4 Jun 2013 : Column 1445

(2) The strategy must include an assessment of the cost effectiveness of the policies included in it.

(3) Before publishing the strategy the Secretary of State must consult such persons as in his opinion may have information that will assist him in drawing up the strategy.

(4) The Secretary of State must—

(a) implement the strategy; and

(b) report to Parliament every year on progress.’.

Amendment (a) to new clause 2, at end add—

‘(5) Nothing in the strategy shall rely upon the use of the price mechanism to reduce demand.’.

Amendment 1, in clause 10, page 8, line 8, at end insert—

‘( ) Section 41(4)(a) of the Energy Act 2008 (“specified maximum capacity”) is amended as follows: “Specified maximum capacity” means the capacity specified by the Secretary of State by order, which must not be less than 10 megawatts.’.

Amendment 42, page 8, line 8, at end insert—

‘( ) Regulations must—

(a) place a duty on the Secretary of State and the Authority to promote new generation capacity from distributed generation schemes; and

(b) define “distributed generation schemes”.’.

Amendment 43, page 8, line 8, at end insert—

‘( ) In section 41(2)(a) of the Energy Act 2008, at end insert—

“() establishing, or making arrangements for the administration of, a scheme of financial incentives to encourage the distributed generation of electricity;”.’.

Amendment 44, page 8, line 8, at end insert— In section 41(2)(b) of the Energy Act 2008, at end insert—

“() requiring or enabling the holder of a distribution licence to make arrangements for the distribution of electricity generated by distributed generation;”.’.

Amendment 45, page 8, line 8, at end insert—

‘( ) In section 41(2)(c) of the Energy Act 2008, at end insert—

“() requiring the holder of a licence to make arrangements related to the matters mentioned in paragraph () or ().”.’.

Amendment 46, page 8, line 8, at end insert—

‘( ) Section 41(4)(a) of the Energy Act 2008 (“specified maximum capacity”) is amended as follows—

“specified maximum capacity” means the capacity specified by the Secretary of State by order, which must not exceed 50 megawatts.’.

Amendment 47, in clause 15, page 10, line 13, at end insert—

‘(d) conferring on the Secretary of State the power to establish an auction market (the “green power auction market”) in which generators are entitled to offer, and holders of supply licences are entitled to bid for, electricity generated from renewable sources.

(e) the the Secretary of State must exercise the powers in subsection (d), and take such other steps as they consider necessary, for the purposes of ensuring that—

(i) the green power auction market begins to operate when the first CFD is made and does not cease to operate until expiry of the last CFD that has been made; and

(ii) the reference price under a CFD entered into by a generator who is a party to any agreement made through the green power auction market is based on the price payable to the generator under that agreement,

(iii) in this section, “supply license” means a licence under the section 6(1)(d) of the Energy Act 1989.’.

Amendment 34, in clause 21, page 12, line 41, leave out ‘this section’ and insert ‘subsection (1)’.

4 Jun 2013 : Column 1446

Government amendment 100.

Amendment 35, in clause 21, page 13, line 6, at end insert—

‘(4A) The Secretary of State must within one year of the passing of this Act make regulations establishing a scheme or schemes to make payments for the purpose of rewarding the installation of energy saving measures.

(4B) Regulations under subsection (4A) are referred to in this Chapter as “demand reduction regulations”.

(4C) Prior to the making of regulations under subsection (4A), the Secretary of State must publish a report setting out the total potential for energy demand reduction and the extent to which this potential will be achieved by Government policies including—

(a) the scheme or schemes, and

(b) other relevant programmes, regulation or expenditure.’.

Amendment 36, in clause 22, page 13, line 13, at end insert—

‘(1A) Demand reduction regulations must make provision about demand reduction payments.’.

Amendment 37, page 13, line 21, at end insert—

‘(2A) Subject to any further provision made under this Chapter, a demand reduction payment is an instrument by virtue of which—

(a) an energy user is paid for reducing the demand for energy or investing in a technology which can be shown to reduce the demand for energy either permanently or for a specified period;

(b) all electricity suppliers may be required to make payments (“demand reduction payments”) to or for the benefit of these users.’.

Amendment 38, page 13, line 23, at end insert—

‘(3A) Provision included in regulations of demand reduction payments for the purposes of subsection (2A) may make provision about the meaning of “energy user”.’.

Amendment 39, page 13, line 41, at end insert—

‘(4A) Provision included in regulations of demand reduction payments by virtue of subsection (2A) may include provision about—

(a) the terms of a demand reduction payment;

(b) the circumstances in which, and the process by which, a demand reduction payment may or must be made;

(c) the persons who may be paid;

(d) the circumstances in which and technologies for which payments may be made;

(e) the number and size of payments;

(f) the means by which demand reduction payments are to be calculated;

(g) a person or body who is to administer the settlement of demand reduction payments (“a settlement body”);

(h) the enforcement of the terms relating to demand reduction payments;

(i) the resolution of disputes relating to a demand reduction payment payment;

(j) the circumstances in which a demand reduction payment may be terminated or reclaimed or varied;

(k) the circumstances in which a demand reduction payment may be assigned or traded;

(l) the means for monitoring and verifying the energy reduction for which demand reduction payments are made.’.

Amendment 40, page 14, line 6, at end insert—

‘(5A) Provision falling within subsection (4A) includes provision—

(a) conferring on the national system operator the function of issuing demand reduction payments;

4 Jun 2013 : Column 1447

(b) about any conditions that must be satisfied by or in relation to a person before that person may receive a demand reduction payment;

(c) about any matters in relation to which a person must satisfy the national system operator before the person receives a demand reduction payment.’.

Amendment 41, page 14, line 9, at end insert—

‘(6A) Provision made by virtue of this section may include provision requiring a person to consent to the inspection of plant or premises, either before or after that person receives a demand reduction payment.

(6B) Subject to the provisions in section 24, the Secretary of State must within six months of the making of demand reduction regulations establish a fund drawn from capacity payments for the purpose of issuing demand reduction payments.’.

Government amendment 135.

Gregory Barker: We now turn to the topics of electricity demand reduction and route to market. I shall speak in favour of the new clauses and amendments in the name of the Secretary of State and I thank hon. Members for tabling the other new clauses and amendments in this group, prompting debate on this vital set of issues.

I will start by setting out the Government’s approach to electricity demand reduction. Making good my pledge in Committee, the Government have brought forward new clauses 11 and 12 and amendments 100 and 135, which, for the very first time in our energy history, would allow energy saving projects to compete for new investment on an equal footing with power stations. It has long been recognised that in many cases it is cheaper, as well as greener, to save electricity rather than generate it. However, the coalition’s radical legislative proposals for large-scale energy efficiency are a double win—a win not only for the green agenda, but for hard-pressed consumers worried about rising bills.

The fact is that successive Governments have failed to grab the opportunity to get units of saved power, or “negawatts” as they are sometimes called, to compete with traditional megawatts. Thanks to this reforming Energy Bill, the era of negawatts has finally arrived. We already have a number of important policies aimed at driving greater efficiency, but these measures mean that we can go further. As I said to the Financial Times way back in September 2010, we need to create new markets for electricity efficiency projects to bring in the scale of new investment needed that is commensurate with the challenges and opportunities.

Following our consultation on options to promote electricity demand reduction, we concluded that a new financial incentive would be the most effective way of delivering a step change in the efficient use of electricity. The most cost-effective way to achieve this, without cannibalising the budget for renewables, is to include demand reduction in our proposed capacity market, and that is achieved through Government amendment 100. Hon. Members and their constituents can now be reassured that while we have a massive, multi-billion pound, low-carbon infrastructure programme ahead of us, we will not be building expensive new energy plants unnecessarily where cheaper alternatives for energy efficiency are available.

Delivering EDR through the capacity market will let us achieve three key objectives: targeting reductions at more expensive peak times; securing value for money

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because it will set megawatts against potentially cheaper “negawatts”; and bringing permanent demand reduction projects into line with shorter-term demand-side response measures to enable more effective, joined-up delivery of energy efficiency across the board. The approach of delivering EDR through a capacity market is proven—it is already being done in the United States of America—but our approach is more visionary and will certainly be much more ambitious. Government new clause 12 will provide a spending power to enable our approach to be tested via a large pilot, or pilots, to better understand, among other things, the complexity of the issue and the scale of the potential. Government new clause 11 and Government amendment 135 allow the Secretary of State to appoint and make payments to an alternative delivery body to National Grid for the capacity market. If it is decided that National Grid is not best placed to carry out the EDR elements of the scheme, then we will have this legislation ready.

I am most grateful to the hon. Members for Southampton, Test (Dr Whitehead) and for Brighton, Pavilion (Caroline Lucas) for their thoughtful amendments, which were tabled prior to the Government’s amendments. I am also grateful for their consistent and constructive, as well as passionate, advocacy of this agenda. I particularly thank the hon. Member for Southampton Test. He and I have long been proponents of action in this area, but his expertise in and technical understanding of these issues are, I think, universally acknowledged to be unsurpassed in this House. I hope that the House will join me in recognising his contribution. Amendments 34 to 41 seek to include demand reduction in a capacity market. In the light of the amendments that I have tabled, which achieve that objective, I hope that hon. Members will feel comfortable withdrawing their amendments.

New clause 2, with its amendment, would require the Secretary of State to publish a strategy to reduce a stated amount of electricity demand by 2020 and 2030 while requiring no use of the price mechanism to reduce demand. I welcome the principle behind the proposal. However, let me point out that as well as establishing the first ever Energy Efficiency Deployment Office within my Department, the Government have published a number of seminal documents, including the first ever comprehensive Government energy efficiency strategy, which will be updated again later this year. We have also published DECC’s energy and emissions projections and, most recently, the Government response to our EDR consultation. These documents provide a comprehensive view of the Government’s approach, which was encapsulated at the launch by the Prime Minister of the first ever energy efficiency mission earlier this year.

Mr Barry Sheerman (Huddersfield) (Lab/Co-op): I want to push the Minister on that point. Will any of those documents address the opportunities for smart metering to play a role in the rapid reduction in energy use in domestic and other premises? Many of us believe that smart metering is the answer for a dramatic reduction. Moreover, the Minister will know that I have tabled new clause 16, which would require the installation of carbon monoxide detectors alongside smart meters. That would help reduce the 40 deaths and 4,000 admissions to A and E a year caused by carbon monoxide poisoning.

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Gregory Barker: Indeed. I hope we will have time to discuss the hon. Gentleman’s amendment on carbon monoxide detectors, of which he is an unprecedented and unparalleled champion in this House. I am glad to say that his point about smart meters is fully recognised in the strategy documents. He is absolutely right to say that smart meters will give far better access, as well as information, to consumers to participate in this new, two-way energy efficiency economy and open up all sorts of opportunities. They will also be an essential part of our vision to build an electricity, internet and smart group in the UK. On the development of a demand reduction measure, we are clear that a financial incentive is the most appropriate way forward and that it should lie in a capacity market.

