Offshore Wind Generation (North Wales)

Nia Griffith Excerpts

Wednesday 24th October 2012 Westminster Hall

[Nia Griffith (Llanelli) (Lab)]

I congratulate my hon. Friend the Member for Ynys Môn (Albert Owen) on securing this important debate and, more importantly, on his unstinting efforts to develop a range of energy resources on Anglesey. He has made enormous efforts to harness its unique combination of resources and location to generate electricity and provide much-needed jobs. He recognises that it is never easy to attract new industry and jobs, but the problem is being exacerbated by the Government’s uncertainty and dithering, their lack of a clear industrial strategy, and their tendency to respond with knee-jerk reactions, instead of working with the industry.

My hon. Friend has recognised the unique potential of north Wales to provide energy for the future, whether using marine currents around the coast or the wind to generate electricity. North Wales is well provided with natural resources, which enables it to make a significant contribution to our energy needs while generating much-needed local jobs, using the skill base to which he referred.

The UK is extremely well endowed with wind resource. It certainly has the best resource in Europe, and some estimates suggest that the UK has 40% of Europe’s potential wind power. The north Wales coast certainly has its fair share. To make a success of that renewable energy potential, we need a Government who are wholeheartedly behind the industry, and what industry wants above all else is certainty, consistency and clarity. To make long-term investments, industry needs to know that the Government are not going to move the goal posts.

We understand why the Government make industry nervous. Last year, we saw the utterly disgraceful fiasco of the unilateral cuts in feed-in tariffs. People in the industry understood that the tariffs would be gradually tapered downwards, but, preposterously, the Government suddenly imposed a cut, even before the end of the consultation period, leaving businesses racing to install solar panels before deadlines; provoking difficulties in the supply chain, because manufacturers, fearful of being left with redundant stock, ran down production; and leaving out of pocket self-employed plumbers who had risen to the challenge of green energy and forked out on courses to train themselves up in installing solar panels. Housing associations across Wales were forced to abandon plans to provide solar panels that would have benefited local low-income households, and people lost confidence in what community projects would deliver That was all because the Government chose to push the industry over a series of cliff edges, instead of allowing it to progress down a gentle slope.

In the wake of the lack of consultation on feed-in tariffs, the Government, far from reassuring industry that they will consult properly with it in future, are doing the reverse. Not many people know that on the last day before we rose for the summer recess and, predictably, without any consultation, the Government sneaked out an announcement that they are abandoning the long-standing commitment that public consultations should normally last 12 weeks. It is outrageous to suggest that as little as two weeks, and sometimes no consultation at all, is appropriate for decisions that impact on industry, businesses, trade associations, unions, local government and the public.

So there it is, plain for all to see in black and white: the Government are abandoning any pretence at engagement and consultation. That really is a blow to far-sighted industrialists who want to work with the Government to deliver energy infrastructure. Will the Minister assure us that he intends to work with industry, and that he can influence his colleagues in the Department for Business, Innovation and Skills and in the Treasury to provide the certainty that we need for continued investment in offshore wind? We need to ensure not only that the huge investment that goes into offshore wind farms such as the Celtic array benefits the local work force with the work to construct and maintain the wind turbines, but that the conditions are right for the supply chain and the manufacture of components here in the UK. Unfortunately, there is a lack of clarity, and lack of a clear industrial strategy.

A fortnight ago, with other MPs and AMs from south-west Wales, I visited Port Talbot steel works, where Tata has invested £185 million to rebuild a blast furnace, and £55 million to create a gas-cooling system. During our discussion there, we were reminded that when Dr Karl-Ulrich Köhler, head of Tata Europe, had visited the plant in July, he called on the UK Government to take down obstacles to growth. Dr Köhler said that the £240 million investment in Wales showed the company’s commitment, but that Tata needs Ministers to help

“to remove obstacles that are in our way as far as competitiveness is concerned”.

One point Dr Köhler was referring to was the Government’s decision to impose an unrealistically high carbon floor price. That burden on energy-intensive industries is unique to the UK. It is bad enough ever to impose punitively high carbon floor prices on industry, but to do so when steel manufacturers are struggling to fill their order books, because many of their customers are caught up in the Government’s double-dip recession, is utterly stupid.

We all accept that it is difficult for manufacturing industry to compete with countries that have very cheap labour costs or low environmental standards, but the carbon floor price makes us uncompetitive even when compared with other European countries that have similar standards of living and similar environmental standards. The Government should be working with our fellow Europeans on reducing emissions to create a level playing field, not imposing a burden unique to the UK manufacturing sector.

