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18 Nov 2008 : Column 137

Mr. Gummer: I think that the Minister has mistaken me; I am asking not about biofuels, but about the powers under the legislation that could have been altered at this point. It is not a question of argument between us that a mistake was made in the legislation—that has been admitted—and we need to put it right. This is the only opportunity to do so, and I wonder why he decided not to take it.

Mr. O'Brien: I will look again at what the right hon. Gentleman is saying to see what has happened, but I am not aware that any legal point needs to be amended. If he is suggesting that there is such a point, perhaps it would have been appropriate to ensure that it was brought to my attention earlier, rather than on the Floor of the House in that way. He smiles knowingly. If he wants to make a point, I will happily consider it later in our proceedings. He will be aware that I have just been handed a note from officials, and I am told that the issue that he raises will be dealt with in secondary legislation. Perhaps that satisfies him. It has brought a smile to his face, and I am pleased to have done that. However, I have not been aware of any legal point such as he described, so I am pleased that officials have now reassured me that it can be dealt with in secondary legislation.

Lords amendments Nos. 30, 31 and 33 will make a small drafting change in relation to the renewables obligation. During a debate in the other place, we identified that, as drafted, the provisions in proposed new section 32E of the Electricity Act 1989 that cover the transitional arrangements for existing projects would have inadvertently prevented future research projects from benefiting from our reforms to the renewables obligation and receiving grant support if appropriate. That was not our intention, and these technical amendments seek to address the issue.

The final set of amendments in this group relates to the provision for offshore electricity transmission. Lords Amendments Nos. 45 and 99 will amend the definition of the term “relevant offshore line” in section 64(1A) of the Electricity Act 1989 for the purpose of defining the term “high voltage line”. The amendments will ensure that the new offshore electricity transmission regulatory regime will apply to the right electric lines—those of more than 132 kV or those built to transmit electricity from an offshore generating station to the onshore grid, even if only a small proportion of the relevant line is situated offshore. The amendments will also clarify the status of electric lines if they convey electricity to a place in Scotland and are wholly or partly in offshore waters—thus ensuring, for example, that a line connecting the Shetland islands to mainland Scotland comes within the scope of the regime even if some of it is on the land.

Lords amendments Nos. 84 and 85 are minor drafting changes to clarify that the references in paragraph 26(2)(b) and (c) of schedule 2 are to the person who owns the asset prior to the transfer scheme taking place. These technical amendments will ensure that the references correctly capture the generator developers who will transfer property, rights and liabilities to the holders of an offshore transmission licence under any property transfer scheme made by Ofgem under schedule 2.

I hope that the House will agree to this group of Lords amendments.

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Charles Hendry (Wealden) (Con): I broadly welcome the amendments. We consider that the Bill has improved greatly since it left the House of Commons a while ago. There are aspects that we should have liked to be included which are still not included, but we are glad to note the concessions that the Government have been willing to offer in the other place in response to significant cross-party agreement on the need for changes in relation to, for instance, smart meters, the role of Ofgem, feed-in tariffs and reporting issues.

I feel an element of frustration about the fact that not one comma of the Bill was changed as a result of our deliberations in Committee, but perhaps the persuasiveness of our arguments at that time caused Ministers to think again about some of the details, although it may have been simply the electoral arithmetic in the other place. I congratulate their lordships on the changes that they have made, but I also thank the Minister, his colleagues and his officials for their willingness to listen to the arguments.

I consider the amendments straightforward and sensible, particularly those relating to the carbon capture and storage regime, although we still feel that the Government’s approach to that issue is very unambitious and that we are proceeding very slowly. While we are still talking about it in this country, China, the Canadian province of Alberta and Abu Dhabi have moved ahead of us. We are slipping down the league table in carbon capture and storage. We are also disappointed, to say the least, by the structure of the Government’s pilot scheme, which rules out various technologies. That, however, is a debate for another day, and I am sure that the Minister and I will discuss it further in due course.

As for the changes in the renewables obligation, we support the move towards banded renewables obligation certificates, and we are pleased that those changes can be applied to Scotland. It is important for such arrangements to apply to all parts of the United Kingdom in the same way. The application of common standards regardless of where the scheme operates in the UK will clearly benefit investors. The clarification of grandfathering rights is also important. It is also sensible to clarify the fact that the rules on offshore transmission will apply even if most of the grid connection cables are onshore rather than offshore. The two should obviously be treated as a single entity. I realise that that will apply in only a minority of cases, but we support the Government’s efforts to secure a cohesive package.

As I have said, these are straightforward and sensible changes which we are broadly happy to support.

Mr. Gummer: I declare an interest, in that I chair a company that advises firms on the provision of renewables and sensibly managed, environmentally friendly products. That gives me the advantage of knowing a little about the issues.

