10 Jan 2002 : Column 269WH

Westminster Hall

Thursday 10 January 2002

[Sir Alan Haselhurst in the Chair]

Wave and Tidal Energy

[Relevant documents: Seventh Report from the Science and Technology Committee Session 2000-01, HC 291, and the Government's response thereto, HC 377.]

Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. McNulty.]

2.30 pm

Dr. Ian Gibson (Norwich, North): It is a pleasure to open this afternoon's debate on behalf of what is acknowledged to be one of the brainiest, political and successful Select Committees in the Palace of Westminster—humble as I am. During the last Parliament, the Committee produced 24 reports on subjects such as cancer services, genetically modified organisms, mobile telephones, British Biotech and scientific advice to the Government. It was difficult for us to manoeuvre through those thorny subjects, but the Committee's sterling work has been acknowledged by the professions, the media and the public, who are all grateful that the parliamentary system is seen to be examining problems of great interest to them.

During this Parliament, the Committee will be inquiring into matters such as the research assessment exercise in higher education, and science education in schools. I am sure that that will be the start of another successful four-year journey, which will add substance to Government debates and policies during that time.

I pay tribute to some Committee members who are no longer with us. Our sterling Chairman, Dr. Michael Clark, is no longer Member for Rayleigh; we often said that he kept us all in order—we could be quite obstreperous at times—and I am sure that he is watching us today from Essex and enjoying his Committee's performance. I pay tribute also to my hon. Friends the Members for Middlesbrough, South and Cleveland, East (Dr. Kumar) and for Birmingham, Selly Oak (Lynne Jones). They are no longer members of the Committee, but they did some great work in preparing our report and played a key role in setting up the inquiry.

I pay tribute to a member of the Committee who is here today, my hon. Friend the Member for Brighton, Kemptown (Dr. Turner), although it grieves me somewhat, because it was my hon. Friend who provoked us into making this inquiry. You will find out why I say that, Mr. Deputy Speaker, when his enthusiasm for and knowledge of the subject are displayed this afternoon.

I thank the many officers of the Department of Trade and Industry and the Departments for Environment, Food and Rural Affairs and for Transport, Local Government and the Regions, the witnesses, those who wrote to us, and the staff and expert advisers who helped us. Our expert advisers were Professor Ian Bryden, Professor John Chesshire and Dr. John Hassard. All have contributed to an erudite report.

10 Jan 2002 : Column 270WH

Finally, I must thank the Minister for Europe, my right hon. Friend the Member for Neath (Peter Hain), who was Minister for Energy and Competitiveness when we conducted our inquiry; he was very supportive of our efforts and appeared before the Committee.

We received 63 written memorandums and held three evidence sessions with six groups of witnesses. We have with us today the Minister for Industry and Energy, my hon. Friend the Member for Cunninghame, North (Mr. Wilson). We look forward to hearing his comments.

Let us get down to it: what is the background for today's debate on our report on wave and tidal energy and the Government's response? In a way, the report takes us back to the 1970s and 1980s, when discussions on energy provision centred almost entirely on nuclear power. The supporters of nuclear power were often eminent scientists, who were fascinated by the technology and its cleanliness, and its buildings with wonderful domes and other features. Its potential for cheap energy production was sold by royalty and others. Indeed, it was claimed at one point that electricity would cost nothing; I remember being told that, as a schoolboy, when Calder Hall opened.

There was an element of that enthusiasm in the notion of forging a new Britain in the "white heat of technology" in the 1960s. The focus on nuclear power in the energy policies of those times had much to do with the commitment of some political parties to rid us of the mining communities and the coal industry. However, quiet voices were arguing even then for green or renewable energy. They criticised the failure to invest in research into alternatives to nuclear power, and highlighted the astronomical sums of money that were needed for nuclear energy and for dealing with the problem—still unsolved—of storing and disposing of nuclear waste. There was talk—it always turned up at the end of speeches—of solar, wind and wave power but they were rarely treated seriously in those days.

Our inquiry into wave and tidal power set out to examine its viability—technological and commercial—and to look at the current level of activity and the part it might play in the Government's renewable energy strategy, and to consider the research and development programme and any environmental consequences. Finally, we investigated how we compare with other nations in this sphere.

We received some clear, positive answers. They included the response from the then Minister for Energy and Competitiveness. There was much solidarity and agreement about the issues. Our report reviews the scientific and technological work in the field, explains how the energy is created and highlights the fact that the oceans and seas—throughout the world and surrounding the UK—are a vast potential source of energy. In paragraph 23 of our summary, hon. Members will read the positive message that was confirmed by the Committee and our academic and industrial advisers, and with which the Government were in substantial agreement.

Recent headlines suggest that we are literally catching the wave, and the Minister has confirmed that renewable energy targets are to double. Not only is the proportion of our electricity generated by renewable sources to reach 10 per cent. by 2010, but there is a loose commitment for it to reach 20 per cent. by 2020. The EU has moved along similar lines with its recent directive

10 Jan 2002 : Column 271WH

insisting that sources of electricity should be clearly identifiable. There is talk of further wind turbines and wind farms, and progress in that regard is certainly visible in areas of our coastline—no doubt we shall hear from hon. Members about what is happening in their part of the country.

For example, in East Anglia, both on and offshore wind farms are being developed. I find the wind turbines rather attractive. I should like to nail my colours to the wind mast; I have a lot of time for those wonderful structures. Although I see them when I go up to north Norfolk, I do not hear much about them—however, they are wonderful. I would rather have one of them at the bottom of my garden than a telecommunications mast.

There are three new wind turbines in Norfolk to provide electricity for 3,500 Norfolk homes—representing an investment of £4 million. That electricity production prevents the emission of 9,500 tonnes of carbon dioxide into the atmosphere. It is a large contribution to the fight against climate change and global warming.

With the latest technology, there is enough easily accessible offshore wind energy to meet all Europe's electricity needs. Apparently, the US has enough accessible wind energy to satisfy its electricity needs in just three states—North Dakota, Kansas and Texas.

Our inquiry concluded that a revolution is required in planning procedures to facilitate a fundamental change in our energy policy. That is true not only for wave and underwater tidal energy, but also for wind and other renewable energy. It is clear that "one-stop shops" for renewable electricity generation should be a consideration, given the many common problems.

A central problem seems to be the connection to the grid. We cannot really talk about the national grid any longer—any more than we can talk about British Rail. The grid has been privatised. Many different energy suppliers use it in a diversified and fractured market. That creates huge problems when it comes to feeding renewables into the system, and that is addressed in the report. Many renewable energy sites are in remote places; they tend to be fairly small and a long way from the nearest connections, so massive investment is needed to turn the energy market around.

The pivotal question is how such huge restructuring can be facilitated. There is obviously the question of who is going to pay for it but, perhaps even more important, a question about the role that the Government will play—beyond mere finance—in making such a concerted effort possible.

The Government response dodges to a certain extent the question as to their role in solving the problems of fair access to the grid. It is naive to assume that the private sector will do everything. Even if the private sector is made to pay for the necessary investment, a centralised, publicly backed-up co-ordination of private investments will probably be needed. I look forward to hearing the Minister's comments.

The parallel with the railway system is a real one. That system started off with dispersed, fragmented investment by private companies, but centralised control was needed to turn it into a functioning,

10 Jan 2002 : Column 272WH

efficient, national network. The system was nationalised. It is not likely that that will happen to the grid now, but it is obvious that localised, competitive companies will not make huge long-term investments, reflecting a change in energy policy, if they are to receive only indirect benefit.

The Government response to the Select Committee report does not really address that important question and I look forward to a reply to it. It is not enough to assume that the market will sort everything out. The Government may not have to put in all the money, but they will probably have to facilitate the concerted extension of the grid.

The problem is not unique to wave and tidal energy; it also affects wind energy. Wind energy looks likely to be the main supplier of renewable energy to meet the new, higher Government target, because it is already at the application stage rather than that of research and development. Our report recommends an increased influx of money, especially for the Engineering and Physical Sciences Research Council, to create critical mass for wind and tidal energy research and development in the UK.

The grid problem will hamper the further development of wind energy, too. The Government response does not discuss wind energy and the parallel problems, even though the technical and political problems are similar and would be best tackled jointly. I hope that the Minister will pay attention to some of those issues in today's debate.

We all agree, I think, that a change in energy policy is needed, despite or because of George W. Bush's disastrous rejection of the Kyoto agreement. Renewables must play an important role in tackling the causes of global climate change. Many forms of renewable energy are available, but wave and tidal energy seem to have moved up the agenda considerably. The Committee looks forward to the Government energy review, which is due shortly, and would like to know when it will be ready, and what follow-up there will be. Will there be a White Paper? A debate is raging behind the scenes, but it must move to the front. We look forward to real debate on energy provision in this country. I am sure that the House will play a big part in that debate.

Other hon. Members will argue more fully some of the points that I have made, and will probably make others. Some might say that we need an energy tsar—a champion to drive renewables. I am in favour of tsars—tsars to the right of them, tsars to the left of them, and a tsarina if we can get one—but we certainly need a champion to drive the process forward. Big issues are at stake.

I am glad that our report fits with the Government's decision to embark on a wave energy programme to develop the technologies further. We can build on engineering skills and experience developed during 50 years of offshore gas and oil exploitation. The Department of Trade and Industry has chipped in with £1.7 million. The Government reply states that, since we reported, they have granted funding—or are in the process of granting it—to three wave energy projects and two tidal current schemes. I compliment them on that. The funding is worth more than £3.2 million.

10 Jan 2002 : Column 273WH

We warmly welcome the wonderful new project on Islay. The Committee was disappointed not to have the chance to visit it. The hotel was booked, the malt whiskies were lined up for our arrival, but I am afraid that a general election got in the way, so we did not go. I apologise if I mispronounced "Islay". We are also grateful for the establishment of the national offshore wave and tidal test centre, and we look forward to hearing how all the units are developing.

A good start has been made and the Committee is pleased to have played a part in that, but we think that more needs to be done to develop the potential of the wave and tidal energy industry. I hope that the Minister will provide more detail about how the Government have begun to move matters forward, and about their plans.

The questions I have raised are urgent because Britain is uniquely placed to get ahead in this promising new technology and to succeed in a competitive international energy market. There is a huge potential export and domestic market, which could do much for this country's industry. The questions are also urgent because we cannot waste any time in our response to global climate change. Let us seize the time. I promise not to ask a question on this subject at Prime Minister's Question Time.

Mr. Deputy Speaker (Sir Alan Haselhurst) : Order. We are attempting to sort out the problem of the noise, which is coming from somewhere beneath us. I congratulate the hon. Gentleman on getting through his speech unfazed by that disturbance, which I hope can be terminated as soon as possible. In the meantime, however, I apologise to hon. Members.

2.44 pm

Mr. Robert Key (Salisbury): I warmly welcome the Committee's excellent report, which was presented to the House on 30 April 2001. We have had to wait a long time for this debate, but I am sure that hon. Members' contributions will show how worth while that wait has been.

I congratulate the hon. Member for Norwich, North (Dr. Gibson), the Committee Chairman. I hope that he is as successful in his bid for more wind farms in his constituency as he was yesterday in his bid for more hospital cash.

I welcome the presence of the Minister for Industry and Energy, which at least guarantees that the debate will be fully reported in the West Highland Free Press, in which I first came across him many years ago. That is not a flippant comment. Certain things did not happen in the west highlands and the islands 20 or 30 years ago, but had they done so the development and transmission of electricity might have been very different.

I should state unequivocally at the start that the Conservative party is strongly in favour of devoting much more effort to developing renewable, carbon-free energy sources. It is a happy coincidence that the

10 Jan 2002 : Column 274WH

headline of today's leader in the London Evening Standard reads "Conservatives rejoin planet earth". Indeed, we have.

The Minister for Industry and Energy (Mr. Brian Wilson) : I welcome the hon. Gentleman back.

Mr. Key : I am grateful to the Minister. In a few years' time, we shall have exchanged roles, and the issue before us will be my happy responsibility.

