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On 10 January 2000, I was lucky enough to secure an Adjournment debate on renewable energy. At that time, the mood in the renewables community was one of considerable frustration. Planning difficulties were immense, and despite words of encouragement from Energy Ministers, funding and even sustained cross-Government commitment was lacking, insufficient or beset with difficulties. Being a renewables developer then was a little like knowing that there was a party that one was supposed to attend, but not having the invitation to get across the threshold.
The real dinosaurs in the energy world still viewed the advocate for renewables with suspicion, and thought, "He might be wearing a suit and tie, but at weekends he probably gets out the kaftan and the open-toed sandals before looking for his tin of lentils." Serious energy people, it seemed, were into gas, nuclear power, or even coal. The mood music in the renewables industry is now very different. There is an extra £200 million plus in capital grants, the renewables obligation is now in force and the community renewables initiative and new solar, biomass and wave programmes have been launched. Offshore wind sites are earmarked, too.
There is genuine cross-governmental interest. There has been an energy review, which prioritised renewables, and some serious Select Committee investigations into renewable energy. New trade associations such as the Business Council for Sustainable Energy have emerged, blinking, into the light to champion renewables. There has been much progress since 2000, and genuine tribute should be paid to Ministers in the Department of Trade and Industry and other Departments. Thanks are particularly due to those in the business world who stayed the distance and stuck to the task.
However, an awful lot more could still be done. An even stronger policy environment for renewable energy would offer a series of massive prizes: serious cuts in carbon dioxide emissions; much greater domestic energy security, and significant new income streams and employment opportunities for the rural economy and the manufacturing and marine technology industries, to give just a few examples. Although long-term signals are importantI shall touch on targets beyond 2010the more immediate question is how we can deliver our 2010 target of obtaining 10 per cent. of electricity from renewables. There is also the immediate task of trying to produce 5 per cent. of our electricity from renewables by 2005.
According to the Library, in 1997 just 1.9 per cent. of all electricity generated came from renewablesa dismal performance of which the Conservative party should be suitably ashamed. By 2000, that figure had risen to 2.5 per cent. I am told that there was a slight drop in 2001 to 2.2 per cent. because of a reduction in the amount of electricity generated by hydro. Despite having far and away the best potential for wind power in Europe, just 0.38 per cent. of electricity is produced from wind in this country. A new framework, the renewables obligation, has been in place for only two months.
I regret that there is still timidity about renewables policy, a sense that we are dipping our toes into the water and that the dead hand of the renewables scepticsthe Bernard Inghams, for exampleis holding back development. Why, for example, is there any doubt about the 20 per cent. target that was recommended for 2020 in the energy review? The consultation document that was launched just 10 days ago in advance of the energy White Paper seems to back-track from that target. The document asks what contribution we can realistically expect renewables to make by that date, andworse than thatit questions whether the Government should set a target for 2020 at this stage. A decision not to endorse that 20 per cent. target would send a powerful signal that Britain is not serious about renewables beyond 2010, and that would damage the fragile momentum that is beginning to build behind the development of a British renewables industry. Instead of pondering a subject on which the performance and innovation unit spent many hours, we should address the institutional and financial barriers that still hold back the development and deployment of renewables in the United Kingdom.
Funding remains a key barrier. The PIU report rightly highlighted a tenfold decline in UK public sector research and development over the past 15 years, and a much lower spend on energy research in Britain than in the countries that are our main trading partners. The chief scientific advisor flagged up the need for new research on bringing down the cost of renewables. Additional funding is also needed for a solar roof programme, to help us catch up with Germany and Japan. That was stated as an aim by my right hon. Friend the Secretary of State for Trade and Industry, in a speech she gave at the Institute for Public Policy Research's low carbon economy conference in December. The solar roof programme that has been announced is welcome, but it will help us to have only 5,000 roofs with solar panels by 2005, whereas Germany is likely to have 140,000, and Japan will have 370,000. Should we not seriously consider offering premium tariffs for solar energy, low interest loans, enhanced capital allowances and solar net metering?
With regard to the bulk of the extra £200 million in capital grants that was made available, the wind industry is the most likely immediate beneficiary, not least because of the huge potential of offshore wind. However, there are significant grid connection and transmission issues. If we are to take advantage of sites in especially deep waters, Government money will be needed to lever in private sector investment, so that such issues can be sorted out.
Mr. Mark Lazarowicz (Edinburgh, North and Leith): I thank my hon. Friend for giving way, and I congratulate him on securing this important debate at such a significant time for the development of energy policy.
My hon. Friend rightly referred to transmission. Does he agree that it is particularly important to address transmission capacity along the west coast of Scotland? If the full benefits of Scotland's geographical position with regard to wind and wave energy are to be fully utilised, those potential sources of energy must be
Mr. Gareth R. Thomas : I agree with my hon. Friend. He has made an excellent point, and I hope that my hon. Friend the Under-Secretary of State for Trade and Industry will inform us how that matter, and the other funding issues that I have raised, will be tackled as part of her Department's bid in the comprehensive spending review.
There is a series of institutional problems, not least, the planning system. According to the Renewable Power Association, less than 25 per cent. of non-fossil fuel obligation wind power projects that were contracted for had been commissioned by September 2001; for biomass, that figure is 28 per cent., which is only slightly better.
Mr. Jon Owen Jones (Cardiff, Central): Does my hon. Friend agree that planning has been the biggest obstacle to the development of renewable energy? In the UK, the pattern of planning applications is patchy. For some reason, planning applications are 10 times more likely to be given assent in Scotland than in England and Wales. England has by far the worst record. Does not something need to be done about that, especially as it would not necessarily cost anything?
Mr. Gareth R. Thomas : I do not entirely agree with my hon. Friend, but I accept his broad point that the planning system has been the biggest single factor in delaying renewable energy projects. A more than sevenfold acceleration is needed if we are to meet our 2010 target for sorting out the planning system in England and Wales and making sure that it does not become worse in Scotland. When can we expect clear planning policy guidance to be issued to local planning authorities to help to resolve the issue?
Mr. John Randall (Uxbridge): The hon. Gentleman is a powerful advocate for wind energy, with which we have much sympathy. While advocating guidance on wind energy, presumably he is a strong advocate for allowing local residents a large say in it. I do not suppose that the good burghers of Harrow on the Hill would be chuffed at the prospect of having a wind farm on top of the hill.
