Energy Bill [HL]

Lord Marland Excerpts

Tuesday 8th February 2011 Grand Committee

[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.

[The Lord Bishop of Chester]

Before the Minister sits down, I want to press one of the points I made. Imagine an electricity generating station in Cornwall, generating electricity from this source. Will the Government view this as akin to nuclear generation and offer no subsidy so that it has to stand on its own commercial feet or will it be regarded as equivalent to offshore wind, where there is an ongoing subsidy for the actual units produced?

[Lord Marland]

Giving it a ROC is an incentive to use it. This means that it is in a totally different category from nuclear and therefore fits into the same category as onshore and offshore wind, which also benefit from the same revenue contributions and financial support. I hope that clarifies the point.

[Lord Jenkin of Roding]

Following on from that question, will the Minister confirm that, if there turns out to be a need for a subsidy for geothermal energy in the way discussed, and the subsidy is in the same form as that for onshore and offshore wind, the cost would fall, as with those two generating systems, on the consumer?

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.

[A noble Lord]

My Lords—

[Lord Marland]

May I deal with one question at a time? I cannot multi-task, like women. That will appear in Hansard.

We feel that this is greater than some of the other technology that we use and that it is appropriate at the moment.

[Lord O'Neill of Clackmannan]

I imagine that this will be part of the electricity market review. We cannot keep adding more subsidies provided by often impecunious consumers to the research fantasies of the British generating industry. There has to be some degree of control. One would imagine that the electricity market review, to which the Government are committed, will give proper consideration to this so that we do not have the creeping incrementalism that results in the submerged and disadvantaged groups in the country subsidising such research programmes.

[Lord Marland]

The noble Lord makes a good point. We have been looking at this matter very carefully for the past month or so. There is a framework in place; we have a deep geothermal challenge fund and have been allocating funds towards research. There is a ROC that is currently cast in stone and we are in a very adequate space to take this issue forward. I invite my noble friend to withdraw his amendment.

[Lord Oxburgh]

To answer a couple of points raised by the right reverend Prelate, I should say that 25 years is a perfectly reasonable time, but it might well be 35 years for the life of a field of this kind.

--- Later in debate ---

[Lord Marland]

My Lords, I am grateful for this amendment because it provoked my noble friend Lord Jenkin to use the full majesty of what used to be his office, and probably should be again, to demonstrate clearly the reasoning for this subsection staying in the Bill. I am grateful that we should have the support of no greater or more august figure than the chairman of the NIA itself, the noble Lord, Lord O'Neill of Clackmannan. Both noble Lords gave extremely good reasons for it.

I will explain briefly that the real reason for this change is to remove the power to subsequently modify an approved programme that has the potential to create uncertainty for operators and investors financing significant long-term investments. The key to this is giving long-term investment commitment to those who are investing in new nuclear. I have nothing to add to what the two noble Lords have so aptly said with their greater experience of the subject, and I invite the noble Baroness to withdraw her amendment.

[Baroness Smith of Basildon]

I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Davies of Oldham]

My Lords, first, I am surprised that my noble friend is surprised that the Front Bench has signed the amendment. It would be somewhat remiss on our part if we did not see merits in it. He made an excellent case. What he kindly—for the Government—left out of his analysis of the situation is an actual feature of the national parks and the Broads Authority themselves: their powers in relation to the Public Bodies Bill that is before the House at present. Perhaps the Minister will offer some reassurance on that front. Suffice it to say that one can already see the national parks adjusting to a changed future in terms of the pressures upon them. We all know the particular circumstances of the Broads Authority, which was considered by this House only 18 months ago.

I emphasise the obvious fact that it is a good move to associate the national parks with the same capacity as local authorities. In fact, it seems somewhat surprising that this issue has not been pressed somewhat earlier than this Bill. I congratulate my noble friend on that point. I emphasise to him that we are in full support. I hope that on this constructive amendment the Minister is able to give a rather more positive response than has been the case on the most constructive amendments thus far. I look forward to his reply.

[Lord Marland]

I am not sure that I quite caught the end of that last sentence. Perhaps it is best that I did not. Suffice it to say that I welcome the amendment tabled by the noble Lord, Lord Judd. I am grateful that it should have the support of his Front Bench, which is excellent news. It is not the first time that his amendments have found favour with government. We are obviously extremely disposed to look at this amendment. Unfortunately, the timing was too tight for us to consult as widely as we wanted with the national park authorities before introducing this Bill, so we have to do that. Of course, like the noble Lord, I welcome their ambition to generate electricity on their own land and support that commendable ambition. With that in mind, and knowing that we will give this amendment consideration in coming days and months, I—

[Lord Deben]

My experience of working with the national parks was not anything like as cheerful as that presented by the noble Lord, Lord Judd. In many cases, the national parks have not been helpful for enterprises within them. I hope that when he talks to the national parks, he will make it clear that he wants them to make it as easy as possible for others within national parks to generate electricity and that this will not be another occasion for the national parks to make it extremely difficult for anybody who is not themselves to do things within their areas.

[Lord Marland]

I note what my noble friend Lord Deben says. If we are going to look at the national parks and what they will do with their microgeneration, we should obviously encourage them to practise as they preach, which I think are the words he is looking to hear from us. With that in mind, I hope the noble Lord, Lord Judd, will withdraw his amendment.

[Lord Judd]

I thank the Minister for that encouraging and warm response. I am sure it will be noted by everybody and bodes well for the future. We look forward to what he brings forward at a later stage on the Bill, because he has indicated that he will respond to this. That is great. I say to others who have intervened that we should not tilt at windmills. I see no evidence whatever of the danger or the prospect to which the noble Lord referred. By contrast, I am very much encouraged by the Minister. I beg leave to withdraw the amendment.