Energy Bill

Lord Cameron of Dillington Excerpts

Monday 28th October 2013 Lords Chamber

[Lord Roper]

My Lords, as my noble friend Lord Jenkin has said, I moved a similar amendment in Grand Committee. As he has also said, we felt that the Minister’s reply on that occasion was not as helpful as it could have been. Although the wood panel industry is not large, it has a significant annual turnover and employs both directly and indirectly a significant number of people. If it is possible for appropriate guidelines to be issued in Scotland, it is not totally clear to me why it is not possible to have them here. Obviously, it is a good thing that a voluntary disclosure agreement now exists, but I think that the industry would prefer there to be a requirement regarding disclosure rather than this voluntary agreement. Like my noble friend Lord Jenkin, I shall be interested to hear the Minister’s reply.

[Lord Cameron of Dillington (CB)]

My Lords, I hesitate to speak to the amendment because I am not against it and I sympathise with the intentions of the noble Lords who are proposing it, particularly if it affected the price of construction timber and made housing more expensive, which would not be good. However, I advocate a bit of caution. I have recently come across a company which is trying to build four medium-sized biomass-powered electricity generating stations using brash, tops, coppice, sawmill offcuts and other non-value timber. They are putting them at different ends of the United Kingdom so they have good local sources for the timber. Each power station will be producing between 12 and 25 megawatts and will cost about £60 million. The material is sustainably sourced and will encourage the use of thinnings. For those noble Lords who do not know, thinnings are quite often not taken out because it costs more to do so than to leave them. If you could take more thinnings out it would create more high-value timber for construction or other uses.

I sympathise with the amendment but if it were applied across the board, with a generalised percentage, it would cripple a highly sustainable, beneficial biomass-generating business before it got off the ground. Before an amendment of this nature is enacted, it either needs to be reworded or we need a statement from DECC guaranteeing a flexible interpretation.

[Lord Berkeley (Lab)]

I support the amendment in principle, but I am concerned. The noble Lord, Lord Cameron, has made some interesting points. I have been told that the biomass market, as we see it today, probably has a life of about 10 years. Investment is going into ports at both ends for the wood, as well as in shipping lines and transport from the ports. I declare an interest as chair of the Rail Freight Group. A lot of investment is going into new wagons or converting coal wagons to keep this stuff dry, because if it gets wet it is not very nice. The message in the industry is that they have got 10 years and then the nuclear power station at Hinkley point, and perhaps others, will be on stream, after which there is no guarantee of what will happen.

If that is the case and if, in the interim, the furniture industry of which the noble Lord, Lord Jenkin, spoke, is decimated, that will not be very good. We will have had 10 years of biomass but no furniture industry after that. I do not know whether that is the case. There are clearly many millions of tonnes of biomass in other parts of the world, but there are problems certifying where it comes from. Also, I am told that if it comes in pellets you cannot convert it to woodchips and vice versa. I would hate to see an industry like that decimated just for 10 years of using local biomass which then proves to be uneconomic and where the plant closes down.

--- Later in debate ---

[Lord Cameron of Dillington]

My Lords, I support the amendment. I, too, served on Sub-Committee D and this was a major part of the message in our report No Country is an Energy Island—a very apt name.

The joy of a pan-European grid—or even an intercontinental grid, because the geothermal springs of Iceland could bring electricity down to the industrial heartlands of the UK—and interconnection would be to allow intermittent renewables to complement each other. When it is not windy in Germany, for instance, it might be sunny in Italy; when it is windy in Portugal in the middle of the night, that power can go to Poland where they are just waking up, and so on. Such interconnection could bring a whole new justification to the renewables yet to be built. Intermittency could become an issue of the past and our energy security would be greatly enhanced.

Furthermore, if this interconnection were to grow, it would not only help to keep the lights on but should ensure that we could get the cheapest and most economic electricity available for both domestic and industrial uses. It is obviously going to cost a lot of money and will take a lot of planning. There are many regulatory and political obstacles to be overcome, not least the public acceptance of more pylons. However, as with everything else in the electricity industry, we must start planning now—that is where I am at odds with the noble Earl, Lord Caithness—in order to get these long-term gains. That is why I strongly support the amendment.

[Lord Whitty (Lab)]

My Lords, I register our support on these Benches for the amendment, although the Minister will already have detected that this is a big conspiracy by Sub-Committee D to get its report discussed again at this late stage. I was party to that. However, as the noble Lord, Lord Cameron, has said, there is enormous possibility here.

I will make only two points. First, as long as there is a sniffy attitude towards interconnectors in any of the European energy markets, we are all going to be operating at higher cost than we need, with greater misery for consumers and, eventually, higher cost to the taxpayer. Secondly, this matter is not separate from the rest of the Bill. When asked earlier in the proceedings where their CFDs could apply in relation to supply from French nuclear power stations or Irish wind farms, the Minister said that in certain circumstances they probably could. That is important. It is not tomorrow’s solution, but it could be quite important as long as they were connected with projects here. The same question arises with the capacity market. This is potentially a hugely important way in which we maximise our capacity, and therefore the report to which the noble Baroness, Lady Parminter, refers is important. Whether the Government want to put it in the Bill or not, they really ought to be looking at the strategy for interconnectors as an integral part of overall energy policy.