Climate change is, according to the vast majority of scientific experts, with whom I emphatically agree, a clear and present danger to our planet and our economy. Our measures reflect yet another example of the coalition’s determination to rise to this challenge and allow the UK to play an ambitious part in combating the worst excesses of dangerous, man-made climate change.

Hon. Members can be reassured that the measure is not an additional green burden on consumer bills. It will make energy policy greener and potentially cheaper—a genuine win-win situation. I therefore hope that hon. Members will withdraw new clause 2 and its amendment (a).

I now turn to the Opposition amendments—I am grateful to them for tabling them—on the important issues of distributed energy and route to market for independent renewable generators. Independent renewable generators are key to the Government’s ambitions for not just green energy, but the energy market as a whole—not just in helping us achieve secure, affordable and low-carbon electricity, but in delivering a more plural, competitive and dynamic market.

The Government agreed during the Bill’s Committee stage to consider an amendment similar to amendment 1, the intention of which is to increase the maximum generating capacity of feed-in tariff eligibility from 5 MW to 10 MW. I have a great deal of sympathy with the proposal. It continues to be under active consideration and I am committed to finding a workable solution. However, it is a complex issue, because not everyone agrees on this way forward. The Solar Trade Association has stated, for example, that it would be against such an increase. My Department is considering whether it could be delivered without destabilising the existing FITs and renewables obligation schemes or creating perverse incentives.

Andy Sawford (Corby) (Lab/Co-op): Will the Minister define more clearly what he means by “active consideration”? Those Members who support amendment 1 will be encouraged by his remarks, but they will also fear that the impetus of amendment 1 might be lost if it is not agreed to tonight.

4.30 pm

Gregory Barker: I deem the raising of the FITs threshold to be very attractive and am personally driving the issue in the Department. However, when looking at the proposal in further detail, I have been made aware of potentially perverse consequences and impacts on the renewables obligation. I was slightly surprised by the views of the

4 Jun 2013 : Column 1450

STA but have taken them on board. We need to unpack a number of issues and I currently have officials working on the matter. I am hopeful that we can find a way through or partially through, and land at an outcome that, while it might not be the one the hon. Gentleman exactly wants, he would find satisfactory. I cannot say any more on that because I have not come to the House in a position to make a commitment or statement, but I hope he takes from the tenor of my response that we are not just considering the matter; work is being done in the Department and we hope to bring further measures to the House. I reassure him that we hope to respond as the Bill continues its passage through Parliament—most likely, in the other place.

Amendment 46 seeks to increase the specified maximum capacity of the FITs scheme to 50 MW. I have considerable sympathy with that objective, which recognises the effective nature of the reformed FITs, but such an uplift could produce unintended consequences on FITs, budgets, the levy control framework and renewables obligation certificates. As things stand, we do not consider that such a large change offers the best value for money, because it could have significant impacts on the functioning of the renewables obligation and push up costs for energy bill payers.

Amendment 42 seeks to define distributed generation. I applaud the motive of the amendment, but having carefully considered it, and as sympathetic as I am to its intention, on balance, we do not consider it necessary. The reformed and highly successful FITs scheme already ensures that communities can generate their own electricity from a range of technologies. I am proud that, under the coalition, hundreds of thousands of people have decided to do so, and are now successfully self-generating electricity to meet some or all of their needs—in some cases, they export to the grid—on both community and domestic scales. Public buildings, particularly schools, are a popular choice.

Amendment 43 aims to implement a new support mechanism for generation attached to our electricity distribution network. I have led reforms on the FITs scheme to ensure that it remains not only open, but successful and increasingly ambitious, while delivering value for money. We are now closing in on half a million installations. Virtually all the installations supported by the FITs scheme are distributed generators. We therefore do not see the need for a new mechanism, which could confuse consumers and potential generators. The reformed FITs system is doing a good job and is increasingly popular.

Amendments 44 and 45 aim to require distribution companies to supply distributed generation—even if that does sound like a slight oxymoron. UK distribution network operators already ensure that electricity generated by distributed generation is transmitted to where it is needed, if it is not consumed locally. While I am sympathetic to the intent behind the amendments, I do not see that they are strictly necessary.

I am grateful to the hon. Member for Southampton, Test for tabling amendment 47, which seeks to address an important issue: the independent renewable generators’ route to market. The amendment would create a duty on the Secretary of State to establish a green power auction market for renewable generation—GPAM, as it is often known. I hope the hon. Gentleman knows, and the House appreciates, that I am sympathetic to the

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intention behind the amendment. Bringing on board new, dynamic and disruptive new entrants is a key aim of the Bill. I am personally committed to breaking the grip of the big six and making our vision of a far more decentralised energy economy a reality.

John Robertson: The Minister will appreciate that this is music to my ears, but how does he expect to be able to do that—by bringing new people into the market or by trying to help smaller companies to develop?

Gregory Barker: Both, I hope. Certainly, it would not be satisfactory if the big six became the big seven or eight. Ultimately, we need the big 60,000. We want to extend the enthusiasm for micro-generation and community generation, and scale it up so that small-scale generators, who currently cater only for their own needs, begin to have the ambition to export electricity in their areas and create community interest companies. We also want entrepreneurial companies. The sector is ripe and rich for entrepreneurs. We want to see new disruptive players coming into the market and using new technologies or offering better services. There are already some good independents in existence. I have met a number of them and they are seeing their customer numbers grow considerably. As things stand, however, there is still a long way between them and the big six.

Bob Stewart (Beckenham) (Con): Does the Minister mean that a district such as Bromley in my constituency might have its own green power generation system, which would be designed specifically for that area and would provide for all its needs? Is that what we are going for?

Gregory Barker: That is a real possibility. A number of local authorities already have that ambition and are using a range of technologies. Woking is using gas-fired CHP, but renewable fuels such as woodchip can be used, too. Such processes can generate substantial amounts of reliable electricity, and if they are carried out locally, the heat generated can also be used constructively, with cheap affordable heat being sent into social housing and public buildings, or to private residents. This model is already starting to take shape in pioneer local authorities. The city of Nottingham has exciting plans for district heating networks on a scale not seen in this country for generations.

The irony is that this is not new technology. District heating by local generation companies is where this energy was born; it began on a distributed model. It was only in recent years that the Labour party nationalised the industry and created one big monopoly, and it was under the previous Labour Government that the number of energy companies shrank from 14 to six.

We are striving to put the “local” back into local energy provision, but we are not prescribing any one model; it could be rolled out in lots of different ways—there are exciting projects around the country, and we want to see a lot more of that—but it must be done in a way that, first and foremost, works for local people and is affordable. I return, however, to a point I made on the previous amendments: we have within our reach the opportunities to do that in a way that is not only green, but affordable—and sometimes even cheaper than the alternative.

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Katy Clark: I am extremely interested in what the Minister is saying. Is not one of the problems, however, that we do not have the infrastructure to do what he suggests? A few weeks ago, the Isle of Arran, in my constituency, was without electricity for a week. Even if it had its own generators, the substation is one-way traffic, and I understand that it would need a smart grid to use any energy created on the island. How will the Energy Bill help that island?

Gregory Barker: We are already embarked on a massive programme of grid renewal. The National Grid has published at length its proposals for how to roll it out. Obviously it cannot be done overnight, but we have made it clear that we are looking to build, with billions of pounds of investment, overwhelmingly from the private sector, a completely new grid that will do exactly as the hon. Lady says and permit a new relationship—a two-way, more equal one—between the consumer and the producer, and allow for the adoption of these diffuse new technologies. She is right that while the old grid is still there, there are certain barriers, but wherever possible and wherever it makes economic sense, we are keen to work with local communities and district network operators to help them overcome those barriers and to see what can be done within a reasonable economic cost. She is right that there are still barriers, but my Department is working proactively to try to overcome them.

I hope that the House appreciates that I am sympathetic to the intention behind amendment 47 to create a green power auction market—bringing onboard these disruptive new entrants is the key aim. GPAM is a means to an end, however, rather than an end itself. No one solution is inherently good; what matters is what it can deliver, and there are several ways of delivering the agreed outcome while navigating in slightly different directions. Our concerns stem from the fact that GPAM is effectively a fixed feed-in tariff, as it provides the generator with a guaranteed price for all the power it generates. As a result, the generator would have no incentive to manage its imbalance risks, as these would be taken away from it, which could work out more expensively for the consumer.

Although I welcome and fully appreciate the aims of GPAM, we have to be careful, despite having all the right motives, not to create an expensive, long-term solution to what might turn out to be a short-term problem. CFDs will undoubtedly improve conditions, which I know have been challenging, in the market for power purchase agreements, enabling independent renewables projects to get off the ground much more easily. They should not only help the smaller independents out there now and doing a great job, but attract—I hope—new entrepreneurs into the market. Although I have issues with GPAM, therefore, I want to make it clear to the House that I am not complacent and am not saying that we have all the answers.

I fully recognise that there is an issue at stake, which the GPAM amendment endeavours to address, but the route-to-market issue is complex. It is such a technical issue that we perhaps cannot do justice to it in a debate on the Floor of the House. However, it is an issue that my officials, with all their skill and expertise, are absolutely committed to tackling. At a political level, I am personally committed to finding a solution to it, albeit a solution that must be workable and not lead to greater costs for consumers.

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4.45 pm

We need to do more work on this issue. I am pleased to say that my Department is working constructively with those in the industry, who have been extremely responsible in their engagement with it. I am extremely grateful for their patience. With hindsight, perhaps we could have engaged with them a little earlier or more effectively earlier, but I am confident that the current level of engagement and the commitment on both sides will enable us to find a solution to the problem. I greatly welcome the constructive way in which the industry—this includes stakeholder groups and companies directly —is working with us.

I realise that that is less than satisfactory as a response at this point in time and that I am unable to provide a definitive response on the issue today, but I stress again that it remains under active consideration; I hope I have spelt out to the satisfaction of the hon. Member for Southampton, Test what active consideration means in this context. I can reassure the House that the Government will respond more fully on GPAM in the course of the Bill’s passage through Parliament. On that basis, I hope that the hon. Gentleman will not press his amendment. I look forward to hearing the views of others in the House on these important issues.

