Energy Bill [HL]

Lord Bourne of Aberystwyth Excerpts

Wednesday 14th October 2015 Grand Committee

Moved by

[Lord Bourne of Aberystwyth]

1: Clause 66, page 38, line 5, leave out subsection (1)

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change and Wales Office (Lord Bourne of Aberystwyth) (Con)]

My Lords, I start by speaking to government Amendments 1 to 13, which seek to amend and supplement Clause 66. I thank noble Lords for extending this debate and allowing us the time for a fuller and thorough discussion.

[Lord Foulkes of Cumnock (Lab)]

I am sorry to interrupt but may I put on record in the Grand Committee what I said in the Chamber? It would have been better for all of us if this debate had taken place in the full Chamber rather than in the Grand Committee.

[Lord Bourne of Aberystwyth]

I thank the noble Lord for his intervention but I make the same response as I gave previously. I know that is the noble Lord’s view but I have heard contrary views, and not from the Conservative Benches, that Members prefer this Bill to be in the Moses Room. However, the point is noted.

As previously set out in the Secretary of State’s announcement on 18 June regarding the early closure of the renewables obligation, we proposed a grace period to protect investor confidence in the wider renewables sector. A grace period was proposed that would provide for those projects which had, as of 18 June this year, planning consent, grid connection and land rights. The grace period was designed to allow for projects that meet certain criteria to continue to accredit under the renewables obligation until the original closure date of 31 March 2017. Following this announcement, we undertook a significant period of engagement to understand better the views of industry and other stakeholders on our proposals.

I recognise that the Government’s amendments, which were tabled last week, are somewhat technical and have the potential to be seen as complex. I reassure noble Lords that, from the outset, the Government have been alive to the issues of investor certainty and clarity, which is why the provisions have been drafted to reflect the approach taken in existing renewables obligation legislation, in particular the Renewables Obligation Closure Order 2014 and the 2015 closure order relating to large-scale solar. This approach aims to ensure consistency and ease of understanding for industry. Following our previous Committee debate on 14 September, we have now carefully reviewed the feedback and evidence provided during the engagement exercise. We have since developed amendments to our original policy to ensure that it strikes the right balance. The amendments aim to protect consumer bills and ensure the right mix of energy, while balancing this against the interests of onshore wind developers and the wider industry.

I am also pleased that the amendments and the revised impact assessment were made available to noble Lords on 8 October in advance of today’s debate and as promised at our last sitting. I hope that noble Lords have had time to review the amendments and that they go some way towards addressing concerns raised during the debate in our previous Committee sitting on 14 September.

Amendments 1 to 13 amend the Bill to introduce the proposed grace period criteria for the early closure policy as outlined in the announcement on 18 June and make a number of additional supplementary amendments.

Amendments 1 to 12 make a number of changes to Clause 66, which introduces a new provision into the Electricity Act 1989 to implement the early closure of the schemes to new onshore wind in Great Britain. The amendments seek to remove the delegated power with a view to setting out the terms of the grace period in the Bill. Amendment 13 sets out the detail of the grace period in the Bill. I hope that these amendments will be welcomed by noble Lords, as initial feedback from the industry to the department following the publication of these clauses has indicated.

I again apologise for the delay in bringing these amendments forward, but hope noble Lords understand the complexity of the policy that has been drafted and appreciate that we will now have an appropriate amount of time in which to debate them today.

I turn first to the terms of the initial grace period criteria as outlined in the Secretary of State’s announcement in June. The proposal was—and, following detailed industry engagement, remains—to offer a grace period to those projects which, as of 18 June 2015, already have, first, relevant planning consents; secondly, a grid connection offer and acceptance of that offer, or confirmation that no grid connection is required; and thirdly, access to land rights.

In addition to this, in certain circumstances, projects that have been granted planning permission following a successful appeal will also be eligible for the grace period. In particular, those projects which have, via an appeal or judicial review, had a negative planning decision that was made on or before 18 June overturned, should be eligible for the grace period. This is because had the correct decision been made in the first instance, they would have had planning consent on or prior to the 18 June cut-off date. These key grace period terms are referred to in the amendments as the “approved development condition” and are referred to in proposed new Section 32LJ.

I turn now to investor confidence. At the time of the announcement outlining the initial grace period, the Secretary of State also said that she wanted to hear the views of industry and other stakeholders before framing the terms of the legislation. The department engaged with hundreds of stakeholders, including the devolved Administrations, supply chain, investors and developers, over the summer. The evidence gathered during that engagement exercise demonstrated the views of individual developers and the wider industry. Evidence was collected though online representations, individual meetings, representations from trade bodies and investor round-table sessions.

Following this engagement, we now have evidence that certain projects which already meet the proposed grace period criteria are experiencing difficulty securing finance. Feedback has shown that a number of financiers may be unwilling to lend to projects due to legislative uncertainty created by the parliamentary Bill process. Therefore, to ensure that projects which meet the grace period criteria and would have otherwise been able to commission and accredit under the renewables obligation by 31 March 2017 are not frozen out of the process, we are offering those projects which meet the approved development condition additional time to seek accreditation. The extension available is broadly equivalent to the period between the date of the Secretary of State’s announcement—18 June—and likely Royal Assent to the Bill, which is approximately nine months. To be eligible for this extra time, projects must be able to provide evidence that they have been impacted by a lack of investment during the period to Royal Assent.

This investment freeze condition I have just described is intended not to increase the pipeline of onshore wind projects that are able to accredit under the renewables obligation but rather to ensure that those projects which were intended to be protected by the grace period, as proposed on 18 June, are afforded this protection.