The Chairman of the Select Committee rightly introduced the issue by giving us a little history lesson. He mentioned Calder Hall, which opened in 1957. I was 12 years old then, and I remember it well. I still have a piece of paper on which I wrote that Her Majesty the Queen was opening Calder Hall at that moment—it was something that caught the imagination of young people. At the time, I was also paddling round the burns of west Scotland building dams. My ambition was to be a civil engineer and to build hydro-electric schemes in Scotland and, indeed, elsewhere. However, that did not happen, which is why I am here.

Using waves as a method of electricity generation received a lot of research funding in the 1970s, just after the first oil crisis. A feasibility study on four proposals for wave-power generating devices reported in 1978. The Severn barrage committee was set up to explore the possibility of extracting power from the tides in the Severn estuary. Those schemes were shelved because of unfavourable economic conditions at the time.

Mr. David Drew (Stroud): As a Severnside Member, I should mention that they were shelved because of great opposition to some of the environmental implications and to the development costs. It was implied that it would come at the cost of an awful lot of housing development.

Mr. Key : Absolutely. I remember it well, and I shall return to that. However, much of that housing development has taken place irrespective of the presence of the barrage.

Some of the most consistently energetic waves in the world are found on the British and Irish coastlines. That is important because consistency is one of the problems that we face. It therefore makes good sense to exploit that resource, and I warmly welcome recommendation 1 of the report. I assure hon. Members that I shall not go through all the recommendations.

Wave energy converters extract wave energy and convert it into a useful form, usually through mechanical motion or fluid pressure. There is a lot of mystery about that and, unless they do a lot of homework, many enthusiastic amateurs, including me, find the process a complete mystery. There is much hand-wringing among professional engineers about such misunderstandings on the part of the public.

It is significant that only a handful of tidal power schemes operate anywhere in the world. The biggest is in the Rance estuary between Dinard and St. Malo in France, where I was only last week. Its barrage of 240 MW of turbines was completed as long ago as 1966, as a pilot scheme for a prospective larger barrage across the bay of Mont St. Michel. That was shelved, but the Rance scheme has operated reliably for more than

10 Jan 2002 : Column 275WH

20 years. The French have decided not to pursue the larger scheme because they have invested heavily in carbon-free generation by nuclear power instead.

I remember the Bay of Fundy project in 1984 well. It is only 20 MW, which is small by any standards. Nevertheless, it was an important project, and I recall its glamour at the time. The concentration in Norway is on small applications on remote islands. The contrast between the large barrage schemes and the small, Norwegian-style plants immediately illustrates the huge diversity of such schemes. Toftestallen was an important wave-power plant until it was swept away by the sea, which illustrates another problem with the technology.

In Australia, Energetech has worked on schemes and already achieved a power purchase agreement with local utilities. In the United States, floating wave-energy devices have been tested on a large scale in the eastern Atlantic. Closer to home in Scotland, the oscillating water column in Islay has caught people's imagination. The project was carried out by a team from Queen's university, Belfast, in 1991 and many lessons were learned from it. The technology in Scotland could generate considerable amounts of energy—about 14 GW from waves and 7.5 GW from tidal streams. By and large, the amount of energy that we could produce from such sources is put at a modest 20 per cent. of consumption, according to Les Duckers in his readable chapter of the Open university's book, "Renewable Energy—Power for a Sustainable Future", which was published in 1998.

Greenpeace is much more ambitious, as one can see on its website, which states:

Policy makers must face the problem of the hugely varying views of what could be achieved. The Minister must be wise to such hugely divergent views already, and must find them difficult. Greenpeace's optimism is important. Its evidence to the Select Committee was interesting, and I am sure that Lord Melchett is briefing the clients of Burson-Marsteller on the subject as we speak.

In the UK, three projects have already been awarded contracts under the third Scottish renewables order. I hope that we shall hear from Scottish Members about that, as it is significant. It was the first renewables order open to wave power. However, one relevant problem is that the prices paid for the electricity from those projects are commercially confidential. I can understand why that is so, but it is tricky to evaluate projects without the numbers. That should not put the Government off, however, as they are comparable with predicted electricity costs from the first offshore wind farms.

The first of those projects—the Limpet device—is now operating. It is a 500 kW oscillating wave column deployed by Wavegen on Islay, as we have heard. We must also consider the Pelamis scheme, a 750 kW floating device that Ocean Power Delivery of Edinburgh is developing. It plans to deploy the device this year, and is working on research and development. The third Scottish renewables obligation contract is for a Swedish wave-power design. All those are hugely important, as we are at the start of a new era.

10 Jan 2002 : Column 276WH

Late last year, I asked the Minister or the Secretary of State to identify the sites of tidal stream generation. I was delighted to receive an answer after 30 October that gave about 44 sites around the coast. The fact that the potential generation sites are a long way from where there is the greatest consumption comes as no surprise to any of us. Some identified sites can only be described as difficult and dangerous; they include the Mull of Kintyre, Corryvreckan, Loch Linnhe-Corran and, in Cornwall, Cape Cornwall, Land's End and the Lizard. Portland Bill is another case in point. Perhaps the most dangerous of all are the Casquets and the Channel Islands. However, it is a significant step that we at least know where we might start looking for that tidal power.

I turn to some problems that we shall face in pursuing that energy source. First, although the lack of emissions is a great benefit, sustainability is undoubtedly a real problem for the electricity market. I was not aware of the situation until I saw some of the new operators, such as TXU in London, carrying on their business. Some of us have an old-fashioned idea about electricity markets, even post-privatisation. The way in which such companies operate with a very fine time threshold is remarkable, but it causes them huge problems, as the wind does not blow consistently and the waves do not wave consistently. Nevertheless, we should welcome the amount of thought that goes into the use of very small time frames. As we see from the sharpest of the energy supply and generation companies, such projects are commercially viable.

There are huge advantages to wave and tidal power, including security of supply, reduction of gas emissions and of regional and local pollution, sustainable development, industrial competitiveness and so on. Therefore, we should welcome wave, wind and water energy. There are few technological barriers to development that could not be solved by transferring expertise, as the Committee suggests in recommendation 4. However, a great deal more research must be done.

I am grateful to Richard Wilson, who, in briefing me on the subject, said that the greatest challenge facing the new and exciting technology of renewables was that of human resources. If renewable energy production is to grow, so must the renewable industry labour force. In this country, we have a small skills base relating to renewable energy, and do not have the human capital resources to fuel the expansion. We must have that if renewable energy is to become a reality. In the short term, renewable energy employers will be obliged to search abroad and in parallel markets for the necessary skill sets.

Mr. Drew : It is sad that the greatest technological expertise in this country is in the nuclear industry, whether we love it or hate it. There are few things that one can tell nuclear engineers about how to generate electricity, but the interchange between nuclear and renewables is almost nil. Would the hon. Gentleman commend binding those industries together to get renewables under way so that they can generate electricity properly?

Mr. Key : The hon. Gentleman is right. The skills base in the nuclear industry is large and, as the Committee identified, many of those skills are transferable.

10 Jan 2002 : Column 277WH

However, we still have a substantial shortage. Businesses must be more adept at importing human capital to handle that, just as they would import any other necessary inputs. We need a huge policy change to develop a broader skills base for the renewable energy industry.

A while ago, I asked the Secretary of State for Trade and Industry about that matter in a parliamentary question, which was transferred to the Secretary of State for Education and Skills. I asked what plans the Government had to promote increased access to training and development in disciplines related to renewable energy. I wish that the DTI had answered the question, because its answer would have been relevant. However, I was told by the Minister for Lifelong Learning:

That is all very worthy, but it did not answer the question. It stimulated me to ask many questions about science teachers, or rather the lack of science teachers in our schools, which is crucially relevant. It also, however, leads me to suggest that the Government should not simply rely on market forces. Indeed, nor should education institutions, and I hope that the Government will not just take the line that it is up to education institutions to respond to market forces. I hope that in light of this report, the higher education sector will seek to stimulate courses and research in alternative energy. That will be a challenge.

Another technical aspect that must be addressed, which was dealt with very thoroughly in recommendation 3, concerns the transmission of electricity and the national grid system. About 9 per cent. of power is lost in transmission from the source to the consumer. The problem is being dealt with by the national grid, and the Chairman of the Committee referred to it. I have often wondered—I do not know the answer to this—whether the UK's highly efficient energy markets, which are way ahead of any other European energy market, are riding on the back of the old national grid. I hope that the monopoly that now controls that, the National Grid Company, is fully renewing the grid and extending it. That will be hugely important, as I shall show in a moment.

The problem of transmission is very important. People get confused about the different levels of transmission of energy. First, there are very local embedded supplies of energy, perhaps the most local being a shipping buoy generating its own electricity. Solar energy now drives lights for traffic signs on roads. Certain farms have been generating their own electricity for some time, particularly on the Falkland Islands, where I have seen such arrangements. The transmission costs of energy in such cases are negligible.

Also, much energy is generated at home level. I recall, 40 years ago, in a Perthshire village called Comrie, seeing a house that had had a hydro-electric scheme since the end of the 19th century. Not so far from home,

10 Jan 2002 : Column 278WH

in the Woodford valley outside Salisbury, Heal house had its own hydro plant; but that is very unusual. There are many local networks for villages, towns and valleys, for which the electricity transmission costs are very low.

The problems start when one moves beyond that and considers the national grid. Transmission issues start to clash with environmental problems, notably those of landscape or aesthetic problems. The latest figures given to me by the National Grid Company show that the cost of an overground line is roughly £500,000 a kilometre, whereas an underground line costs £10 million a kilometre. North Yorkshire has shown us how controversial such power lines can be, although I think that they would be less so if the gull wing design of pylon, which I happen to favour, was chosen—but that is a matter of personal aesthetics.

The cost of transmission methods is very important. Internationally, there is another kind of system—I am thinking particularly of the Norway interconnector. In spring 2000, the European Commission funded a feasibility study on that interconnector, which is designed to be 730 km long, carrying 1,320 MW. Implementing such an interconnector would be very expensive, and I shall come to the west coast interconnector in a while.

Dr. Brian Iddon (Bolton, South-East): I do not know whether the hon. Gentleman is aware of it, but after our report was produced, National Grid wrote to the Committee—the letter appears in an appendix to the Government's response—making it clear that the devices that we are discussing would be unlikely to connect to the national grid but would connect to the local supply networks instead.

Mr. Key : Yes, the hon. Gentleman is right. In appendix 2 of the Government's response, National Grid said:

Scotland, which is already a net exporter of energy, is to be a litmus test. It exports to the rest of the UK 25 per cent. of the electricity that it generates. The Scottish Executive renewable energy networks study said:

We must ensure that much more research is done on that, because it will be very important. I cannot understand why the Scottish National party is opposed to exporting surplus energy from Scotland. It seems to me to be a good thing to export.

Mr. Michael Weir (Angus): The Scottish National party is not opposed to the export of energy; it is opposed to the generation of energy by nuclear reactors.

Mr. Key : That obfuscates the problem and does not answer the question, but we shall return to that.

Mr. Wilson : May I de-obfuscate? Scotland gets more than 50 per cent. of its electricity from nuclear power, so if that 50 per cent. is taken away, there will not be much left to export.

Mr. Key : There lies the challenge to the Minister in his energy review. What will he do about its replacement?

10 Jan 2002 : Column 279WH

Mr. David Chidgey (in the Chair): Order. The hon. Gentleman is straying from the point. I should be grateful if he would keep to the subject of the debate.

Mr. Key : May I welcome you to the Chair, Mr. Chidgey? Now I shall have to mind my Ps and Qs, because this is a subject that you know something about.

The problem of planning is a huge issue. We know that there are objections to wind farms, not only to onshore wind farms—perhaps not in Norfolk from what we have heard, but certainly in Cornwall and elsewhere—but to offshore wind farms. Generally, that is on not aesthetic but practical grounds. The Royal Navy and the Royal Air Force object to some wind farms for various obvious reasons. It would not be good to have a wind farm offshore at Warton in Lancashire, near the main runway, as is proposed.