This group also includes Government amendments 100 and 135, and new clauses 11 and 12. I encourage the hon. Members for Southampton, Test and for Brighton, Pavilion and my hon. Friends the Members for Christchurch (Mr Chope) and for Gainsborough (Mr Leigh) not to press their amendments and new clauses. The Government are actively considering the issues raised by amendments 1 and 47. Although it may be disappointing that there is no definitive answer at the moment, I encourage the right hon. Member for Don Valley (Caroline Flint) and the hon. Member for Southampton, Test not to press their amendments and to allow the Government to continue the active work stream that is already in hand.

Whether it is opening electricity markets to exciting new technologies, creating new dynamic markets for electricity demand reduction and demand response, welcoming in new and disruptive companies and entrepreneurs, or empowering communities and consumers to generate their own electricity, this Government are driving a decentralised energy revolution, one that I believe finds support right across the House.

Luciana Berger (Liverpool, Wavertree) (Lab/Co-op): The Minister raised a number of issues. I wish to focus on his points about demand reduction and community energy, before handing over to other hon. Members who wish to speak on this group of amendments.

Let me begin by saying how wonderful it is finally to hear what the Government propose to do about reducing demand for electricity. When the Bill was first published in May last year, many industry experts rightly observed that there was a gaping hole where the answer to that question should have been. We spent many hours in Committee and on Second Reading discussing and debating how we generate energy, but not how we could use less of it in the first place. A fortnight ago, the Government produced new clauses 11 and 12. I will come to their merits in a moment, but first I must tell the Minister that these proposals should have been brought forward much sooner. I know that the right

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hon. Gentleman agrees with me about that, because when we debated the need for demand-side measures in Committee at the end of January, he said:

“There can be no proper discussion and scrutiny of electricity strategy or really forward-looking ambitious Government energy policy without the inclusion of our plans for demand reduction.”––[Official Report, Energy Public Bill Committee, 29 January 2013; c. 345.]

He was absolutely right. It was challenging, however, that the Government did not have any demand reduction plans in place at that time.

Martin Horwood: Has the hon. Lady not noticed the launch of the green deal, which is possibly the most significant energy efficiency initiative in British history? I have to say that, for those of us who remember the chaotic system of energy efficiency grants that existed under the last Government, it compares extremely favourably with them. I think she is being a little ungracious about this Government’s energy demand reduction strategy.

Luciana Berger: We wanted properly to scrutinise the Government’s plans in Committee. We have only recently had the opportunity to do so, and we have just heard what the Minister said. I remind the hon. Gentleman that pay-as-you-save efficiency scheme pilots were started under the last Government. We are waiting to see exactly how the green deal is doing. We await the Government’s figures, and we expect to see them at the end of June.

During pre-legislative scrutiny, the Energy and Climate Change Committee concluded that Ministers were failing to give enough priority to demand-side measures. As I have said, we still had no firm proposals on Second Reading. In Committee, the Minister would not confirm whether the Government would definitely seek to include demand reduction amendments in the Bill once his consultation had concluded. Now, at long last, we have the results. We received them two weeks before Third Reading and a year to the day since the Bill was first published.

The Minister has now said that he is minded to pilot measures to reduce electricity demand through the capacity market, and we welcome that step. However, the Government’s own response to their consultation accepted that that course of action still presented a number of uncertainties. A number of questions remain unanswered. I am sorry that the Minister will not have an opportunity to answer them, but I would be happy to give way if he would like to intervene on me. It would be helpful to know, for example, exactly how the pilots will work and by how much the proposals will reduce electricity demand. Those are currently complete unknowns.

The Government’s forecasts from before the new clauses were published showed that current policies would reduce electricity demand by 59 TWh in 2018 and by 68 TWh in 2030. That energy saving would be dwarfed, however, by an additional 92 TWh of untapped potential saving that could be achieved by 2030, according to analysis by McKinsey. That could be the equivalent of a 25% reduction in total electricity demand, representing a colossal saving. It is unfortunate that the Minister could not share with us the Government’s estimate of by how much the capacity market could reduce electricity demand over the same period.

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Many people have also raised serious concerns about how effective the capacity markets can be in rewarding energy saving. In the United States, for example, a similar policy in Massachusetts resulted in energy efficiency projects receiving just 3% of total capacity payments. Despite complex design, 70% of capacity payments went to existing fossil fuel generation instead. Were the Government aware of that scheme? If so, what lessons have they learned from it?

The way in which new clauses 11 and 12 are drafted provides the mechanism for pilots to happen, but they do not offer any further detail. I listened carefully to the Minister’s remarks, but there were a lot of gaps. The proposals do not specify what measures will be piloted, or whether more than one measure will be trialled. We are no clearer, following his remarks, as to when the Government are planning to launch the pilot or when they expect the first capacity auction to take place.

Gregory Barker: We are expecting to run a capacity market trial in 2014. We expect the pilot for energy demand reduction to be run then as well. We will be providing further details.

Luciana Berger: I thank the Minister for his intervention, and hope he will lay before the House the rules governing those auctions so that we can properly scrutinise them. We hope they will be forthcoming.

I was disappointed by the Minister’s response to the amendment proposed by my hon. Friend the Member for Southampton, Test (Dr Whitehead). I echo the Minister’s words that my hon. Friend, as the whole House will know, has long-standing expertise and considerable experience in this area. His amendment 35 would require the Secretary of State to establish

“a scheme…to make payments for the purpose of rewarding…energy saving measures”

and to do so “within one year” of this Bill becoming law. That would introduce clear, simple payments for households and businesses, and it could start immediately, with no wait for a capacity crunch to trigger an auction. I understand that the majority of respondents to the Government’s consultation favoured a premium payment option along those very lines, but we did not hear from the Minister the rationale behind the Government’s decision to reject that option and favour instead incentivising demand reduction through the capacity market.

Let me touch briefly on amendment 47, also proposed by my hon. Friend the Member for Southampton, Test, which would establish a green power auction market, or GPAM. This would combat a significant issue. The UK needs to invest £75 billion in new renewable generation by 2020. Analysis of DECC’s own figures has shown that the Government are currently relying on 35% to 50% of this investment being delivered by independent renewable energy generators, or the “disruptive new entrants”, as the Minister referred to them on a number of occasions. Their current route to market is dependent on long-term purchase power agreements with the big six. A green power auction market of the kind my hon. Friend proposes could open up the market to new suppliers, increase competition and potentially deliver a cash saving to consumers of £2 billion. Although I welcome the Minister’s saying that he wants to address this sector and that a real issue is at stake, I sincerely

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hope that a viable solution, which he said would be forthcoming, is in place in time for the allocation of the first CFDs in 2014.

I conclude by dealing with our amendment 1 on community energy, which stands in my name and those of my right hon. Friend the Member for Don Valley (Caroline Flint) and my hon. Friend the Member for Rutherglen and Hamilton West (Tom Greatrex). Speaking as a Labour and Co-operative Member, I am very proud to speak to this amendment. It would appear that the Minister and I agree that community energy schemes deliver enormous benefits to our country. They bring diversity, resilience and security to the energy market. They boost our economy by attracting new sources of investment, and they help to tackle fuel poverty through a strategy for generating and saving energy that is owned by local people.

I recently saw that first hand when I visited Brixton Energy, an award-winning solar project run by Repowering South London. It is the UK’s first inner-city co-operatively-owned energy project, and I urge hon. Members to pay it a visit if they have not already had the pleasure. As well as offsetting 28 tonnes of carbon every year, the project is providing invaluable work experience opportunities for young people. There are many other fantastic community energy projects throughout the country: Westmill wind farm co-operative in Oxfordshire, Neilston community wind farm near Glasgow and the Lochcarnan community wind farm—the list goes on. There is a risk, however, that as drafted the Bill could stop these types of larger community schemes ever happening again. That is why we need to amend it today.

The Secretary of State has said that he

“wants nothing less than a community energy revolution”,

but those words ring rather hollow when we examine how this Bill fails to address how community energy schemes can compete with large-scale commercial generation. The issues have been well summarised by Cornwall Energy, when it said that the high degree of technical knowledge needed to participate in the system is a barrier for many smaller generators, and that the proposed CFD system does not compensate smaller generators for the lower market prices they receive for their power. With the end of the renewables obligation, the Bill provides no incentive for suppliers to purchase renewable electricity from independent generators.

Katy Clark: I congratulate my hon. Friend on the way in which she is putting forward her case. She will be aware that many of the successful community generation projects—those that really laid down the way forward—were in Scotland, and particularly in the island communities where there is a very strong sense of community and a wish to have a sustainable future. If we look around Europe, we find that this is also very common—in Germany, Scandinavia and Greece, for example. Does my hon. Friend agree that we have fallen behind in this area?

Luciana Berger: We need to see urgent action in this regard. Other countries are forging ahead with numerous locally generated schemes, and we ought to have as many, if not more.

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5 pm

We are considering the Bill without the benefit of having seen a Government community energy strategy. Both the energy Minister and the Secretary of State confirmed in Committee that a consultation paper on such a strategy would be published in March, but alas we are still waiting six months on. The delay was confirmed two weeks ago by the Minister in answer to a parliamentary question asked by my hon. Friend the Member for Rutherglen and Hamilton West, when he said that the community energy strategy would be published “later this year”. The matter will be of concern to all Members, not least the hon. Members for Hove (Mike Weatherley) and for Brighton, Pavilion (Caroline Lucas), who have also tabled amendments on community energy.

Most notably, community energy groups have expressed the view that the threshold for the fixed feed-in tariff is not high enough. The current threshold is 5 MW. When we pressed the Secretary of State on the issue in January, he produced what was probably the most insightful piece of analysis that I heard during the Committee stage. He said:

“Let us be clear. In our discussions on that, the vast majority of community energy schemes that we are seeing are below that threshold.”––[Official Report, Energy Public Bill Committee, 15 January 2013; c. 16, Q39.]

Yes, because that is what the threshold is. That is why it is called a threshold.

Let me be equally clear. Our amendment 1 would correct that flaw, and increase the feed-in tariff threshold from 5 MW to not less than 10 MW. That is the action that community energy projects throughout the country are crying out for.

Caroline Lucas: I certainly support the amendment, but I wonder why the hon. Lady limited the threshold to 10 MW. The Energy and Climate Change Committee talked of 50 MW, and many non-governmental organisations have talked of more than 10. I think it would be useful to convey the idea that “community” means more than just “small”.

Luciana Berger: If the hon. Lady looks at the amendment, she will see that it refers to

“not less than 10 megawatts.”

It does not limit the threshold to that level.

I listened carefully to what the Minister said about his commitment to “active consideration”, a phrase that he used many times. He used the same phrase when we discussed a similar amendment in Committee four months ago. If the Government really want to deliver the community energy revolution to which the Secretary of State has referred, actions must speak louder than words. The hon. Member for Edinburgh West (Mike Crockart) expressed his support for community energy, and I hope that he will join us in the Lobby to support amendment 1. Unfortunately, the hon. Member for Beckenham (Bob Stewart) is no longer in the Chamber, but I noted his aspirations for community-generated energy in Bromley, and I hope that he, too, will join us in the Lobby.