It is all very well for the Department for Business, Innovation and Skills to claim that it has announced a £250 million package for energy-intensive industries, but that will be spread very thinly, and it would have been better if the Government had not imposed such a high carbon floor price in the first place. Karl-Ulrich Köhler also called on the Government to think about their supply chain more strategically—in other words, to ensure that we provide a domestic market for the steel that we produce. The challenge to the Government is what measures they can take to encourage maximum use of UK-manufactured components in the construction of offshore wind farms.

Colleagues in Tata have calculated that offshore wind turbines can use more than 1,000 tonnes of steel and typically use at least six different types of steel, but that some UK offshore wind developments have only 10% UK content, with all the major steel components being imported from outside Europe. Tata estimates that the UK market for offshore wind will be 4 million tonnes of steel by 2020, and through investments in the UK, Tata Steel has indicated a clear intention to be part of that market. All too often, however, new supply chains present a risk to developers, and they tend to prefer current suppliers in Germany and elsewhere, which means that the UK is nowhere near capturing the full economic benefit of those developments. We certainly do not want a repeat of what is happening in Scotland, where the Scottish National party Government are replacing the Forth road bridge at a cost of £790 million and the consortium building the bridge chose to use 37,000 tonnes of Chinese steel to be fabricated in China, Poland and Spain.

In 2011, the Minister’s predecessor said that in taking forward the next stage of offshore wind development we must ensure that the supply chain jobs come to the UK. Therefore, for continued investment in offshore wind and the supply chain, we really need to know that the new Energy Minister is on the side of industry. It is no secret that he has expended considerable energy campaigning against proposed wind farms in his Lincolnshire constituency, and that, back in 2009, he insisted on regional TV:

“Wind turbines are a terrible intrusion in our flat Fenland landscape. Renewable energy needs to pass the twin tests of environmental and economic sustainability and wind power fails on both counts.”

Is he opposed to all wind farms, or only those in his constituency?

How can I describe the attitude of the new Secretary of State for Wales towards wind farms? To call it lukewarm would be very generous indeed. His antipathy to Gwynt y Môr was referred to by my right hon. Friend the Member for Delyn (Mr Hanson), and the Secretary of State is well known for his scathing comments about the Welsh Government’s TAN 8. Back in 2006, he treated the Select Committee on Welsh Affairs to his views on the Rhyl Flats many times over. Now he has said that he wants to work with the Welsh Government, but he will do Wales no good at all if he greets potential investors in offshore wind with a lukewarm approach.

I hope that the new Energy Minister might now be converted to the cause and that he will go out with evangelical enthusiasm to convert our new Secretary of State for Wales. Sadly, however, with the Secretary of State for Environment, Food and Rural Affairs an advocate of shale gas fracking, and the Energy Minister and the Secretary of State for Wales both seemingly wind farm sceptics, potential low-carbon investors could be forgiven for thinking that the Government are boosting support for the oil and gas industry, throwing doubt on how much support there will be for renewables and undermining the Prime Minister’s pledge to be the greenest Government yet.

Small wonder that a fortnight ago we heard that major green businesses sent letters to Ministers. Siemens, Alstom UK, Mitsubishi Power Systems, Areva, Doosan, Gamesa and Vestas, which together employ 17,500 people in the UK energy sector, say that a lack of decision-making and threats to relax environmental targets have caused them to reassess the political risk of investing in the UK. It is serious stuff when such companies are threatening to go elsewhere and we could lose thousands of new jobs. It would be tragic if we lost new investment in renewables simply because the Government are not only dithering, but backtracking on their supposed commitment to a green agenda. In addition, more than 50 companies and non-governmental organisations, including Microsoft, Asda, EDF and Sky, released a similar letter demanding an end to uncertainty over the direction of the UK’s energy policy and the inclusion of a decarbonisation target in the upcoming energy Bill.

The Minister’s predecessor summarised what we need to do in his article for The Observer this weekend, when he said that

“our future can’t depend on gas alone… Energy security can only be delivered with a mix of technologies… Renewables harness the exceptional resources of these islands… Harnessing our low-carbon potential isn’t just right environmentally, but it is a central plank of energy security… But there isn’t much time left. Decisions on where to invest are being made now. Uncertainty and hostility would undermine the UK’s ability to secure the jobs and economic benefits from the supply chain for those new power plants. And if those companies walk away from the UK, it is a permanent loss and we all pay the price.”

To sum up, will the Minister confirm his unreserved support for the development of offshore wind in north Wales, and state whether those investments will enjoy the full support of his colleague, the new Secretary of State for Wales? Assuming that the mixed messages from his Government have not frightened companies off from investing in renewables in north Wales, will he also tell us what policies he will pursue to keep jobs in the supply chain in the UK—jobs in the steel industry and in the various components industries?