Mr. Gareth R. Thomas : The good burghers of Harrow on the Hill and of Harrow, West have a sophisticated understanding of such issues. Planning difficulties would not be a factor in Harrow. The hon. Gentleman made a fair point that local residents need to be consulted. However, we must speed up the process and still make sure that people have their say. As for offshore wind sites, only 18 have been identified despite the considerable potential for more. Business interest in offshore wind has been much higher than expectedhigher even than the excellent British Wind Energy Association predicted.
Even though the consents process has been compressed for offshore wind, each site is still likely to take more than 12 months to secure full planning consent. The process needs speeding up further. It
Given the number of wind farm sites to which the MOD objects, the renewable industry's most paranoid minds have been wondering whether Don Quixote has not been reincarnated as Colonel Blimp, and whether the planning system has replaced Sancho Panza as the new modern weapon of war against windmills.
Mr. Simon Thomas (Ceredigion): Does the hon. Gentleman share my worry about the sites that the MOD is now opposing? Its recent decision to oppose offshore as well as onshore wind farms and the fact that they cannot be constructed in areas of outstanding natural beauty or in national parks leaves little suitable wind-speed areas left. That means an overdevelopment of sites in areas such as mid-Wales, which is disproportionate to the amount of sites that should be placed there.
Mr. Gareth R. Thomas : The potential disruption of radar is a serious issue. It is not a problem that can be taken lightly. Will my hon. Friend the Under-Secretary say what progress has been made in finding a technical solution? Either way, is it not time that the MOD had much better engagement with developers of renewables, so that we can stop the significant costs and wasted effort that an MOD objection late in the day to a wind farm proposal can cause?
I have been lucky enough to chair the parliamentary renewables group for several years. In March, some of us visited Germany to examine the reasons for the success of its renewables programme. In Schleswig-Holstein, where wind turbines are an accepted feature of the landscape, 1 per cent. of the state area has been specifically prioritised as wind farm sites. Only wind farms can be erected on them. Early identification of sites has stopped the planning blight that we have come to expect in Britain
Another reason for a less hands-off approach to site selection for offshore wind is that substantial wind farms will need to be located in much deeper waters, require more complex technology and, possibly, legislative time, and will certainly cost more initially. As I mentioned earlier, there will also be significant grid connection issues. In the light of our experience with onshore wind, a much more proactive approach to offshore wind farm sites is now needed. Perhaps my hon. Friend the Under-Secretary can tell us when we might expect a strategy for offshore wind farm sites.
Joan Ruddock (Lewisham, Deptford): I also was on the trip to Germany. I remind my hon. Friend that we were told in Schleswig-Holstein that the wind farms were a major tourism industry. There have been concerns about the effect on the landscape of both onshore and offshore wind farms, but people in
Mr. Gareth R. Thomas : My hon. Friend is absolutely right. It is interesting that she makes that point. To allude to the intervention made by the hon. Member for Uxbridge (Mr. Randall), the people of Swaffham initially objected strongly to a very large turbine that was put up there. It is now an accepted and popular feature of the landscape and has helped to stimulate tourism in the area.
Mr. Lazarowicz : On that point, I do not know whether my hon. Friend is aware of the report produced by the central research unit of the Scottish Executive in August 2000 on public attitudes to wind farms in Scotland. The research found that respondents were generally positive about wind farms. Indeed, those who lived nearest to wind farms were actually more positive about them than those who lived farther away. Most interesting, although 40 per cent. of respondents anticipated problems prior to the development, only 9 per cent. remained concerned after the wind farms were put in place. In other words, the fears were not proven.
Another key institutional barrier for many smaller and medium-sized renewables developers has been the new electricity trading arrangements. I believe that it is now accepted that NETA has had a positive effect in reducing electricity prices overall, but its effect on intermittent generators such as wind power has been very serious, reducing significantly the income to those generators, stalling new development and increasing the risk identified by bankers for those wanting to invest in renewable energy.
To the DTI's credit, the former Energy Minister recognised the damage that NETA was about to do prior to its launch and asked Ofgem to carry out a review, which was published in September last year. It showed that there had been a huge drop in output of renewables plant. Carbon emissions were on the increase, as coal plant had replaced more environmentally benign plant, and not even the skilled operators of companies such as BP have been able to find a way through the new risk that Ofgem has unleashed in the energy market. In hindsight, it seems that NETA has been designed in glorious isolation from the Government's environmental goalsa classic case of unsustainable development and progress.
The PIU energy review recommended a series of transitional arrangements over and above those already under way to help small generators. They are to be implemented by January 2003. A concern that I flagged up in last week's debate on the preparations for Johannesburg is that, according to the Combined Heat and Power Association, which met with Mr. McCarthy and his officials a few days ago, Ofgem still does not seem to have any clear idea on the way forward. I hope that Ministers will give Ofgem a very clear steer that it has to sort out the problem.
My hon. Friend the Minister for Industry and Energy announced that the new electricity trading arrangements are to be extended to Scotland at the same time as the Scottish Executive is rolling out major plans for wind turbines in Scotland. We need assurances that NETA's problems in England and Wales are not going to hamper the Scottish Executive's efforts to roll out its programme for wind. Given that there is a vacancy on the Ofgem board, it and the Government can help by making sure that someone who understands renewable energy, rather than the traditional lawyer, accountant or dry economist, is appointed.
The final institutional barrier that needs urgently to be addressed is the way in which local distribution networks are organised and financed, because embedded generation has traditionally had difficulties in securing access to the grid without incurring huge additional costs. I hope that my hon. Friend the Under-Secretary will be able to say something about how the recommendations of the embedded generation working group have been taken forward. That working group was an example of joined-up, cross-governmental work in which officials from the DTI and the Department for Environment, Food and Rural Affairs worked alongside industry representatives.
The PIU recommended an extension of such cross-departmental working through the creation of a sustainable energy unit. That would not be as good as a sustainable energy agency, but is, nevertheless, a significant step forward. I hope that my hon. Friend the Under-Secretary will be able to say how progress is being made in establishing such a body.
