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The IEA report estimates that the German feed-in tariff regime between 2000 and 2012 will result in payments of €68 billion, of which some €30 billion to €36 billion will be the additional costs of renewables. It is important to point those facts out. By 2012, the annual cost would be between €8 billion and €9.5 billion.
It is also worth reporting the IEAs finding that solar PV would provide some 4.5 per cent. of Germanys electricity while taking some 20 per cent. of the potential payments. When we compare systems, it is important that we look at the costs as well as the benefits.
Paul Farrelly (Newcastle-under-Lyme) (Lab): I apologise that I was unable to be present to hear all the Ministers comments. As I left my office, I heard on the monitor some of his arguments against new clause 4 and they seemed reminiscent of those used by the Department on the subject of agency workers: we ought not to do anything here, because it might scupper our efforts in Europe. In fact, Britain was not playing ball with Europe in the most progressive way.
Alan Simpson: I am grateful for the Ministers comments on the cost, but does he also accept that we need to take on board, in full, the German Governments report on costs and on economic savings that come out of their commitment to renewables? Their figures show clearly that they can deliver savings of up to €5 billion a year, and the economic benefits of 250,000 new jobs generate spending in the economy. Meeting their own energy needs rather than having to buy from external sources is an enormous cost saving as well as a huge boost to their energy security.
Malcolm Wicks: I agree that we need to look at both costs and benefits, but we also need to accept that long-term consistency is the hallmark of the German regime. Therefore, it might not be sensible for us to change horses now and move away from the RO.
Mr. Swire: The hon. Member for Nottingham, South (Alan Simpson) is right to suggest that we need leadership from the Minister and the Government, because we are simply not getting it. The Minister says that he is weighing up the costs and the benefits, but I can tell him that the costs are the subsidies involved, and that the benefit is that microproducers will be encouraged to take energy production seriously. The Government need to lead on this, because otherwise we will fall behind other countries just as we have already fallen behind Germany.
Malcolm Wicks: As far as Germany is concerned, we must remember that the endgame of all the different mechanisms is to reduce carbon emissions. Again, I refuse to accept the simple comparison that suggests that Germany is in a better place than we are
Malcolm Wicks: I shall explain what I mean, as I want to be helpful to the hon. Gentleman. Per capita carbon dioxide emissions of 9,937 kg in the UK compare with 10,936 kg in Germany, which suggests that something is going right here. Moreover, energy use per capita is significantly higher in Germany than it is in the UK. We have to careful about comparisons, because the endgame is about two thingsclimate change and energy security.
On consistency, industry representatives have told us again and again that they want the Government to ensure that decisions are implemented as quickly as possible so that investors can rely on a stable and consistent policy framework. We have given that commitment, so the new clause could have an effect opposite to what those who propose it intend. Industry and investors have told us that it would be likely to create uncertainty in the market that would lead to delays in new investment.
We are moving forward with reforming the RO. Indeed, the Bill amends the RO to make it sensitive, and it will remain the main policy mechanism for renewable electricity. Any move that threatens to replace the RO would destroy investor confidence and would be likely to result in significant delays to projects coming on line. That could put the delivery of the EU emissions target at risk.
The Government have also received a clear steer from industry that financial support for large-scale generation is not the main barrier to delivering more renewable energy. We are also working hard, as colleagues know, to address a range of other factors, including the planning system and grid access.
Mr. Morley: I am grateful to my hon. Friend for giving way. Many of us accept that there has been consistency in Germany about the feed-in tariff, and that we have been consistent about ROs, but all sorts of new micro-technologies are being developed and my hon. Friend the Member for Nottingham, South (Alan Simpson) has made a persuasive case about them. The Minister is about to deal with those new micro- technologies, but is he prepared to look at different ways to incentivise that new sector that would not disturb the consistency that he has described?
As I anticipated, my right hon. Friends question leads me into the next section of my argument. It is important, because I sometimes think that there is a bit of confusion in the debate about renewable instrumentsthat is, feed-in tariffs as opposed
to ROs. Are we talking about how to incentivise all renewable projects, macro as well as micro, or is the House mainly interested in microgeneration? That is why I now want to discuss smaller-scale generation, which has been the subject of much debate in the media and in this House, especially over the past week or so but also for a longer period of time. I recognise the great support for the early-day motion. I sympathise with, and fully support, peoples yearning for appropriate incentives to encourage the faster take-up of microgeneration. Several hon. Members will know that I have long been an advocate of microgeneration, both in principle and through my attempted practice as a citizen. I have long held the view that if we are to tackle climate change and global warming, there will be important roles for big institutionsthe EU, the G8 and the United Nations big Governments and big corporations. There is also a need for a proper carbon market. However, I have also always taken the view that we need to empower more of our concerned citizensthe recycling generation, if I may call them that, who want to do something about their dwellings and community buildingsto be active citizens on behalf of the environment.
Under the low-carbon building programme, we have made some £86 million available in capital grants to reduce the cost of buying and installing equipment. We have removed the need for planning permission for domestic installations that have little or no impact beyond the host property. People have called for that for some time, and the Governmentthe Department for Communities and Local Governmenthave listened. We have also announced double the support for all microgeneration technologies under the RO, once banding is introduced. That support will be maintained after the first banding review of 2013.