For a long time, there have also been planning objections to barrages. Those are addressed by the Government in a document published only a few weeks ago by the Department for Transport, Local Government and the Regions on major infrastructure projects. In conjunction with the Select Committee report, it is interesting to read in that document how the Government propose to tackle the issue. It is also interesting to see how new parliamentary procedures for processing major infrastructure projects will work, sidestepping the current system. Various criteria are laid down, under which projects will qualify, but as I understand it, the Secretary of State will first decide whether a project fits the criteria for parliamentary approval and then a national policy statement will be developed, following public consultation. The third step will be for the public to make their views known before Parliament debates the issues—a sort of pre-legislative scrutiny, which I hope will also be available online. The fourth step would be the parliamentary process itself. The fifth step would be a public inquiry on the detailed aspects of the scheme, on which people would express their views in the normal way. The final step would be the Secretary of State's decision.

One might ask what are the criteria and why they would affect renewable energy. Annexe C of the Government paper states that

The criteria in section 2 are: (a) thermal power stations; (b) nuclear power stations;

that is not a very big line; and

Again, that is not very big.

Mr. Andrew Stunell (Hazel Grove): The hon. Gentleman is dealing with the subject in an erudite way. Will he concede that, in relation to wave and tidal power, virtually all those projects will be beyond the jurisdiction of the Department for Transport, Local Government and the Regions and that the real problem is with the Crown Estate, which is the barrier to rapid development of the sea floor and investment in renewables?

Mr. Key : I certainly concur about the Crown Estate; I was going to come to that. However, I do not believe

10 Jan 2002 : Column 280WH

that the hon. Gentleman is right; if he will let me finish my point about the document he will see why. Section 5 deals with dams and other installations; section 10 deals with the extraction of petroleum and natural gas; section 11(a) deals with pipelines for the transport of gas, oil or chemicals; section 11(b) with terminals or extensions to existing terminals, compressor stations or gas storage facilities designed to improve gas transmission and distribution; and section 14—this is where Parliament must be extremely careful—with major development by or on behalf of the Crown judged to be of national significance. In other words, it deals with anything that the Secretary of State thinks is a good idea. We might find some clashes when it comes to transmission. Although the planning for a modest tidal flow system off Portland Bill may not intrude significantly, one must still get the electricity ashore in a major tourist area—one of high landscape quality. That challenge will be repeated around our shores. We shall have to watch carefully.

I have yet to make up my mind, as does the Conservative party, on the merits of the proposed new planning system and, in particular, the new parliamentary procedures. We shall listen with great interest to the discussion nationally as well as in Parliament. It could be significant for alternative energy sources, even wave and tidal power, when it comes to the transmission of electricity.

The DTI is looking at the viability of placing an undersea interconnector down the west coast. I was excited when I heard that the Minister was doing that. It could be the key to unlocking a great deal of potential down the west coast. I look forward to the report being published; I understand that it is with the Minister. I hope that it will be published in the near future so that we can all see what it says. If the undersea interconnector is financially impractical, that could have a severe negative impact on the development of renewable energy.

The ATLAS project is a major initiative aimed at establishing an information base on behalf of Directorate-General XVII of the European Commission. It has published papers on wave energy devices and discussed the environmental impact. That is referred to in recommendation 14 of the Select Committee's report, which states:

Here I join the hon. Member for Hazel Grove (Mr. Stunell), who mentioned the Crown Estate Commissioners. They are largely involved with wind farms and the regulations are complex. They also have responsibility for what happens to the floor of the sea, particularly in estuary areas. One problem is that hydrodynamic devices can impact on the flow patterns of sediment, which could result in the need for very sensitive site selection.

Such devices have other environmental impacts. Of course, there are navigational hazards, but we should not underestimate the impact on inshore fishing in, for example, the Bristol channel, and certainly the Irish sea. I have received many representations from Fleetwood inshore fishermen, who are concerned about wind farms off Barrow-in-Furness. Wave energy devices, in

10 Jan 2002 : Column 281WH

particular, could also have an impact, but so could tidal flow devices such as those off Lynmouth, in Devon. Moreover, we should consider the visual impact.

Broadly speaking, however, this is a most exciting development, and I have no doubt that there will be a big increase in such activity. I share the Minister's view that Britain has been technically advanced in this area for many years, but in the past 20 years we appear to have lost a lot of that advantage to foreign competitors, notably the Danes. I very much hope that we can regain it. It is true that wind energy technology has been developed on the Isle of Wight, for example, and there have been projects for manufacturing plants on the Mull of Kintyre, but I hope that we will seize the opportunity to develop wave and tidal power equipment. As well as providing an environmental benefit through carbon-free energy generation, such developments are important because they will generate new jobs in traditional technologies, as well as the higher technology to which the hon. Member for Stroud (Mr. Drew) referred. Such technologies can also be transferred from nuclear energy, which constitutes a great source of supply and strength in engineering.

I agree with the Select Committee that the export market has enormous potential. I should remind the Chamber that the Institution of Mechanical Engineers has been at the forefront of educating the public about such matters. In general terms, anything on this planet that moves needs a mechanical engineer at some point. I salute the enthusiasm and vision of the institution, which has enthused successive generations of children, including me, about the ways in which the application of science can benefit mankind. Today's developments are just another chapter in that story, from Brunel onwards.

I shall end with a corny quote, as I could think of nothing better in considering the way forward. As Shakespeare put it so much better than the rest of us:

3.18 pm

Dr. Desmond Turner (Brighton, Kemptown): This debate is particularly timely, anticipating as it does the publication of the report of the performance and innovation unit on the future of UK energy supplies. Now is the time to look at the prospective place of wave energy and tidal energy on the spectrum of energy supply.

In answer to a point made by the hon. Member for Salisbury (Mr. Key), I want to make it clear that the report under discussion specifically excludes tidal barrages, which introduce a completely different set of problems. It is a huge irony that one of the most important criteria considered by the PIU is the security of energy supply, because it is difficult to think of a more secure energy source than wave or tide. It is true that wave is somewhat variable, according to weather conditions, but an Atlantic swell sufficient to generate some power is always running, and tidal streams are wholly predictable, varying in speed only with the lunar cycle. The tides will be with us for as long as the solar system exists.

Both sources are completely immune from outside interference or market variation, and they have no price tag. Both sources are absolutely clean and free of

10 Jan 2002 : Column 282WH

emissions. It is unlikely that any other prospective energy source will emerge that is as truly renewable and sustainable as wave or tide power.

That is why, 18 months ago, we thought it important to assess the current state of development and exploitation of those resources and to undertake the report. The total size of the resource is enormous. As the hon. Member for Salisbury noted, there is a wide range of predictions. However, whichever estimate one subscribes to, it can be said with full confidence that the UK is in the fortunate geographical position of having almost the best wave resources and certainly the best tidal stream resources of any country in the world. That is a good starting point.

In 1999, the DTI's energy technology support unit estimated that the energy that was easily and practically accessible was 50 TWh per year from offshore wave power and 36 TWh per year from tidal power—and that from only the 10 most promising sites. Even on extremely conservative estimates, more than a quarter of the UK's total energy consumption of 330 TWh per year is available and exploitable. In fact, I am inclined to err towards the Greenpeace estimate and predict that there is sufficient exploitable energy resource to supply our total energy consumption requirements.

Another important aspect of energy provision is a regular baseline supply. The prime argument of the nuclear lobby is that nothing can supplant nuclear reactors in supplying steady, predictable baseline load. We received evidence from energy generators that they could see few problems for electricity companies in integrating both wave and tidal energy supplies into the grid owing to the reliability and predictability of their output. That certainly applies to tidal power because, apart from the short interval of slack water between tides, there is available power for 24 hours at every site. Not only that, there will eventually be constant supplies due to tidal variations—as long as sites are scattered along the coast. Tidal power is uniquely capable of supplying the baseline load that the nuclear industry claims as its prerogative.

The marine environment is harsh and challenging. However, in the UK we start from a position of advantage, because we have decades of experience in offshore oil exploration and production. We have the expertise and technology base to deal with the problem. We have an enormous transferable skills set and an enormous and readily available work force. We concluded in our report that there were no major technological barriers to the effective deployment of wave or tidal energy devices that cannot be dealt with by transferring existing knowledge within the UK. It seems strange that such an attractive resource has not been tapped before, but perhaps it is not that strange if one considers the history.

As has been mentioned, a UK Government research and development programme was started in 1974 as a response to the oil crisis. Most of us can remember Salter's nodding ducks, and it was gratifying to see Professor Salter back before the Committee as one of the witnesses because he has survived the political vicissitudes of research and development support. That programme led to a trial device that operated successfully for 10 years, but in 1982 the work was terminated because it would never—allegedly—have been commercially viable. Figures may be subject to

10 Jan 2002 : Column 283WH

manipulation, and I suggest that a greater factor was pressure from the nuclear energy lobby for the construction of more nuclear power stations, which is exactly what happened.

Another big mistake at the time of commissioning the original wave energy programme was that it was conceived as replicating large power-generating plants. Now we can see the absurdity of thinking that a 2,000 MW power-generation plant could be plonked into the sea. That thinking led to tidal barrages because only they, if implemented on a large scale at a location such as the Severn or Morecambe bay, could produce that amount of power in one installation. However, the picture becomes different if one examines smaller units, as we do with wind energy generation. Happily, in 1999 wave energy research and development started again because the Department of Trade and Industry realised that a major mistake had been made in the early 1980s by stopping research and development.

Denmark's achievements with wind power began in 1982. Its technological development of wind turbines has reached a state of commercial viability, and in the process it has gained an industry that employs about 15,000 people, which, given Denmark's small population, is significant. It is the world market leader in the export of wind turbines and it is responsible for producing about 90 per cent. of the wind turbines that are currently installed throughout the world.

Mr. Tony McWalter (Hemel Hempstead): Does my hon. Friend agree that one important ingredient in Denmark's success was its minimisation of damage to the environment? In particular, cables were buried underground so as not to have a tissue of pylons and voltage cables, which led to wider acceptability of wind power in Danish society than would have been the case if it had had a criss-crossing network destroying the landscape. We should learn from that example.

Dr. Turner : I thank my hon. Friend for his intervention with which I agree. That is one of many lessons that we can learn from Denmark's development of wind power technology.

What position would we have been in if instead of terminating wave power research and development in 1982 we had invested more in it? If we had continued and invested more in it, we might now have as proud an industry in wave power as the Danes have in wind power.

Mr. Wilson : I agree with everything that my hon. Friend said about the short-sightedness of the decision that was taken then. It is also worth recording that the same thing happened with wind power. We had a technological lead in wind power and threw it away.

Dr. Turner : I thank my hon. Friend for emphasising the point.

We face a different set of imperatives from those of 20 years ago. The prime drivers now, in addition to the need for energy supply, must be the response to environmental change and climate change, and the need for sustainability. The report makes an overwhelming

10 Jan 2002 : Column 284WH

case for putting the maximum energy and financial resources into the development and rapid implementation of wave and tidal power to meet the challenges that we face in the next 50 years and beyond.

Rev. Martin Smyth (Belfast, South): Queen's university in my constituency has analysed past delays and I pay tribute to its work over the years. There were upsets in the early days, but it has gone ahead. What obstacles are now holding back development that would increase employment opportunities, bring other people into the market and enable us to export those facilities?

Dr. Turner : I thank the hon. Gentleman for his intervention. I would say that the obstacles are none. If we took the same determined approach that the Danes took to wind power and applied it to wave and tide power, there is no reason why we should not replicate the success that the Danes have achieved with wind-generated power.

I think we can safely say that no energy source befits this country so well as wave and tide, uniquely because of our geography. Luckily, despite Maggie, we still have a lead in wave technology. We are still just at the front and we have a unique skills and technology base to apply to the problem.

Wave, tide and wind energy go together because they are true sustainables and can be used in a national context to contribute to the grid. Photovoltaic energy is also truly sustainable but is probably a non-starter as a contributor to the grid. I want to make a comparison with other sources, because it is strikingly obvious to me that wind and tidal power are outstanding candidates.

Photovoltaics could make a contribution, but the cost is currently high. Photovoltaic tiles on a roof would cost a bomb and would not make a commercially viable contribution to large-scale power generation. Not only that, we do not have the best source of solar energy in the world and at night it is turned off, so there are definite physical limits to what can be expected from solar power and photovoltaics.

