Draft Renewables Obligation Order 2002

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Mr. Wilson: From what the hon. Gentleman says, it seems that I owe him an apology. The report is available, and I shall make sure that a copy is sent to him. I shall then be happy to discuss what further work is being done. Given that he tabled a question and has not had a copy of the report, I owe him an apology.

Mr. Key: I am grateful for that generous comment, and I would love to see a copy of the report. It puts to rest some of the speculation that has been around in the industry in the past week or two about the cost, which is much greater than was at first expected. That is key to the argument. We all expected that the west coast interconnector would be expensive and that it would cost 1 million a mile, or between 450 million and 600 million overall. I gather, however, that the outturn is about 2.3 billion. If so, we have a serious problem with the development of large wind farms in north-west Scotland. I would be grateful if the Minister would clarify the issue. The whole Isle of Lewis project will be put in severe jeopardy if the cost of the interconnector is of that order. That is to say nothing of going further down the west coast, perhaps to Anglesey. The west Yorkshire link will also be crucial to the enterprise. If the cost of electricity transmission is as high as some of the figures that I have heard, it will be difficult for us to achieve the results that the Minister and I want. We must consider those problems.

There is also the question of technological advancement. We cannot expect the industry to deliver if we do not have the technology. We have lots of proven technologies, such as wind farms. I

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agree with the Minister about the desirability of expanding the construction of such equipment. Why should Denmark take all the cream, when the idea started in this country?

Other technologies are, however, untried and untested. Tidal flow technology is very much in its infancy, and a lot of research and development must be done. Again, I repeat the cry that I have heard from energy manufacturers and suppliers: we simply do not have enough technologies. We do not have people who know about renewables technologies, and we must deal with that problem.

We must also consider the national grid, and grid issues in general. It is part of the historic legacy of the national grid that it was developed and paid for mostly by the taxpayer. That was in response to the need to generate electricity on the coalfields and to transport it to the old centres of heavy manufacturing. That legacy is still with us, but it does not reflect modern needs. The national grid will require massive expenditure, but who will bear the risk? Again, that relates to the west coast interconnector. Will the industry bear the risk, or will the taxpayer need to support some kind of national infrastructure?

As the Minister rightly and helpfully mentioned, there is also the issue of planning. We must recognise the need for a new approach to planning in this regard. Under NFFO, promising projects failed for lack of planning permission, and we do not want that to happen now. Everyone would be grateful if the Minister could clarify one or two issues, some of which were discussed last night. The first is the status of the consultation paper issued by the Department for Transport, Local Government and the Regions on new parliamentary procedures for processing major infrastructure projects. My understanding is that the changes in that paper will not apply to Scotland, which will have a separate arrangement. If so, that is significant, because the proposals would undoubtedly benefit any installations for the production of energy from renewable resources, as that document calls them, and thermal and nuclear power stations, and there would also be benefits in terms of the problem of overhead electric power lines.

Much of the debate in the Chamber last night was about the alleged row between Ministers about whether the Scottish Parliament or the Westminster Parliament would have precedence on such matters. I would be grateful if the Minister clarified whether I am right to understand, having listened to that three-hour debate, that any application for a nuclear power station or other installation for the generation of electricity in Scotland must meet ordinary planning requirements, and that those are a devolved responsibility to the Scottish Parliament, but there are also licensing requirements from the DTI in London. The DTI could therefore not impose a nuclear power station on Scotland if the application failed on planning grounds.

Equally, I understand that an application in Scotland for a power station of any kind would have to meet planning criteria alone. An application could

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not be turned down because one did not like nuclear power, wind farms or anything else. Clarification from the Minister on the subject would slice through the argument that we had to listen to for three hours last night from members of the Scottish National party, who seemed to think that planning law could be used to turn down the types of power that they did not currently favour.

