Revised Draft Overarching National Policy Statement for Energy (EN-1)

Lord Marland Excerpts

Tuesday 11th January 2011 Grand Committee

Moved By

[Lord Marland]

That the Grand Committee do report to the House that it has considered the Revised Draft Overarching National Policy Statement for Energy (EN-1).

[The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Lord Marland)]

I am very pleased to open this debate on the revised draft energy national policy statements—the NPSs. The NPSs are a suite of documents that will comprise the decision-making framework for major energy infrastructure proposals. I will briefly explain the changes that we have made to them since the first consultation in November 2009.

First, I should explain briefly the role of Parliament in ensuring that the revised documents are as robust as possible. This debate is part of the scrutiny process set out in the Planning Act 2008. It is an opportunity to comment on the revised energy national policy statements, apart from the nuclear one, which we will debate on Thursday. The coalition Government believe that NPSs should be subject to approval by Parliament so that they have the strongest possible democratic legitimacy. This House has an important role in scrutinising draft NPSs, and this debate will help the Government prepare the final versions of NPSs. I hope your Lordships agree that we have taken on board the very helpful comments by noble Lords in shaping these NPSs. We intend to lay the final NPS for ratification in the spring.

The revised versions of the five non-nuclear NPSs take into account the previous Grand Committee debates and the recommendations from the Energy and Climate Change Select Committee. Details of these are set out in the response to parliamentary scrutiny. I have also placed a memorandum on the changes to the NPSs in the Library.

Throughout the NPSs we have tried to improve the clarity and consistency and we have removed repetitive material from the technology-specific NPSs where it could be said once in the overarching NPS. We have made significant changes to the statement of need in the overarching NPS, EN-1. This now includes research that was not available for the first draft, including more detailed analysis of scenarios to achieve an 80 per cent reduction in carbon emissions by 2050. However, the conclusions remain the same: we urgently need a new energy infrastructure.

In fact, the Pathways 2050 model shows that we might need at least twice the electricity-generation capacity by comparison with today in order to meet our climate change targets because we will need to electrify large amounts of industry, heating and transport. Our modelling shows we need about 59 gigawatts of new electricity capacity by 2025, of which more than half will come from renewables. We would like a significant proportion of the remaining non-renewable generation to be filled by either low-carbon technologies, such as nuclear or coal with CCS. New nuclear should be free to contribute as much as possible to this. We also need gas generation as part of our transition to low-carbon. We have also included more detail in EN-1 on what is required for an economic feasibility assessment to ensure that fossil fuel generation stations are carbon-capture ready.

In this Committee last February, the noble Lord, Lord Woolmer, suggested that the provisions in the fossil fuel generation stations NPS—EN-2—which require applicants to demonstrate the economic feasibility of carbon-capture readiness, were such that developers would have difficulty demonstrating economic feasibility. We have therefore added more detail in EN-2 on how applicants might demonstrate that their proposals for CCR would be economically feasible, including a model for an economic assessment that takes into account the difficulties of calculating variable costs over a long period. The revised overarching and fossil fuel NPSs also note that operators of fossil fuel generating stations will have to comply with an emissions performance standard. That may be introduced but it is not currently envisaged that it would be a development consent condition.

We have clarified that the renewables NPS—EN-3—does not cover alternative renewable energy technology, such as tidal and wave power or solar energy. We do not anticipate that most of these technologies will become commercially viable above the Planning Act 2008 thresholds in the near future. However, applications for consent for tidal range schemes may be submitted to the IPC or its successor in the next few years. We are therefore considering including tidal range schemes in the NPSs, either through an amendment to this NPS or through a separate NPS at an appropriate stage.

I thank the noble Baroness, Lady Young, for her suggestion in the previous debate that the renewables NPSs should set out specific directions to the IPC on assessing the sustainability of biomass for generating stations using it as fuel. We have considered this carefully. However, we believe that sustainability of biomass is best addressed through the renewables obligations. The revision of the renewables NPS explains that, subject to the necessary changes being made to the RO, there is no need for the IPC to consider this matter further. We have consulted on the necessary changes in the Renewables Obligations Order 2011. We are also consulting on further proposals in the EMR consultation that closes in March.

We have also revised the text with regard to noise for onshore wind farms. The ETSU-R-97 recommendations for noise limits for the operation of wind turbines have been criticised as being outdated. We have therefore made it clear that applicants should take into account the latest industry good practice on assessing noise from wind turbines, as well as existing guidance in ETSU-R-97. We are keen to ensure that planning authorities and developers have clarity about best practice to provide greater certainty and consistency in the planning system. Therefore, we have also commissioned research to analyse consideration of noise in development consents. This is due to be completed in March and will inform the text in the renewables NPS.