Biomass is also in the frame and at the moment it is receiving more support than wave and tide power. That is questionable, so perhaps the Minister will comment on that. Biomass is less technologically challenging than other renewable options, although we should qualify the word "renewable" in respect of biomass because it has drawbacks. For example, its economics are uncertain. I am not aware of any reliable, published figures on the economics of electricity generation by biomass. Unresolved issues of environmental impact and potential pollution exist, and any application in generating plants of a large scale would raise a storm of planning issues. The same can be said for waste incineration. At the moment, municipal waste incineration is also counted as part of renewables, which I find highly questionable.

Both options are described as CO2 neutral and that is rather simplistic because they involve rapid CO2 emission—far more rapid than the speed at which CO2 is taken out of the atmosphere to produce the materials that are being burnt. To describe them as CO2 neutral is therefore putting it strongly.

In respect of municipal waste, the part of the waste stream that will be incinerated is also the part that is most amenable to recycling—newsprint is one example.

10 Jan 2002 : Column 285WH

Incineration therefore becomes a counter-productive approach in environmental terms. The preliminary document from the PIU refers to the need for new energy crop technologies to be developed, which underlines the fact that biomass technology lags behind wave and tidal paths and, even when developed, it cannot guarantee non-CO2 emitting energy production in the way that wave and tide can. If any hon. Member had the possibility of a large incinerator being sited in or near their constituency, they would know exactly what I mean as regards public response.

The nuclear lobby has been highly active. It is pressing for a new chain of reactors to replace the ageing Magnox stock. Experience tells us that any cost estimates—[Interruption.]

Mr. Drew : It is the nuclear lobby.

Dr. Turner : I apologise, Mr. Chidgey. I think that that phone call was from my daughter—she always chooses the right time—[Interruption.]

Dr. Gibson : Switch it off.

Dr. Turner : I am trying to. My humble apologies.

Bitter experience tells us that any cost estimates from the nuclear lobby should be taken with tonnes of salt, as should its assessments of whether its technology would work and be safe. As history shows, we can believe almost nothing that the nuclear lobby tells us; it has left a legacy for many generations to come. In the paper this morning, I noticed comments—I forget exactly from whom they came—about the threat of Sellafield. It said that if anyone detonated a big bomb there, a vast area of Britain would be made uninhabitable for 100 years. Safety considerations are therefore overwhelming.

Wind power remains the only truly sustainable source and, in its current state of development, it represents a wonderful example of what can be achieved through a determined, single-minded effort, and of the enormous benefits that can accrue. After 15 years, it contributes 13 per cent. of Denmark's power needs and has created a magnificent industry. However, its exploitation in the United Kingdom has been mainly limited by planning resistance, which has been considerable. Its best opportunity for exploitation lies in offshore installations. There is a further point to be made in comparing wind with tide. The biggest practical wind installations currently generate 2 MW with a single turbine. Although the machine is rather elegant, it is very big. The blades have a 60 m diameter and they stand on a mast about 50 m high. That can never be inconspicuous. Such machines are elegant, but inconspicuous they are not. By contrast, water turbines generate 2 MW from a 15 m diameter set of blades, completely immersed in the water. Nothing can be seen above the water but a sort of pylon, which would look like and be about the same size as a buoy.

In terms of visual impact, tidal power starts with an enormous advantage and in terms of development costs it is promising. When wind power started out, in about 1982, the generating costs were extremely high. In today's prices they were about 15p per kWh. Since then, those costs have come down progressively through

10 Jan 2002 : Column 286WH

technological development, exploitation and economies of scale. They have now just about gained the upper reaches of commercial viability.

At a comparably immature stage of development, the generating costs of wave and tidal power are already at or around 5p per kWh. Development and large-scale exploration will inevitably bring those costs down to less than 2p an hour, which puts them fairly and squarely within the cost range of present electricity generation from fossil fuels.

The fossil fuel costs, even if one wanted to continue in that direction for other reasons, would not be sustainable at that level, because they depend on almost artificially cheap coal imports and on gas supply contracts that will not stay at their current artificially cheap level. Those costs are bound to rise in the future, and with the development and large-scale application of wave and tide power, we could find that, in addition to all its other merits, it is the cheapest electricity source.

What, then, should be the mix of power sources for the future? The option of replacing nuclear capacity should be ruled out for all time; not only because of the safety and environmental problems and the dodgy economics, but because if we entered into a new nuclear programme, the massive capital investment involved would swallow up the capacity of the market to invest in newer technologies. We would run the risk of satisfying the nuclear lobby by saving perhaps 10,000 jobs in a dying 20th-century industry at the expense of generating, say, 50,000 jobs in a new, 21st-century industry with a sustainable future.

We should look to a wholly non-carbon, sustainable spectrum of energy sources, on which wind, wave and tide should take the main place. That desirable impact level would not happen of its own accord. As the Danes did with wind power, the UK Government would have to will the means to make it happen rather than standing by and waiting for the market with a little development capital. At the moment, only £5 million is on offer. In the context, that is a drop in the ocean.

A short-term option that is not necessarily desirable in the longer term will always attract the market. I was grateful to hear the remarks of the hon. Member for Salisbury, who clearly agreed with that point. We cannot simply rely on the market to solve problems, especially future energy problems.

Mr. Drew : I speak from the experience of a visit to Denmark a year ago by the parliamentary renewables and sustainable energy group. One interesting aspect of it was the different approach to raising capital there. Copenhagen's wind generation is paid for in the form of a co-operative. The people of Copenhagen own many of the wind generators. It should be remembered that, in addition to the market or the state, mutual solutions can be advanced.

Dr. Turner : I thank my hon. Friend. I, too, took part in the PRASEG visit, and saw that other features also helped the exploitation of wind power. We visited farms where farmers had wind turbines on their land in exchange for taking a cut of the proceeds. Everyone

10 Jan 2002 : Column 287WH

benefited. There are more ways to skin a cat than those we normally think about. We must be reasonably free-thinking about it.

Dr. Gibson : What about animal welfare?

Dr. Turner : Perhaps that was an unfortunate analogy.

The difficulty of grid connections has been mentioned. As we say in the report, the Government would need to intervene to help in the extension and modernisation of the grid to meet the problems. The downsides of privatisation have been mentioned, and that is one. Another difficulty faced by companies with demonstrator machines has been the lack of a suitable test site with available connection to the grid. That has meant that companies have had to look to other countries for sites, such as Greenland and Portugal, which is extremely unfortunate. If they have to continue doing so, the industry could move abroad. I am glad that the Government are moving to implement our recommendation to help to provide a test site.

Mr. Key : I would welcome the hon. Gentleman's view on the Norwegian interconnector. I am not asking a trick question. It might be possible to import substantial quantities of electricity from Norway generated by wind, wave or hydro-electric power via the interconnector. Might that be an even more economic answer to our country's problem of energy resources?

Dr. Turner : That would not necessarily be the best answer, although it might be a short-term one. Our country would be far better served by generating its own sources offshore and being self-reliant. In that way, we would also maximise the industrial potential that goes with energy-generating technologies.

We stand on the threshold of exciting changes in energy production for the future. If we make the right choices and back them vigorously—I am convinced that wave and tide are two of the key choices—we can forge not only a sustainable future for the UK in clean energy, but a massive new industry with enormous export potential and the capacity to contribute towards reducing UK and world CO2 emissions. That is the ultimate conclusion of our report, and I am happy that the Government acknowledged it in their response. What we now need is serious action from the Government. If they give a clear lead, the country could, for quite a modest input of Government money, achieve massive returns.

3.49 pm

Mr. Andrew Stunell (Hazel Grove): We have been privileged to hear three well-informed and well-researched speeches. I am not sure whether I can maintain the standard, but I welcome the debate. It is important for the House and the country. I welcome the report, too, and the introduction that the hon. Member for Norwich, North (Dr. Gibson) gave it. It makes some timely points, which I hope can be incorporated in the thinking of the performance and innovation unit and in the Government's response via the energy review.

10 Jan 2002 : Column 288WH

It would be remiss of me not to welcome also the Minister for Industry and Energy. I note the reference in the report and in the remarks of the hon. Member for Norwich, North to the possibility of appointing an energy tsar. I hope that the Minister will not mind my saying that while I do not know whether we need such a tsar, we need an Energy Minister who lasts longer than a year. The Minister is the fourth Energy Minister in four years.

As we know—it has already been mentioned—the energy policy-making function in government is by no means in the hands of one Minister, or even one Department. The Department for Environment, Food and Rural Affairs, the Department of Trade and Industry, the Treasury and apparently the Cabinet Office are all involved. Such fragmentation is not conducive to a coherent energy policy, whoever the Government.

The underlying reason that the report has been brought before the House is a gathering awareness of the significance of climate change and the damage that it does to our national and international environment—it is in many ways life-threatening and it is certainly threatening to society—and of the resulting need to reduce carbon dioxide emissions and, therefore, to change the way we use energy. The Liberal Democrats are strongly committed to the development of a sustainable, long-term renewable energy policy that can link wealth creation and growth to environmental protection. Those objectives do not have to be in conflict.

Such aims mean that we must examine a wide range of renewable options, and some have already been outlined. The hon. Member for Brighton, Kemptown (Dr. Turner) ran through a list: solar, wind, biomass, wave and tidal—I do not think that he mentioned geothermal. There are many options available for exploitation here and in neighbouring countries.

We need to take care, in considering this subject, not to fall into the trap that the hon. Gentleman to an extent fell into of treating alternative renewable sources as being in competition. We are in an evolutionary process, in which some resources are available and well developed, at market price levels, so that they should be used and exploited now, while others still need work, but will provide opportunities in the long term. We shall need increasing amounts of renewable energy as fossil fuel runs out and nuclear power drops out of use. We do not need to be combative or competitive in our claims for different renewable technologies.

Two years ago, I published a small booklet on the subject of energy policy. Its title, "Energy—Clean and Green to 2050", encapsulates the key issues for a United Kingdom energy policy. It should be clean in its immediate effects, green in its use of resources and long term. The year 2050 is a long way away, but not in energy policy terms. The design life of the majority of plant that is built now is expected to be more than 25 years and, in many cases, 50 years. If we are to have a sustainable and renewable energy policy by 2050, we must take decisions now.

The argument that I have deployed is that we must consider the medium and long terms. The first stage is to ascertain how we ensure that carbon dioxide emissions do not rise as nuclear power drops out of use. It is

10 Jan 2002 : Column 289WH

therefore important that a first generation of renewable energy technologies comes into use at market rates, develops and delivers to the energy industry. The Government's horizon currently appears to stop at 2010, although they have wound it forward a little in recent weeks, and the hon. Member for Norwich, North mentioned a loose target for 2020.

We should, however, establish a much longer-term target. It need not be radical or hugely ambitious, as long as it projects far enough forward. If we added just 1 per cent. to our renewable energy stock year by year beyond 2010, 50 per cent. of generation would come from renewables by 2050. Incidentally, that rate of change in sources of generation is slower than the rates of change in sources of electricity generation between 1900 and 1950 and between 1950 and 2000. Some say that we cannot achieve such an aim between 2002 and 2050 because it would require too great a rate of change and an excessive degree of technological development. Those people should consider what has happened to the generation, distribution and use of electricity over the past 100 years. What is being proposed is very modest.

One reason why we need a more coherent and co-ordinated energy policy is that we are talking about not only generation, but the use of energy. I have not yet heard the word "conservation" in the debate. There is tremendous scope for the more efficient use of energy and the conservation of resources, which would be more than sufficient to neutralise the effect of the growth in the use of energy outside the transport sector. I hope, therefore, that the debate will be about not only the Select Committee's report or the viability of wave and tidal power, but the much wider issue of how we develop a renewable and sustainable energy industry.

The interesting point is that we can trigger most of the necessary changes comparatively simply, while still relying on market forces. I am afraid that some of us are not fully reconstructed and not completely wedded to the idea that market forces can deliver everything. However, there is no doubt that they must play a significant part in the energy industry, which is inevitably an international industry. To a large extent, financing and investment for new facilities and conservation must come from private sources, which need a return on their investment.