Mr. Roy Beggs (East Antrim): I congratulate the hon. Member for Harrow, West (Mr. Thomas) on securing the debate, and agree with the case that he is making. Does he agree, however, that the Government should seek to support those who are promoting hydro-generation and that we should maximise all renewable sources of energy?
Mr. Gareth R. Thomas : The hon. Gentleman is right. As I mentioned in my comments about funding, perhaps hydro sources will be included in a possible bid to the comprehensive spending review? I hope that my hon. Friend the Minister can enlighten us about that.
Lastly, I welcome the creation of Renewables UK, which is based in Aberdeen, to promote the British renewables industry. I hope that its brief can be extended to include other sustainable energy technologies such as combined heat and power. I hope that we will continue to see high-profile ministerial effort to encourage both national and international energy businesses to locate renewable energy plant, and in particular manufacturing plant, in the UK. At the moment, we have only one small wind turbine manufacturing plant, which has just been set up. Clearly there is massive potential for more plants of that sort.
In summary, renewable energy has massive potential in both our country and internationally to help tackle the problems of climate change, to increase the diversity and security of our domestic energy supply and to be the engine for new green business opportunities. We need to
Mr. Simon Thomas (Ceredigion): I congratulate the hon. Member for Harrow, West (Mr. Thomas) on securing this important debate. I apologise to him for missing the first minute of his speech; that was because I was with Mr. Speaker. At school, the best excuse for missing the start of a lesson was to say that one was with the headmaster.
I want to draw Members' attention to my entry in the Register of Members' Interests. I recently attended the fourth inter-parliamentary meeting of the European Forum for Renewable Energy Sources at Santiago de Compostela in Galicia. I want to take this opportunity to learn one or two lessons from the expansion of renewable energy in Galicia. Those lessons will be apposite to another small, wet, green, hilly country on the west coast of Europe, namely Wales. What we saw in Galicia applies to the difficulties in expanding renewable energy in Wales, which, as the hon. Member for Harrow, West said, relate to planning and wind energy.
One of the first things to say in this regard is that 70 per cent. of wind energy expansion in Galicia has been funded, manufactured and maintained by local Galician businesses. That contrasts strongly with what the hon. Member for Harrow, West said about the very small manufacturing and maintenance industry for wind energy in the United Kingdom at the moment. There is a huge gap between the potential for an area such as Wales in expanding wind energy and biomass, which I will touch on later, and the manufacturing capability and the ability of our local businesses to benefit directly from that. If there were a better fit between the two, some of the public objections to the expansion of renewable energy, and wind energy in particular, could be overcome.
There were three main problems facing the expansion of wind energy in Galicia. The first was the question of interconnectivity and the reliability of the grid. That is a problem that we undoubtedly face in this country. Galicia overcame that by working hard with distribution companies. We still have to overcome that in the United Kingdom because there is a problem with NETA. I am concerned that we have not yet seen the environmental guidelines that were supposed to be issued to Ofgem, which would perhaps give them a better steer around some of those issues.
When we took evidence from the director general of Ofgem in the Environmental Audit Committee, it was clear that its view on the needs of future customers was a very narrow, commercial and market-led view that did not take into account the future needs of the customer base as a whole. One of the problems is that Ofgem has no environmental guidelines. The DTI has been preparing such guidelines, and I hope that the Under-Secretary will tell us when they are issued.
In my constituency, where the DTI has just approved the application for the largest wind farm in England and Wales, one of the complaints that I receive is that wind turbines are noisy. I was interested in that, and we visited a test site in Galicia for a new set of wind turbines, including one of similar size to those that will be constructed at Cefn Croes in Ceredigion. I took a quick film with a digital camera of the wind turbine turning so I could know how noisy it was. I could then put the film on the website and invite people in my constituency to log on and see how noisy the turbine was. However, that was not possible; the coach in which we had come up to the top of the mountain to view the turbine still had its engine running, and all I could hear was the engine of the coach. I could not hear the wind turbine, and I had to ask the driver to turn the engine off. Even after that, it was not noisy enough to register on a digital camera. There is a lot of misinformation about what a modern wind turbine is like. The more people who see them, visit them and have experience of them, the less some of the opposition will be.
The third issue faced in Galicia was that of local planning difficulties. That had been a very real problem, which was only overcomeas it was in Germanyby joint planning work by the local xunta in Galicia and the national Government in identifying upfront sites that would be suitable for wind farms. That is so different from the approach that we take in this country where we just open up the field and decide on a hit-and-miss basis whether a wind farm can go here or cannot go there. In the case of the Kielder forest development, we were waiting for more than eight years, until the Ministry of Defence objections on tactical training areas suddenly overturned the largest wind farm application in England. That brings into disrepute the Government's central strategy of meeting renewable targets.
In their review of the planning process, the Government have to consider how planning processes can be meshed at a local level so that local people have their say in the choosing of the site, but once those sites have been identified the process should flow more freely and openly. The success in Galicia means not only that 70 per cent. of their wind energy is funded and maintained by local businesses, but that they have 30 per cent. of Spain's complete, installed renewable energy wind capacity. As a region, Galicia itself ranks third or fourth in the world. The potential for Wales is along those lines.
Mr. Jon Owen Jones : Was the hon. Gentleman's experience in Galicia that the local political parties supported renewable energy and wind farms, or that they supported them only in principlein a wider national sensewhile opposing local developments for electoral advantage?
Mr. Simon Thomas : That is the hon. Gentleman's tangential way of asking whether I talked to Liberal Democrats in Galicia. The political parties that I spoke to were united in agreeing with the process that was
Wales clearly has the potential to contribute as a nation in the UK set-up. Galicia expects that, by 2010, 89 per cent. of its energy will be produced from renewables, together with biomass and solar energy. That would meet Spain's 12 per cent. renewable target, and Galicia is keen to meet the Spanish EU obligations by itself. It knows the benefit that that would bring to Galician business and to the region's economy.
It is worth noting that Galicia also has an expanding tourist economy, and the point made by the hon. Member for Lewisham, Deptford (Joan Ruddock) is relevant. I hope that the Under-Secretary will say what work the Government will undertake to ensure that the expansion of wind energy and renewables does not affect tourism. I hope that the Government are considering the issue, so that they can disprove the myths that are around.