Paragraph 112 of the second report of the Select Committee on Trade and Industry during the 200102 Session stated:

    ''It is too soon to predict whether the Renewables Obligation will achieve the Government's target. It appears to be better adapted to promoting renewable power generation than earlier instruments, but it is doubtful whether it can succeed unless the other problems currently facing all potential investors in new power plants are addressed. In particular, we think the costs of meeting the target in the current market may well be higher than the Government hopes. This is critical because the 10 per cent. target is subject to the proviso that the costs to consumers 'are acceptable'. The Government must take other measures, such as amendments to the planning law and direct assistance with research and development costs, if the renewables sector is to meet the 10 per cent. target by 2010, let alone any higher target by 2020.''

That says it all, and is a fair assessment of the problem that we face.

I repeat that I welcome the order, and hope that the Minister will respond to the concerns that I have expressed on behalf of a wide range of electricity producers and suppliers across the United Kingdom.

5.18 pm

Mr. Wilson: I thank the hon. Gentleman for the measured and reasonable way in which he welcomed the order and raised a wide range of sensible questions about it. I will try to deal with each in turn, and will be pleased to write to him about those I do not get round to.

The basic point to emphasise for the wider audience is that there is wide consensus on the desirability of the legislation, and a good deal of excitement about the potential that it will engender. Earlier this week, I launched a new organisation called Renewables UK, which is symbolic of that potential. I see the issue not only as a question of energy and the environment but as a fantastically important manufacturing opportunity. Some of the contributions at the session I attended were interesting in relation to the sheer scale of investment in renewables to which energy companies are committing themselves.

It is certain that in the next few years many billions of pounds will be spent on the technology and equipment to bring the renewables revolution into reality. A central question underlying that fact is whether the equipment will be manufactured in this country and create jobs and wealth here, or whether it will be imported. The message that I want to send out concerns the scale of the opportunity available to our manufacturing industries, many of which are hard pressed on other fronts. I appeal to everyone with a potential stake in the growth of renewables to examine the possibilities.

I want to deal with the points that the hon. Gentleman raised about hydro, for which, as I have said before, I am a great enthusiast. I think that hydro-

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electricity is a wonderful thing and it is always worth pointing out that it is still this country's biggest contributor to electricity from renewable sources. A few months ago I announced, in anticipation of this order, that it would be extended to include the refurbishment of existing hydro-electric schemes. However, hydro-electric schemes, once built, do not create much employment in the areas where they are located, so the announcement, which was ostensibly about rural Britain and the places where hydro schemes are located, in fact concerned the industrial heartlands.

I often make the point that there are two relevant companies in Alloa, in the constituency of my hon. Friend the Member for Ochil (Mr. O'Neill). That is where the benefits of the investment in hydro will be enjoyed. It is not the place that most people would associate with hydro-electricity, but it is where jobs will be created and retained as a result of the relevant policy.

That effect happens across the range of renewables. Windmills will not necessarily be built where they are to be located, but they create great manufacturing opportunities in other, industrial parts of the country. At Monday's event we discussed the news, which is surely very good news, about investment in Kintyre, and about the potential for building windmills in Lewis, as well as locating them there. Of course Cambrian Engineering is operating in Wales, and doubtless there are others. The north-east of England, where there will also be a renewables initiative, is relevant too. The traditional manufacturing base there would be appropriate for transferring to the technology in question.

Underlying all this is a great opportunity for manufacture and export. The alternative is no manufacture in this country, a lost opportunity, and a great deal of importing. The initiatives are going to happen; the question is whether the technology and equipment used for them will be ours or imported.

Wind tends to have a higher profile than other renewables, but it should be emphasised that wind is not the only issue. The chairman of the Renewable Power Association took part in the recent event. His line of business is biomass. He runs a biomass bank using chicken manure, in Cambridgeshire. That is the other end of the scale from wind farming. I visited it recently and was disappointed that all the equipment was made in Sweden or Germany, which he acknowledged. He said that he will be adding more technology, so unless it begins to be manufactured here, that is going to be good news for Sweden and Germany.

 
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