I urge Ministers to support our amendment, and I urge the House to divide on the issue if they will not do so.

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David T. C. Davies: I am normally a loyal Back Bencher. I sometimes skip merrily through the Division Lobbies behind my leaders, and at other times go through those Lobbies with a slightly heavier heart. I am afraid that this will be one of the occasions on which I back the Government, but do so with a certain amount of trepidation.

I listened with great interest to the Minister’s explanation of how he would reduce electricity demand, but one of the most important questions that can be asked from these Benches is not “how”, but “why”. Why is it necessary to do this in the first place? The Minister gave us a bit of an explanation by referring to climate change, which he described as a clear and present danger. Of course it is a clear and present danger. No one whom I know of has denied the reality of climate change, and I have certainly never done so. The point is that the climate has always been changing. That has been a clear and present danger for the last 4.5 billion years. The new clause, and indeed the entire Bill, was tabled on the basis that the 0.8° rise that we have seen over the last 300 years is somehow more of a danger than any of the other rises and falls that we have seen over the last 4.5 billion years.

I did a bit of scribbling as I was sitting here and listening with interest, and I worked something out. I have seen many graphs in the documents backing up these claims, and if we had a graph that showed every 100 years as 1 cm, in order to show how long the earth had been in existence, the graph would have to be 280 miles long, which is twice the length of the High Speed 2 rail route. If we really did have a graph that was that long and we were going to look at just 3 cm of it, would it be wise to put forward such far-reaching amendments and Bills based on changes that are not that far out of the ordinary over the course of the 280 miles that my imaginary graph stretches?

Gregory Barker: Despite my hon. Friend’s eloquence, I fear that he and I are never going to agree on his interpretation of the science of climate change or on the need to act. I will just say to him about energy efficiency measures, however, that even if there were not man-made climate change, there would still be a compelling reason to act, because saving money is always a good thing to do, and that is what these energy efficiency measures will deliver for hard-pressed consumers.

David T. C. Davies: The Minister is right. He did not, however, mention the other reason that is sometimes put forward—that we are about to run out of carbon-based fuels and uranium—and as he did not mention it, I will not knock that argument back. Instead, let us address the point he made: that this may well lead in the longer term to cheaper energy.

I have no objection at all to many of the things the Government are doing: the smart meters, the decentralisation—which the Minister talked about—and the insulation, which was not mentioned, but which I assume is part of the same package. I get slightly more nervous when I hear him talking about negawatts rather than megawatts, however, as that suggests people will be paid for not producing things.

We have already had that situation in farming, where people have been paid not to produce food. I sometimes wonder whether the Minister—or, indeed, the hon. Member

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for Brighton, Pavilion (Caroline Lucas)—would like to pay me for not making speeches. I see much nodding of heads. I ask myself, however, whether this proposal is economically sensible. I am a keen student of economics, and it is my understanding that there are only two ways to reduce demand for anything. One way is to ration the goods that are in demand, and to some extent the Government are making provision for that, as they know there is a danger that we could run out of electricity over the next 10 to 15 years. My understanding is that there have been discussions as to how, if that were to happen, demand might be rationed in respect of certain high users of energy. The second way to reduce demand for any commodity is to increase prices.

Whatever the Minister says about negawatts and insulation and smart meters, the reality is that prices are going up partly in response to the policies this Government are putting forward. We have a system that now subsidises production of electricity that would otherwise be economic, in order to make it harder for people to get hold of it.

At the moment, the clear and present danger to all of us is the economy. The one thing the coalition was elected to do was sort the economy out.

Dan Byles: I am still digesting what was said about the supply and demand curve. It is, of course, also possible to shift the demand curve, and my understanding is that, in terms of energy efficiency, we are seeking not to reduce demand down the curve through pricing or rationing, but to shift the entire demand curve so there is less need in the first place.

David T. C. Davies: Well, I am going to have to think about that one for a few minutes before coming back with a substantive response. I will say, however, that it is not wise to talk about reducing people’s access to electricity at a time when we want to be saying to businesses across the world, “Come to the United Kingdom and invest.” We are not going to be able to compete with anyone on the basis of labour costs; indeed, we do not want to compete on that basis. We do, however, want to be able to say to business, “If you come here, you’re going to get a large and reliable source of electricity.”

Gregory Barker: Let us just be clear that we are not talking about reducing businesses’ access to electricity; we are talking about seeing energy as part of being in a resource-efficient, competitive, global economy, where businesses that can use less energy in creating their products or delivering their services will have a competitive edge.

David T. C. Davies: I fear that within 20 or 30 years those who are now talking about the temperature changes we are seeing will find that they are not that out of the ordinary in the context of the past 8,000 years or 4.5 billion years. We may look back and ask, “Why did we suddenly decide to make it more expensive to generate electricity in this country? Why did we suddenly decide to decarbonise at a time when other nations, such as China and other places in south-east Asia, were doing quite the opposite?” We may look back from a point in the future when not only the GDPs of those countries, but their GDPs per head are much larger. Carbon emissions will not have stopped, temperatures will not have risen that much and those rises that do take place

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will be as much to do with things such as the Pacific decade, oscillation and the natural changes that go on in the Earth, and we will wonder whether we were right to go down this path.

Dan Byles rose—

David T. C. Davies: I will not give way any further. I have made my point. I will be supporting the Government, as much as anything else because I look at some of the people who are not supporting them and I realise that being in coalition, even being in the same party as people whom one can respect and admire but not always agree with, is all about a bit of give as well as a bit of take. So I will support the Government tonight, but I hope that the Minister will think about what we say and consider whether these policies might need amending in the light of further evidence about the relevance of temperature rises in the future.

Dr Whitehead: I think the hon. Member for Monmouth (David T. C. Davies) will be going home tonight and throwing all the contents of his fridge out, because he knows that he can go down to the shop to buy some more food tomorrow. Perhaps he might think about the wider externalities of saving energy and saving demand, because, among other things, having a good demand-side reduction policy means that we do not have to produce the new capacity that otherwise we might have in stream to meet our energy demand, as we would be using energy across the board much more efficiently. Whether or not one believes—he plainly does not—that anthropogenic climate change is a real and pressing issue, using our energy far more efficiently and making sure that those possibly unfundable, difficult-to-organise increases in capacity can be averted by doing so is a prize in its own right. That is the case whether or not one thinks this is intimately bound up with climate change, and I wish to dwell briefly on that precise point.

The Minister showered me with kind words, so he would not expect me to say anything unkind in return. It would be churlish of me, and I was not intending to do so. [Interruption.] There is no “but”. Instead of advocating, at great length, the amendment that I was pursuing on demand-side reduction, I wish to see whether we can unpack a little of some of the consequences of the Government proposals that have now been introduced. I warmly welcome those, and I know that the Minister had quite a hard time getting them to the table in their current form. Therefore, I very much welcome both the effort that has gone into introducing these provisions and their content. Essentially, the amendments would produce, through the right mechanism of capacity payments rather than contracts for difference, a serious method of addressing the question of demand-side reduction over a long period, but I would place a little question mark against that demand-side reduction capacity or anti-capacity being auctioned through the general capacity auction system. As my hon. Friend the Member for Liverpool, Wavertree (Luciana Berger) has mentioned, we know from experience elsewhere in the world that demand-side auction participants tend to be squeezed out of wider auctions on capacity when they participate.

5.15 pm

If we are left with a mechanism that merely introduces the ring, as it were, to would-be boxers in the demand-side reduction auction world but does not go further than

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that to ensure that they can compete in the ring properly, the outcome might look good on paper but will not produce much change over the next period. I am, however, encouraged by the idea that there will be pilot auctions for demand-side reduction measures. I do not know whether the word “pilot” is meant to propose alternative routes to auctioning, which could considerably advantage demand-side reduction measures if they stand outside the overall capacity auction market as far as is possible, or whether they will just be pilots that set out the parameters for arrangements and are therefore limited in their ambition.

I freely accept that among the reasons for tabling my amendments was a wish to ask the Government to table some amendments and to suggest some that might do the job if they did not do so. However, the amendments also try to work out how such a de-capacity market might work. They would draw forward not just the auction but payments taken from the general capacity payments at an early date, in advance of a capacity auction, to ensure that the demand-side payments were auctioned or allocated at an early stage and before such an auction. Although a capacity auction is pretty certain to take place, under the legislation as it stands there is no guarantee that the Government will hold such an auction. The Government must look forward to see what the capacity constraints are likely to be over the next period and declare an auction on that basis and if it happens that the capacity constraints are not what was thought, the Government might decide to have a capacity auction later or not to have one at all.

I would be concerned if the question of demand-side reduction measures was lost because a capacity auction for demand was delayed or removed entirely as a result of those exigencies. The idea of separating out as far as possible the idea of either auctioning or allocating demand-side reduction measures within the overall capacity measures seems to me to have quite a strong measure of sense about it. As for the future, I would like the pilots mentioned by the Minister to fledge into a longer running version of a parallel market for demand-side reduction measures rather than simply leading to the opportunity to take part in the wider auction market, which, for the reasons I have outlined, might not lead to the sort of success that we all want for those measures once they have been put into place.

I hope that when the Minister brings forward more details of the pilots, he will give us a better understanding of what they might look like and whether they might work in the way that I described. If that is the line of thinking, I would be happy not to press my amendment to a Division.

Gregory Barker: I have been following the argument closely. Although we are not in a position to announce details today, our thinking is very much in tune with that of the hon. Gentleman, and we recognise the issues that he raises. We expect the capacity market to run in 2014, but we expect that, separate from that, piloted projects for energy demand reduction will be funded to help scale up the market, and in future we expect ring-fenced auctions, at least for a transitional period, for specific demand response and demand reduction projects.

Dr Whitehead: I thank the Minister for that clarification. I am encouraged by the thinking that clearly is beginning to be done on what these things might look like. I wish

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the Minister luck when the Treasury realises that the pilots taking place on capacity payments may have more substance to them than the Treasury might think. I should not have said that, in case someone there reads the


transcript of this debate! I am encouraged by the Minister’s response.

The other matter that I want to raise relates to amendment 47, which calls for the establishment of a green power auction market arrangement in wholesale and retail sales of energy. I want to spend a moment establishing why something like GPAM is so important. My amendment attempts to resolve, or at least to go some way to resolving, a very serious issue: the drying-up of opportunities for independent generators to establish reliable markets for their low-carbon generation once the renewables obligation comes to an end in the spring of 2017.