We often hear that the RO is complex, especially for microgeneration, compared with Germanys feed-in tariff. I understand that there are 500 different feed-in tariffs in Germany, with about 120 to 150 more tariffs being added each year. That is not the simple, straightforward picture that some people assume is the case. However, we are not complacent about the changes required to simplify our RO. In April 2007, we introduced the use of agents within the RO. Since then, the number of microgenerators accredited under the RO has increased by more than 250 per cent. We have simplified the accreditation form, and such forms can now be completed and submitted online.
Additionally, suppliers are voluntarily, albeit supported by the RO, offering a tariff system for electricity generation from microgenerationreally, a feed-in tariff. For example, Scottish and Southern Energy is offering 18p a kWh to small generators for their electricity that is exported to the grid. However, that is not all. We will launch a consultation this summer on what we should do to increase renewable energy use to meet our share of the EU 2020 target.
That will cover a broad range of issues and involve collaborative efforts across Government and with business, consumers and the wider community. The proposals will strive for the best value for money for UK taxpayers and consumers. As the Prime Minister explained in November, we want a serious national debate about how to achieve our targets.
Some hon. Members will be aware that I announced in Committee that as part of the strategy, we will examine a range of options further to support microgeneration, including a consideration of whether a feed-in tariff might be a better support mechanism than the renewables obligation for small-scale generationI am thinking of domestic dwellings, community schemes, small civic buildings and small businesses. It would not be right to impose a requirement to introduce a feed-in tariff now without first carefully examining precisely how it would operate, whether there might be better alternatives, and the impact that it might have. We need to be confident that any legislation covers all scenarios and does not impact negatively on existing legislation. In my view, such work can be taken forward only in the wider context of what else we might do to meet our target.
Colin Challen: I had nearly given up. I appreciate a great deal of what my hon. Friend the Minister says. There are lessons to be learned from Germany; one of them is that Germany is still proposing new coal-fired power stations without carbon capture and storage, so it is not all green on the other side of the street. My question is: if a group of people want to come together to set up some kind of community microgeneration, why should we set an artificial cap on the power that the group can generate? I think that he is saying that we would artificially cap microgeneration at, say, 50 kW to preserve the renewables obligation.
Malcolm Wicks: As we saw in the case of micro-hydro, there is always the issue of where one draws the line, yes? [Hon. Members: Yes!] I am happy to draw the line under the positive arguments that I am putting forward. [Laughter.] It is nice to amuse the latecomers. As I have said, I recognise that there is a financial gap in the renewable energy strategy, and that there is a need for a new financial incentive. We will look properly at feed-in tariffsI said that weeks ago; I am not just saying it todayand at other mechanisms for householders and community schemes. I understand the importance of what my hon. Friend says, because renewables should not solely be about big corporations doing things to local communities. We should enable communities to do things for themselves as part of the active citizen agenda.
I hope that hon. Members are reassured that we are taking the issues seriously. After the renewable energy strategy, we will bring forward appropriate proposalsincluding proposals for legislation, if necessaryas soon as possible. I ask my hon. Friend the Member for Nottingham, South to consider withdrawing new clause 4 in light of my comments.
Alan Simpson: I have listened to the concerns and arguments that the Minister has put forward. Let me try to address two of his concerns, and then his arguments. The first concern is about the commitment that he has already made to considering the issue of microgeneration. The great difficulty is that there is a whole series of issues that the Government have agreed to consider. For instance, they agreed to look at the 2010 fuel poverty targets. Unfortunately, having done so, they decided that the targets were too difficult to reach, and that we will not meet them, so that commitment will not get us out of the mess that we are in.
Secondly, the Minister expressed concern about the fact that if a feed-in tariff scheme were applied too widely, it could create chaos. He did not mention the fact that he would be in charge of determining how widely the scheme would apply, so the chaos would be his, as is the current chaos. We have to recognise that although good things that are beginning to happen, they are beginning to happen in a country that is at the bottom of the European renewables league. There is nothing in our programme that will allow us to meet the 2010 targets to which we have committed ourselves.
What we are asking colleagues to vote for, through the new clause, is a commitment on the part of the Government to come back within a year with a framework that sets out how we would introduce appropriate feed-in tariff legislation that applies to the different technologies and to electricity generation, heat generation and the production of biogas. We are talking about a timetable, more than anything else.
Let me explain the significance of the timetable. Last December, our Government sent Ministers to the conference on climate change in Bali. The scientists reporting to that conference said to global leaders that in the next five to eight years we will determine the fate of the generations that will follow. It is what we do in those five to eight years that will determine whether we pass the tipping-point for climate chaos or not. We cannot avoid having to deal with the crises ahead of us, but we do not need to allow chaos to develop. That requires us to act on a dramatic scale now. There is nothing in the framework before the House that will allow us or equip us to take that step. I am asking colleagues from all parties in the House to have the courage to take that step.
A love declared for days to come,
Is as good as none.
Consultations without commitments are as good as none. The House today has the opportunity to make a commitment that crosses party divides, that crosses interests in society, but that unites us in a commitment to deliver something meaningful and sustainable. I hope we have the courage to do so.
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