To provide a consistent approach to all onshore wind projects eligible to accredit under the renewables obligation, we also ensure through these amendments that a pre-existing grid and radar delay grace period applies here. This entitles projects affected by unforeseen grid and radar delays an additional 12-month period in which to accredit.

We are confident in our amendments and the proposed grace period. We have actively listened to stakeholders and worked to ensure that the final policy strikes the right balance between the interests of onshore wind developers and those of the wider public. I beg to move.

--- Later in debate ---

[Baroness Maddock (LD)]

My Lords, I wish to add my voice to some of the points that have been made this afternoon. I particularly want to talk about parliamentary process. I have done this before. For the duration of the coalition Government, I was a party Whip and I am still a party Whip. We have never had to deal with the situation that we had with this Bill where we had the Second Reading on the last day of business. We had the first day of Committee when we came back for two weeks. We then went away for two weeks. We were promised that we would have the amendments to the Bill on 7 October. We got them on 8 October. They were several pages of very technical amendments.

I feel a great deal of sympathy for the Minister because it is probably not his fault that this has happened. But to have to deal with this Bill in this way? This is his first Energy Bill and I have great sympathy for him, so I am not necessarily having a go at the Minister, but at the process. We really need to get our act together.

We have heard today about how this is affecting people outside; about how important it is and how people want to talk to us. I made the point before that we are now a very big House. If we make technical changes like these at the very last minute, it is very difficult for Back-Benchers to get involved. A lot of us get bombarded by people from outside who are worried about what is going on, and what time have we had to deal with that? I would like to send the message—I am very pleased the government Chief Whip is in his place—that we try to avoid this in the future. It is not a good, efficient way to work and it is not the way the House of Lords has worked in the past.

The other point that I want to support is the issue of certainty. In the last Parliament, we had the promise made by the noble Baroness, Lady Verma—I was there, working on that Bill. We again spent hours on technical stuff, going through an Energy Bill, trying to make sure that in the future people who invest in energy across the board would have certainty about what was happening. We are already into the uncertainty around this Bill. I read with horror in one of the newspapers—I am afraid I cannot find the article again—that the funding for one of the gas turbines had been withdrawn because of the uncertainty about what the Government were doing in the whole of the energy sector. This is an important point that the noble Lords, Lord Deben and Lord Foulkes, have also talked about.

We are where we are and the uncertainty is very difficult for industry. We have heard about businesses going under and so on. We are between a rock and a hard place on these Benches because in some ways we do not particularly like the way in which the Government have carried on, but we want to try to make sure that the amendments are as good as we can get them. My noble and learned friend, Lord Wallace, is much more able than I am and has explained them all beautifully to the Committee. I hope that the Government can respond to these, because it is important that the uncertainty does not go on any longer if we can possibly help it. I thought that the noble Lord, Lord Deben, had a wonderful phrase for the things that we are trying to sort out—examples falling the wrong side of the lines. I think that is the sort of thing that we are trying to put right. I hope that between us we can reach a reasonable conclusion and we do not have uncertainty any longer in this industry.

[Lord Bourne of Aberystwyth]

My Lords, I thank noble Lords who have participated in this debate and raised some salient points. I congratulate the noble Baroness, Lady Worthington, who was good enough to take me into her confidence some time ago. I am delighted about her prospect, and we all wish her well in that new role. She will bring considerable knowledge and massive commitment to that task. We share objectives, and I wish her every success in that role. I know that she will continue to have a vital part to play in the House of Lords.

I also pay tribute to the noble Lord, Lord Purvis, who is not in his place. He handled part of the Bill as well as leading for the Liberal Democrats on some of these issues. That role has been taken over, but he had tremendous brio and contributed massively to some early consideration of the Bill.

I shall deal with the point about the recommital before I move on to say something about the amendments. I listened very carefully to what the Labour Front Bench, the Liberal Democrat Front Bench and some Cross-Benchers were saying. I went to considerable lengths to get this recommital organised. The only option for doing the recommital was in the Moses Room, otherwise it would have disrupted business elsewhere in a way that noble Lords would not have wanted. There was little option for recommital other than to have it in the Moses Room. It was a genuine and considerable effort to get organised.

There is obviously a difference of opinion over the amendments that have been put forward. There is clearly a difference between noble Lords about the desirability of what we are doing. I point to the manifesto. We may have different views about whether this is desirable but there is a commitment in the manifesto in relation to onshore wind, and that is why we are pursuing it. I understand that other parties would deal with it in a different way, but there is a democratic process and there has been a general election.

In view of what has been said today in this Committee, I am minded to withdraw these amendments to represent them next week, having considered very carefully some good points, particularly from the noble and learned Lord, Lord Wallace, which were echoed by the noble Baroness, Lady Worthington. There are some very serious points that I would like to look at. Some of them clearly merit looking at in the way that the noble and learned Lord, Lord Wallace, approached them in terms of improving what the Government are committed to doing. Others do not like what we are doing. As far as I am concerned, that matter was settled in broad terms by the general election. There are going to be democratic differences between the parties. This is the way things happen. However, I am very happy to go away and reflect on the points that have been made. We have come a long way and I thank the noble Baroness, Lady Quin, and my noble friends Lord Howell and Lord Deben for what they said about the amendments. I agree with the commitment to renewables that was put very forcefully by my noble friend Lord Deben. They are vital and are something we are pledged to, as we are pledged to the climate change negotiations that are going on in Paris and are moving at great speed, with 149 countries yesterday, and probably more now, having made commitments regarding their contribution. There is a great prize there internationally.

I will reflect on what was said today and, having considered the points that have been made, will bring these amendments back on Report. I hope that in the light of what was said by some noble Lords that that is considered a reasonable approach.

Amendment 1 withdrawn.