Hitherto, those independent generators have been able to secure power purchase agreements on the back of renewables obligation certificates, and to use those agreements effectively to bank their investments, so that they have the sort of market certainty that enables those investments to be funded because it is known that there is a stream of sale coming forward that will ensure that the investment is made and works well, as far as both the independent generator and the bank are concerned. With the arrival of contracts for difference, that simply will not be the case. Indeed, power purchase agreements for those people still undertaking RO arrangements before the end of the renewables obligation have already dwindled to virtually zero. In fact, only one company, as far as I know, is presently providing power purchase agreements.

Most independent generators, whether we are talking about onshore, offshore, or other forms of low-carbon generation, are already thinking, when it comes to their investment decisions, about CFDs rather than ROs, simply because of the time period over which those investments have to be considered. They cannot go back to the bank and say, “Can we have that investment on the basis of what we can demonstrate to you, in the absence of other financial credit lines, is a known supply line for our energy product?”

The outcome could be quite perverse, with regard to what the Bill’s intentions have always been. It was always the intention, with the contracts for difference, to try to bring a lot of new, different investment into the energy market, as well as independent generators of different sizes. It was also the intention to ensure that the vertical integration seen in recent years did not become the enemy of investment, or of small, independent operators and others trying to get into the market, but rather became its friend, as other entrants came into the market alongside larger generators.

If the outcome is that as a result of the Bill we further consolidate the vertical integration of the market rather than the opposite, that will be a perverse outcome relative to everything that the Bill was supposed to bring about. If we can get a mechanism similar to the green power auction market—if it quacks a bit like GPAM and walks a bit like GPAM—I would be happy with that. We need some mechanism that can ensure that independent generators are not captured by the very large companies and that they do not have to enter

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into such disadvantageous contracts that they will fail to make a living from the energy that they are trying to put into the market in the future.

Mr Sheerman: As I understand it, small generators in some parts of the world, particularly America, are increasingly looking at crowd funding in order to get started. That is a new opportunity for finance, which some people are calling a new form of democratic capitalism that empowers local communities.

Dr Whitehead: My hon. Friend is right. Indeed, there are companies in the UK, such as Ecotricity, which have not exactly involved themselves in crowd funding, but have engaged in bond arrangements for the development of their low-carbon power. Even if such a source of funding is available, if the deal for the subsequent sale of the energy is so disadvantaged by a contract for purchase that shaves off the reference price or makes arrangements that are extremely disadvantageous to the ability of that company to sell its energy into the market—while at the same time those potential purchasing companies take advantage of their vertical integration by providing routes to market for their own generation at different costs and under different arrangements—the future market will be very distorted indeed.

I welcome the Minister’s saying that the issue is being actively considered, that he understands the problem at the heart of the GPAM proposals, and that he is actively in dialogue with industry on possible routes to solutions. I look forward to proposals in another place to address the issues. It is essential that they are addressed before the Bill completes its passage, so that the market that we produce as a result of CFDs is fair for those participating in it and produces the varied and pluralistic market that we want for electricity generation, particularly low-carbon energy generation, in the future.

Caroline Lucas: I want to say a few words about the amendments in my name, starting with new clause 2, which deals with the strategy for electricity demand reduction. The clause sets a clear ambition for 2020 and 2030, using figures published by DECC, alongside the electricity demand reduction consultation, and requires the Secretary of State to have policies that get us there.

I was a little disappointed that, in response to the amendments that I have tabled, the Minister on many occasions indicated warm sympathy but not action to achieve the aims. Willing the ends but not the means creates a nice warm fuzzy feeling, but does not change the menu of targets and strategies before us. That particularly matters when it comes to electricity demand reduction, because there is so much scope for doing so much more in this area. No matter how sympathetic we feel to that aim, however, unless the legislation is in place, we do not have the clarity, certainty or confidence that action will be taken. We have seen all too often how, in the absence of firm targets and strategies, Governments fail to put in place adequate polices or resources to achieve things. My worry is that in many respects elements of the Bill are more like a wish list than a strategy.

5.30 pm

The Government’s own analysis shows that the UK could reduce demand for electricity by 36% by 2030, but current policies will capture only 13% of that. In other

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words, about 100 TWh of potential demand reduction is simply not being accessed by efficiency policies. It is also disappointing to see Ministers revise down their estimate of demand reduction potential in the DECC response to the consultation on reducing electricity demand, so we are left with no target for demand reduction and certainly no world-leading ambition, just a rather unambitious pilot.

John Robertson: The figure of 36% sounds rather large. How is that made up?

Caroline Lucas: I refer the hon. Gentleman to a report by McKinsey on DECC’s website, which sets out exactly how we can reduce electricity demand by 36% by 2030. That potential figure was properly referenced and much work has gone into identifying it—indeed, others have used a higher figure—but we are not even getting anywhere close to that at the moment.

The focus of my new clause is to say that that is not enough, given that those on both sides of the House, with the possible exception of the hon. Member for Monmouth (David T. C. Davies), appear to agree that the most effective way to tackle fuel poverty and high energy bills is to reduce the overall amount of energy we need to keep our homes warm and to cut energy waste. The new clause is straightforward and complementary to amendments 39 to 41 on demand reduction regulations.

While energy demand reduction is a bit of a no-brainer, the Government’s current approach is failing. The latest shocking example is last week’s news that the number of homes installing cavity wall insulation has crashed by 97% since the introduction of the green deal. Quite incredulously, I can say that a DECC spokesman is quoted as saying that the early signs are encouraging. I wonder what Ministers would consider discouraging and alarming if a drop from almost 40,000 cavity wall insulations in April last year to 1,138 this April is not precisely that.

For the sake of existing energy efficiency businesses that are struggling in Brighton, Pavilion and elsewhere, for the sake of families paying huge bills due to poorly insulated homes, and for the sake of the huge number of jobs that could be created in every constituency across the UK, we urgently need a serious approach with suitable ambition, a plan to get there, and that is exactly what new clause 2 would achieve.

John Robertson: I tried to get cavity wall insulation and I was told that because of my brickwork I could not have it, although I would have thought that my type of house was ideal for it. Is it not that the rules are now being adhered to by companies, whereas before they were putting it in and a lot of houses were suffering from damp as a result?

Caroline Lucas: Obviously, I am not deeply acquainted with the brickwork of the hon. Gentleman home, but I find it slightly surprising that the justification that he advanced would be responsible for such a dramatic reduction. I cannot believe that quite so many cavity wall insulations, down from 40,000 last year to just over 1,000 this year, could be as a result of its having been done badly in the past. There might have been an element of that, but there are some real concerns about

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the take-up of the green deal and the way in which it replaced some pretty good schemes instead of building on them.

New clause 3 is about community rights to priority access to local power generation and local grid ownership.

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. New clause 3 comes in the next group.

Caroline Lucas: I apologise, I thought they were all wrapped up together in one happy family.

I am delighted that amendments 42 to 46 are supported by the hon. Member for Hove (Mike Weatherley), so in recognition of that I will call them the amendments from Brighton and Hove. They are basically about decentralised energy, which was another area where the Minister said that he appreciated the direction but did not feel that action was necessary. I quote from “Power to the People—the Decentralised Energy Revolution”, a document from the Prime Minister himself:

“In other countries low carbon energy sources have led a process of decentralisation—in the Netherlands, for instance, in little more than a decade, combined heat and power (CHP) became the single largest supplier of the country’s energy needs.

I want to see a similar revolution happen in Britain.”

I want that too, but I do not see it happening unless we put the means in place. It is a real shame that that vision has gone the same way as the abandoned huskies—once hugged, now hated. Distributed generation is about producing and using energy locally.

Gregory Barker: We have a long way to go, but since the coalition came to power, hundreds of thousands of homes and businesses have started generating their own electricity—and that is only the beginning.

Caroline Lucas: I am delighted to hear the Minister say that. All I want to do is build on that wonderful beginning and make it go even faster with even more ambition. That is why I so hoped that he would support the amendments that go in exactly that direction. Seriously, I know that the Minister is deeply committed to the issue; I simply think that we could get there faster and with a bit more ambition by having a clearer strategy and focus.

Decentralised energy is not even formally defined in Government policy. I would have thought that it would be simpler if it were; that is one of the issues that my amendments would address. Of course, decentralised energy is already used in hospitals, schools, small towns and so forth, but its untapped potential remains vast. I cannot help thinking that if Ministers spent a fraction of the time promoting decentralised renewables that they spend promoting the nuclear industry, we might have a different kind of energy system today.

The amendments would create a new feed-in tariff scheme for distributed generation, with a maximum capacity limit of 50 MW. I am glad that I now understand the amendment tabled by the hon. Member for Liverpool, Wavertree (Luciana Berger); I am delighted that the 10 MW was a bottom line rather than a top limit. The 50 MW was the level recommended by the Energy and Climate Change Committee and we should be more

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ambitious than the 5 MW that the Government currently foresee or the 10 MW ballpark figure from the official Opposition.

Finally, the amendments would require distribution network licence holders to play their part in facilitating decentralised energy. It is worth pointing out that a distributed generation feed-in tariff would involve no additional cost for consumers or the Treasury; it would simply provide an effective way for small generators to invest in electricity generation and participate in the market.

Again, the new clause is complementary to amendment 47 on a green power auction market and to Opposition amendment 1. I hope that the amendments can be taken together as a positive contribution to moving to decentralised energy in a swifter fashion.

Andy Sawford: It is a pleasure to follow the hon. Member for Brighton, Pavilion (Caroline Lucas) and my hon. Friend the Member for Southampton, Test (Dr Whitehead).

A year ago, my hon. Friend and I, along with my right hon. Friend the Member for Don Valley (Caroline Flint), wrote in a paper called “The Power Book” about the potential for community energy. We argued that as the new energy industrial revolution unfolds in this country, future technologies, new sources of renewables and low-carbon energy have huge scope to challenge the existing market, help reshape the relationships between people and power providers and create new agents of delivery. I pay particular tribute to my hon. Friend the Member for Southampton, Test, who has been pioneering such work for some years—for example, he has championed the district heating project in Southampton as an MP and former local council leader.

I also want to mention such projects as the Baywind energy co-op in the Lake District, Watchfield in south Oxfordshire and Brixton Energy. There are increasing numbers of inner-city providers of community energy.

However, we have to be honest. The scale of such projects in this country is small compared with other countries. We should look to America, for example. Some 42 million American citizens, the equivalent of two thirds of the population of this country, are members of energy co-ops. The German example is even more impressive. Since 1990, German citizens have had a legal right to be producers and suppliers of electricity to their grid system. The big step change came a decade ago when their Government introduced a system of preferential feed-in tariffs. That transformed an energy sector that once had only four major suppliers into one that now has over 2 million contributors. It also created 400,000 jobs and has lowered prices, year on year, over the past five years.

