Contracts for Difference

Mark Garnier Excerpts

Tuesday 3rd September 2024 Commons Chamber

[Mark Garnier (Wyre Forest) (Con)]

I am grateful to the Secretary of State for the timely advance sight of his statement. I would like to put on record that Members on the Opposition Benches welcome the success of the contracts for difference allocation round 6. The Secretary of State is right to be proud of that achievement by the Government. It is to be celebrated that we, as a country, are creating an extra 131 clean energy projects that include 5 GW of offshore wind farms and 3 MW of floating wind.

The Secretary of State will be grateful to the previous Government for setting up the details of auction round 6 last November. The previous Secretary of State recognised the problems of AR5 and the price set for offshore wind—a price that was set before a round of inflation that made the CFD strike price cap too low for the producers. By the way, this was not just a UK problem; it affected other projects for offshore wind around the world. Increasing the strike price by around 60% to the current AR6 price of £73 has been crucial to securing the current success. Of course, in addition, the previous Government had many other successes. In 2010, just 7% of our energy needs were supplied by renewables. Today it is nearly 50%. This has come from many initiatives, not least bringing in the contracts for difference auctions in 2014 and making the auction process an annual event—an initiative that was learnt from AR5 problems.

It would not be fair to ignore the contribution by the new Secretary of State. As he said, he has increased the pot for this year’s auction by 50%. While that is welcome—frankly, who would not welcome more renewable energy—that does not tackle our energy issues. At the same time as increasing renewable energy production, the Government are decreasing UK gas production. The UK needs reliability of supply of energy, but we all know we cannot predict with any certainty when the wind will blow and the sun will shine. That is why we need baseload, dispatchable energy that can supply the energy needs of our homes and economy.

We recognise the importance of investing in renewables to deliver clean energy, and the 9.6 GW announced today is a brilliant step in the right direction, but given these successes, and his self-declared success today, why does the Secretary of State plan to saddle the country with billions in debt to fund Great British Energy? In previous months, he may have answered that question by saying that the purpose of GB Energy was to cut energy bills by £300. However, we note that his promise to cut energy bills seems to have gone missing, much like the winter fuel payments of 10 million pensioners.

Despite the Secretary of State’s pledge, and that of many hon. Members on the Government Benches, he will be aware that energy bills are in fact going up. Can he confirm when bills will fall, and by how much? Pensioners are not the only ones being impacted by this Government’s ideological energy targets. As I have already mentioned, the Secretary of State banned new oil and gas, which will cost 200,000 oil and gas workers their jobs. Research conducted by the industry predicts that that move will see tax revenues from that industry fall by £13 billion by 2030.

The Opposition welcome the Secretary of State’s ambition to make sure that the jobs created by the transition are located in Britain, but, at this stage, the majority of jobs in the solar and wind sectors are located in China. What steps is he, as the current Secretary of State, taking to ensure all the jobs created through AR6 are located in Britain? He has already made a bit of a habit of riding roughshod over the concerns of local communities, approving developments without regard to the concerns of local communities. These decisions will see some of Britain’s green belt and best agricultural land developed. Will the Secretary of State confirm what share of today’s investment will take place on the green belt? What protections is he putting in to protect the green belt?

The Secretary of State has spoken at length about the need to overcome challenges facing the grid. In Government, we delivered a 500% increase in the amount of renewable energy connected to the grid, but we recognised that so much more needed to be done. What steps is the Secretary of State taking to support this further increase? Has he investigated undergrounding? What plans does he have to protect the countryside from more pylons?

I note that the Secretary of State today recommitted to decarbonising the grid by 2030. We have previously warned him of the risks of being over-ambitious, which include leaving families facing the cost. It is not only the Opposition who have warned him of that—Chris Stark, his newly appointed head of mission control, once described the 2030 target as “over-ambitious”. Will the Secretary of State please share exactly what his head of mission control believed to be over-ambitious about a 2030 decarbonisation target? His head of mission control also warned that it was entirely fair that people are concerned about the cost of decarbonising by 2030. Will the Secretary of State confirm that neither taxpayers nor bill payers will be left with the cost of the 2030 target? Will he tell the House when we will see a proper, comprehensive estimate for the full systems costs of his decarbonisation plans for 2030?

In conclusion, the Opposition welcome the fact that the Secretary of State has built on our successes in boosting renewable energy. However, we hold serious concerns about what this round will mean for Britain’s green spaces and whether, given the increased cost of AR6, his commitment remains to cut bills by £300.

[Ed Miliband]

I congratulate the hon. Gentleman on his elevation since the election. I look forward to our exchanges in this House. I say him to gently that the crucial first phase of Opposition, in my experience, is having a bit of humility to admit where they have got things wrong. I do not deny that some of the things that the previous Government did were right, but quite a lot of what they did was wrong—for example, the nine-year ban on the cheapest, cleanest form of power, the blocking of solar projects across the country and the crashing of the offshore wind market, which led to the worst energy bills crisis in generations. That is their legacy, and at some point some of the leadership candidates will have to face up to that.

Let me deal with the hon. Member’s specific points. If I may say so respectfully, I feel like he answered some of his own questions. He draws attention to the fact that energy bills are rising from 1 October. He is right about that, and that is deeply regrettable. Why is that happening? Because we are exposed to international gas markets. This is about power that we do not control. Every solar panel that we do not put up, every onshore wind turbine that we do not erect, and every piece of grid that we do not build leaves us more exposed. The Conservative party is in a dilemma on this, because it is facing both ways, but it has to face up to that fact. Of course we will have a proper and orderly transition in the North sea, keeping existing fields open for their lifetime and having a just transition for the workforce, but the idea that the Conservative party and some of its erstwhile friends are clinging to—that fossil fuels will get us out of this—is completely belied by all the facts and the crisis that we went through.

The shadow Minister says—and I agree with him—that we need to have jobs in this country. He says it as if he finds it hard to remember who has been in power for the past 14 years. It is terrible, he says, that everything is being produced elsewhere. He is right. Germany has almost twice as many renewable energy jobs per capita as the UK. Sweden has almost three times as many, but, most interestingly, Denmark, with its publicly owned energy company, Ørsted, has almost four times as many.

The hon. Gentleman asks about Great British Energy. We will debate that matter on Thursday, but one reason why we went to the electorate on this point and were endorsed on it is that, unless we have a publicly owned national champion, all the evidence is that the jobs will go elsewhere. That is part of having a basic industrial policy.

The hon. Member talks about solar energy, but, again, he has to make up his mind about where he is on this. He says that he agrees that we need clean energy in this country, and that we have to get off the international gas markets, but the problem is that the Conservatives duck every difficult decision. Then he asks about undergrounding. The Conservatives were in power for 14 years, so they had plenty of time to do the undergrounding of all the cabling. Why did they not do that? It is because they know that it is multiple times more expensive. Now they come along, less than two months after the general election, and say that it is time for some undergrounding of the grid. For goodness’ sake! I have experience of being Leader of the Opposition. Perhaps it is time for the Conservatives to have some private tutorials on how to be in opposition.