Energy Generation

Tom Greatrex Excerpts

Wednesday 17th April 2013 Westminster Hall

[Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr Gray. I congratulate the hon. Member for St Ives (Andrew George) on securing the debate. As is his habit, he gave a comprehensive account of the issues, many of which other hon. Members were seeking to add to the debate. He rightly made the point about the time pressure in respect of the Energy Bill. Members of the Bill Committee know that we need to return to a range of issues and it is important that we have adequate time on Report if we are ever to get to them. Even in this debate, a number of hon. Members have been unable to speak or have had to truncate their remarks on a fundamentally important issue.

It is always a pleasure to stand opposite the Minister, although I am slightly disappointed that the other, new, part-time Energy Minister—the third Energy Minister in six months—is not here, because his other part-time responsibility is in the Department for Business, Innovation and Skills, and publications coming out of that Department have highlighted the important role that decarbonisation and the green, low-carbon economy needs to play in having a target and a direction for the future.

[Mark Reckless]

Will the hon. Gentleman give way?

[Tom Greatrex]

I am tempted not to, because the hon. Gentleman came into the debate late, but I will. I am more generous than I should be.

[Mark Reckless]

Some are concerned about the extent to which decarbonisation and the green agenda are pushing up electricity prices. The shadow Minister says that he is keen to have sufficient time to discuss all the issues on Report, so would he support having two days on Report?

[Tom Greatrex]

I am glad that I gave way, because the hon. Gentleman is right on that point. Significant time needs to be given to these matters, because a range of issues must be discussed, and this is just one. He has talked previously about other issues covered in aspects of the Energy Bill—not directly on this point—and I am sure that he would want to contribute. I hope that the Minister and the usual channels have heard his concern.

I have mentioned the other responsibilities of the new Energy Minister. The hon. Member for St Ives rightly focused on the business case, and the jobs and growth case, for the decarbonisation target, but there are other strong arguments. My hon. Friends the Members for Brent North (Barry Gardiner) and for Southampton, Test (Dr Whitehead) made the climate arguments. There are also important security-of-supply arguments about why this is sensible.

The hon. Member for St Austell and Newquay (Stephen Gilbert), the close geographical colleague of the hon. Member for St Ives, is sitting slightly apart from the rest of the Liberal Democrat Members today, and he is the only Liberal Democrat in the Chamber who had the opportunity to ensure that this target was in the Bill. We debated the matter in the Energy Bill Committee and he and another colleague chose not to vote for his party’s policy. I hope that the number of Liberal Democrats who are here this afternoon is indicative of the fact that those who are not encumbered by ministerial or Parliamentary Private Secretary posts will support that policy when the opportunity to support the cross-party amendment comes in due course, although their party’s policy was not in the manifesto, but was agreed at their party conference in October, when the Bill was under way and under discussion in pre-legislative scrutiny.

[Andrew George]

Neither was it in the Labour party manifesto. Rather than trading points, I want to speak on behalf of my hon. Friend the Member for St Austell and Newquay (Stephen Gilbert), because he cannot speak in this debate, and say that we should ensure that this agenda is shared across all parties. It is led, as the hon. Member for Rutherglen and Hamilton West (Tom Greatrex) knows, by a Conservative Member. Although I cannot speak for the Conservatives, there is an economic agenda in favour of decarbonisation. That needs to be emphasised at this stage and we need cross-party consensus for it.

[Tom Greatrex]

The hon. Gentleman is right to make that point, as he did in his speech and as other hon. Members have. My remark about his colleague was just to make it clear to those who were not on the Energy Bill Committee that there was an opportunity to put that target in the legislation, but sadly it was missed. That could have been done, but those with the opportunity chose not to do so. I hope that, on reflection, we will get to a better position and a better decision on Report.

Members of the Energy Bill Committee have dealt with a number of similar issues that the hon. Member for North Warwickshire (Dan Byles) touched on. He mentioned targets, including in other countries. I am sure that he is as aware as I am of the targets in Denmark—the 2035 target for all electricity and heating production to be fossil fuel free; in Austria, in relation to low-carbon energy by 2050; and in Germany, in relation to 50% of electricity generation in 2030.

It is not strictly accurate to suggest that there are not targets elsewhere in Europe and across the world, because those countries are seized of the growth and job opportunities that come with the imperative to decarbonise the power sector. Those of us on the Energy Bill Committee heard repeatedly—others will have heard this in subsequent letters—that business is seeking clarity of purpose beyond the scope of this Government and of this Parliament and the next, towards 2030.

My hon. Friend the Member for Brent North was right to address the levy control framework, but the hon. Member for Angus (Mr Weir) was also right to mention the time it takes to make some of those decisions. There are serious, big decisions that have not yet been made, such as on the memorandums of understanding that have been signed on siting offshore wind fabrication facilities in the UK. Part of the reason why the final decision has not yet been taken on that is the fact that the global companies involved, which have to make a case to their international boards, are not convinced that they have the clarity to be able to say that there will be a market. The only way we will bring down the cost of offshore wind is by having scale, and the way to do that is through manufacturing. There are strong business threads throughout the debate.