Across the UK, local councils are rising to the challenge of transforming the energy sector. I have followed community energy projects around the country and I have profiled projects in Stoke, Stevenage, Kirklees and Sheffield. I am particularly pleased to welcome Electric Corby, which was launched in my constituency on Friday. It is a not-for-profit community interest company formed with the support of the borough council to establish the UK’s leading practical community-scale test centre for future low-carbon living and transportation and to redistribute the benefits of its labours to the

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Corby community. As the Minister will know, Electric Corby is funded via DECC’s Cheaper Energy Together switching competition. We welcome that support, but it is very much a local initiative.

Jim Shannon: The hon. Gentleman is energetically outlining the case for the community initiatives that are taking place across the whole United Kingdom. Does he feel that these community initiatives will enable people to see that this is not being foisted on them because they have an opportunity to control the situation? That is why they are good, and they should have had a great start.

Andy Sawford: I absolutely agree with the hon. Gentleman, who hits on the key point that this is about shifting the power in energy supply to give ordinary people a chance to say to the big six, “If you won’t give us a fair deal we can do this for ourselves in our local communities.”

Electric Corby is partly about enabling people to switch their energy provider, but it is wider and more ambitious than that. For example, it will involve an electric vehicle charging point infrastructure. I recently welcomed the shadow Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for Streatham (Mr Umunna), to Corby to see those electric charging points and other innovations in my constituency. In Priors Hall, a major development of 5,000 new homes has just begun, and there is smart metering and electric charging points across the whole development.

We are trying to lead in Corby, but I am concerned about the potential impact of this Bill. I particularly support amendment 1, which has been ably championed by my hon. Friend the shadow Minister. In Committee, the Government indicated that they were supportive of the amendment. That was welcome, and it was on that basis that it was withdrawn at that stage. We have heard some very warm words from the Minister today. He and I have previously spoken in the Chamber about energy policy. I know that he tries to listen and respond to good debate, as in Committee, but it is disappointing to find that he cannot offer something more substantive to the House in respect of amendment 1.

The purpose of amendment 1 is to raise the feed-in tariff threshold to benefit co-operative and community energy suppliers. Currently, the feed-in tariff is for projects of under 5 MW. That means that renewable developments of over 5 MW have to participate in the new contracts for difference. I share the concern that contracts for difference will raise the barriers to entry for the community energy projects that Members in all parts of the House have said that they support. The need for a higher degree of technical knowledge is one such barrier to entry. The contracts will mean that smaller generators will receive lower market prices for their power. With the end of the renewables obligation, there will no longer be an incentive for suppliers to purchase renewable energy from independent suppliers.

For those reasons, the feed-in tariff threshold should be raised to above 5 MW. I agree with the hon. Member for Brighton, Pavilion that we should be ambitious and raise it further, but the amendment would allow us to raise it to apply to schemes of above 10 MW. That would give smaller renewables projects a clear and certain route to market and enable us to promote the community-owned renewables sector.

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Nigel Adams (Selby and Ainsty) (Con): Will the hon. Gentleman explain why the Solar Trade Association is opposed to raising the threshold to 10 MW?

Andy Sawford: I have to inform the hon. Gentleman that had I been a representative of the Solar Trade Association I would have declared an interest. I am sure that he and I can both read the briefings it supplies to this House. Indeed, he may wish to enlighten us about this; I will gladly give way if he wishes to do so.

I was surprised to hear about that. I have a letter from 15 organisations involved in the championing of community energy provision in this country, including the Centre for Sustainable Energy, the Forum for the Future, the National Trust, the Low Carbon Communities Network, the Communities Carbon Action Alliance, the Co-operative, Co-operatives UK and, indeed, the Co-operative party, which I represent in Parliament. They all believe that the Energy Bill’s measures will make it much more difficult to achieve the step change in the provision of community energy that I hope we all want to see.

5.45 pm

Gregory Barker: This has been a very thoughtful debate. I am sorry that I have not been able to deliver everything that Members have sought, but I think there has been an unusual degree of consensus on the direction we are taking, our objectives and the Bill’s overall intent.

It is clear that we need to do more on independent generators. I listened carefully to the hon. Member for Southampton, Test (Dr Whitehead) and I assure him that we are working to come up with an acceptable proposition to address the real concerns of independents about the barriers to markets they face, but in a proportionate way that makes sense. The green power auction market, as has been said, is a means to an end, not an end in itself, and we believe that we can navigate our way to that destination in an effective, proportionate way.

On community energy, a great deal unites us throughout the House. I have been campaigning for it since 2006, so I am sympathetic to calls to raise the feed-in tariff threshold. Now that we have reformed the feed-in tariff scheme—in the teeth of the Opposition—we can consider going further. The hon. Member for Corby (Andy Sawford) should not infer from the fact that we are unable to support amendment 1 that we are in any way set against the proposal. We are actively looking at it, but we need to think about the impact on all of the technologies. As my hon. Friend the Member for Selby and Ainsty (Nigel Adams) said, the Solar Trade Association is opposed to it. I was slightly surprised by that, but if we consider just how big a 5 MW solar array is, perhaps we will conclude that it makes sense. It is the size, I think, of several football pitches, so 5 MW of solar is a significant installation. Concerns about the potential siting of inappropriate large-scale solar on greenfield prime agricultural land before our sustainability criteria are in place, rather than on where we want to see it, namely rooftops, brownfield sites, industrial sites, factories, warehouses and supermarket car parks—basically, integrated into the built environment wherever possible and certainly on non-agricultural land—could present certain problems. We need to think through the unintended

4 Jun 2013 : Column 1469

consequences that raising the tariff threshold would have. On the surface it seems extremely desirable, but it will have further impacts.

We also need to think about how that relates to the renewables obligation. In the short term—for the next few years, at least—the alternative for community schemes will not be contracts for difference, but renewables obligation certificates, which are now, finally, after a series of improvements, being used and understood by the small player. However, we believe that in the longer term, even for the smaller-scale independent, contracts for difference will be a significant improvement. We are determined to make them work for small-scale and community players.

I hope Opposition Members take on board that the coalition has an unprecedented commitment to rolling out a distributed model of generation, and that the Government are taking steps to put that vision into reality. I am sure the hon. Member for Brighton, Pavilion (Caroline Lucas) is right that there is always more to do. We have not finished yet—it will take two or probably three terms of government to achieve our ambition—but in the Bill we have the foundations of a new, exciting, dynamic, secure, low-cost and low-carbon energy economy. I urge colleagues to support the Government’s amendments and urge Opposition Members not to press their amendments to a Division.

Question put and agreed to.

New clause 11 accordingly read a Second time, and added to the Bill.

New Clause 12

Pilot scheme for electricity demand reduction

‘There may be paid out of money provided by Parliament expenditure incurred by the Secretary of State in connection with arrangements made—

(a) for the purpose of reducing demand for electricity, and

(b) wholly or partly for the purpose of determining provision to be included in electricity capacity regulations.’.—(Gregory Barker.)

Brought up, read the First and Second time, and added to the Bill.

Clause 10

Direction to offer contract

Amendment proposed: 1, page 8, line 8, at end insert—

‘( ) Section 41(4)(a) of the Energy Act 2008 (“specified maximum capacity”) is amended as follows: “Specified maximum capacity” means the capacity specified by the Secretary of State by order, which must not be less than 10 megawatts.’.—(Luciana Berger.)

Question put, That the amendment be made.

The House divided:

Ayes 245, Noes 312.

Division No. 19]


5.51 pm


Abbott, Ms Diane

Abrahams, Debbie

Ainsworth, rh Mr Bob

Alexander, rh Mr Douglas

Alexander, Heidi

Ali, Rushanara

Allen, Mr Graham

Ashworth, Jonathan

Austin, Ian

Bailey, Mr Adrian

Bain, Mr William

Balls, rh Ed

Banks, Gordon

Barron, rh Mr Kevin

Beckett, rh Margaret

Begg, Dame Anne

Benn, rh Hilary

Benton, Mr Joe

Berger, Luciana

Betts, Mr Clive

Blackman-Woods, Roberta

Blears, rh Hazel

Blomfield, Paul

Bradshaw, rh Mr Ben

Brennan, Kevin

Brown, Lyn

Brown, rh Mr Nicholas

Brown, Mr Russell

Bryant, Chris

Burden, Richard

Burnham, rh Andy

Byrne, rh Mr Liam

Campbell, Mr Alan

Campbell, Mr Gregory

Campbell, Mr Ronnie

Caton, Martin

Champion, Sarah

Chapman, Jenny

Clark, Katy

Clarke, rh Mr Tom

Clwyd, rh Ann

Coaker, Vernon

Coffey, Ann

Connarty, Michael

Cooper, Rosie

Cooper, rh Yvette

Corbyn, Jeremy

Crausby, Mr David

Creagh, Mary

Creasy, Stella

Cruddas, Jon

Cryer, John

Cunningham, Alex

Cunningham, Mr Jim

Cunningham, Sir Tony

Curran, Margaret

Dakin, Nic

Danczuk, Simon

David, Wayne

Davidson, Mr Ian

Davies, Geraint

De Piero, Gloria

Denham, rh Mr John

Dobbin, Jim

Dobson, rh Frank

Docherty, Thomas

Dodds, rh Mr Nigel

Donaldson, rh Mr Jeffrey M.

Donohoe, Mr Brian H.