Mr. Roger Williams (Brecon and Radnorshire): Does the hon. Gentleman agree that renewable energy is not an end in itself? The purpose of pursuing renewable strategies and initiatives is to moderate or eliminate climate change, and thereby protect wildlife diversity and landscapes. It is important that we ensure that renewable projects to do not destroy the features that we are keen to preserve.
Mr. Simon Thomas : I agree, with the major caveat that I would not put landscape in the same category as biodiversity. A wind turbine can be easily dismantled so that it does not greatly affect the landscape. The hon. Gentleman may be aware of a big project to build on the mountains between Tregaron and Abergwesyn, and I was concerned about one of the landscape considerations. There is a Neolithic cairn in the area, and some landscape experts said that we should preserve the landscape as Neolithic man would have seen it. That is absolute nonsense, because we need the landscape to work for the benefit of local people. People in Tregaron remember the living, working landscape, on which there were many small farms and sheep, before the conifers came. The hon. Gentleman will know what I mean from his own experience in Powys. We must therefore be careful not to put landscape considerations above climate change considerations.
I agree that biodiversity is important, but I have seen no significant effect on biodiversity from renewables projects. I specifically asked about bird strikes at the wind test site in Galicia, and I was told that there had not been one verifiable bird strike on the whole test range. There are many myths about the effect of wind energy and wind farm development on biodiversity.
I shall conclude with a few words on biofuels. On 21 May, I, and other members of European Standing Committee A, discussed two draft directives on biofuels. The targets directive dealt with the promotion of biofuels for transport, and the second directive dealt with the possibility of a reduced rate of excise duty on
However, we need mandatory targets rather than indicative ones; the second directive, on the rate of biofuel tax, is potentially very damaging to biofuels in this country. It would link the rate that the member state was allowed to levy on biofuels to the duty rates for mineral fuels, mainly oil. That would be damaging. We have a high diesel levy. If we linked our biodiesel levy to that, it could damage expansion of biofuels in the UK.
I visited a bioethanol plant that was about to open in Galicia. There, when it was decided to make such a major investment, it was also decided to have a 0 per cent. rate on biofuels. The directive would make a 0 per cent. levy on biofuels illegal in European law; it would have to be a minimum of 50 per cent. of the conventional rate on fuels, and that would be destructive to biofuels in the UK.
I hope that the Under-Secretary will say something about the recent announcement of new money for biomass power stations for the United Kingdom. I declare an interest, as a chair of the working group on biomass in Ceredigion. A small CHP has opened for the Llandysul leisure centre, but I would welcome the ability to open a real power station, perhaps in the Aberystwyth area, powered by crops grown by local farmers and giving electricity and light to the people of the district. I hope that the Under-Secretary will say something about the opportunities opened up by recent announcements.
Joan Ruddock (Lewisham, Deptford): I congratulate my hon. Friend the Member for Harrow, West (Mr. Thomas) on securing the debate, who is so actively interested in renewables. In contributing to this debate, I want to refer to something different because he has, as I knew that he would, given a comprehensive review of renewables and of what is required.
I want to concentrate on people who suffer a great energy deficit; those in developing countries. I recommend to everybody the consultation document "Energy for the Poor", issued by the Department for International Development, from which I am going to quote. The countries of the Organisation for Economic Co-operation and Development, according to the most recent survey, consumed 54 per cent. of commercial primary energy, compared with 12 per cent. in transitional countries, 11 per cent. in China and 23 per cent. in other developing countries. Slightly more than 1 billion people in industrialised countries consumed about 54 per cent. of total conventional energy supply, whereas 5 billion others consumed the remaining 46 per cent. To meet the basic cooking needs of the 2 million people who are not served by modern fuels would take no more than 1 per cent. of global conventional energy consumption.
The fact that poor people have to spend a substantial part of their income to meet any energy needs at all means that even small changes in the price of fuel can put people into or out of poverty. Particularly in remote areas, switching to local energy supplies can reduce costs for the poor. They could also benefit from lower energy costs if new, clean energy technologies were to be
In order to warrant increased volume of manufacture, the demand for such technologies needs to be increased here, as my hon. Friend the Member for Harrow, West has indicated. The G8 renewable energy task force recognises that the fastest way in which to increase demand and deployment of the renewable energy technologies is to increase their use in developed countries, thus bringing down the cost and making them more affordable. However, other mechanisms are equally important, particularly so as we prepare for the summit on sustainable development in Johannesburg.
In my brief speech, I want to focus on the role of export credit agencies, which are the main public financiers of energy projects that contribute to climate change. Such projects often result in environmental devastation and destruction of local communities worldwide. ECAs remain a clear case of lack of coherence between trade and environmental policies throughout the European Union. EU export credits benefit but a few large multinational companies while fostering unsustainable development outside EU borders. The United Kingdom Export Credits Guarantee Department is, I am sorry to say, no exception.
Energy modellers say that reducing emissions to a level that would avoid dangerous climate change without relying on the widespread use of nuclear power would require that energy efficiency be maximised and renewable energy account for at least 40 per cent. of global energy consumption by 2050, and 80 per cent. by 2100. The deployment of sustainable energy technologies such as renewable energy and energy efficiency is desperately needed to avoid further accumulation of the devastating environmental and social impacts already associated with fossil fuels, large dams and nuclear power.
However, this has not yet impacted on the strategy of our ECGD or other ECAs throughout Europe. Predictions by the International Energy Agency suggest that renewable energy will represent only 3 per cent. of global primary energy mix by 2020 if the business-as-usual investment trends continue. Again, it is obvious that change must come. In that context, organisations such as Greenpeace, Friends of the Earth and WWF are all bringing pressure to bear on ECAs to change their means of operation. They have recently sent a letter requiring that ECAs should allocate 20 per cent. of their energy portfolios to the support of sustainable energy.
Globe UK, of which I am the chair, and Globe Europe have been more modest in demanding 10 per cent. Whether the target is 10 or 20 per cent.I hope that we support the larger targetit is apparent that a strategy needs to be developed if we are to help developing countries out of their dire poverty, of which energy is an essential part, and devise sustainable means of energy use for them.
Friends of the Earth International, Greenpeace and the World Wildlife Fund have specifically called for the funding of fossil fuels, large dams and nuclear power to be phased out, starting with an immediate cessation of all funding for export-oriented fossil fuel extraction projects, nuclear power and dams that do not meet the standards of the World Commission on Dams, as well as any other projects that do not receive prior informed consent from local communities in developing countries.
