Energy Generation

Debate between Tom Greatrex and Ian Swales

Wednesday 17th April 2013 Westminster Hall

[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.

Biomass Power Generation

Debate between Tom Greatrex and Ian Swales

Wednesday 20th March 2013 Westminster Hall

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

It is a pleasure to speak under your chairmanship, Mrs Main. I congratulate the hon. Member for Selby and Ainsty (Nigel Adams) not just on securing the debate, but on the comprehensive way in which he dealt with the issues in relation to biomass. To start with, he is right to make the distinction between biomass and biofuels. The Minister, I am sure, will recall that on 6 March we engaged in the discussion on the Renewables Obligation (Amendment) Order 2013. Certainly the hon. Member for Brecon and Radnorshire (Roger Williams) was present as well. I do not know whether anyone else here was. Possibly the hon. Member for Redcar (Ian Swales) was; I am not sure. The debate touched on a range of issues, but it focused particularly on biomass and biofuels, and I did reflect that there was sometimes in that discussion a degree of confusion and overlap between what people were talking about, so the hon. Member for Selby and Ainsty was right to make the distinction between the two at the outset of today’s debate.

This debate is important. I am conscious of the time and I do want to give the Minister time to respond to the wide range of points that have been made during the debate—some specifically on biomass and some slightly more wide-ranging—but I just want to reflect on the point that the hon. Member for Selby and Ainsty made in relation to the perhaps liberated comments made by the soon-to-be former chief executive of Ofgem when he talked about the capacity crunch recently. While not wishing to disrespect that opinion, I am sure that he will be aware that there are a number of different views about what the level of capacity will and will not be. That is one scenario, but it is important to highlight that similarly expert commentators have painted other scenarios. We need to reflect on them all, to see where we are going with our wider energy policy.

The hon. Member for Redcar referred to the decisions announced today on carbon capture and storage. I was interested to hear the Minister’s response, particularly on the two projects that were not included in the announcement in the Budget today. If we are serious about CCS, we need to ensure that we get the long-term support regimes—such as those we are discussing in the Energy Bill, which is awaiting its Report stage—right. That will ensure that those two projects—and the Hatfield project, which was not successful in the New Entrants Reserve 300 funding scheme, because it did not get the go-ahead for match funding from the Treasury—are not completely lost and that we do not lose opportunities in those areas and in the export potential of our technological and academic lead in the industry.

The hon. Member for Thurrock (Jackie Doyle-Price) talked about the power station at Tilbury, the impact it has had and its contribution to the national grid since its very recent conversion. She also made an important point about the cost of grid connections. It is about not only the financial cost, but the time it takes energy sources to be connected to the grid, particularly in the less populous parts of the British isles. There are complications, and concerns about the time some sources take. Her important points add to the case for making biomass part of the balanced mix, particularly because, as is sometimes described, it can be used during a transitional phase, while other sources are developed further. I do not think that biomass is completely ideal, but we do not live in a completely ideal world and we have a significant energy challenge to meet over the next few years.

The hon. Members for Hexham (Guy Opperman) and for Montgomeryshire (Glyn Davies), who do not necessarily have negative perspectives, drew attention to some areas of concern with biomass. They both pointed out that they are not opponents of biomass, but they wanted to draw the House’s attention to some of its consequences. I shall pick up from where the hon. Member for Hexham left off. I do not do so as some sort of “bourgeois liberal”, “chi-chi” commentator or whatever other phraseology the Minister uses to keep those behind him happy in debates, but from the serious perspective of the potential consequences for other industries. I am sure that the Minister will recall that I touched on the specifics when we discussed the topic in Committee.

I discussed some of the consequences with my right hon. Friend the Member for Stirling (Mrs McGuire), who is a colleague of the hon. Member for Hexham on the all-party group on the wood panel industry. The issue is what is, and is not, waste. We hear a different interpretation of waste when we talk to the wood panel industry, as opposed to when we talk to other industries, such as the furniture industry. There needs to be a decent level of engagement between the Government and the industry, because they have different data that show very different things—the impact on price is just one factor that needs to be explored properly. The Minister said earlier this afternoon that he intended to ensure that there was that level of engagement. It is important because anyone’s starting point with biomass is that it needs to be sustainable and focused on genuine waste products—products that cannot be used in any other meaningful way, such as in furniture or in the wood panel industry, which can use lower-grade wood than the furniture industry. I am sure that he is well aware of those points.

[Ian Swales]

The hon. Gentleman is right to flag up the differences in data. Is he aware that the Renewable Energy Association says that there has been a 15% fall in wood prices in real terms since 1996?