Doran, Mr Frank

Doughty, Stephen

Dowd, Jim

Dromey, Jack

Dugher, Michael

Durkan, Mark

Eagle, Ms Angela

Eagle, Maria

Edwards, Jonathan

Efford, Clive

Elliott, Julie

Ellman, Mrs Louise

Engel, Natascha

Esterson, Bill

Evans, Chris

Farrelly, Paul

Field, rh Mr Frank

Fitzpatrick, Jim

Flello, Robert

Flint, rh Caroline

Flynn, Paul

Francis, Dr Hywel

Gardiner, Barry

Gilmore, Sheila

Glass, Pat

Glindon, Mrs Mary

Godsiff, Mr Roger

Goggins, rh Paul

Goodman, Helen

Greatrex, Tom

Green, Kate

Greenwood, Lilian

Griffith, Nia

Gwynne, Andrew

Hain, rh Mr Peter

Hamilton, Mr David

Hamilton, Fabian

Hanson, rh Mr David

Harman, rh Ms Harriet

Harris, Mr Tom

Havard, Mr Dai

Healey, rh John

Hepburn, Mr Stephen

Hermon, Lady

Hillier, Meg

Hilling, Julie

Hodge, rh Margaret

Hodgson, Mrs Sharon

Hoey, Kate

Hopkins, Kelvin

Hosie, Stewart

Howarth, rh Mr George

Hunt, Tristram

Irranca-Davies, Huw

Jackson, Glenda

Jamieson, Cathy

Jarvis, Dan

Johnson, rh Alan

Johnson, Diana

Jones, Graham

Jones, Helen

Jones, Mr Kevan

Kaufman, rh Sir Gerald

Keeley, Barbara

Kendall, Liz

Khan, rh Sadiq

Lammy, rh Mr David

Lavery, Ian

Lazarowicz, Mark

Leslie, Chris

Lewis, Mr Ivan

Llwyd, rh Mr Elfyn

Love, Mr Andrew

Lucas, Caroline

Lucas, Ian

MacNeil, Mr Angus Brendan

Mactaggart, Fiona

Mahmood, Shabana

Malhotra, Seema

Marsden, Mr Gordon

McCabe, Steve

McCann, Mr Michael

McCarthy, Kerry

McClymont, Gregg

McCrea, Dr William

McDonagh, Siobhain

McDonald, Andy

McFadden, rh Mr Pat

McGovern, Alison

McGovern, Jim

McGuire, rh Mrs Anne

McKechin, Ann

McKenzie, Mr Iain

McKinnell, Catherine

Meacher, rh Mr Michael

Meale, Sir Alan

Mearns, Ian

Miller, Andrew

Morden, Jessica

Morrice, Graeme


Morris, Grahame M.


Mudie, Mr George

Munn, Meg

Murphy, rh Mr Jim

Murphy, rh Paul

Murray, Ian

Nandy, Lisa

Nash, Pamela

O'Donnell, Fiona

Onwurah, Chi

Osborne, Sandra

Owen, Albert

Paisley, Ian

Pearce, Teresa

Perkins, Toby

Phillipson, Bridget

Pound, Stephen

Qureshi, Yasmin

Raynsford, rh Mr Nick

Reed, Mr Jamie

Reed, Mr Steve

Reynolds, Emma

Reynolds, Jonathan

Riordan, Mrs Linda

Robertson, Angus

Robertson, John

Robinson, Mr Geoffrey

Rotheram, Steve

Roy, Mr Frank

Roy, Lindsay

Ruane, Chris

Ruddock, rh Dame Joan

Sarwar, Anas

Sawford, Andy

Seabeck, Alison

Shannon, Jim

Sharma, Mr Virendra

Sheerman, Mr Barry

Sheridan, Jim

Shuker, Gavin

Simpson, David

Skinner, Mr Dennis

Slaughter, Mr Andy

Smith, rh Mr Andrew

Smith, Nick

Smith, Owen

Spellar, rh Mr John

Stuart, Ms Gisela

Sutcliffe, Mr Gerry

Tami, Mark

Thomas, Mr Gareth

Thornberry, Emily

Timms, rh Stephen

Trickett, Jon

Turner, Karl

Twigg, Derek

Twigg, Stephen

Umunna, Mr Chuka

Vaz, Valerie

Walley, Joan

Watson, Mr Tom

Watts, Mr Dave

Weir, Mr Mike

Whiteford, Dr Eilidh

Whitehead, Dr Alan

Williams, Hywel

Williamson, Chris

Wilson, Phil

Winnick, Mr David

Winterton, rh Ms Rosie

Wishart, Pete

Wood, Mike

Woodcock, John

Woodward, rh Mr Shaun

Wright, David

Wright, Mr Iain

Tellers for the Ayes:

Tom Blenkinsop


Susan Elan Jones


Adams, Nigel

Aldous, Peter

Alexander, rh Danny

Andrew, Stuart

Arbuthnot, rh Mr James

Bacon, Mr Richard

Baker, Norman

Baker, Steve

Baldry, Sir Tony

Baldwin, Harriett

Barclay, Stephen

Barker, rh Gregory

Baron, Mr John

Barwell, Gavin

Bebb, Guto

Beith, rh Sir Alan

Bellingham, Mr Henry

Benyon, Richard

Berry, Jake

Bingham, Andrew

Binley, Mr Brian

Birtwistle, Gordon

Blackwood, Nicola

Blunt, Mr Crispin

Boles, Nick

Bone, Mr Peter

Bottomley, Sir Peter

Bradley, Karen

Brady, Mr Graham

Brake, rh Tom

Bray, Angie

Brazier, Mr Julian

Bridgen, Andrew

Brine, Steve

Brokenshire, James

Brooke, Annette

Browne, Mr Jeremy

Bruce, Fiona

Bruce, rh Sir Malcolm

Buckland, Mr Robert

Burley, Mr Aidan

Burns, Conor

Burrowes, Mr David

Burstow, rh Paul

Burt, Lorely

Byles, Dan

Cable, rh Vince

Cairns, Alun

Carmichael, rh Mr Alistair

Carmichael, Neil

Carswell, Mr Douglas

Cash, Mr William

Chishti, Rehman

Chope, Mr Christopher

Clark, rh Greg

Clarke, rh Mr Kenneth

Clegg, rh Mr Nick

Clifton-Brown, Geoffrey

Coffey, Dr Thérèse

Collins, Damian

Colvile, Oliver

Cox, Mr Geoffrey

Crabb, Stephen

Crockart, Mike

Crouch, Tracey

Davey, rh Mr Edward

Davies, David T. C.


Davies, Glyn

Davies, Philip

Davis, rh Mr David

de Bois, Nick

Dinenage, Caroline

Djanogly, Mr Jonathan

Dorrell, rh Mr Stephen

Dorries, Nadine

Doyle-Price, Jackie

Duddridge, James

Duncan Smith, rh Mr Iain

Ellis, Michael

Ellison, Jane

Ellwood, Mr Tobias

Elphicke, Charlie

Evans, Graham

Evans, Jonathan

Evennett, Mr David

Fabricant, Michael

Fallon, rh Michael

Farron, Tim

Featherstone, Lynne

Field, Mark

Foster, rh Mr Don

Fox, rh Dr Liam

Francois, rh Mr Mark

Freeman, George

Freer, Mike

Fullbrook, Lorraine

Fuller, Richard

Garnier, Sir Edward

Garnier, Mark

Gauke, Mr David

George, Andrew

Gibb, Mr Nick

Gilbert, Stephen

Glen, John

Goodwill, Mr Robert

Gove, rh Michael

Grant, Mrs Helen

Gray, Mr James

Grayling, rh Chris

Green, rh Damian

Greening, rh Justine

Grieve, rh Mr Dominic

Griffiths, Andrew

Gummer, Ben

Gyimah, Mr Sam

Halfon, Robert

Hames, Duncan

Hammond, Stephen

Hancock, Matthew

Harper, Mr Mark

Harrington, Richard

Harris, Rebecca

Hart, Simon

Harvey, Sir Nick

Haselhurst, rh Sir Alan

Hayes, rh Mr John

Heald, Oliver

Heath, Mr David

Heaton-Harris, Chris

Hemming, John

Henderson, Gordon

Herbert, rh Nick

Hinds, Damian

Hoban, Mr Mark

Hollobone, Mr Philip

Holloway, Mr Adam

Hopkins, Kris

Horwood, Martin

Howarth, Sir Gerald

Howell, John

Hughes, rh Simon

Huppert, Dr Julian

Hurd, Mr Nick

Jackson, Mr Stewart

James, Margot

Javid, Sajid

Jenkin, Mr Bernard

Johnson, Gareth

Jones, Andrew

Jones, rh Mr David

Jones, Mr Marcus

Kawczynski, Daniel

Kelly, Chris

Kirby, Simon

Knight, rh Mr Greg

Kwarteng, Kwasi

Laing, Mrs Eleanor

Lamb, Norman

Lancaster, Mark

Lansley, rh Mr Andrew

Latham, Pauline

Laws, rh Mr David

Leadsom, Andrea

Lee, Jessica

Lee, Dr Phillip

Leech, Mr John

Lefroy, Jeremy

Leslie, Charlotte

Lewis, Brandon

Lewis, Dr Julian

Liddell-Grainger, Mr Ian

Lidington, rh Mr David

Lilley, rh Mr Peter

Lopresti, Jack

Lord, Jonathan

Loughton, Tim

Luff, Peter

Lumley, Karen

Macleod, Mary

Main, Mrs Anne

Maynard, Paul

McCartney, Jason

McCartney, Karl

McIntosh, Miss Anne

McLoughlin, rh Mr Patrick

McPartland, Stephen

McVey, Esther

Metcalfe, Stephen

Miller, rh Maria

Mills, Nigel

Milton, Anne

Mitchell, rh Mr Andrew

Moore, rh Michael

Mordaunt, Penny

Morgan, Nicky

Morris, Anne Marie

Morris, David

Morris, James

Mosley, Stephen

Mowat, David

Mulholland, Greg

Mundell, rh David

Munt, Tessa

Murray, Sheryll

Murrison, Dr Andrew

Neill, Robert

Newmark, Mr Brooks

Newton, Sarah

Nokes, Caroline

Norman, Jesse

Nuttall, Mr David

O'Brien, Mr Stephen

Offord, Dr Matthew

Ollerenshaw, Eric

Opperman, Guy

Paice, rh Sir James

Parish, Neil

Patel, Priti

Paterson, rh Mr Owen

Pawsey, Mark

Penning, Mike

Penrose, John

Percy, Andrew

Perry, Claire

Phillips, Stephen

Poulter, Dr Daniel

Prisk, Mr Mark

Pritchard, Mark

Pugh, John

Raab, Mr Dominic

Randall, rh Mr John

Redwood, rh Mr John

Rees-Mogg, Jacob

Reid, Mr Alan

Rifkind, rh Sir Malcolm

Robathan, rh Mr Andrew

Robertson, Mr Laurence

Rogerson, Dan

Rosindell, Andrew

Rudd, Amber

Ruffley, Mr David

Russell, Sir Bob

Rutley, David

Sanders, Mr Adrian

Sandys, Laura

Scott, Mr Lee

Selous, Andrew

Shapps, rh Grant

Sharma, Alok

Shelbrooke, Alec

Shepherd, Sir Richard

Simmonds, Mark

Simpson, Mr Keith

Skidmore, Chris

Smith, Miss Chloe

Smith, Henry

Smith, Julian

Smith, Sir Robert

Soames, rh Nicholas

Soubry, Anna

Spelman, rh Mrs Caroline

Spencer, Mr Mark

Stanley, rh Sir John

Stephenson, Andrew

Stevenson, John

Stewart, Bob

Stewart, Iain

Streeter, Mr Gary

Stride, Mel

Stunell, rh Andrew

Sturdy, Julian

Swales, Ian

Swayne, rh Mr Desmond

Swinson, Jo

Swire, rh Mr Hugo

Syms, Mr Robert

Thornton, Mike

Timpson, Mr Edward

Tomlinson, Justin

Tredinnick, David

Truss, Elizabeth

Turner, Mr Andrew

Tyrie, Mr Andrew

Uppal, Paul

Vara, Mr Shailesh

Vickers, Martin

Villiers, rh Mrs Theresa

Walker, Mr Robin

Wallace, Mr Ben

Ward, Mr David

Weatherley, Mike

Webb, Steve

Wharton, James

Wheeler, Heather

White, Chris

Whittaker, Craig

Whittingdale, Mr John

Wiggin, Bill

Willetts, rh Mr David

Williams, Mr Mark

Williams, Roger

Williams, Stephen

Williamson, Gavin

Willott, Jenny

Wilson, Mr Rob

Wilson, Sammy

Wollaston, Dr Sarah

Wright, Jeremy

Wright, Simon

Yeo, Mr Tim

Young, rh Sir George

Zahawi, Nadhim

Tellers for the Noes:

Greg Hands


Mark Hunter

Question accordingly negatived.