Later, I want to hear what the Minister has to say about the introduction of the renewables obligation and about what stage we have reached. That measure has, albeit haltingly, put in place an increasing incentive for the private sector to invest in renewables.

Mr. Wilson : May I clarify that the renewables obligation will be introduced on 1 April?

Mr. Stunell : I thank the Minister for that. The last date that I heard was 3 October 2001, so things are slipping a bit, but I am pleased that he can give us an assurance that the proposals will come into effect.

A desirable outcome could be achieved by placing an escalator on the renewables obligation. If the obligation requires 10 per cent. of electricity to be purchased from renewable sources by 2010, we should aim for 11 per cent. in 2011, 12 per cent. in 2012 and so on, so that the obligation gives investors the certainty that a market will exist for their product and that the drive continues towards renewables.

10 Jan 2002 : Column 290WH

That brings me to some of the issues in the report, as there is a difference between what it recommends and what the Government's response says is acceptable. The writers of the report suggest that it would be a good idea to have a banded renewables obligation. In other words, some technologies should be given a preferential rate or a requirement should be made for a preferential purchasing regime for some technologies as against others. The Government say that they do not believe that that is the right way forward, for reasons that they adduce in their response.

Broadly speaking, I agree with the Government's response, in that a banded renewables obligation would present serious difficulties. In the past, Governments have had a bad record in picking winning technologies. The introduction of banding presupposes a capacity by legislators to guess correctly which technology will be the one that delivers for Britain. Despite the enthusiasm of the hon. Member for Brighton, Kemptown, it is wise for us to keep available a mixed economy of renewable sources. If we chose only one or two technologies in the renewables field in which to invest, we might make the same mistake as was made in the 1950s and 1960s, when we put everything on the nuclear horse.

A better way of regarding the matter is to think of the evolutionary nature of technologies, rather than their competitive nature. Again, there is a difference between the report and the Government's response on that matter. The report says that "the majority" of the £100 million promised for renewable technologies should be put into wave and tidal power. The Government's response lists all the things that they are doing in that regard—as I would if I were the Minister—giving a price tag at the bottom of £2.3 million. That is a lot less than the majority of £100 million.

If we are to consider technologies from an evolutionary standpoint, we must recognise that some technologies, such as onshore and offshore wind power, are at about market level and can respond favourably to a regime dictated by the renewables obligation. Other technologies, of which wave and tidal are examples, are quite a long way—a very long way, one might say—from being at market level. In those cases, twiddling with the renewables obligation is unlikely to produce effective results in the short or medium term. However, investing significant amounts of money to develop prototypes and pilot projects would be worth while. I accept that they would not themselves bring us electricity at a marketable price, but they would allow the industry to develop and expand.

My hon. Friend the Member for Northavon (Mr. Webb) drew my attention to the problems of one of his constituents. That person is an investor in a wave and tidal company, but the company has found that there is a significant gap between what it can achieve at the bench, in the research laboratory, on the computer or in theoretical micro-projects and what is needed to develop a sufficiently robust technology to begin to move towards marketability. There is a gap between the funding available for pure research and that necessary to develop marketable models. The Government's response points in the right direction, and they clearly have good intentions, but they suggest £2.3 million against the Committee's majority wish for £100 million. I hope that the Minister will reconsider that response and that he will give significantly more money to developing prototype and pilot projects.

10 Jan 2002 : Column 291WH

The third issue where there appears to be a difference—not necessarily between the Committee and the Government but between the Committee and the national grid—is location. The hon. Member for Salisbury (Mr. Key) dwelt on the subject at some length, but I do not want to cover the same ground. The figures given in the Committee's report are based on the national grid's general presentation and other presentations that it has made. The national grid was built at a time when the culture of the country was to have a small number of very large electricity generating plants, either nuclear or coal, and latterly oil. Those plants were built relatively close to the fossil fuel sources that would feed them, and also as close as possible to the heavy industry that would use the electricity.

During the past 25 years, the consumption of electricity has been diffused and more widely dispersed. The most significant consumption has moved to the south-east and we have lost most of our heavy engineering and manufacturing base, with its single-point sources of consumption. The national grid is now pointing in the wrong direction. Electricity is being generated in the north of England and in Scotland, yet most of it is being consumed in the south-east of England, where we have seen the most rapid expansion of population, of service industries and of commerce.

The next generation, the replacement of our existing stock of generating capacity, needs to comprise smaller, more dispersed units. It would be a mistake to do as the nuclear industry argues, because most of its sites are large and on the coast, well away from consumption areas, and any risk—or objection—would be reduced by 50 per cent. as a result, because there would be no population on the seaward side. It is a mistake to think that the solution to our problem would be to put more large plants on existing sites in the north and on the coast. Those are the wrong places. We need dispersed generation capacity, and if possible it needs to be closer to where it is used.

It is not a trivial problem. It is not a question only of whether the grid is needed. As much as 8 per cent. of our generating capacity is lost between the place of production and generation and the consumption point. Shortening lines of communication would be an important way of conserving energy and achieving a reduction in the need to generate it.

One of the earliest uses of water power was only a few hundred yards from this place on London bridge, where every arch had a water mill in it. There was tidal flow because the river flowed up and down—power from tide was available practically 24 hours a day at London bridge until about 1820.

That brings me to the Government's energy review and the performance and innovation unit report. I hope that that will produce an outcome that will balance the United Kingdom's intended direction on policy across a wide range of renewables, which will be seen as the way of replacing, in the first generation of replacement, the nuclear industry as existing plant comes to the end of its safe life and, in the second stage, fossil fuel as that, increasingly, runs out and its availability for the UK declines.

10 Jan 2002 : Column 292WH

I have some questions for the Minister. Can he confirm that the loose target for 2020, mentioned by the hon. Member for Norwich, North, will be firmed up? I hope that he will agree that the proportion of renewables used should increase percentage point by percentage point, year after year beyond that. That is the way to make sure that investors have the certainty of a market. I hope that the Minister will say that the financial support package will be increased from the figure that is in his response—is it 2.3 per cent. or £2.3 million, or perhaps the £5 million mentioned by the hon. Member for Brighton, Kemptown?—to rather closer to the figure recommended by the Committee, which was in excess of £50 million. I hope also that he will confirm that, as the other side of that financial support, he will use the renewables obligation in an innovative way to create a market for all renewables, and that he can encourage us by saying that export opportunities are strongly borne in mind as the Department of Trade and Industry develops its policies.

One of my difficulties over the past four years has been in understanding why the DTI, with the responsibilities that it has for energy, has always appeared to regard renewables as a drag on the market—something that it has to pay for because it is expected to—rather than as the foundation stone of a major export and wealth-creating industry. The example of the Danes has been mentioned. They did not capture the entire international wind turbine market because they had a great technological lead. The companies that lead their production and marketing are former agricultural machinery firms—not high-tech firms—that took on the commitment of the Danish Government for a steady, continuous growth in the requirement for renewable energy. They founded a solid domestic market, and managed to reduce their prices and production so that they could make a great deal of money internationally.

Attention has been drawn more than once to the stark contrast between the Danish situation and that in the UK. I was pleased to hear of the strong commitment of the hon. Member for Salisbury to renewable energy in the future, although he rather glossed over what happened in 1994, when the whole thing was chopped off at the roots. My point is that any energy policy needs to be not bipartisan but tripartisan. There must be objectives that are taken for granted by all the political parties and that are sustained decade after decade.

We have been able to do that with some of our major public services, with occasional wobbles and differences of emphasis but a common understanding that some things are so important that they have to be delivered come what may. I hope that we can make that what happens with energy policy.

We have an excellent report; it is challenging and innovative. I look to the Government to build on their encouraging first response and to put the UK on course for a sustainable, profitable and efficient energy industry.

Mr. David Chidgey (in the Chair): Order. Many hon. Members wish to speak. I ask those whom I call to limit their speeches to about eight minutes so that as many hon. Members as possible may contribute to the debate.

10 Jan 2002 : Column 293WH

4.14 pm

Dr. Brian Iddon (Bolton, South-East): I am pleased to be able to make a short contribution to this timely debate. We have reached a milestone in the development of energy policies through the ages. However, some important decisions must be taken in the next few weeks and months, and I would not like to be in the position of the Minister and the Secretary of State, because they are being lobbied hard by those who represent all sides in the energy debate. I trust that my right hon. and hon. Friends will make the right decisions.

Unlike the hon. Member for Brighton, Kemptown (Dr. Turner), who has sponsored the Select Committee's consideration of this topic, I am not in favour of baseline supply coming from a single source. We have had that in the past. We had a dash for nuclear energy, as has been mentioned. Then, under the Conservative Government, we had the dash for gas. I am in favour of diversity of supply, and I shall try to explain why. I also believe that there is a place for nuclear energy, although perhaps not on the scale that we envisaged in the past.

There has been mention of a tsar. I must tell my hon. Friend the Member for Norwich, North (Dr. Gibson) that the only tsar with whom I have ever worked closely met the same end as the Russian tsars. The reason why he met that end was that he did not have the power of the Russian tsars. In fact, he had no power whatever. I am not in favour of tsars; I am in favour of leaving power with the Minister and the Secretary of State.

I declare an interest as a chemist. I was a chemist, and possibly still am, and I have never been in favour of burning massive amounts of fossil fuels. Not only is it an inefficient way of developing energy, because most of the energy goes up the chimney in the form of heat, but the precautionary principle has told us recently that we must reduce emissions of gases such as carbon dioxide. However, the more important reason why I object to the burning of fossil fuels such as coal and oil is that, as a chemist, I know that they are extremely valuable sources of the basic building blocks of all the more complex chemicals that we make from them, including pharmaceuticals and dye stuffs. These days, every advanced chemical that we manufacture starts from oil—it used to be from coal—so it makes sense to me to leave those resources in the ground for as long as possible. They should be trickled out to the widest possible benefit of future generations, at least until we develop alternative chemical economies.

The Government's target is for 10 per cent. of electricity to come from renewable sources by 2010. I want to emphasise that, for every 1 per cent. in market share from renewables, there is a 2 per cent. reduction in carbon dioxide emissions. That is one of the reasons why I fully support the report. I am also in favour of security of supply, which is why I favour diversity of supply. Several times in the previous century, we saw what happened when oil supplies were disrupted, and I want us to be free from circumstances under which we are told what to do by the Organisation of Petroleum Exporting Countries. That would eventually affect the price of oil, so there are wider reasons for developing diversity of supply.

As treasurer of the all-party group on warm homes, I cannot help but underline what the hon. Member for Hazel Grove (Mr. Stunell) has already said: the best

10 Jan 2002 : Column 294WH

energy policy is not to use the energy in the first place. I am pleased that the Government are making massive advances in energy-efficiency policy.

There is a third reason why we, as an advanced country, should develop renewables—not only for our benefit but to transfer those renewable and cleaner technologies to the third world. Nobody has mentioned the third world. If everybody in the whole world used the same amount of energy that people in this Chamber use every day, we would be in a right mess. That is the most essential reason for developing renewable and cleaner energy technologies. We have the scientists and engineers with the skills to do that. We can then transfer those technologies to the rapidly developing countries, which have a right to use as much energy as we do.

As my hon. Friend the Member for Brighton, Kemptown said, the wind, the sun and the natural movement of any large quantity of water present huge untapped resources of energy. In the past, we have lost out to Denmark on wind power, and we should not lose out on wave and tidal developments.

The development of the North sea oil and gas industry generated much work for our engineering industry at the very moment when the shipbuilding yards were closing down. We lost huge quantities of shipbuilding capacity to countries such as Japan, which subsidised it, and third-world countries using cheap labour. The developments in the North sea were the salvation of many of those shipyards, especially the small and medium-sized companies that relied on engineering.

We all know what is happening in the North sea at the moment: output is declining. The development of alternative engineering businesses is therefore vital. Wave and tidal power may be the next diversification for those engineers, who have already been saved once, but will soon need to be saved again. We have one of the longest coastlines of any country of a comparable size, and consequently one of the best development possibilities for wave and tidal power anywhere in the world.