[Ian Swales]

Does the shadow Minister agree that it is not just climate that companies are interested in? Although climate is obviously an important overall consideration, the companies want their specific arrangements to be grandfathered when they decide to invest.

[Tom Greatrex]

I agree. We are grappling with the legislation because we do not know the detail of how that will operate. Again, in Committee we received assurance from the then Minister of State, Department of Energy and Climate Change, the right hon. Member for South Holland and The Deepings (Mr Hayes), that that will be forthcoming, but it has not yet emerged. Not only can we not scrutinise it, but the companies, to which the hon. Member for Redcar (Ian Swales) was going to refer before he had to truncate his speech, cannot.

Finally, Ministers speak about setting a decarbonisation target, as the Deputy Prime Minister did on the very afternoon that we moved amendments in Committee that the Liberal Democrats failed to support, but that is not to say that this is about setting a target. As others have said, it is about the power perhaps to set a target. The Government may set a target, but they might not. The longer this goes on, all we are doing is storing up lack of certainty, which means that the costs will not necessarily come down as fast as they might and that we cannot get the benefit of jobs and growth from the shift to the green economy that is happening—and it will have to happen in any case.

[David Mowat]

It is right that the costs need to come down, and, of course, activity will drive down the costs. There is a school of thought that says that excessive subsidies stop costs coming down, but I accept that costs need to come down. Does the shadow Minister accept that these are global industries and that global activity, not just UK activity, is what will drive down costs?

[Tom Greatrex]

There is activity in other parts of the globe, and these are global companies making global investment decisions. To get the costs down we need scale, and to get scale we need manufacturing. That manufacturing will not happen without the sense of a long-term trajectory in that part of the energy sector in this country.

I am conscious that I am about to run out of time, but I hope that we get the opportunity on Report to debate the issue fully. I am sure that the cross-party amendment will draw a degree of support from across all parties, as has been demonstrated this afternoon.

--- Later in debate ---

[Gregory Barker]

Quite right. I stand corrected. Although I am blowing my own trumpet, the hon. Member for Rutherglen and Hamilton West (Tom Greatrex) chided my Department for its turnover in Energy Ministers. Coming from the Labour party, that is a bit bleeding rich. Under the previous Administration, there was a revolving door on the Department. I think I am now the longest-serving Energy Minister since the previous Conservative Administration—

[Tom Greatrex]

Will the Minister give way?

[Gregory Barker]

No, I will not, I am afraid. I greatly welcome the closer alignment with the Department for Business, Innovation and Skills. I cheered the last Government when they created a separate Department of Energy and Climate Change. It is a good thing, but it must also be a good thing, as he pointed out, to have much closer alignment between BIS and DECC. The appointment of my right hon. Friend the Member for Sevenoaks (Michael Fallon) to the important job of Energy Minister, much as it will stretch him, sends a clear signal about the central importance of the low-carbon economy to British growth and our long-term growth prospects, as the Prime Minister said and every Member who has spoken in the debate has pointed out. The CBI supports the agenda, and there is wider support for the low-carbon economy that goes way beyond certain renewable energy technologies. It offers export and other business opportunities requiring little or no subsidy, and it has a great deal of its own momentum.

We will return to the decarbonisation target when the Bill returns to the Commons on Report after the Queen’s Speech. I know that some hon. Members have argued that we should go further and set a target now, to provide greater certainty to investors. I understand that argument—I listened carefully to the contributions made in the evidence session before the Bill Committee—and I see the strong merit of the argument for a decarbonisation target. That is why we are introducing measures in the Bill to create such a target. However, we must also resist the temptation to think that life is about targets. Surely, we learned our lesson under the last Government. Simply setting targets does not deliver results. If this Government are about anything, we are about deployment, results and driving real change in real time, and our record demonstrates that we are capable of doing that.

As we set out in the carbon plan in December 2011, it is likely that, as well as decarbonising electricity generation, meeting our 2050 target will require the electrification of a significant amount of heat and transport in the UK. In turn, that will not only affect overall demand for electricity but require us to take into account when that electricity is needed. For instance, when will people want to charge electric vehicles? Heat demand changes seasonally and over the course of a single day. All those things must be taken together when we consider the best way to decarbonise electricity as part of a least-cost route to meeting our obligations under the Climate Change Act 2008.

The second reason why I believe we should wait to set a target range is that we do not need to do so now. As I have said, we have provided clear signals to investors via a range of different initiatives, legally binding targets and the action that we are taking through the electricity market reforms in the Energy Bill. They have prompted the director of the CBI to say that the Bill sends

“a strong signal to investors that the Government is serious about providing firms with the certainty they need to invest in affordable secure low-carbon energy.”

That is what we are doing.

This must be seen in the context of the Government’s wider plans. The green investment bank is now investing billions of pounds in our green economy and catalysing billions more. I appreciate that hon. Members have focused on one element, but the wider package is extremely ambitious and encouraging.