We have clarified that the gas supply infrastructure and gas and oil pipelines NPS—EN-4—covers only oil and natural gas pipelines, and not CO₂ pipelines. We will seek views on the development of the CO₂ infrastructure and intend to include onshore CO₂ pipelines in a suite of NPSs at a later date. The noble Lord, Lord Crickhowell, suggests that NPSs should address safety in LNG deliveries to terminals. The Government agree, and the NPS has been amended to include an explanation of the regulatory controls that apply to ensure safe shipping of liquefied natural gas.

In the February debates the noble Lord, Lord Judd, was concerned about the impact of overhead electricity lines—I agree entirely with his concern, as a private matter—in areas of outstanding natural beauty. We have tried to ensure that the government policy on undergrounding and the need to treat each application on a case-by-case basis is expressed more clearly in the electricity NPS, EN-5. We have also added a new section on bird strike in this NPS to reflect findings in the revised appraisal of sustainability.

We have also substantially revised the appraisal of sustainability for the non-nuclear NPSs. This will make it easier for people to evaluate the likely environmental impacts of the revised draft national policy statement. We also set out strategic alternative approaches to the NPS policies and explained why at this stage we do not think that they represent better ways of achieving our energy policy objectives through the planning system.

The Localism Bill, which had its First Reading in the other place on 13 December, sets out our proposals to abolish the Infrastructure Planning Commission and replace it with a major infrastructure planning unit as part of the Planning Inspectorate. Under the reform regime, major infrastructure projects will be decided by Ministers in accordance with the policy framework, not by a quango, so there is an urgent need for the new major energy infrastructure. The energy national policy statements in place will provide a clear framework against which planning applications for this infrastructure will be assessed. I commend these national policy statements to the Committee.

--- Later in debate ---

[Lord Marland]

I thank all noble Lords who have contributed and all those who have come to listen; it is much appreciated and shows the keenness with which we take this subject. As the noble Baroness said, we finished the year off with energy, we are starting it with energy, and, my goodness, we are going to be spending a lot of time on energy over the next month. We have got a lot on our plate. I hope that despite some complaining in the ranks, noble Lords here recognise that this Government do listen. I think that it is probably mistaken to get into the technicalities of a lot of the parliamentary procedure, because we have a lot of conversations outside the Chamber—we have a lot of listening; we have breakfast; we have had all sorts of things. I hope that you agree that we are listening.

The reason we are doing this is that this is a subject that transcends all Governments. It is fundamental to the country that we have a time line that goes to 2100, as I shall enunciate in a few minutes. In fact, our own pathway goes to 2050. So this is a major subject that in my view is largely outside the subject of party politics. As I think everyone will also understand, we have some serious heavy lifting to do. We have had a long time of inactivity; a long time of resting on the laurels of the wonderful wealth of oil from the North Sea which has kept this country afloat. As I said in an earlier Question today in answer to some of the noble Lord’s questions, we have got to spend more than £110 billion on our infrastructure just to get it up to scratch in the next 10 years. This is a massive project that confronts the Government today.

I turn to the specific questions which, if I may, I shall take in order. The noble Lord, Lord Giddens, as always, is excellent on this subject. He questions our striving for renewables and indicates that we want to achieve 30 per cent. In fact, as I said in our opening speech, we are committed to 50 per cent—which, even for a thicko like me, is larger than 30 per cent. That is our commitment: to have half our energy from renewables by 2050. The noble Lord is also right that there is a huge amount to do.

The noble Lord also asked what happens if CCS does not work. I am very grateful to my noble friend Lord Oxburgh, who really said it all for me. It means that I have to say very little—so I will not. If it does not work, which we fully intend it to do, we will obviously rely on nuclear. I shall come back to the CCS demo project later, if I may.

The noble Lord also asked whether we should put faith in ETSs. ETSs are what we have got as a European standard. As the noble Lord, Lord Deben, said, we should listen to the EU on these subjects. I do not entirely agree with him, but we should listen on some things, and I think that this is good because it works. We should challenge it the whole time and ensure that it is ticking the box. But there is a considerable take-up in this area.