I thank the Minister for this group of amendments, and also for other developments that have occurred during the Bill’s passage. I hope that the House recognises just how complex the issues will be, and how easy it is to distort the future simply by getting the legislative parameters very slightly wrong. The Minister has been extremely helpful, as was his predecessor, in ensuring that we have a fit-for-purpose Bill to deal with what are sometimes considered boring details. I thank the Minister particularly for the measures relating to offshore electricity. The
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issues that arose in my constituency, where one of the largest offshore wind farms in Britain happens to connect with the grid within a nuclear power station complex, showed me just how complicated such matters can be.

I hope the Minister accepts that we shall probably have to return to these issues much sooner than we would normally wish to do, simply because the technology and the circumstances are moving so fast. It is because he has been willing to change right up to the last minute that I permitted myself my intervention on his speech. It is a case of keeping up with rapid change at a time when, as was pointed out by my hon. Friend the Member for Wealden (Charles Hendry), other countries too are moving very fast. We need to be fully competitive.

I now find myself in the unusual position of being able to say thank you for a Bill that I think has been greatly improved by the amendments.

Mr. Mike O'Brien: May I briefly thank the hon. Member for Wealden (Charles Hendry) and the right hon. Member for Suffolk, Coastal (Mr. Gummer) for their support on these measures, and join the hon. Gentleman in thanking the officials for the way in which they have dealt with matters? I know that my predecessor agrees with me in regarding the officials as exceptional in being able to grasp a very complex policy area and address it with skill and dedication, and in their devotion of so much time and effort. We greatly value that.

4 pm

The right hon. Gentleman is right that transmission access will be a major issue in the decades to come—and much sooner, probably. We will have repeatedly to return to this, because many in the industry are concerned about it. He is right that there is not an easy answer, but we need to ensure that we get it right, because others are competing with us and we must get the best possible access to transmission to the grid that we reasonably can.

Let me say once more that I am grateful for the support on these amendments.

Lords amendment agreed to.

Lords amendments Nos. 2 to 41 agreed to.

After Clause 40

Lords amendment: No. 42, to insert the following new clause— Feed-in tariffs: electricity.

Alan Simpson (Nottingham, South) (Lab): I beg to move amendment (a) to the Lords amendment.

Mr. Speaker: With this we shall consider amendments (b) to (d) and Government amendments (g) and (f) to the Lords amendment, and Lords amendments Nos. 43, 44, 69, 71, 75, 88, 91, 94 and 103.

Alan Simpson: I shall also speak to amendments (b) to (d) and Government amendment (g).

Let me begin by taking this opportunity to pay tribute to those involved in bringing us to this point. As in all our debates on feed-in tariffs under this Bill, the amendments are cross-party. I also pay tribute to the coalition of organisations that are the drivers of the
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renewable energy agenda outside the House for the help they have given us in bringing the key arguments into the Chamber. Without diminishing the role of any of the other organisations, it is important to recognise the role played by Friends of the Earth, and in particular Dave Timms and Ed Matthew, who have almost unendingly pursued our understanding of the arguments, and we are truly grateful for that.

Bob Spink (Castle Point) (UKIP): May I join in the tributes the hon. Gentleman is paying to the various bodies and the cross-party support? Will he extend that to the Government and congratulate them on including these amendments, which improve the Bill? Does he agree that we should have a proper timetable for the introduction of the feed-in tariffs for renewables, and that 2010 would be a good time? I wonder whether the Minister and the three wise men would agree with that, too.

Alan Simpson: The hon. Gentleman is right, and his comments allow me to come to the final part of my tributes to those who have brought us to our current position, by paying tribute to the new Secretary of State, because it is fair to say that the lead he has given is what has transformed the agenda. We are right to have tabled today’s amendments, which require any feed-in tariff scheme to include a precise timetable for its introduction and to be precise about the technologies that will be incorporated and the different tariffs that will apply both to the technologies and the scale of the technologies.

On a personal level, every time I had to bang on the Secretary of State’s door about getting things right, I did not find the difficulties or hostility that we faced little more than a year ago. It is important that the House recognises the way in which the goalposts have shifted in the debate. It was not too long ago that the Department for Business, Enterprise and Regulatory Reform issued an internal briefing paper whose whole approach was hostile to feed-in tariffs, dogmatically repeating a mantra that the renewables obligation delivered all the answers and that feed-in tariffs would be a distraction. The Secretary of State grabbed the process by the scruff of the neck and gave it a shake. He saw that there was nothing in that argument, and he came to the House to make a commitment to introduce a feed-in tariff regime in the UK; his role in that should be recognised.

I am sure that the Secretary of State will not parade any of the bruises or scars that he has acquired in introducing his proposals on the threshold for feed-in tariffs. It is fair to say that behind the scenes there was enormously hostile opposition to the shift from the previous position to where the Secretary of State—and, I hope, the whole House—intends to take us.