It has been suggested that taking such a "dark green" attitude is a means of imposing western values on developing countries that are desperately poor in energy. However, I would suggest that we are trying to give the developing world the best of our technology to increase production of that technology and therefore lower its cost in such a way that people in developing countries will have real choice and be able to choose the sustainable energy sources and production that are most relevant to their own needs.
That view is echoed in the 2001 report of the G8 renewable energy taskforce. The report called upon export credit agencies to identify criteria to assess the local and global environmental impacts of energy projects and establish minimum standards of energy efficiency and carbon intensity. The report noted that simply supporting renewable energy is not enough; subsidies for conventional energy must be reduced simultaneously.
I appreciate that my hon. Friend the Under-Secretary does not have a direct responsibility for this area. However, I would press on her the need for Government thinking, as we have so often said, to be joined-up. There is a real connection between our need in the developed world to tackle the most critical environmental question of climate change and the needs of developing countries to emerge from poverty and to have fuel sources appropriate to their needs. There are also the needs of our own manufacturing industry. All of those can be brought together in a win-win situation. I ask the Under-Secretary to discuss with her colleagues in DFID how overseas development money should be spent, and with the ECGD what support should be given to the export of energy sources.
Mr. John Horam (Orpington): I congratulate the hon. Member for Harrow, West (Mr. Thomas) on securing the debate. The subject is significant and will become even more so in the years to come. I acknowledge, too, that he has been a long-standing supporter of renewable energy, even when it was much less fashionable than it is today.
I like to think that the hon. Gentleman may have received some encouragement for his view when he was, in the previous Parliament, a member of the Environmental Audit Committee, of which I have the honour to be the Chairman. He would be interested to know, if I can give a short promo for the Committee's work, that we are about to produce a report on renewable energy, with all the trenchancy, realism and action-oriented values that I am sure Conservative Members would acknowledge are characteristic of that Committee. I am sure that he will support that report and ask for a debate on it when it is published.
He is right to say, as other hon. Members have said, that the prime driver for an interest in the expansion of renewable energy is climate change. A report brought out today by the United Nations and introduced by Mr. Klaus Topfer, the executive director of the United Nations environment programme, reinforces the point about climate change. It predicts a surge in the incidence of wars, famine and other catastrophes linked to humanity's over-exploitation of nature. The report is apparently rather apocalyptic in tone; I have not yet seen it, as it came out only this morning. It considers what has been achieved in the past 30 yearsnot very muchand offers a look at the 30 years ahead. It also includes the global environmental outlook that is produced every year, and clearly shows that we should be cautious about the way in which we are developing our economic policies.
Clearly, the second main driver is the run-down in our own sources of energy. For example, nuclear power produces 25 per cent. of our energy resources but is predicted to provide only 3 per cent. by 2020. That is a huge reduction in an emissions-free source of energy. As we know, production of oil and gas is beginning to decline, and the United Kingdomhaving been a big exporter of those commoditieswill become a major importer over the next 20 years. Coal is now a minor player. Whatever view one takes of the role of nuclear power, a huge gap is undoubtedly opening up in the energy market. Renewables will be an essential means of filling it.
Thirdly, we should sensibly exploit our own resources. As the hon. Member for Harrow, West and others said, we have the largest resources for renewables of any nation in western Europe; many times larger than those of other countries. It would be foolish to ignore that in a future energy scenario. I am not overly convinced by arguments about security of supply, because countries such as Japan, Germany and even the USA are heavily dependent on outside sources of energy. However, we have an opportunity to exploit our resources sensibly.
The Russians find the question of climate change debatable; perhaps because they have a large country and can afford to take a more phlegmatic view than smaller countries such as Galicia or Wales. They asked us what point there was to the renewables proposals if no account was taken of climate change, and we suggested that renewables and the precautionary approach to climate change could create a good business situation. It could be a win-win situation from a technology point of view. A country such as Russia needs to take account of the obvious technological gains that countries such as Denmark and Germany are making because of their positive attitude to renewable energy.
Those are the four key reasons why it is right to take a strong approach to renewable energy. As the hon. Member for Harrow, West candidly admitted, the Government are taking a timid approach to the opportunity. They have not satisfactorily addressed the planning situation, which hon. Members acknowledge is crucial and could be a major stumbling block. As we discovered from the EAC visit to Germany, there is a possibility of a different approach, given careful Government analysis. There are parts of the United Kingdom that would welcome wind farms, whereas other parts would not. As a Member representing London, I know that it would be difficult to get planning permission for wind farms in my constituency, but in other parts of the country they might contribute to the economy without unnecessarily damaging the environment. Some Government steer would be in order to help the problem along.
There is also the problem of the new electricity trading arrangementsNETAwhich the Government have not yet tackled. As the hon. Gentleman rightly said, NETA has had a favourable effect on price and eliminated inefficient producers, but it has also had a devastating effect on investment. That is a serious problem for small renewable producers. We do not want in this country a situation similar to that which occurred in California, whereby investment is so devastated that we are short of power and suffer blackouts as a consequence. NETA needs to be considered, after the short period in which it has run fully.
There is also the question of picking winners. The Government seem extraordinarily reluctant to take a view, but if they do not pick winners they may end up picking losers by default. Finally, the PIU report was disappointing. It was trumpeted as a major and significant review of this important matter, but it was bland, stated obvious facts that we all knew and was complacent. I fear that the Government may be reacting complacently and I urge them to look at the need for action during the next 12 months when many issues will come together, including the NETA review planning. They should look at their own plans in the light of the comprehensive spending review, and I echo the hon. Member for Harrow, West in wanting to see serious action-oriented policy during the next six months.
Mr. John Randall (Uxbridge): I am delighted to follow my hon. Friend the Member for Orpington (Mr. Horam), who has great expertisemuch greater than I havein the matter. I congratulate the hon. Member for Harrow, West (Mr. Thomas) on securing this important debate, which would have been the preserve of the beards and sandals brigade 10 or 15 years ago. I may have retained the beard, but I am now shod more appropriately. The fact that the subject is now discussed seriously shows its importance.