If I could wave a magic wand, of course we would have targeted regional planning. It makes complete sense. It requires a lot of cross-government co-operation, and now that we have been in government for six to nine months, it is a subject where we should be looking to achieve, particularly if we are going to develop the offshore renewables industry. If this is going to become one of our great exporting subjects, we should have a centre of excellence, and I have suggested to our Secretary of State that that is a subject we should take on. I am grateful for those comments.

The noble Lord, Lord Teverson, asked about the CCS competition update. As I am leading the negotiations on the competition, I can tell the Committee that next week we have our second meeting with the chairmen of Shell, National Grid and Iberdrola at 8 am on 19 February. They are coming back to us with their offer regarding what they can achieve within the budget that we have set them. I have no doubt that we will not accept their offer, they will go back and then come back again, hopefully, with something that is more acceptable. The timetable that we have set ourselves is a vigorous one; I want to see heads of agreement signed early this year with a view to having a legally binding document by October, and they are committed to that timetable. It is important that this should happen, and I am grateful that my noble friend Lord Oxburgh should give such encouragement in this area from a scientific point of view.

The noble Lord, Lord Teverson, mentioned consultation with local planning authorities and where we go on that. It is a requirement of the Act that local planning has to happen first. That is the normal practice that we have had in this country and we are not changing it. For major infrastructure projects, we are abolishing the IPC because we believe that it is a quango—it is not an elected body—and ultimately it should be the Secretary of State who makes the decision on major planning projects. We have debated and talked about that on many occasions. The noble Lord also talked about the biomass timescale. That is set out in the Renewables Obligation Order 2011, which should be implemented in April this year.

I enjoyed hearing the dulcet tones of the right reverend Prelate the Bishop of Liverpool this morning on “Thought for the Day” as I was trying to think for the day and about how to deal with this debate; it was marvellous to hear them coming through on the subject of bankers. He can talk about any subject, can’t he? It is marvellous to have such expertise in this House and indeed in Liverpool. The right reverend Prelate wants to know what goals we have set ourselves. Pathway 2050 is one of the clearest documents that have been produced by the Government and shows the enormous challenges and the principles that we have to confront. The document is there as a target, and 2050 is a long way off.

The right reverend Prelate asked us to raise the subject of nuclear risk assessment, particularly in the flood areas. We can do no more than consult the experts, who have laid out the agreement up to the year 2100—hopefully, I will still be alive then—which is the timeframe within which the flood assessment is contained.

He also mentioned carbon counting, an issue that he has raised before, and I am grateful for that. There is a suggestion that the IPC should be responsible for carbon counting. We think that the Government’s policy in this area is perfectly adequate. Obviously it is something that we have to take seriously and, as with all these things, I will take the right reverend Prelate’s suggestions away and consider them further. With regard to his comments on China; yes, these issues have been raised with the Chinese delegation at a private meeting with the Secretary of State as well as through the Prime Minister’s Office.

There was the issue of the gap between planning applications and the IPC and when that will happen; the noble Baroness asked about that as well. As my noble friend Lord Jenkin said, we are grateful that the IPC has thoroughly co-operated in this process, and it is to be commended. In fact, I think that my noble friend went public in saying that it should co-operate with us, and I am glad that it has taken on board what he has suggested. There are two planning applications for power stations that are likely to be approved by the IPC, but anything other than that will be in this interregnum period, which looks like being a fairly smooth process.

My noble friend Lord Jenkin, eruditely as always, asked a number of questions on the issue of offshore and onshore. It is our belief, and I think it is a Conservative tenet, that market forces are best placed to determine how the two marry up together. I have referred to that, and I will do so again at a later stage.

The noble Lord also mentioned shale gas, as have a number of noble Lords. We welcome shale gas, of course; if it reduces the price of gas, that will be fantastic. There are no signs as yet that the Americans are going to supply it to the outside world, as they are intending at the moment to keep it within their own country, but anything that reduces the price of gas will be of great benefit.

I have mentioned parliamentary process, but will now mention it in more detail. I am not going to try to second-guess the parliamentary process regarding these national policy statements. It is not for me to do so; I am only a young whippersnapper in this world. But the changes that are being made through the Localism Bill will give the opportunity, within a 21-day period, for people to register their amendments, and then there will be a vote on them. The difference between now and then is that that vote will be binding, whereas before it was not worth the paper it was written on. If you add that to the general consultation that we are having through these various debates and parliamentary issues, I feel confident that all noble Lords will recognise that we are having our say. The Energy Bill is starting in this House, where it will be honed, argued over, debated and made fit for purpose. That shows the intent of the Government and the recognition of the excellent contribution that noble Lords make here.

