Energy Bill [HL]

Lord Grantchester Excerpts

Tuesday 8th February 2011 Grand Committee

[Lord Lea of Crondall]

I support one of the points made by the right reverend Prelate. I am sure that the principle underlining this Bill, and other Bills, is not that we have a totally random system of subsidies but that we have a consistent system of subsidies, a point to which the Minister will perhaps respond when I move my amendment a little later. Nothing would be more fatal than for people to think that any fool can get energy from any place they like and receive unlimited subsidy to do so. As I understand it, that is not part of the principle of a Bill, but it deals with how this consistent pattern of subsidies, or a consistent pattern of carbon taxes, for that matter—that is the reverse side of the coin—will operate, so that it is transparent to all. I am sure that the noble Lord, Lord Teverson, would agree with that principle. It would mean that we would not have the anxieties that have been revealed.

I am all in favour of geothermal, by the way; in fact I spent much of last summer in Iceland and Greenland, where one can see boiling water coming out of the earth all over the place; it is a good form of cheap energy. However, we have to look at the competing forms of energy with some consistent system of units, whether a price per kilowatt hour delivered or whatever. I am sure that this is capable of being embraced within the spirit of the amendment.

[Lord Grantchester]

I am grateful to the noble Lord, Lord Teverson, for tabling his amendment today, as both he and I mentioned it at Second Reading last year. The Minister replied in that debate that he was actively looking at a licensing system. I trust that he will be able to update us today with a positive proposal. As we know, the industry has spent £4 million of the £6 million allocation from our previous Labour Administration, and from the remaining £2 million, the Conservative-led Government have cut the funding by 50 per cent to £1 million with no arrangements in place thereafter.

The noble Lord, Lord Judd, has already updated us on one such proposal. My noble friend Lord O'Neill will also know that geothermal energy has been tapped into since Roman times, with the enjoyment of hot springs, and shallow geothermal projects such as ground-source heat pumps are slowly growing. Even conservative estimates calculate that deep geothermals a few kilometres down could provide 10 per cent of the UK's electricity. It operates 24 hours a day and is always hot; emission levels are virtually non-existent and it should not run out. We agree with the noble Lord, Lord Teverson, that the timing in his amendment specifying within 18 months gives an unnecessarily long leeway within which the Secretary of State could operate such a system. We would support a shorter timeframe.

I would also add to the suggestion of my noble friend Lord Lea that perhaps we could look at increasing the feed-in tariff threshold to 10 megawatts and include a deep geothermal tariff of 23p. If the Minister's plans have extended that far, he could update us on what those might be. We look forward to that.

[Lord Marland]

My Lords, welcome back to what I hope will be the last day of our Committee stage. I also welcome back the noble Baroness, Lady Smith of Basildon. I hope that her foot is much better. Should we have a vote later today, a number of coalition Peers will be very happy to push her into the Chamber in her wheelchair to ensure that, for once, she goes into the right Lobby.

The coalition Government welcome this amendment. I have telegraphed this before in various debates that we have had on the subject. The noble Lord, Lord Teverson, is a recognised expert and, as usual, is thumping the drum for Cornwall. I am very grateful to the noble Lord, Lord Judd, for thumping the drum for the north-east, which I looked at very closely and from where I have also had representations. The noble Lord, Lord Oxburgh, is absolutely right that capital moves within countries and, if we are to take this matter forward, we should do it as quickly as we can to look at the possibilities.

To answer a number of questions, geothermal does benefit from two ROCs. There is financial support available. As recently as December, we gave grants to Keele, Newcastle and Southampton universities to continue their activities. I hope that that deals with part of what the right reverend Prelate the Bishop of Chester said.

As I have said before, we are looking actively at the practicalities and, in particular, the legal aspects. In fact, only the other day we looked to see whether we could use the Irish licensing system, legal system and legal documents to do it, but it is a huge amount of work. It is not a question of just adopting their system and using it as a template. Unfortunately, because the UK legal system is silent on this issue, we start with a blank sheet of paper and have to create our own licensing regime, which, those of you who have been in government will know, is quite complex.

Given the potential complexity of the licensing scheme, it is my proposal that the Government continue to work on this issue and to take the matter away. I can assure noble Lords, as I have done in the past, that looking closely at trying to find a regime that suits is something that has my sympathy and support. I am very grateful that we should have the scientific evidence that the noble Lord, Lord Oxburgh, mentioned to support this excellent amendment. However, I ask the noble Lord to withdraw his amendment.

--- Later in debate ---

Lord Marland: I cannot confirm the costs on the consumer at this early stage of the procedure. However, I can confirm that there are two ROCs already in place available for deep geothermal. Therefore, there is a system in place for rewarding the person who produces it.

[Lord Grantchester]

The noble Lord mentioned two ROCs as a subsidy to the industry. My understanding from submissions I have received is that the industry feels that this is insufficient. Has his department looked at increasing this? The submissions asked for these to be upgraded to four.

[Lord Marland]

I am sure that all industries are keen to upgrade the amount of ROCs that they get, but we consider that a very suitable figure at this point.