Our energy policy has been guided by various factors: initially economic, but increasingly environmental and social, including the alleviation of fuel poverty. My hon. Friend the Member for Orpington also referred to security of supply. We are more aware of climate change and global warming and we must address the problem seriously. With reference to the flat earth brigade, whenever there is a cold snap, someone says, "Global warming; what global warming? It's a load of rubbish. Winters are colder or wetter" and so on. That is a short-term view, and it is becoming increasingly well established that climate change is a serious problem, although some people still deny its existence.
One of the problemsif it can be called a problemis that competition in the energy market has resulted in increased consumption, and I have noticed that even in my family. When I was a young lad, I was always being told to switch off lights and so on, but there seems to be less awareness of that now. That results from price rather than awareness of the need to use less energy. The Home Energy Conservation Bill, which is currently going through Parliament, now includes targetsI hope the Government will allow those targets to remain in the Billand will have a positive effect.
Another problem that has been mentioned, particularly by the hon. Member for Ceredigion (Mr. Thomas), is that there are many urban myths, as well as rural myths, about renewable energy. It is not 100 per cent. environmentally friendly and it would be foolish to say that it is. I was pleased to hear about the experience of bird strikes in Galicia. Some hon. Members have a great interest in biodiversity, and particularly birds, although the matter is not clear cut.
I was also pleased to hear about Galicia, where the bull has been taken by the hornsthat may be the wrong phrase to use in a Spanish contextand there have been some achievements. All political parties there have taken the matter on board. It is vital that all interest groups, including political parties, put aside ideological and short-term interests. My comments to my neighbour, the hon. Member for Harrow, West about Harrow on the HillI can see the spire from my homemay have been flippant, but, understandably, there will always be some nimbyism, of which we are all sometimes guilty. However, we must put those interests aside in a genuine effort to identify a strategy that is on balance likely to deliver the greatest benefits overall. That will be achieved only by political commitment at the highest levels sustained over a period of time. I believe that not only hon. Members but an increasing number of our constituents expect that from the Government.
Energy policy is pivotal to the future prosperity of the UK economy and to the sustainability of the UK environment. That is why it is so important to develop a strong renewable energy industry to respond to our energy needs.
There are two key arguments. A successful modern economy needs access to reliable and affordable power in the long term. The hon. Member for Uxbridge (Mr. Randall) mentioned conservation and switching off lights. Although much work needs to be done to promote the efficient use of the energy that is available, the production of energy from a renewable source is extremely important.
We need to ensure that the power that we produce is sustainable not only economically, with the right price over the right interval of time, but environmentally. The hon. Member for Harrow, West and others pointed out the opportunities and difficulties that exist for the UK. Hon. Members will agree that he gave an informed and realistic critique of the issues that we face. The entire debate so far has been commendably free of motherhood and apple pie, even though it relates to a matter that was until a little while ago a fringe activity.
There seems to be a gap in the Government's thinking and planning: they have their own energy gap, between the talk and the action. I hope that the Under-Secretary will assure us that they are determined to bridge it.
The Government garnered a great deal of praise because of their leading role in developing the Kyoto agreement. Indeed, they almost boasted about it. Yet in parallel they introduced a gas moratorium. They have taken the credit for getting rid of the non-fossil fuel obligation and substituting the climate change levy, yet we have had the NETA and their impact on the combined heat and power industry.
The Government talk about the need for social and environmental guidelines to inform how the energy market is run. In November, I was told that such guidelines were likely to be issued in January. I have not asked recently, but it may be next January. Meanwhile, Ofgem resists applying any implied social or environmental guidelines and is rigidly stuck on a strict market interpretation of its role and functions. I have challenged its director on several occasions. He makes the point that if the Government wanted him to apply social and environmental guidelines, they would issue them. I therefore hope that we shall hear that those are in the post to Ofgem even as I speak.
We have had the PIU's energy review, which has been dismissed this morning as bland and stating the obvious. It may have stated the obvious for many of us participating in the debate, but for many people outside, its conclusions were not necessarily obvious. It points in the right direction. It could have been bolder, more succinct or more determined in its recommendations. However, I criticise not the PIU report but what flowed from itthe key issues for consultation, which were issued a couple of weeks ago. On close reading, I find
The consultation period is commendably long compared with all the other consultations, which are issued on 1 August and we have to reply by 31 August. However, it is so open-ended that one fears that yet another innovative project has been put on the back-burner, and that little more will be heard of it. Again, the talk is strong, and the action weak.
The renewables obligation has been delivered to us. I was delighted when it came before the House as a statutory instrument, but I was not delighted that the proposals for the renewables obligation to be an escalator beyond 2010 were not accepted, as that would have made a lot of sense. Although we have an escalating requirement for the use of renewables, it stops at 2010. The hon. Member for Harrow, West made a good point about the need to extend those targets beyond that date not because they are a threat to industry, but because they provide a framework for future investment. If we wait until 2005, 2006 or 2007 to set those targets, investment will never catch up.
Like the hon. Members for Harrow, West and for Lewisham, Deptford (Joan Ruddock), I went on the trip to Germany. We discovered that although we have installed 60 MW of wind power in the past year, Germany has installed 2000 MW. It has designated offshore areas, and has taken a route that enables development to take place, rather than one that prevents it. The UK has a small number of photovoltaics. We shall have perhaps 5,000 by 2005; Germany will have 140,000.
The Government's talk about renewable energy being a vital issue with top priority can be somewhat discounted when we realise that there have been four different Energy Ministers in the past five years and that four DepartmentsDTI, DEFRA, the Treasury and DTLRhave responsibility for different fragments. There is talk of vigorous expansion, but there is a muddle about making onshore and offshore developments. We cannot even agree about net metering, although many countries in Europe and across the Atlantic are doing it as a matter of course.
Ministers have talked the talk, and today we would like to hear the Under-Secretary say that she intends to walk the walk. Could we have some co-ordination, put a sustainable energy policy in place, rescue CHP and get wind power going properly? Will the Government also invest in energy conservation? It is possible to prepare the UK to meet not just our 2010 targets but sensible targets beyond then. As soon as they are announced, industry can start to provide the investment that can deliver not only the targets but access to the expanding international market for renewables. There is deep frustrationand an overheated planetout there; I hope that the Under-Secretary will respond to that.