My noble friend Lord Jenkin raised a number of other issues. I will be happy to discuss them with him afterwards or put them in writing to him. Some of the issues refer to nuclear and I will deal with them, if I may, in the nuclear debate, on which I notice his name is down to speak. He asked why we have an interim milestone of 2025. We have to have interim milestones; we have to have something that most of us can believe we will actually see, and 2025 is a perfectly reasonable figure.

I was disappointed that the noble Lord, Lord Judd, was not as complimentary as he might be, although I took some of the serious and excellent comments that he made on board. I take no persuading of his view on overhead power cables; in fact, when I was a parliamentary candidate I was asked what was the one Private Member’s Bill that I would introduce and I said the removal of overhead cables, so he is preaching to the converted. Of course the CPRE is an excellent organisation, and we listen to it with great intent—well, I do, anyway.

I really think that the noble Lord has got the wrong end of the stick on the Holford rules. I want to read something that I read earlier, paragraph 2.8.5 in EN-5:

“Guidelines for the routeing of new overhead lines, the Holford Rules, were originally set out in 1959 by Lord Holford, intended as a common sense approach to the routeing of new overhead lines. These guidelines were reviewed and updated by the industry in the 1990s, and the IPC should bear them and any updates in mind as they examine applications for overhead lines”.

It goes on to list what the Holford rules state—on pages 12 and 13, for those who have the statement—and then continues:

“In considering whether all or part of proposed electricity lines should be placed underground to obtain the benefits of reductions in landscape and/or visual impacts, the IPC will need to weigh the reductions in visual intrusion against the impacts (economic, environmental and social) and technical challenges of undergrounding”.

That seems to be a common-sense approach.

[Lord Judd]

I am grateful to the Minister for giving way, and it is wonderful to have his emotional sympathy for the general drift of my commitment, but can he spell out what he understands by the injunction to “bear in mind”, in terms of actually achieving a situation in which we can be confident that these things will prevail?

[Lord Marland]

I look to the opening words, which state that the Holford rules were,

“intended as a common sense approach”.

In other words, it was a very 1959, laissez-faire rule. What we are doing is hardening the rules. We are not giving anything away on them. We have merely said that the Holford rules should apply, but if there are implications in terms of whether it is not geologically feasible to put lines underground, the rules should be borne in mind for the same reason as the noble Lord, Lord Deben, said—the cost. We cannot impose unrealistic costs just because we are completely determined, as the noble Lord, Lord Judd, and I are, to place those lines underground. However, I assure him that he has my greatest support and sympathy, and I have taken on board what he said. I shall fight the good fight, as he will, on these issues.

I am also grateful for the noble Lord’s point that we have to consider the future of our society. That is fundamental, and it is something that your Lordships’ House takes more seriously than most, because we take a long-term view of these things. What the noble Lord said was very important.

My noble friend Lord Reay is well known for his views on onshore wind. I cannot comment on whether I share them or not, because onshore wind is a government policy. However, I am always interested in his views. He asked some good questions. Onshore wind is part of a mixed portfolio required under our 2050 pathway if we are to supply this country with twice the supply that it needs today. Onshore wind supplies not a significant amount but a relevant amount. We know where the significant amounts of supply will come from, and we talked about them earlier. We want to be very careful about getting sidetracked into the smaller aspects of supply and concentrate our firepower as a Government on the major things, such as new nuclear, CCS and converting our waste into something much more effective.

Of course, onshore wind has tremendous support in certain parts of the country, particularly in Scotland and Wales, where local communities have come together and determined that there are benefits. Equally, a huge number of communities in England do not see the financial benefits to them. Luckily, we have rigorous planning procedures which ensure that fair play is maintained.

The noble Lord asked what the effects are on the CCR requirement and what extra costs there are on the companies for fulfilling it. There are no delays at the moment because everyone who applies for CCS is just buying the land next to them. There have been no problems with approval on that. The only extra cost is that of purchasing the land. I have mentioned two or three good points about CCS and the Holford rules, with which I hope the noble Lord is satisfied.

As far as the Met Office is concerned, the Government should review several things. First, should we be the owners of the Met Office? There are compelling reasons for the Government not owning an institution, and I am on the PEX-A committee which is reviewing whether the Met Office and its advice should be owned by the Government. However, people tell me that there is only one nation in the world that does not own its own meteorological office and that is Malta. That would be an interesting combination.

