Mike Crockart
Main Page: Mike Crockart (Liberal Democrat - Edinburgh West)
Tom Greatrex
What I learned from the time towards the end of the Labour Government is that a focus on industrial strategy is absolutely key in diversifying our economy, and that the significant increase and activity in the renewable and low-carbon industry, which were happening and are now under threat, resulted from a clear set of signals from the Government. That is what we need from the Government now, but we will not have it unless the target is included in the Bill.
I will make progress, as other hon. Members wish to contribute. Before the interventions, I was touching on some of the points implicit in remarks made by some Government Members about costs and gas. Rejecting a 2030 target will almost certainly lead us to another dash for gas. As I said in Committee and all the way through our consideration of the Bill, gas has an important place in our system. As I have made clear, I do not take an ideological position on shale gas either; it needs to be properly regulated and monitored, but we need to explore what is there before we can know what we can get out of it.
Making simplistic extrapolations from what has happened in the US indicates a bout of wishful thinking, and a hope—and risk—in respect of something that might well not turn out to be the case. We need gas and will continue to need it; it is important for our security of supply and for our being able to deal with peaks in demand. However, the combination of a failure to decarbonise our electricity sector and increased reliance on gas leaves us more exposed to the volatility of that globally traded commodity.
It is essential that there should be diversity in our energy supply even before we consider any of the impacts in relation to emissions and the climate. The danger is that we will be left open to a greater reliance on gas and consumer prices going up even further. Various hon. Members have referred to the increase in cost to consumers, but they know as well as I do that the greatest element of that cost increase in the past three years has related to wholesale energy prices.
Sometimes there are discussions about how far companies properly pass on savings when the costs fall, but over the three years wholesale prices have certainly increased and that is the greatest single part of the increase in energy bills paid by my constituents and those of the right hon. Member for Wokingham and other hon. Members. The target is also vital for that reason.
The problem is the Government’s approach to decarbonisation and how it is characterised in their amendments in Committee. The Government may or may not, at some point in the future that is yet to be defined—it may never be defined or indeed reached—set a decarbonisation target range for the carbon intensity of electricity generation in Great Britain. The definition of carbon intensity itself and the means of calculating it can be changed by the Secretary of State—and, by the way, the Secretary of State can revoke the order. That is hardly the sense of clarity that the amendment seeks.
The illogicality of the Government’s argument is summed up in amendment 52, which the Minister only barely referred to. It would require the Secretary of State to publish an annual report from 2014 setting out how he had met the duty to meet a decarbonisation target. I suspect that that report would be very thin, simply reading: “A target will not be set until 2016. There is nothing more to report—move along now.”
It was not only the Secretary of State who said that he supported a target. The Minister here, the right hon. Member for Bexhill and Battle (Gregory Barker), did so in the recent Westminster Hall debate, saying:
“I see the strong merit of the argument for a decarbonisation target”—[Official Report, 17 April 2013; Vol. 561, c. 124WH.]
But he also said that we should wait to set it. The Minister’s predecessor said in Committee:
“The principle, that it would be useful and of value to set such a target, is established.”––[Official Report, Energy Public Bill Committee, 5 February 2013; c. 489.]
If that is the case, there is no reason why the Government should not at the very least support the amendments that change “may” to “must”. However, as we have heard from the tenor of the Minister’s and some other hon. Members’ remarks, that is not what the issue is about.
The issue is about a deep division in the Government and a damaging and risky outlook that a dash for gas is the best course of action for our energy policy. That is obviously what the Chancellor thinks, but it is not what the Chief Secretary to the Treasury thinks, unless he has changed his mind. The Committee on Climate Change does not think that; nor does industry or the 200 organisations that support the amendment. As I said, the Secretary of State has supported a target and he does not think that either, although he has lost out in discussions with what he referred to as “assertive colleagues”.
There is an opportunity for Parliament to be assertive this afternoon—assertive about security of supply, about jobs and growth, about investment, about clarity of purpose and in our support for the important amendments before us.
Mike Crockart (Edinburgh West) (LD)
I rise to speak with a fair amount of trepidation; I feel like Lord Cardigan, commander of the gallant 600, charging into the valley of death. Half a league onward, as they say. [Interruption.] Yes, some did make it through; I shall hold on to that fact.