[Tom Greatrex]

Indeed, and I was about to quote from its figures. The hon. Gentleman is right and he makes the point about the different interpretations. In debates about different aspects of energy policy, sometimes differences of view are over-interpreted and elaborated on by people with an ideological objection, which is regrettable. In this case, if we go into the detail of the different sets of data, to establish exactly what the impact is, it would be good for the industry and good for the energy supply going forward.

The last time we discussed this, in a Committee, I asked the Minister some questions. He gave a commitment, but he did not answer other questions precisely or completely, so I would like to give him the chance to do so, because there is a slightly different audience this afternoon. When he met the all-party group, he agreed to write to generators requesting information on their biomass sourcing intentions for the next five years. I want to press him again on whether the correspondence has begun and whether the information is back from the generators. They are important data, particularly, as he knows, in relation to the differentiation between imported and indigenous supply, which brings us back to the points the hon. Member for Hexham made about the industry.

The Minister said that he will look again at the option of differentiating support for imported and indigenous products. Will he come back to that point? He also said that he would establish a working group with the wood panel industry and that the letters would go out before the end of the month. We are not quite, but almost at the end of the month, and he made the commitment at the beginning of the month. Has he been able to do it yet?

Energy Market Reform

Debate between Tom Greatrex and Ian Swales

Wednesday 24th October 2012 Commons Chamber

[Ian Swales]

I thank the Minister for that approbation. Such investment is all good news, but to encourage new investors, especially green investors, we need clarity of policy, simplicity of policy and, above all, certainty of policy over the long term. Any arrangements made must be grandfathered over the period of a project. I wish to say a bit more about green investment, because one of the key features for investors is political risk. Gyrations in policy have seriously damaged the nascent biofuels industry in the past decade, and we must remember that policy can emerge independently in both Westminster and Brussels. Without giving too much encouragement to hon. Members sitting behind me, I believe that we must sometimes stop the change and the conflicting policies emerging from over the water—we are dealing with one such policy on biofuels right now.

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

The hon. Gentleman mentions Brussels, and he, like me, is a strong supporter of carbon capture and storage technology; I not sure whether he was about to make some remarks about it. Given what he has just said, does he share my concern about today’s suggestion by his Lib Dem MEP colleague Chris Davies that the NER300 money that was supposed to be available for potential UK CCS projects is now not going to be available? Chris Davies said:

“Carbon capture and storage blocked. UK to lose out on €600 million”

and that this

“is a major defeat for Lib Dems”.

Does the hon. Gentleman share my concern about that? Does he want the Minister to respond to it?

[Ian Swales]

The shadow Minister is raising an issue that I knew nothing about. If he is right, that does sound disappointing. However, I need to go away and look at the details.

Not dealing with long-term political risk will make potential investors simply go away. Alternatively, they will charge a huge risk premium, which may in turn make many schemes not viable. The recent whispering campaign against this Government’s green policies from some quarters has been particularly unhelpful.

I agree with what has been said about the problem of the market between generators and suppliers, and between the sellers and the customers. I spent the first five years of my career in the Yorkshire Electricity Board, which was a monopoly supplier to that part of the world and was buying from a monopoly producer, the Central Electricity Generating Board. So I am well aware of how inefficient such markets are. Despite our criticisms today, I think that we are in a lot better place now than we were at that time.

Encouraging new investment in energy is good for UK business and good for growth. I know that because I see it in my constituency, where, as well as the project that has been mentioned, Ensus runs the largest bioethanol plant in Europe, which has recently restarted; Northumbrian Water has invested £60 million in an anaerobic digestion power generation unit; and EDF is, right now, building 27 giant wind turbines just off Redcar beach.

One part of the Teesside carbon capture and storage project is for International Power to bring its mothballed 1.8 GW gas-fired power station at Wilton back online, and I hope that the current bid in the UK will be successful. The recent Ensus 12-month shutdown was salutary. I made a ten-minute rule Bill speech on bioethanol in this House some time ago, highlighting four different areas of Government policy that were causing problems for that industry. I am delighted that the plant has restarted, but as I said, the recent news from Brussels about indirect land use legislation and proposed new tariffs is extremely unhelpful when people have put £300 million into a long-term investment.

All such projects are for the long term; nobody makes a fast buck on these investments. So the Government must be focused on the long term—far longer than a single Parliament. I am confident that Ministers understand that, that they will put long-term legal, financial and regulatory measures in place, and that they know how important energy investment is to economic growth. So I will be supporting those Ministers in the Lobby today.