Martin Horwood (Cheltenham) (LD): The hon. Gentleman is perhaps being too modest in underestimating his role in shifting the balance of opinion. He has gone from a time when the Liberal Democrats were his only allies in this place to the exercising of such influence on his own Benches that the Secretary of State has followed his lead.

Alan Simpson: I always thought that we could get majority support, and it is great that we are moving collectively towards that position.

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I want to say more about the shift that has taken place. On the record, many of the big energy suppliers have been fighting tooth and claw to prevent us from doing anything as bold and imaginative as we are doing. The Association of Electricity Producers had lobbied for a threshold of 50 kW. The British Wind Energy Association lobbied, until the last moment, for a threshold of 500 kW. Such demands would preclude the opportunity to develop genuine, transformational renewable energy systems on a community, town or city scale. The Secretary of State should be praised for his determination and willingness to push the boat out much further than many of those vested interests would have felt comfortable with.

It is worth noting that the arguments used by energy companies, and their representatives in another place, suggested that if we were willing to be bold by setting a threshold of 3 MW or 5 MW, it could be disastrous. In the other place, Lord Jenkin of Roding cautioned the Lords:

I am glad that the Secretary of State ignored or resisted that argument, because the truth is that they will not push off anywhere. Far be it for me to suggest that the energy companies that have been hiking up household energy charges in Britain are crooks in this sense; let us merely say that energy companies recognise a gravy train when they see one, and they are fond of gravy. Under the renewables obligation, they have been able to make returns on capital of roughly 40 per cent., so it is little wonder that they want to preserve this precious domain of substantial rewards that go only to our large energy companies.

Mr. Graham Stuart (Beverley and Holderness) (Con): We are a nation of inventors, and I wonder whether, like me, the hon. Gentleman is excited at the prospect of inventors across this country being able to develop ways of providing energy and feed-in tariffs providing the means by which to make their inventions economic? This could be an exciting future, and new technologies could develop in this country as a result of these changes.

Alan Simpson: I share that excitement, but I want to repatriate some of our inventiveness. This country has some of the leading solar photovoltaic suppliers in Europe, but their leading role is primarily based on supplying others, rather than us. A recent high-profile article in The Guardian featured a Scottish company, Pelamis Wave Power Ltd, which has constructed the “serpent”, a wave-generating machine, off the coast of Portugal. It will be part of a sequence that will deliver 21 MW of energy under Portugal’s feed-in tariff regime. That is precisely the inventiveness that we must seek to bring back into our domestic energy agenda. The one thing that we must be able to say is that we have access to wave power that many of our European partners would envy. We must harness that inventiveness on the basis of the security and clarity that a feed-in tariff regime has to offer.

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I make that point only as a way of reinforcing many that have been made to successive Departments by Government-commissioned studies into the way forward on renewables. Many of the reports have stated specifically that the renewables obligation is an obstacle to the dynamic extension of renewable energy generation in the UK. Even those who have tried to say that we should set lower thresholds have come up with fairly fraudulent arguments about what would be lost if the big energy suppliers ceased to invest.

I wish to make two points on that. First, the big energy companies know the obligation that they share with us on the UK’s 2020 renewable energy obligations. Any company that does not want to be part of meeting those obligations can simply surrender its part of the energy market, and I am sure that its competitors would gladly clean its plate for it—if a company does not want to be part of this, let it go. Secondly, it is fallacious to say that the companies are already doing what I hope the Secretary of State will ensure we are able to do after this Bill is passed. The fear argument is that somehow this 5 MW threshold would scupper investors’ security. Even the figures on the British Wind Energy Association’s website make it clear that, in reality, the amount of wind energy being supplied at less than 5 MW—the existing capacity—is 8 per cent., the amount in construction is 0.6 per cent. and the amount in the planning system is no more than 1.2 per cent. So this threshold will not scupper any of the energy companies’ plans—the truth is that all their plans have been on a much larger scale.

The simpler reality is that the energy companies do not want to go down the path that 18 countries elsewhere in Europe have already taken with the introduction of feed-in tariff legislation. The principal reason for that is that the energy companies do not want to pay citizens for contributing to a renewable energy future, yet any of the partner countries in Europe will tell us that that is precisely what gives dynamism to their renewables agenda.

4.15 pm

It is brilliant that the Secretary of State has decided to be the driving force in ensuring that Britain occupies the same front line and promotes technology, innovation and scientific research while giving clarity and security to the structure within which that must take place. Some of that clarity must be in the definition of what will be included in the scheme. I think that even the large energy suppliers, perversely, will want the Government to deliver that clarity. They will want clarity about the time scale within which we intend to introduce the scheme, about the pricing regime and about how and where it interfaces with the renewables obligation. It is important that we make this change not just to deliver energy security for the future but to harness some of the potential that is sitting waiting for us.

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