The hon. Gentleman can be forgiven a little party political taunting, but it was the Government of my noble Friend Lady Thatcher that funded the research that discovered the hole in the ozone layer in the first place. It was her Government, and that of my former right hon. Friend John Major, that led the way to Rio and all that followed. It is ridiculous to make the assertion that he made; as if anyone would believe it. May we have less Millbank spin, please?
Of course we are not ashamed of what we achieved. If there had not been the liberalisation of markets that began under the Thatcher Government, we would not be in our current position of leading all European countries in the energy market and energy consumerism. It is important to recognise that, when we consider renewables, we should take it for granted that we are all in favour of them because their first objective is to tackle climate change and carbon emissions. That straightforward objective is sometimes mixed, to say the least.
The hon. Member for Harrow, West talked about NETA. I was interested that he believes that no lawyers, accountants or dry economists should have anything to do with renewable energy; I am a dry economist, I suppose. We should be more realistic about the problems, and I shall concentrate my remarks on practical impact.
As several hon. Members said, the Government are pepper-potting or adopting a scattergun approach on renewables and carbon emissions. We must firmly focus on carbon emissions. Neither the United Kingdom nor the European Union are single-mindedly dedicated to reducing carbon emissions. The processes and tax structures in place throughout the European Union are a strange mixture. That is, however, a bit wide of the mark for this debate.
It is important to reinforce the point made by the hon. Member for Hazel Grove (Mr. Stunell) that the Government are in a bit of a muddle. The recent consultation paper adds to that muddle and to the sense of confusion. We do not believe that the Government know what they are doing when they publish a consultation paper that is a list of more than 100 questions that arise from the previous PIU report, which was only an internal report to the Government. It is scandalous that the Government have not made time available for a debate on the Floor of the House on this important issue. How are we to reflect the wide range of views of our constituents and organisations if we cannot have such a debate? I hope that we shall not have to wait for that debate until January next year when the White Paper will be launched; that date has slipped from the autumn.
The consultation paper is the latest in a long line of papers that raise an enormous number of issues, and summarises questions from the PIU report. However, we should discuss the strategies that the Government must put in place. Doing nothing or dithering is not an option because that would delay important investment decisions that should be taken now.
Perhaps the most important decision to be taken about renewable energy is on security of supply, which is a huge problem. Intermittent generation is inevitable and we must react to that problem positively. NETA has not done that; it is part of the problem, not part of the solution. I sympathise with the criticism of Ofgem; the director is doing his job and the Government have not told him to do it any differently.
Different approaches to the security of supply of existing renewables occur throughout the world. Last year, the regulator in New Zealand had to deal with a substantial drop in water levels. The previous winter had been very dry and the supply squeeze was greater than that in California during the previous year. The market was allowed to work in New Zealand. Price signals were sent to consumers, demand decreased and there were no blackouts. Lake levels have now recovered and, consequently, prices have fallen. Such market flexibility must exist.
Many trading tactics that worsened the supply crisis in California were a consequence of the exploitation of regulatory interventions by market participants. Many interventions such as capacity requirements and congestion payments were designed to protect the security of supply but, ultimately, they had the opposite effect. If the interventions had not existed, the crisis would have been less severe. Security of supply is best achieved by allowing markets to work and intervening only if there is clear market failure and if the cost of that failure outweighs the cost of regulatory fixes.
Many people who are involved in renewables remain worried about the renewables obligation. They believe that we can work our way through it, but the current potential for renewable generation is the real problem. It is limited. I should love to join those who are absolutely determined that, come what may, we will achieve our 2005, 2010 and 2020 targets. However, we must be realistic and note the advice from those who have to produce the technology, such as turbines for wind power. I have been told by a serious source that we would have to construct two wind turbines a day for 20 years to achieve such targets. That is a long shot. The British Wind Energy Association is doing a tremendous promotion job. I was interested to read a comment from Nick Goodall of the BWEA. He said that NETA
I wish to concentrate on some of the problems that we are facing. It is not really fair, because the matter is not the Under-Secretary's particular remit; will she be kind enough to write to me about the point that I am about to make? Yesterday, the Minister for Industry and Energy issued a press release from the Scottish islands about crofting law and the impact on crofting of wind energy. He said:
In terms of landowners, the current rate of return for royalties is put at about 2 per cent. of gross revenue. It is a standard figure that perhaps the Duchy of Cornwall would expect if wind farms were constructed on its sites. However, if the Minister for Industry and Energy is seriously proposing that the figure should increase to 50 per cent., he will kill stone dead most wind energy and renewables projects. I should be grateful to receive clarification of whether the press release represents a new policy of the Government or a new approach from the Department of Trade and Industry.
Communities feel strongly about such issues. It is no good calling them nimbys. They are not. Ordinary people are seeking straightforward answers to difficult questions. Let us consider the Isle of Arran, in the constituency of the Minister for Industry and Energy. I have had an interesting flow of e-mails and telephone calls with its community. A pyrolysis plant has been proposed for the island. It has received outline planning permission, but there is a dearth of information about it. The Minister has made some inflammatory comments to his constituents about the bubonic plague being imported to the island. Nevertheless, genuine questions have been asked. If we want communities to accept pyrolysis plants or wind farms, we need upfront information and straightforward facts so that fears can be put to rest.
Another problem area is the Cefn Croes farm in the constituency of the Member for Ceredigion (Mr. Thomas). A planted question on today's Order Paper from the hon. Member for Chorley (Mr. Hoyle) asks when the Secretary of State
There are other areas in which the Government could do more, one of which is geothermal heating. This concerns the interesting matter of building loops that incorporate heat rejecters and boilers to dissipate excess heat and to add heat respectively in extreme conditions. It is more efficient than conventional air conditioning and heating installations. There is also the ground source heat pump when the ground, lake or sea is used as a heat source or a heat sink to eliminate the need for a heat rejecter and boiler. Heat can be extracted efficiently via the heat pump from ground temperatures as low as minus 4 deg C. Such technologies exist. The heat pump technology is up and running in Chesterfield, and Chesterfield borough council has taken a lead in that at the Dunston innovation centre, a three-storey office complex.