I shall leave it to the Minister to recount what the Government have promised in the development of wave and tidal power. However, I am pleased that the Government response to our report, which was published on 21 November, considers five sites for the development of a national test centre, with the conclusion that a marine energy test centre should be located at Stromness on Orkney. That is a significant announcement, and I am pleased that it was made.

I turn to the challenging demands of any development at sea. This country, among others, has overcome the challenges of the sea. We can tether large oil and gas platforms to the sea bed and transport their products to the shore. We can resist the corrosion of the sea on the metal from which they are constructed. We can resist marine fouling—by barnacles, for example—and restrict, or even eliminate, damage from the most severe weather conditions that can be found anywhere in the world. We do not want to lose those skills, because they can be transported to the wave and tidal development that we are calling for. One problem is that anti-fouling paints have become very unpopular because they usually contain tributyl tin, which damages the marine environment. Research on alternatives for tributyl tin is

10 Jan 2002 : Column 295WH

well under way. I am pleased to say that Leigh's Paints in Bolton is one of the largest manufacturers of marine paints in this country.

The west coast is obviously the best place to develop wind and tidal power, because the prevailing winds come in off the Atlantic. I was pleased to be at the conference where the Minister announced the west coast interconnector, which the hon. Member for Salisbury (Mr. Key) mentioned. That could be a significant development. I urge the Minister to get the two sides of the industry—the wind side and the wave and tidal side—to work together on the interconnector if it proves to be feasible in the long run.

My hon. Friend the Member for Brighton, Kemptown ably described the peaks and troughs of seasonal and daily demand, the baseline that supports most of our electricity supply, and how renewables can tap into that.

At least one company, Seapower Ltd., is already preparing for the hydrogen economy through generation of electricity from wave and tidal devices, and through electrolysis of sea water. Electrolysis produces hydrogen and oxygen, and the hydrogen is then stored in large sea containers and transported to shore. I am convinced that one day soon, the hydrogen economy will begin to take off.

The message about planning consents, which hon. Members have already mentioned, came over loud and clear in evidence from witnesses. If planning constraints prevent us from getting these developments off the ground, it is likely that such companies will go elsewhere—witnesses mentioned Portugal, for example—to develop and test their mechanisms.

In the end, electricity generation is driven by the sale price. Of course, liberalisation of the UK's energy market has affected the sale price: it has gone down, much to the annoyance of environmentalists, who would have liked it to rise. As the price has gone down, people have used it more and more, without thinking about the environmental consequences. Significantly, Dr. James Martin, generation director of Scottish and Southern Energy plc, which generates 48 per cent. of its supply from hydro, told the Committee on 21 March last year that he was studying the decommissioning of hydro in part because of the price drop, but also because the company had reached a difficult stage at which much old plant—it had been in place for 30, 40 or 50 years—was about to be replaced.

At a current estimated cost of 4p to 8p per kWh, wave and tidal energy is significantly more costly than electricity from fossil fuel plants, which costs about 2p to 3p per kWh. The price of wave and tidal energy has been halved in the past 20 years, however, and as test rigs come on-stream it will undoubtedly be more than halved again. What we should really be considering is pounds per tonne of carbon dioxide avoided, which is an important cost component that has not been referred to this afternoon.

The hon. Member for Hazel Grove has already discussed banding in detail, so I shall not rehearse the argument, except to say that I used to be in favour of it. As treasurer of the warm homes group, I have listened to the arguments concerning banding. At one time, I

10 Jan 2002 : Column 296WH

was fairly convinced that we had to have it, but once I heard the Government's arguments I came down on their side. The best method is to grant aid to those technologies that are furthest away from development. Otherwise, as the Government said in their response to our report, we might send the wrong signal and imply that some renewable technologies are more important than others. I do not want to do that.

Mr. McWalter : Does my hon. Friend agree that the Committee has sent out such a signal by suggesting that wave and tidal power is a potential British industry of the future? That will not happen, however, unless the right decisions are taken now, so it is necessary for the Committee to underwrite a preference for such technologies.

Dr. Iddon : I fully support the report and the development of wave and tidal power to its maximum capacity. I do not believe, however, that it might prove an important contributor to baseline supply, as my hon. Friend the Member for Brighton, Kemptown seemed to suggest.

In conclusion, I hope that today's debate and the Science and Technology Committee's report on wave and tidal technology will give added stimulus to development of this important renewable resource.

4.29 pm

Mr. Michael Weir (Angus): I welcome the report, which makes a good case for wave and tidal power without minimising the difficulties that it faces. The hon. Member for Norwich, North (Dr. Gibson) mentioned the cost of nuclear energy on its introduction, but I should remind him that the same was said of hydro-electricity. When hydro-electricity was first introduced in Scotland, it was said that it would be too cheap to be worth metering. However, I still get my quarterly bill from Scottish Hydro-Electric, which is to become Scottish and Southern Energy plc.

The report makes it clear that there is considerable potential for wave and tidal power within the UK, not least in Scotland. It is, however, unclear how much energy can be produced by that method. Although we have heard a great deal about Greenpeace's estimates, until we have a large-scale working model we cannot tell how much energy would be produced. That model must come through Government investment, which would be an investment in all our futures.

I draw hon. Members' attention to recommendations 2 and 16, which discuss previous funding. Recommendation 16 states:

Therein lies the rub: wave and tidal energy is only a potential, and more research and money is required before it can be realised, which is a crucial point.

In an intervention on the hon. Member for Salisbury (Mr. Key), the Minister mentioned the level of nuclear energy generated in Scotland. Although we may quibble about the figures, the important point is that we have a window of opportunity fully to invest in renewables to meet future energy needs.

10 Jan 2002 : Column 297WH

We are told that the energy review conducted by the Cabinet Office performance and innovation unit will report shortly, but I am sure that the Minister will not accept my invitation to tell us this afternoon what its report will say. Initial leaks suggested that it would lean towards nuclear energy, but later leaks suggested other alternatives.

We in Scotland know that existing nuclear power stations are due to be decommissioned in the near future, with the newest, Torness, due to be decommissioned within the next 20 years. We have a window of opportunity to get new and renewable sources of energy up and running to meet the gap that might appear once these stations are decommissioned.

The Minister will not be surprised to learn that the Scottish National party is resolutely opposed to nuclear power and believes, as I explained to the hon. Member for Salisbury, that existing power stations should be decommissioned at the end of their technological lifespan, and that no new power stations should be built. We are examining how we can get renewables into place within that period.

I mentioned earlier that Government investment will be required, and the Minister pointed out that £100 million is invested in renewables, but that pales into insignificance compared with past investment in the nuclear industry and the current quotes for £85 billion to deal with existing nuclear waste, let alone waste that might be produced by new stations. This would not be the first time that Government money has been put into the energy sector—never forget that the national grid was originally constructed with such money. Paragraph 31 of the report states:

Renewable energy concerns not only our future energy needs, but the problem of CO2 emissions and the planet's future. If this is not a suitable case for the investment of Government money, it is difficult to imagine what is.

We have heard about the national grid's problems, and it is a problem in that most wave and tidal energy is in the north and west of Scotland, while the grid is on the other side of the country. I was taken by Professor Salter's comment in his evidence that it is depressing how inconveniently the Scottish grid has been arranged. It is as though it was designed by someone who did not like nuclear power. That problem must be addressed because none of us believes that the privatised electricity companies will invest sufficient sums to enable the grid to be extended to include energy from wind and wave power. That needs a kick start from the Government and if Government funds are not provided, I suspect that wave and tidal energy will never get far from the drawing board. The most cynical among us might begin to suspect that the meeting at the Randolph hotel, to which Professor Salter referred, might have been reconvened. The Government must provide investment.

The report recognises the huge potential for investment in existing industries in the United Kingdom, particularly Scotland. Shipbuilders could construct the machines, and oil-related industries could diversify into wave and tide power. That will become increasingly important in the north-east of Scotland and parts of my constituency as the exploration phase of oil development runs down.

10 Jan 2002 : Column 298WH

Recommendation 9 states the position succinctly:

The Government must provide that investment, because the economic viability of the technology for other areas is considerable.

Another potential environmental benefit of wave and tidal power is that it could help to combat coastal erosion. Reference to that is made in the report and specifically in the evidence from RV Power Company Ltd. and Ian Henderson, but is not pursued in detail. I understand that Professor Salter referred elsewhere to the potential benefits. Although the report discusses the matter in connection with east England, there are serious problems with coastal erosion in other areas, including Angus in eastern Scotland, which have required a considerable amount of money. Investment in wave and tidal power would provide benefits for the supply of energy, the environment and the reduction of CO2.

I wanted to refer to other matters, but time is short, so I shall wrestle with the hon. Member for Salisbury for the worst quote of the afternoon by reminding Members that time and tide wait for no man. If we do not grasp the opportunity now, we may end up being beached.

4.38 pm

Mr. David Drew (Stroud): I am aware of the time, Mr. Chidgey, and will try to remain within my eight minutes because I know that other Members want to speak. I do not have a doctorate and I am aware that I am mixing with members of the Select Committee on Science and Technology, so my comments will be prosaic rather than erudite—[Interruption.] I have my own views on genetic modification, which we will not enter into.

I cannot resist the digs at the nuclear industry. I make no apology for saying that I am an advocate of nuclear energy—partly because it is the largest employer in my constituency—and the technological interface that is offered by the industry. As I tried to say to the hon. Member for Salisbury (Mr. Key), we do not make enough of that understanding. The issue is not nuclear versus renewables; we should be moving in both directions to get rid of fossil fuels as early as possible. I agree with my hon. Friend the Member for Bolton, South-East (Dr. Iddon), because the tragedy is that if we try to pretend that it is one or the other, there will be a slower rundown in fossil fuels than the world should permit us.

Apart from his views on nuclear power, the arguments of my hon. Friend the Member for Brighton, Kemptown (Dr. Turner) were spot on. I agree that we need to consider wave and tidal energy, not tidal barrages. The debate over the Severn barrage has shown how difficult it is to convince consumers that they should move towards new technologies. In all other respects, especially given my interest in fuel poverty, I would welcome the fact that energy prices are lower, in real terms, than they have ever been before, but it makes it more difficult to make the necessary changes because people always think that there is a reason to hold fire. The movement that has taken place has not been an

10 Jan 2002 : Column 299WH

unalloyed success. It has done the opposite of what many of us wanted, in that it has made the move to renewables more difficult.

I shall dwell for a moment on what the major report on the Severn barrier told us. I challenge anyone to say that they have read it. It was hardly environmentally friendly, because many trees must have been taken down in its preparation. The project failed because it did not address how to convince people that environmental technologies were right and necessary. The hon. Member for Salisbury gave two instances of why that consciousness was not delivered. Although I do not pretend to have expertise in wave and tidal energy, the experience of wind energy tells us that what is seemingly God-given and must therefore be capable of being tapped into is not always popular. We must accept that not everything in this area will achieve consensus or even, in some instances, majority support. That does not mean that it is wrong for us to explore and to carry out certain things, because the options are much worse.

I do not mind being associated with the nuclear industry. It has many faults, of which lack of transparency is the greatest. It rues the day when it locked itself into a bunker mentality, and I hope that it realises that it must come out of it. If we can harness that technological expertise, we can begin to crack some of the problems in the renewables industry, not all of which are locked into specific parts of it. For example, some relate to how we can link technology to business acumen. I do not pretend that the nuclear industry has been very successful in its ability to come up with the economic answers per se. However, there are some who understand how to meet market conditions and how technology can be advanced without looking entirely in that direction. We ignore that at our peril.

Energy has an obsession with the big answer. That was a mistake in terms of nuclear power. We must look for smaller-scale nuclear solutions, not necessarily large ones. Some hon. Members may have heard "In Our Time" on the radio this morning, which was about nuclear physics. The dream is fusion. Although it is almost 40 years away, it would be silly to throw away the chance to achieve that dream—not for ourselves, as my hon. Friend the Member for Bolton, South-East said, but to deliver energy for the next generation and the third world.

