Luciana Berger
Main Page: Luciana Berger (Liberal Democrat - Liverpool, Wavertree)
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
The Minister raised a number of issues. I wish to focus on his points about demand reduction and community energy, before handing over to other hon. Members who wish to speak on this group of amendments.
Let me begin by saying how wonderful it is finally to hear what the Government propose to do about reducing demand for electricity. When the Bill was first published in May last year, many industry experts rightly observed that there was a gaping hole where the answer to that question should have been. We spent many hours in Committee and on Second Reading discussing and debating how we generate energy, but not how we could use less of it in the first place. A fortnight ago, the Government produced new clauses 11 and 12. I will come to their merits in a moment, but first I must tell the Minister that these proposals should have been brought forward much sooner. I know that the right hon. Gentleman agrees with me about that, because when we debated the need for demand-side measures in Committee at the end of January, he said:
“There can be no proper discussion and scrutiny of electricity strategy or really forward-looking ambitious Government energy policy without the inclusion of our plans for demand reduction.”––[Official Report, Energy Public Bill Committee, 29 January 2013; c. 345.]
He was absolutely right. It was challenging, however, that the Government did not have any demand reduction plans in place at that time.
Martin Horwood
Has the hon. Lady not noticed the launch of the green deal, which is possibly the most significant energy efficiency initiative in British history? I have to say that, for those of us who remember the chaotic system of energy efficiency grants that existed under the last Government, it compares extremely favourably with them. I think she is being a little ungracious about this Government’s energy demand reduction strategy.
Luciana Berger
We wanted properly to scrutinise the Government’s plans in Committee. We have only recently had the opportunity to do so, and we have just heard what the Minister said. I remind the hon. Gentleman that pay-as-you-save efficiency scheme pilots were started under the last Government. We are waiting to see exactly how the green deal is doing. We await the Government’s figures, and we expect to see them at the end of June.
During pre-legislative scrutiny, the Energy and Climate Change Committee concluded that Ministers were failing to give enough priority to demand-side measures. As I have said, we still had no firm proposals on Second Reading. In Committee, the Minister would not confirm whether the Government would definitely seek to include demand reduction amendments in the Bill once his consultation had concluded. Now, at long last, we have the results. We received them two weeks before Third Reading and a year to the day since the Bill was first published.
The Minister has now said that he is minded to pilot measures to reduce electricity demand through the capacity market, and we welcome that step. However, the Government’s own response to their consultation accepted that that course of action still presented a number of uncertainties. A number of questions remain unanswered. I am sorry that the Minister will not have an opportunity to answer them, but I would be happy to give way if he would like to intervene on me. It would be helpful to know, for example, exactly how the pilots will work and by how much the proposals will reduce electricity demand. Those are currently complete unknowns.
The Government’s forecasts from before the new clauses were published showed that current policies would reduce electricity demand by 59 TWh in 2018 and by 68 TWh in 2030. That energy saving would be dwarfed, however, by an additional 92 TWh of untapped potential saving that could be achieved by 2030, according to analysis by McKinsey. That could be the equivalent of a 25% reduction in total electricity demand, representing a colossal saving. It is unfortunate that the Minister could not share with us the Government’s estimate of by how much the capacity market could reduce electricity demand over the same period.
Many people have also raised serious concerns about how effective the capacity markets can be in rewarding energy saving. In the United States, for example, a similar policy in Massachusetts resulted in energy efficiency projects receiving just 3% of total capacity payments. Despite complex design, 70% of capacity payments went to existing fossil fuel generation instead. Were the Government aware of that scheme? If so, what lessons have they learned from it?
The way in which new clauses 11 and 12 are drafted provides the mechanism for pilots to happen, but they do not offer any further detail. I listened carefully to the Minister’s remarks, but there were a lot of gaps. The proposals do not specify what measures will be piloted, or whether more than one measure will be trialled. We are no clearer, following his remarks, as to when the Government are planning to launch the pilot or when they expect the first capacity auction to take place.
Gregory Barker
We are expecting to run a capacity market trial in 2014. We expect the pilot for energy demand reduction to be run then as well. We will be providing further details.
Luciana Berger
I thank the Minister for his intervention, and hope he will lay before the House the rules governing those auctions so that we can properly scrutinise them. We hope they will be forthcoming.
I was disappointed by the Minister’s response to the amendment proposed by my hon. Friend the Member for Southampton, Test (Dr Whitehead). I echo the Minister’s words that my hon. Friend, as the whole House will know, has long-standing expertise and considerable experience in this area. His amendment 35 would require the Secretary of State to establish
“a scheme…to make payments for the purpose of rewarding…energy saving measures”
and to do so “within one year” of this Bill becoming law. That would introduce clear, simple payments for households and businesses, and it could start immediately, with no wait for a capacity crunch to trigger an auction. I understand that the majority of respondents to the Government’s consultation favoured a premium payment option along those very lines, but we did not hear from the Minister the rationale behind the Government’s decision to reject that option and favour instead incentivising demand reduction through the capacity market.