I have spoken to many individuals, companies and organisations over the past few weeks and months and asked each of them what they felt was needed in the Energy Bill. To be frank, nearly all of them asked for different things. This is a mammoth Bill trying to do lots of different things and everyone is clear that those things need to be done in the right way.
I have talked to small generators—new entrants to the market. They would like a decarbonisation target, and so would I, but what they would like more is for their route to market to be easier and free from too great a reliance on the big six suppliers—whether that is through a green power auction market or other means. I know that a great deal of work has already gone into this, but it is essential that the Government table amendments that offer a long-term solution and not merely transitional help.
I have also talked to large generators, which are already investing billions of pounds in new infrastructure. They would also like a decarbonisation target, as would I, but what they would like more is for the strike price to be set at a level that gives certainty in their markets and allows them to plan for the next 20 or 30 years and access finance over that time scale.
I have talked to consumer groups, acting on behalf of hard-pressed electricity customers. They would like a decarbonisation target, as would I, but what they really want is a meaningful simplification of tariffs. They want a single, consistent unit price to allow people to compare and immediately identify cheaper alternatives, forcing suppliers to keep prices down, improving competition and making it easier for consumers to switch.
I have talked to companies, large and small, involved in the manufacturing supply chain for renewable energy. They, too, would like a decarbonisation target, as would I, but what they want more is for access to ports to be sorted out or for the tripling of the levy control framework to happen in a controlled and steady way, rather than being backloaded towards 2020, so that their new technologies get a chance to establish themselves and deliver the tens of thousands of jobs that green growth can bring. Small and medium-sized enterprises more generally are most exercised by uncompetitive energy contracts and unfair renewal terms.
I have also talked to community groups, and guess what? They would quite like a decarbonisation target, but what they crave is an increase in the small-scale feed-in tariffs threshold for community energy schemes from 5 MW to 10 MW. The danger is that, as community schemes become more successful, they may hit 5 MW. An increase in the small-scale feed-in tariff limit will ensure that we do not inhibit their development. That is real and meaningful help for community energy schemes, making routes to market simpler and more attractive for them.
What about investors—investment banks and pension funds? Would they like to have a decarbonisation target? Of course they would, but at the top of their shopping list are things such as detailed contract for difference terms that are fit for purpose, a credible contract for difference counter-party that the market can trust and believe in, an easier route to market for independent generators, and no strike-price auctions before the electricity market reform regime has been operating for a number of years and the financial community has grown comfortable with other aspects of the contracts.
Mr Deputy Speaker (Mr Lindsay Hoyle)
We can bide our time on that until we get to that group of amendments.
Mike Crockart
I have been told not to deal with it; I think the direction I was given is quite clear.
Of course I would like a decarbonisation target, but that was not in my party’s manifesto; indeed, it was not in any party’s manifesto. Nor was it in the coalition agreement. In fact, there is only anything about it in the Bill at all because of the efforts of a Liberal Democrat Secretary of State, ably backed up by the present incumbent. Of course I would like more, but as 15% of the coalition Government we cannot always get exactly what we want. [Interruption.] It is 15.5%, in actual fact.
I came to this place from business: a place where making a contract and signing up to it really means something. If one side reneges on that contract along the way, they can expect there to be consequences. We have already seen examples of that in this Parliament. It would be great to see much more of the processes, attitudes and behaviours seen in business than the opportunism, time-wasting and theatrics that we see far too often in this Chamber. Again, however, we cannot always get everything we want.
There are many things I would like to have seen in the Bill, but many more are included that all sorts of organisations want us to get right. For the Minister’s perusal, here is my Christmas list: an easier route to market for independent generators, a strike price that provides certainty in the market, simplification of energy tariffs, the levy control framework to be implemented in a controlled way, an increase in the small-scale feed-in tariffs threshold for community energy schemes, credible counter-party and contract terms that are fit for purpose, and a binding EU-wide emissions reductions target of 50% by 2030. It is not a long list.
Last year—I thank the Secretary of State for this—I got a green deal that is set to support 60,000 installation jobs this year, up from 26,000 in 2012, and a green investment bank investing £635 million in green infrastructure projects. If, at the end of this legislative process, I get everything on my list, I will say thank you again. I am damn sure that I do not intend to be the spoilt child stamping my feet and whining, “But I didn’t get my decarbonisation target,” because, after all, if I got everything I wanted this year, what would I ask for next year?
