined in the UK to export our renewable investments, it works the other way round; investors are not necessarily looking at coming to the UK only. They can go to invest in other places, and all the evidence is that that is beginning to happen. My hon. Friend the Member for Sunderland Central pointed out that we have now fallen out of the attractiveness index top 10 for the first time since the list began, with a serious decline in our country’s renewable energy attractiveness.

The case is compounded by the fact that not only have events of the past three months weakened investment, but the Government are simply not taking decisions on various schemes for the next period. If the decisions were taken, we could enhance greatly the certainty for investment in renewables and low carbon energy. There is no certainty on the future of the levy control framework, as several hon. Members have pointed out. Not only is there no certainty on the future of that framework post-2020, but the opaque figures we are presented with at the moment for the levy control framework prior to 2020 mean that it is very uncertain whether there will be further auctions of low carbon energy over the next period, and, even if there are auctions, whether the content of those auctions will be sufficiently large to present any serious opportunities for investors to take part in.

My hon. Friend the Member for Stalybridge and Hyde mentioned the Government’s heat policy shambles and the complete uncertainty over the future of the renewable heat incentive. Like him, I fear we may hear further bad news about that incentive this afternoon. As my hon. Friend also pointed out, there is no certainty on the future of the energy company obligation post-2017, and the green deal has been taken out and shot with apparently nothing to take its place over the next period. So that adds up to a really shambolic picture.

[John Mc Nally]

I should have mentioned it earlier, but I have to declare a family interest in the solar panel business. The right hon. Member for Delyn (Mr Hanson) mentioned that nobody turned up at an official opening. In my own constituency of Falkirk, in Denny, we have the world’s first Difgen, which generates electricity from a natural water source. I opened it with another couple of nonentities: Lord Colin Moynihan and Nicola Sturgeon. The significant difference is that they attended and turned up at meetings and official openings. Although it was a small-scale turbine, it was the world’s first. That signals the step-change that this Government should follow.

[Dr Whitehead]

I thank the hon. Gentleman for that intervention. That comes under the category of the signals that the Government are giving out, which are almost wholly negative as far as renewable and low carbon investment are concerned.