Let me touch briefly on amendment 47, also proposed by my hon. Friend the Member for Southampton, Test, which would establish a green power auction market, or GPAM. This would combat a significant issue. The UK needs to invest £75 billion in new renewable generation by 2020. Analysis of DECC’s own figures has shown that the Government are currently relying on 35% to 50% of this investment being delivered by independent renewable energy generators, or the “disruptive new entrants”, as the Minister referred to them on a number of occasions. Their current route to market is dependent on long-term purchase power agreements with the big six. A green power auction market of the kind my hon. Friend proposes could open up the market to new suppliers, increase competition and potentially deliver a cash saving to consumers of £2 billion. Although I welcome the Minister’s saying that he wants to address this sector and that a real issue is at stake, I sincerely hope that a viable solution, which he said would be forthcoming, is in place in time for the allocation of the first CFDs in 2014.
I conclude by dealing with our amendment 1 on community energy, which stands in my name and those of my right hon. Friend the Member for Don Valley (Caroline Flint) and my hon. Friend the Member for Rutherglen and Hamilton West (Tom Greatrex). Speaking as a Labour and Co-operative Member, I am very proud to speak to this amendment. It would appear that the Minister and I agree that community energy schemes deliver enormous benefits to our country. They bring diversity, resilience and security to the energy market. They boost our economy by attracting new sources of investment, and they help to tackle fuel poverty through a strategy for generating and saving energy that is owned by local people.
I recently saw that first hand when I visited Brixton Energy, an award-winning solar project run by Repowering South London. It is the UK’s first inner-city co-operatively-owned energy project, and I urge hon. Members to pay it a visit if they have not already had the pleasure. As well as offsetting 28 tonnes of carbon every year, the project is providing invaluable work experience opportunities for young people. There are many other fantastic community energy projects throughout the country: Westmill wind farm co-operative in Oxfordshire, Neilston community wind farm near Glasgow and the Lochcarnan community wind farm—the list goes on. There is a risk, however, that as drafted the Bill could stop these types of larger community schemes ever happening again. That is why we need to amend it today.
The Secretary of State has said that he
“wants nothing less than a community energy revolution”,
but those words ring rather hollow when we examine how this Bill fails to address how community energy schemes can compete with large-scale commercial generation. The issues have been well summarised by Cornwall Energy, when it said that the high degree of technical knowledge needed to participate in the system is a barrier for many smaller generators, and that the proposed CFD system does not compensate smaller generators for the lower market prices they receive for their power. With the end of the renewables obligation, the Bill provides no incentive for suppliers to purchase renewable electricity from independent generators.
Katy Clark
I congratulate my hon. Friend on the way in which she is putting forward her case. She will be aware that many of the successful community generation projects—those that really laid down the way forward—were in Scotland, and particularly in the island communities where there is a very strong sense of community and a wish to have a sustainable future. If we look around Europe, we find that this is also very common—in Germany, Scandinavia and Greece, for example. Does my hon. Friend agree that we have fallen behind in this area?
Luciana Berger
We need to see urgent action in this regard. Other countries are forging ahead with numerous locally generated schemes, and we ought to have as many, if not more.
Caroline Lucas
I certainly support the amendment, but I wonder why the hon. Lady limited the threshold to 10 MW. The Energy and Climate Change Committee talked of 50 MW, and many non-governmental organisations have talked of more than 10. I think it would be useful to convey the idea that “community” means more than just “small”.
Luciana Berger
If the hon. Lady looks at the amendment, she will see that it refers to
“not less than 10 megawatts.”
It does not limit the threshold to that level.
I listened carefully to what the Minister said about his commitment to “active consideration”, a phrase that he used many times. He used the same phrase when we discussed a similar amendment in Committee four months ago. If the Government really want to deliver the community energy revolution to which the Secretary of State has referred, actions must speak louder than words. The hon. Member for Edinburgh West (Mike Crockart) expressed his support for community energy, and I hope that he will join us in the Lobby to support amendment 1. Unfortunately, the hon. Member for Beckenham (Bob Stewart) is no longer in the Chamber, but I noted his aspirations for community-generated energy in Bromley, and I hope that he, too, will join us in the Lobby.
I urge Ministers to support our amendment, and I urge the House to divide on the issue if they will not do so.
Andrew Percy
No, I will not give way. There are very concerned people who feel very disempowered with respect to the planning process because of the march of onshore wind. That has to be taken into account. I am not prepared to vote for something that would say to my constituents, “Whatever your view is, it doesn’t matter. We have this target and we have to deliver on it.”
I think about the public inquiry at Saxby Wold, at which I spoke only a few weeks ago. I got a clap from local residents; it is not often that Members of Parliament get clapped by their constituents. I spoke for my constituents who said clearly that they did not want an ever-increasing march of onshore wind turbines. I also think about the residents in the towns of Winterton and Broughton and elsewhere. Just this weekend, I was informing them about the proposed development in the Ancholme valley of yet more wind turbines—an area that has already hit its 2020 targets.
So please do not present those of us who oppose the target as anti-renewable. We are pro-renewable, but we want a balance and a sensible energy policy that gives the people most affected by the changes a real voice in the process. That is why I will support the Bill. Perhaps in a year, two years or three years, we will be able to support a decarbonisation target. However, the CCS technology is not yet there and I am not prepared to say to people in my constituency who work in the industries I mentioned that they should be put out of work for a vague target that somebody has plucked out of thin air.
Question put, That the Bill be now read the Third time.