Energy Bill
Debate between Tom Greatrex and Mike Crockart
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.