We must look for options, which is why I commend different solutions to embedded generation. These would involve looking not simply to the market or the state, but to co-operative solutions. I say that as a co-operator. We can convince the general public, but not necessarily through the market; that they must feel that they have a stake in the development of the industry.

The report is a good one, and it is crucial that it plays its part in the energy review and the PIU investigation. I hope—and it is not impossible—that we can fill some of the technological lacunae, such as group connections. If we can harness expertise across the energy industry, we can make use of wave and tidal power and the other renewables, and not a day too soon.

4.45 pm

Mr. Alistair Carmichael (Orkney and Shetland): Like other hon. Members, I welcome the report from what should henceforth be known simply as the Select

10 Jan 2002 : Column 300WH

Committee for clever people. I do not know whether it is necessary to have a PhD to be a member of the Committee, but it is clearly of considerable assistance.

The debate has been immensely enjoyable, and I have enjoyed it even more than I expected. It has covered renewable energy, which has long been a personal and political interest of mine. It has also featured several references to Islay, where I was born and brought up and where my family still live. [Interruption.] I shall come to that in a minute. It will also allow me a brief canter on one of my favourite hobby horses—bashing the Crown Estate Commission. One could not ask more from a debate than that.

The report and, in particular, the recommendation for a national marine energy test centre, were welcome in my constituency. As the hon. Member for Bolton, South-East (Dr. Iddon) said, the centre will be situated in Stromness. Regrettably, the members of the Committee failed to get to Islay, but they might want to visit Orkney during this Session to ascertain what progress has been made. The hon. Member for Angus (Mr. Weir) referred repeatedly to investment, and credit must be given to Highlands and Islands Enterprise and to the Scottish Executive for funding the centre. As it moves into its later stages, I hope that it will find the same sympathetic response in Whitehall that it has so far in Edinburgh and Inverness.

The hon. Member for Norwich, North (Dr. Gibson), who introduced the debate, referred to recognising the potential for energy from tidal and wave power, although anyone who has tried to go round the Mull of Oa or through Corryvreckan in a boat would know about that—it is there for us all to see. I hope that some imagination will be used in developing that form of renewable energy. It has long been said in Shetland that Bluemull sound and Yell sound, two of the tidal races referred to by the hon. Member for Salisbury (Mr. Key), have immense potential. In Shetland, there is also significant, although not unqualified enthusiasm for fixed links—bridges between the different islands. If we are to have fixed links between Yell and Unst, it is eminently sensible that they should incorporate turbines for generation. They could use the extraordinary power in that tidal stream.

To pick up the point made by the hon. Member for Angus about investment and that made by the hon. Member for Salisbury about the west coast interconnector, I gently remind the Minister that I wrote to him about those issues on 14 November last year. According to my files, however, I do not appear to have had a reply. I made the point that, although I welcomed the idea of a west coast interconnector, I did not see why even at the stage of a feasibility study it did not go further north than appeared to be proposed. The hon. Member for Salisbury referred to a list of 44 tidal stream sites, which includes no fewer than 12 in the northern isles and a few others along the north coast of Caithness. At the least, the feasibility of taking the interconnector round to Orkney and on to Shetland demands investigation. I ask the Minister to deal with that. As the hon. Member for Angus said, investment in infrastructure such as the west-coast interconnector would be a litmus test if we were to be serious about the development of wave and tidal generation.

10 Jan 2002 : Column 301WH

Will the Minister tell us what discussions his Department has had with the Crown Estate Commissioners about the laying of a cable down the west coast? From bitter constituency experience, I know that they are jealous of their right to charge rent for use of the sea bed for laying of cables. It seems arrant nonsense for Government money to be invested in infrastructure on one hand to encourage the generation of electricity from wave and tidal power, and taken out with the other in rent to the Crown Estate. If there have been no discussions, as I suspect might be the case, I commend to the Minister that they start sooner rather than later.

The northern isles view the debate with some anxiety. We have been in the vanguard of research and development before, especially with the wind turbines on Burgher hill in Orkney. The Minister may be familiar with them. The project was developed to the point at which it was opened for commercial exploitation, only for the Conservative Government to fail to put in the investment necessary to make it commercial. The excellent work done there was lost, especially to Denmark, which invested further and saw commercial potential realised. We and the Western isles are carrying out the research, and it would be nothing short of sinful if the potential, once realised, was not fully developed.

4.53 pm

Mr. Calum MacDonald (Western Isles): I am grateful for the opportunity to say a few words. I start by congratulating the Committee on producing a superb report. For non-scientists such as me, it is enormously useful. From talking to non-governmental organisations during the past couple of months, I know that they see it as a significant step forward in the debate. I want to touch on how to maximise the benefits of the technology for the entire country, and for the local communities in which the power will be generated.

One of the most striking figures in the report is that Denmark, because of its investment strategy over time—several hon. Members have referred to it—controls 75 per cent. of a global market worth £3.5 billion a year. That tells us that the wind-power industry is not small or frivolous, but of enormous economic importance. We can see that investment strategy in Scotland, in that the manufacturing facility for wind turbines in Kintyre is being developed by Vesta, a Danish company. In my constituency, where AMEC and British Energy are thinking of developing a large wind farm, the Danish and German company Nordex is interested in developing the turbine manufacturing side of the project.

Those examples show the potential of the proper sort of Government policy, intervention and support in the industry for bringing large-scale economic benefit to the country as a whole. I would encourage the Government to think in terms not only of national targets for development of wave and tidal and offshore wind energy, but to keep an eye on what other countries are doing throughout the world. We should make it our target, given our national resources in wind and tidal energy, to emulate what the Danes have done with wind power. We should be controlling, 10 years from now, 75 per cent. of the global market in wave and tidal energy. I would encourage the Government to think not only in

10 Jan 2002 : Column 302WH

terms of what we will need in the UK, but to watch what happens throughout the world. They should watch what our competitors are doing and ensure that our policy moves on, if necessary, to match that, so that we develop a lead in the years to come.

The proposals by AMEC and British Energy in my constituency have been mentioned by the hon. Member for Salisbury (Mr. Key), and several other Members have spoken about what is now called the west-coast interconnector. I remember the evening that the idea of the interconnector emerged. It was at a seminar organised by the Minister in my constituency, where people from the private sector, from Government and from the Scottish Executive were all present. The first evening of the seminar took place at a nice restaurant overlooking the cliffs of Uig, called the Bonaventure, and the idea of the west coast interconnector was born in those congenial circumstances.

It is amazing that what seemed to be a wild aspiration back in July has so quickly taken on the flesh of a practical proposal, so much so that AMEC and British Energy are now looking to invest £700 million to realise a project to run cable down the west coast of Scotland to harness the massive resources there and plug them into the real market, in the south of England. To run that cable over that distance is a very expensive proposition, which will require about £400 million of investment. That is why AMEC is proposing a wind farm of such a scale in my constituency. It needs the cash flow that that will provide to fund the interconnector. If that wind farm happens, as I hope it will, it will be the biggest in the world.

One of the benefits and prime attractions of the proposal, from my point of view, is that it will not only contribute to the country's environmental targets and develop our industrial infrastructure in a significant way, but it will also bring genuine, tangible and substantial benefits to the local communities where the development would be located. The final question that I would like to raise with the Minister is that of how we can maximise that local benefit.

Examining the development of wind power, and I suspect that the same will be true of wave and tidal power, one finds that it does not take many people to run a wind farm—it is not manpower intensive. However, to install such a farm requires many people and creates many construction jobs. To build turbines also requires many people. To manage an export industry in the way in which the Danes do it employs many people. The proposed biggest wind farm in the world, a 600 MW farm with some 300 turbines, will need only 30 people to run and maintain it. The benefit to the local community is not really in job creation; that has to be sought elsewhere.

Wind farms—the same would be true of other renewable energy developments in my constituency—will produce a rich rental stream for developers, thanks largely to Government policy. This development will be located on land that belongs to the local community. It is owned by a body called the Stornaway trust, the board of which is elected every three years by every elector in the district. The rental stream that comes to the landlord in this instance will be recycled into social and economic development in the local community and will indirectly create further jobs. The benefits are real. How can we ensure that similar benefits will be enjoyed as we go on

10 Jan 2002 : Column 303WH

to develop wave and tidal energy? The hon. Member for Orkney and Shetland (Mr. Carmichael) mentioned the role that the Crown Estate Commissioners play. That will be critical. We have a model on the west coast of Scotland in which Crown Estate Commissioners are very much involved in the development of a key local industry— fish farming—which gives them a very rich rental stream. Sadly, very little of that rental stream is recycled into the local communities, which is a source of considerable grievance there.

That is a just about tolerable situation in terms of fish farming, because—

Mr. David Chidgey (in the Chair): Order. I think that the hon. Gentleman is drifting slightly away from the topic of the debate.

Mr. MacDonald : I just want to make the point that fish farming in the Crown Estate is tolerable in that instance because it directly creates thousands of jobs. Wind farms and wave power will not give that direct benefit to local communities, therefore we must achieve that in other ways. That is why we must consider, as the hon. Member for Orkney and Shetland urged, the role of the Crown Estate Commissioners, and how the rental stream that they will draw upon can be recycled into local communities. In many instances—although not necessarily all the way round the coast of Britain—developments will take place in the middle of communities that are suffering depopulation, that exist on the margins with relatively low incomes and that are losing their young people due to a lack of job opportunities.

If we develop a massive new industry adjacent to declining and depopulated communities, we shall not have succeeded in the wider public policy objectives that we should be setting ourselves. I urge that that should be a major consideration in the Government's forward planning.

5.3 pm

Mr. Tony McWalter (Hemel Hempstead): I am aware that my hon. Friend the Minister will not have much time to reply, so I shall try to be brief. I am concerned, as a member of the Committee, that during the debate there has been a drift away from what it has been recommending. I hope to try to put it back on course.

The last three speakers from outlying areas of Scotland have understood the drift of the report, but I am worried about the remarks of my Committee colleague, my hon. Friend the Member for Bolton, South-East (Dr. Iddon). He suggested that wave and tidal power will continue to be Cinderella suppliers, although he did not use that term, in that he did not expect those sources of power to provide baseline supply.

We cannot do other than say that our aim is to tap a huge energy source in sufficient quantities to make up for the carbon-bearing fuels that we currently burn and the nuclear fuels that none of us wishes to replace by building more nuclear power stations. We are considering a long-term strategy to create an industry that does not use fossil or nuclear fuels. That is the

10 Jan 2002 : Column 304WH

general drift of the Committee's report. It worries me that anyone can suggest that the report is not targeted at the baseline supply; it must be. However, having said that, we must accept that many of the previous actions of the Department of Trade and Industry are not consistent with that.

There has been an imaginative response to many of the Committee's recommendations, accompanied by generous funding, but only for research projects. The hon. Member for Angus (Mr. Weir) was right when he said that this is not only about research projects. We need large-scale prototypes. I do not know whether we need one large-scale prototype the size of this Room, which incorporates methods of harnessing both latitudinal and longitudinal motions in the sea, or whether we need one model for each method, but if we do not have large-scale models, we will not know whether we can begin to think about generating electricity in the volumes that are necessary to implement the Committee's vision in the report. Large-scale models require us to think about not just a Salter duck, but a very large-scale Salter duck, which even Professor Salter says might or might not work. We are talking about very large-scale ventures, venture capital on a very large scale, and uncertain outcomes, albeit with extremely strong and rich potential.

That was the Committee's vision, which the Department has not so far accepted. That was made clear by the Minister's remarks about our renewables obligation. At present, if an electricity supplier needs a renewable component in the fuels that are burned to generate electricity, he will choose the most economic form of that fuel and chisel it in at whatever percentage level is required to meet that obligation. New technology, in its infancy, generates electricity that is much more expensive than that. As wind power reduces in price, it provides tremendous opportunities for the Danes, but we believe that wave and tidal power needs to be protected at this stage. On the renewables obligation, the Government say, in paragraph 11 of their response, that we cannot buck the market. I agree that we cannot do that in the long term. [Interruption.] I am aware that the Minister wants to start his speech at 5.10 pm.