Dr Whitehead
I trust the hon. Member for Edinburgh West (Mike Crockart) will support a number of later amendments on demand-side reduction and routes to market for independent generators and community energy. He put his finger on some of the problems that several people have been grappling with as the Bill has made its way through the House.
It is very odd that when the Bill first made its way to this House in draft form it had no target in it, and yet it was all about low-carbon electricity, routes to market for low-carbon energy generators, the future of large-scale low-carbon energy and how that might be supported to play a much increased role in our energy mix over the next few years, and how the whole electricity market would be decarbonised over the next period in line with what DECC had previously published as its plans for a radical decarbonisation of the electricity market over that period. The Bill was the embodiment of how those changes would be made—how, over the next period, our energy markets, particularly our electricity market, would radically change how they move forward and how they supply energy to us. The Bill also contains emissions performance standards that reduce the emissions that plant may make, also in line with the decarbonisation of our energy over the coming years.
It is blindingly obvious that a Bill of that kind should have a target at the front in order to underpin all the other things that it is doing. Not having that target is rather like someone carefully strapping a belt around their waist and then sallying forth having forgotten to put on the trousers that the belt was supposed to be supporting in the first place. When the Bill first arrived, the lack of a target was a puzzle to a large number of people. In a sense, the hon. Member for Edinburgh West has started to unpick some of that puzzle. As my hon. Friend the Member for Rutherglen and Hamilton West (Tom Greatrex) outlined, we know from what the Secretary of State has said to the Energy and Climate Change Committee on more than one occasion that he was very keen on having a target in a Bill and was engaged in work on that target, the details of which he could not yet vouchsafe to the Committee.
In fact, the Secretary of State was engaged in discussions with the Treasury about what might go at one end of the Bill and what might be negotiated away at the other end to secure the things that he thought were quite important, relating particularly to supporting low-carbon energy in the way that I have described. The result, as we discovered fairly recently, is the announcement of the extension of the levy control framework from 2015 to 2020, with a figure increasing from the current amount of £2.3 billion to, allegedly, the whopping figure of £7.5 billion in 2020.
We need to be rather careful about immediately jumping for joy about that aspect of the negotiation, because as soon as we unpack the figures we realise that each year the levy control framework takes along with it the accumulated underwriting of whatever has been commissioned in the year before. That means that by the time we get to 2020, the accumulated contracts for difference, or ongoing renewables obligation certificates, that are caught up in the £7.5 billion make up a good proportion of the total. The actual amount of support contained in the levy control framework up until 2020, per year for new entrants—that is the key thing to look at in terms of the development of low-carbon energy, particularly round 3 offshore wind and the like—turns out to be not much more than is being undertaken at the moment. The idea of its ending up at twice the current level is rather belied by the figures in the levy control framework. Nevertheless, the Secretary of State felt that he had got a good deal.
It is not, however, a particularly good deal and it is clear that the inclusion of a target in the Bill was sacrificed. A belt and trousers had not previously been available, but on 5 February—halfway through the Committee stage—the Secretary of State came along with the belt that had resulted from the discussions. As hon. Members have said, as a result of the discussions, although the Secretary of State could not set a target before 2016, he could set a target at various levels that could be considered then. Indeed, the Minister has made great play of the argument that we will need to have all the facts at our disposal with regard to the future state of the universe in order to decide how we might set a target.
A couple of important things need to be considered during the intervening period. First, the gas strategy set out by the Department of Energy and Climate Change over a number of years assumes a relatively low level of gas over the long term and, while it views gas as essential, it sees it as a back up for other, renewable forms of generation. The recent gas strategy includes an option to reverse that approach and puts gas at the centre of a future strategy. It includes gas plants running at maximum capacity, grandfathered for a long period and playing the main role—not the back-up role suggested by the low-carbon strategy exemplified by the Bill—in energy generation.
Explicit within that gas strategy is the need to take a decision in 2014. The strategy specifically says that, depending on what happens in Europe, a decision will have to be made as to whether to increase the carbon target. Accommodating the strategy could therefore result in a target of about 200 grams of emissions per kWh by 2030, rather than the 100 to 150 grams envisaged previously by the Department and endorsed by the Committee on Climate Change. A significant decision might be taken in 2014—way before 2016—which could blow the potential 2016 target out of the water.
Secondly, regardless of the negotiated outcome, the levy control framework has been extended to 2020, but we have not heard what will happen beyond then. There has been no indication of what support might be given to low-carbon energy after 2020. There is a cliff face.