I am disappointed that the noble Lord, Lord Crickhowell, did not applaud me to the rooftops for the changes that we have made on LNG and siting. We have made great strides and have listened carefully to what he has said, as I said in my opening speech. The noble Lord, who is an expert in this field, notes that this is a complicated area. There is no single legislative body and there are many different licensing conditions. Clearly, the Government are absolutely adamant that safety at all standards must be maintained. We have the best health and safety standards in the world. On the pipelines, he raises the very good point that standards should be maintained and constantly reviewed. Lessons should be learnt from the BP incident in the Gulf of Mexico. We are reappraising standards rigorously. Perhaps the noble Lord is going to applaud me to the rooftops.

[Lord Crickhowell]

Clearly, we are not just dealing with the safety of individuals and property. The security of our whole energy policy is dependent on these facilities being safe. However, I hope that the Minister and his colleagues will look again at the possibility of referring to offshore LNG facilities, rather than taking the view that these facilities must in future always be close to centres of population with long pipelines. Examples from other parts of the world should guide us here.

[Lord Marland]

As I said, the noble Lord has great knowledge in this area and we take on board what he has to say. I am perfectly happy to discuss this with him later to see how we can improve. It is a complicated area, as the noble Lord knows.

I will deal with the issue, raised by the right reverend Prelate the Bishop of Chester, of nuclear subsidy. The Government do not intend to provide a subsidy for nuclear because it is a very mature market. Subsidies should be for new technologies, which we can pump-prime to generate electricity. Of course we should maximise our resources in oil and gas, but we should also husband them because they do not last forever, as the noble Lord, Lord Deben, said. That requirement is satisfied. We have just granted licences in the Shetlands to allow new oil drilling to happen.

I thank the noble Lord, Lord Oxburgh, for answering half my questions and the noble Lord, Lord Deben, for his sage-like remarks and for laying out the landscape for us. He rightly says, in the true Conservative way, that we will look at the costs. We cannot waste taxpayers’ money and must be careful. We must also remove any impediments to this substantial development.

I will be as brief as I can in answering the noble Baroness, Lady Smith, whom I thank for her co-operation. She asked about the Localism Bill and what is material in the Secretary of State putting a matter to the vote. I am not the arbiter of what is material and neither is she. We all know in our heart of hearts what is material and what we would expect. We will bring the usual pressures to bear through the other place or here to make sure that anything material gets debated because of the cross-relationship.

I mentioned earlier our reason for abolishing the IPC. The noble Baroness asked me to talk about the green investment bank, which is complicated. We have committed money to it. It is being set up primarily to commit to new technologies. We are investing taxpayers’ money and other banking institutions’ money in it. Therefore, there will be a rigorous test of whether it is a profitable enterprise. It is not a giveaway bank; it is an investment bank. However, it is an investment opportunity that will be available to people with new technologies to help them develop, provided they have a profitable end to them. We are not in the business of unprofitable enterprises.

The need case that was referred to is set out clearly in the 2050 Pathways Analysis, which is a very substantive document. If the noble Baroness would like to discuss issues on that after the event, I am very happy to do so. She also mentioned Renewables UK, the “dash for gas” and all those sorts of things. We need to have a broad portfolio in order to achieve our 2050 pathway, which is an enormous task. There is no point in saying, “I don’t like that, and I don’t like that”. We have to like it all because we need it, and we owe it to the next generations among us here to provide it. We cannot say, in our own isolated world, that we think this and we think that. We owe it to the next generations to deliver their requirements in a low-carbon, secure-energy framework. That is why I commend these NPSs to the Committee.

[Baroness Smith of Basildon]

I thank the noble Lord for the time and care that he has taken to address many of the questions asked of him today. Perhaps I can press him on one point that I do not think he was able to answer. He said, in response to the comments of the noble Lord, Lord Crickhowell, that he would look at it again and take it back and discuss it with colleagues. If he were to do that and if changes were made to the national policy statement as a result, would that have to go through another round of consultation and another revised document, or could it be inserted as a result of the consultation and before it was put to a vote in the House of Commons?

[Lord Marland]

This matter goes to the House of Commons for a vote, where they can vote. It will happen in the spring. They are perfectly entitled to have amendments put in there for consultation. It may or may not be feasible that the comments of the noble Lord, Lord Crickhowell, will be something that the Government want to achieve. I am happy to explore them with him, as one would with any development of a policy, but whether that would come in this policy, in an attachment to the energy policy or in future national policy statements is another matter. We are trying to achieve what we have set out here in this policy.

Motion agreed.