What one can do is simply not conform to a market. However, we are talking about committing investment beyond research and making a market in which it will be feasible for people to make the first moves towards creating a large wave and tidal power industry. That was the Committee's vision. Some of the Scottish Members seemed to understand that well, and I hope that, in his response, the Minister will support that ambitious target.

5.10 pm

The Minister for Industry and Energy (Mr. Brian Wilson) : It is a cliché for the Minister, in replying to the debate, to comment on what an excellent exchange of views there has been. However, without any resort to cliché, I can say that it has been a first-class, valuable debate and an enjoyable afternoon. We cannot often say that in this place.

As the hon. Member for Orkney and Shetland (Mr. Carmichael) said, an added bonus of the debate is that we have taken a pleasant geographical tour. I want

10 Jan 2002 : Column 305WH

to give my hon. Friend the Member for Norwich, North (Dr. Gibson) the good news: he may have had to delay his visit to Islay and the world's only commercial wave station, but the nearest distillery, at Bruichladdich, has reopened in the meantime. He will easily be able to visit both locations in the course of a day.

I was also delighted that my hon. Friend the Member for Western Isles (Mr. MacDonald) took us to the Bonaventure in Uig, which is another of my favourite locations. I like to think that it will be associated historically with the evolution of the ideas that we have been discussing, as well as a few good nights.

I have had a long-standing interest in the subject of our debate. The hon. Member for Salisbury (Mr. Key) spoke of his early and, alas, wasted education in reading the West Highland Free Press. Some 20 years ago we published articles by a Mr. David Ross, who was a great proponent of wave power, and I have had an interest in the subject since then. The two papers for which he wrote professionally were the Daily Express and the Tribune, which I always thought was a slightly odd combination, but one could say that he was following in the Michael Foot tradition. However, he was a great advocate of the source.

As the hon. Member for Hazel Grove (Mr. Stunell) said, it is pleasing that Professor Salter gave evidence. We all remember the hopes that were vested in Salter's duck many years ago. Sadly, for reasons that have been mentioned, it never came to anything. However, I have had a long-standing interest and belief in the source, so to be in a situation in which I may be able to do something about it—albeit marginally and, as the hon. Gentleman implied, perhaps briefly—is a real privilege. It represents an opportunity that I hope I can usefully take.

I am glad of the opportunity to debate an excellent and stimulating report. I congratulate my hon. Friend the Member for Norwich, North on the way in which he presented it and the Select Committee as a whole on its work. We are at an exciting point in the choices that we can make over energy, and decisions made now will affect our energy mix for many years and will influence the lives of our children and grandchildren, which is not always the way in this place.

The main drivers for change are the need to reduce harmful greenhouse gas emissions and their impact on climate change, along with the need to maintain diversity and security of energy supply. Renewables have a huge amount to offer on those issues. Achieving 10 per cent. by 2010 from renewables eligible for the obligation is expected to result in carbon saving of about 2.5 million tonnes a year by 2010. That is a useful contribution to emissions savings. I do not know whether the target will increase by 1 per cent. a year or whether it will stand at 20 per cent. at 2020, but there is no need or intention to stop at 10 per cent. in 2010. We must set more ambitious targets thereafter, but I am not a believer in setting targets for the sake of it—the targets must be reachable. We must monitor closely between now and 2010, at each stage and in each part of the country, what progress has been made towards meeting targets rather than simply paying lip service to them. A wide range of technologies exists within renewables, and we heard about most of them today. They include hydro-electricity, which is my favourite.

10 Jan 2002 : Column 306WH

Scotland has a higher proportion of renewables because people in the 1940s and 1950s, notably Tom Johnston, the Secretary of State for Scotland in the post-war years, had the vision to set up a great social scheme—it was ridiculed at the time and was bitterly opposed by land-owning interests in the highlands, which should be remembered in the context of other current debates—that brought power to the remotest straths and island communities decades before it would have arrived otherwise. That was real vision. If we can match it now with other renewable energy sources, we will have done a good job for future generations.

Renewable energy sources include hydro energy, onshore and offshore wind energy, energy crops and biomass, landfill gas, and wave, tidal and solar energy. We should not be picking winners at this stage. We must let them all flourish to their optimum, and then decide which has the greatest potential for use in the United Kingdom. The market will decide to some extent, but we will have a much more realistic view in a few years' time of which systems can provide significant and economic sources of power. As well as having an environmental benefit, that extra 10 per cent. of renewable electricity will add significantly to the diversity and security of our sources of supply.

I do not have the time to answer the debate fully, but I want to answer a point raised by the hon. Member for Hazel Grove and others. Renewable energy is not only about what is required in the United Kingdom. We will have a huge exporting opportunity, and I shall say more about that in the near future. If we develop the technologies and maintain our technological lead for our markets, we can create many thousands of jobs in manufacturing industries. We can also do a lot of good in the outside world by selling to developing countries the sort of technologies that they need rather than trying to flog them ones that they do not.

We intend that the energy review will be published by the end of the month, or soon after. It is now in the hands of Downing street, because my right hon. Friend the Prime Minister commissioned it, and it has yet to be decided whether a White Paper should follow. It is agreed that the energy review process is transparent, open and inclusive. I intend that what follows after publication of the review will be in the same spirit, and that it will stimulate further debate. The energy review is a report to the Government rather than by the Government, and it should stimulate further debate. It is not the end of the story, but the beginning.

As part of the energy review, a survey has been carried out to assess potential renewable energy resources in Scotland. That study suggests that as much as 60 GW of new renewable energy capacity might be available in Scotland by 2010 at less than 7p per unit, with large amounts of new capacity coming from wave and tidal energy if the technologies are successfully developed. That, too, is an interesting contribution to the wider renewables debate, and further evidence, if it were required, of the extent of the UK's vast renewable energy resources. We must now decide how much of it can be developed practicably and at affordable prices.

The Select Committee's main finding was that we are not doing enough for wave and tidal energy. It is hard to resist that criticism; the historic argument is that those energy sources have not received support proportionate to the sort of capacity that the Committee has identified

10 Jan 2002 : Column 307WH

and that my hon. Friend the Member for Brighton, Kemptown (Dr. Turner) has described. We must now look forward and ensure that they have support. I will not get into the percentages game for the reason that I will not say that these are the two horses on which we should be betting. We should be supporting—and we are—the range of renewables to explore their potential. As the potential of wave and tidal is identified, and more proposals come forward that look to be significant contributors, sufficient flexibility must be in the system to provide additional support.

It is wrong to focus on the figure of £2.3 million and say that that is what we are doing for wave and tidal energy. For example, an additional £5 million has been dedicated to wave and tidal from the Prime Minister's £100 million for renewables. Some of the £10 million that has been allocated for blue skies research can also be used for wave and tidal. Those are new budgets in addition to the £3.8 million committed from the DTI's research and development programme and the grants of more than £1 million from the Engineering and Physical Science Research Council. Significant sums of money therefore already exist, not least because of the Select Committee's report, but those have not been quoted this afternoon.

Before I make a couple of announcements that will be warmly welcomed, it is a good starting point to have had such large cross-party consensus today. We all seem to be kicking towards the same goal and I, in an unusual fit of charity, am prepared to let bygones be bygones; I will not remind the hon. Member for Orkney and Shetland that that should have been happening earlier—oh, I have said it.

It will be of particular interest to the hon. Gentleman that we will be contributing more than £1 million of the total cost of the almost £1.5 million stingray project, which is aimed at demonstrating a novel concept for extracting energy from tidal currents. The stingray device prototype generates electricity from the oscillatory movement of hydro-planes driven by flowing tidal currents—I thought that the technical specialists in the audience might want to know that. The project is being developed by the Engineering Business, a Wallsend company, which plans to test its device in Shetland. It is the third demonstration project in the wave and tidal stream area to be supported by Government during the past six months.

I hope that hon. Members agree that that represents a significant Government commitment to the industry. It also answers the point of my hon. Friend the Member for Hemel Hempstead (Mr. McWalter) about moving beyond the research and development stage and getting something in the water. The stingray project may herald the start of an exciting new episode in tidal power but, as we have repeatedly heard, we already have a commercial wave power station operating on Islay, which is the only such power station in the world with a capacity of 500 kW. That was developed and installed by an Inverness company, Wavegen. We have announced support for the same company for the development of an offshore device—we are putting £1.7 million into the development of offshore wave—which is likely to be tested at the new centre in Orkney.

10 Jan 2002 : Column 308WH

When I visited the Islay station, I was struck by the fact that something that had been talked about for decades had been built and now works. It is remiss not to build on what exists already because that gives it commercial and operational credibility. I do not want to lose the momentum for shoreline and near-shore systems, and I want to encourage the refinement of that technology. I am therefore pleased to announce that one of the UK's major electricity companies, Scottish and Southern Energy plc, is working with Wavegen to develop a proposal for a cluster of shore-based stations in the Western isles.The intention is that they will be technically innovative and act both as demonstration plants and commercial generators to supply Scottish and Southern.Wavegen is currently undertaking surveys in the Western isles to establish suitable sites for these developments and is working on outline project proposals. It hopes and intends that a key feature of the plans will be the use of the former Arnish fabrication yard for manufacturing.

Wavegen is now in touch with the owners of Arnish—the Stornoway trust. Its use for this purpose is entirely compatible with the intention of AMEC and British Energy to use the yard for manufacturing purposes related to their proposed wind farm on Lewis. My Department supports the principle of further development of shoreline and near-shore-based wave power, and I expect that we shall be asked by Wavegen to consider its proposals within the next three months. I know that these comments will be particularly welcomed by my hon. Friend the Member for Western Isles, whose commitment to the development of renewable energy is well established, and also by Comhairle nan Eilean Siar, the Western Isles council whose initiative in creating an energy innovation zone has helped to stimulate all this activity.

The Engineering and Physical Sciences Research Council has a substantial research and development programme on renewables, which is running at £6 million in this financial year and focuses on fundamental science and engineering issues. Of that, just over £1 million is committed to wave and tidal energy. It is important to maintain a healthy fundamental research base to generate further innovation. The chief scientific adviser has undertaken a review of Government support for research and development, and demonstration activities as a contribution to the wider energy review. We shall carefully consider its recommendations.

A host of issues has been raised during our debate and I do not have a hope of getting through them. However, I promise the hon. Member for Salisbury, who speaks for the Opposition, and other hon. members that I shall write to them responding to the points that I have not covered.

My hon. Friend the Member for Norwich, North asked about the Government's role in steering investment into the transmission and distribution system. The world has changed and it is a matter for the private sector, but that is not to say that the Government do not have a role in discussing with the industry where improvement and investment are needed. I assure my hon. Friend that we have already instigated a number of studies because the strength of the grid and its relevance to current and future needs is crucial.

10 Jan 2002 : Column 309WH

I also agree that it is necessary to have a planning process that matches the country's needs, particularly when major infrastructure projects are involved. We simply cannot wait five years for decisions to be made. We need a more flexible system that respects people's right to contest proposals but does not lead to unreasonable delays. We already promote a positive approach to planning for renewables and my Department is working with colleagues in the Department for Transport, Local Government and the Regions to review the planning arrangements for renewables, particularly PPG22.

The hon. Member for Salisbury referred to the role that a Norwegian interconnecter could play in meeting renewable energy targets. The potential of such a project is interesting and there will be a meeting next week with the parties involved to discuss the matter further. It is essential that we do not rely on imports from Norway or elsewhere. The renewables obligation does not cover imports because the stimulus would not exist for our

10 Jan 2002 : Column 310WH

indigenous industry and we must make the most of our expertise, particularly in wave and tidal power, which the Committee identified.

I have raced through some of the many points that were raised and I shall write to hon. Members about the others. The matter is big and exciting, but there may be honourable disagreement about which renewables we should concentrate on. I do not accept the renewables versus nuclear dichotomy. It would have been at least as relevant today if we had talked about gas as much as we have talked about renewables. Do we want to be 90 per cent. dependent on imported gas by 2020? The energy review must consider that, but there is loads of room without divisive argument for progress on renewables in general and specifically. Our objective should be to maximise their potential and their contribution. If we do that, we shall not only safeguard the energy needs of this country—

 IndexHome Page