There are questions to be asked about roof installations. Powertech Solar Ltd. in Ferndown wants to know why, although we are talking about £20 million of funding for the solar power initiative, the solar energy system does not attract support. Those are different kinds of energy; solar power is photovoltaic, but solar energy is panels on roofs. I could offer further examples. For instance, the Association of Coal Mine Methane Operators is worried because the industry is so tightly restricted.
Progress is being made, but it is piecemeal. That is the problem. If we have to wait for another six months before we have a White Paper, and only then move to legislation, that will be too long; it would lead to the postponement of investment decisions that need to be taken now.
We wish the Government well, but we want to ensure that they go faster and further, and that they are better informed and take people with them on this great quest thatit is important to rememberhas the objective of cutting down carbon emissions to stem global climate change.
The Parliamentary Under-Secretary of State for Trade and Industry (Miss Melanie Johnson) : The debate is taking place at a turning point in the development of renewable energy in this country. At present, less than 3 per cent. of electricity that is generated in the UK comes from renewable sources. Much of it comes from traditional large hydro, despite a growing contribution from other sources, such as wind, biomass and small-scale hydro.
We are now implementing a policy that will advance renewable energy much more quickly than in the past, make a significant renewables contribution to our energy supplies in the coming decade and beyond, and contribute to meeting our Kyoto targets for reducing greenhouse gas emissions.
The centrepiece of our policy is the renewables obligation. It came into force on 1 April 2002. It requires electricity suppliers in England, Wales and Scotland to provide a specified proportion of their sales from renewable sources each year for 25 years. That proportion rises each year until 2010, and our target is that 10 per cent. of sales will come from eligible sources by that year.
The 10 per cent. target that we have set is challenging. There is long way to goand we need to get there quicklybut we believe that the target is achievable through the strategy that we have developed. We expect that renewables will contribute more than 10 per cent. a year after 2010. The PIU review suggested that the targets for beyond 2010 should be considered after progress on the obligation has been examined in 200506. The figure of 20 per cent. for 2010 is important because of the impact of the cost of electricity to the consumer.
Planning is always regarded as the bugbear of renewables projectsand of wind farms in particularand it has much concerned hon. Members in the debate. Renewables generally have had about the same success
Achieving our renewables targets means that more renewables generators will be built, and it is not good enough simply to pay lip service to the environment, and oppose sensible action that would help to tackle its problems. There is bound to be some impact on the countryside but, as always, a balance must be struck, and the key is to get public opinion on our side. I agree with the hon. Member for Salisbury (Mr. Key) that that is important.
Sensitive design can make a great difference to a proposed project's reception. Developers know the public's main objections by now, and they can go a long way towards ameliorating matters through their designs. That may not be the whole answer, but it is certainly an important aspect that developers need to take into account. The public are hugely supportive of renewable energy in principleseveral hon. Members made that pointand we need to harness that support in practice.
The Government will produce revised planning guidance for renewables, and a draft is expected to be ready for consultation in the next few months. The equivalent guidelines for Scotland have already been revised, and we shall certainly consider them as a model for the future. We are also allocating £2.5 million to support planners and local decision makers on renewables, and we have allocated £10 million to support community-based renewables.
Applications to build larger-scale projects over 50 MW in England and Wales are approved by my right hon. Friend the Secretary of State for Trade and Industry. Many such projects, are in the consents process in Scotland, where such consents are devolved, and in England and Wales. In all, large-scale projects with a total capacity of about 800 MW are seeking consent. Many are wind energy projects, and about half the applications are in Scotland. That gives a good idea of how the introduction of the renewables obligation and the other support that we have introduced is accelerating the drive towards cleaner energy.
I wish to deal with some of the points on planning guidance issues that my hon. Friend and others raised. The Government's national planning policy in England on renewable energy is set out in PPG22, which gives local planning authorities guidance on the issues that affect the siting of all renewable energy projects. Work has already started to revise PPG22. The Department for Transport, Local Government and the Regions aims to finalise the consultation draft during the summer and to publish a final version next spring. It will underline the key role that planning must play in supporting renewable energy targets.
As several hon. Members mentioned, planning is a significant issue, and a major hurdle for many projects, but regional resources estimates, supported by the Government, suggest that though challenging, our target is achievable. The key is to get public opinion on our side, and developers have a major role. We have also allocated additional funds to achieve further support.
On other support measures, renewables are exempt from the climate change levy and, by 2010, the market for ROCsrenewable obligation certificateswill be about £1 billion a year. If we add the value of the electricity itself, including that outside the scope of the obligation, and the value of the climate change levy exemption, we anticipate a total market value for renewable energy of somewhere between £1.5 billion and £2 billion a year by 2010. That is a significant step change for renewables and a massive opportunity for British industry and investors.
The Government recognise the different rates of development of renewable energy technologies. The most commercial technologies will benefit significantly from the renewables obligation, while those that are at the demonstration stagefor example, offshore wind, energy crops and solar photovoltaicsneed additional support to bring them to market. Other technologies such as wave and tidal energy need more research and development and prototype testing to work through any remaining engineering problems.
In all, the Government are providing more than £260 million in the next three years through grants and research and development support. That substantial support will bring forward the next generation of
I mentioned at the beginning of my remarks that we are at a turning point. By that, I meant that we are moving into a new phase of deployment of renewable energy, with the emphasis now very much on the industry taking forward its plans and utilising all the Government support available. We are pleased to say that the industry is responding well to our initiatives. A good example is offshore wind energy. My hon. Friend the Minister for Industry and Energy announced only a few weeks ago consent for a 76 MW capacity offshore wind farm off the coast at Great Yarmouth. This will be the UK's largest wind farm so far.
He also announced the establishment of Renewables UK, a business support team based in Aberdeen, to maximise UK potential in the supply chain. We now have 19 offshore wind energy projects that have obtained leases of the seabed from the Crown estate, which is the first step in taking forward such projects. The offshore wind energy capital grants scheme is twice oversubscribed. We have received bids for more than 2,000 MW of capacity offshore, which seek some £160 million of grant support. That compares with the £74 million available from the DTI and the new opportunities fund. We agreed that grant provision from the two complementary programmes will be closely co-ordinated and that there will be a single point of access to the process.
The Government's role is to ensure that interest and momentum are maintained and that ambitions can be fulfilled. For offshore wind farms, we need a vision of how larger offshore developments than those envisaged could progress over the next few years.