4 Jun 2013 : Column 1470

4 Jun 2013 : Column 1471

4 Jun 2013 : Column 1472

4 Jun 2013 : Column 1473

6.6 pm

Proceedings interrupted (Programme Order, 3 June).

4 Jun 2013 : Column 1474

The Deputy Speaker put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83E).

Clause 21

Power to make electricity capacity regulations

Amendment made: 100, in page 13, line 4, at end insert—

‘(3A) The provision which may be made about the meaning of “reducing demand for electricity” includes provision that reducing the consumption of electricity reduces demand for electricity.’.—(Gregory Barker.)

Clause 133

Financial provisions

Amendment made: 135, page 102, line 30, after ‘operator’ insert

‘, a person or body on whom a function is conferred by virtue of section [Provision about electricity demand reduction]’.—(Gregory Barker.)

Third Reading

Queen’s and Prince of Wales’s consent signified.

6.7 pm

The Secretary of State for Energy and Climate Change (Mr Edward Davey): I beg to move, That the Bill be now read the Third time.

Let me begin by thanking those from all parts of this House and outside who have helped to strengthen this crucial Bill and bring it to this point. I thank the Energy and Climate Change Committee and its Chair, my hon. Friend the Member for South Suffolk (Mr Yeo), and the informal scrutiny group in the other place for conducting invaluable pre-legislative scrutiny of the draft Bill. I also thank the individuals who gave oral evidence to the Committee, as well as the organisations that took the time to provide expert written evidence and recommendations.

In particular—I think you will agree with me, Mr Speaker—I could not allow the Bill to leave this place without thanking my right hon. Friend the Member for South Holland and The Deepings (Mr Hayes) for skilfully guiding the Bill through Committee. I am told that at one point in Committee he managed to compare himself to Henry VIII and Indiana Jones in the same breath—I am not sure whether he has told his wife. I for one salute his unique style in promoting renewables.

I also want to thank the Ministers of State, Department of Energy and Climate Change for their hard work. It would be remiss of me if I did not also mention my hon. Friend the Member for Wealden (Charles Hendry).

On the Opposition Benches, the hon. Members for Rutherglen and Hamilton West (Tom Greatrex) and for Liverpool, Wavertree (Luciana Berger) have been skilful and insightful. I am grateful that they have applied the principles of constructive opposition to the Bill’s scrutiny rather than the principles of destructive opportunism, which are all too often applied in politics generally—by people of all political colours—but which are all too often not in the national interest. Let me take this

4 Jun 2013 : Column 1475

opportunity to remind the House why the passage of the Bill is so important and so firmly in the national interest.

Caroline Lucas: I am grateful to the Secretary of State for thanking everyone for contributing to making the Bill stronger, but I wonder how he thinks that it has been made stronger, given that, as far as I can see, not a single Opposition amendment has been accepted, either in Committee or on Report.

Mr Davey: The hon. Lady might not have noticed that the Government have responded to a lot of the debates and tabled a lot of amendments on everything from electricity demand reduction to decarbonisation. I will come to those amendments shortly.

Electricity market reform, which is at the centre of the Energy Bill, is the result of four imperatives: the need to power the country; the need to protect the planet; the need to insulate consumers from rising energy bills; and the need to get the economy moving. With demand for electricity set to increase, and around a fifth of our power plants set to close, we will need to attract £110 billion of new investment in electricity and grid infrastructure in this decade alone to ensure that we have enough reliable capacity to meet demand. The Energy Bill will do that.

The Climate Change Act 2008 commits the United Kingdom to an 80% reduction in greenhouse gas emissions by 2050, so we need specifically to encourage investment in low-carbon energy generation: renewables, carbon capture and storage, and nuclear. The Energy Bill will do that. With global demand driving wholesale prices higher, and with that in turn driving domestic energy bills higher, we need to create a more diverse and competitive energy market to help to cushion consumers from volatile fossil fuel prices. We also need to ensure that they are getting the best deal from suppliers. The Energy Bill will do that.

By facing up to the need to invest in low-carbon energy infrastructure, we will support economic recovery too. The trebling of support under the levy control framework will mean £7.6 billion a year by 2020 to support low-carbon technologies, including infrastructure projects that are ready to go now, supporting jobs, supporting communities and providing prosperity. Projects worth over £8 billion are already in the planning pipeline. Electricity market reform could support as many as 250,000 jobs in the energy sector. The Energy Bill will support green growth. That is why I am pleased that the Bill, as strengthened in Committee and on Report, benefits from a general level of cross-party support in the House.

I want to reflect on some of the ways in which the Bill has been further strengthened in this House. Let me start by dealing with the decarbonisation target head on. No party in this House—not the Liberal Democrats, not the Conservatives, not Labour, not the nationalists, not even the Greens—had a commitment in its 2010 manifesto to set a 2030 decarbonisation target during this Parliament. Nor has any other country yet set a power sector decarbonisation target for 2030.

I can understand the argument that an early decarbonisation target could provide extra certainty for large, long-term projects in the UK power sector,

4 Jun 2013 : Column 1476

particularly in the supply chain. However, there is also logic in the consistency of setting the decarbonisation target for 2030 at the same time as the fifth carbon budget, which is scheduled for 2016—still 14 years ahead of the target date. By comparison, the 2020 renewables target was set in 2008, just 12 years from its target date.

If anyone still doubts my commitment, or that of this Government, to decarbonisation, they should consider the decision that we have just made on the UK’s position for the EU’s 2030 greenhouse gas target. In the context of winning an ambitious global climate change treaty, we will be arguing for a 50% reduction target in the EU. That is the most ambitious position of any member state, and I am proud that this Government are leading the way on climate change action.

Let me turn to other areas of the Bill—first, to contracts for difference. Long-term electricity price stability will be provided through CFDs and will be a key part of the new low-carbon electricity market. As such, the Commons Committee quite rightly looked at the nature of the CFD counterparty body and made a number of recommendations. In response, the Government have clarified the Bill’s drafting to make the policy intention more explicit.

Mr Weir: I am listening closely to the Secretary of State, but does he not share my slight concern about the CFDs that, as the Bill presumably leaves this House tonight to go to the other place, we still do not know basic details such as the strike price? Although that information has been promised on several occasions, we are now told that the delivery document may be published next month. We do not seem to be getting any nearer to getting this information.

Mr Davey: We always said we would publish the document in July 2013, and we are on track to publish it in July 2013.

Accompanying the CFDs, the capacity market will ensure that sufficient reliable generating capacity is available to meet electricity demand as it increases over the next decade, but we are also looking at reining in demand. We have added measures on electricity demand reduction that for the first time can allow energy-saving projects to be able to compete with power stations for new investment—negawatts. Delivering through the capacity market can incentivise permanent reductions in demand at times when electricity is most expensive, allowing for a more direct trade-off between generation capacity and demand reduction. This is a radical approach that has been shown to work in international examples such as in forward capacity markets in the United States, and it is a major advance for the UK.

We acknowledge that many consumers are “feeling the pinch”, and we remain committed to doing everything we can to help. Let me be clear, however, that the main reason for rising energy bills is rising wholesale gas prices, which make up around half a typical household dual fuel bill. These prices are set on global markets and changes are driven by global events. This Bill paves the way for increased UK production of energy, which will help to reduce price rises from global markets.

As well as providing a more stable pricing environment and helping consumers to reduce their electricity demand, we introduced in Committee new provisions on domestic

4 Jun 2013 : Column 1477

tariffs to ensure that all households will be able to get the best deal for their gas and electricity. These provisions will ensure that energy companies provide consumers with clear information about their tariffs and put them on the cheapest tariff that meets their preferences. These provisions will also ensure that there are fewer and simpler tariffs so that it is easier for consumers to shop around for the best deals across the market. Last year, Ofgem estimated that there were approximately 900 open tariffs. Under these proposals, each supplier will be allowed to offer a customer a maximum of four core tariffs for each fuel and meter type. We want to see a competitive retail market, where suppliers have to work hard to retain their existing customers and attract new customers.

These measures complement the new consumer redress measures already in the Bill, which ensure fairer outcomes for consumers by giving a new enforcement power to Ofgem. This power will enable Ofgem to require energy companies that have breached regulatory requirements directly to compensate consumers where they might otherwise not have done so. This is another step forward for energy consumers.

We have listened to the concerns raised throughout the passage of the Bill. Opposition Members have raised questions about transparency and accountability, and we have responded by amending the Bill further to ensure that it aligns with the Government’s principles in this area.

We remain committed to encouraging a more diverse and competitive energy market, and there are a number of related areas within the Bill that we will hope to consider further in the other place. As indicated in Committee, we will continue actively to consider raising the threshold for the small-scale feed-in tariff scheme from 5 MW to 10 MW, and the Government hope to respond to this issue in the other place. We are taking backstop powers in the Bill to enable the Government to intervene in the generating market, if needed, to improve liquidity and competition.

I am grateful to the House for taking the time to scrutinise and contribute to this Bill. The wide cross-party consensus we have achieved sends a strong signal to investors in the UK and investors globally. The UK is the place in the world to invest in low-carbon energy. We now have the opportunity to deliver a lasting framework for investment in the country’s energy infrastructure: delivering green jobs and green growth, securing a low-carbon energy future, and ensuring that consumers get a fair deal. I commend the Bill to the House.

6.19 pm

Caroline Flint: Let me begin by paying tribute to my hon. Friends the Member for Rutherglen and Hamilton West (Tom Greatrex) and for Liverpool, Wavertree (Luciana Berger), who, with just a fraction of the resources and staffing available to Ministers, have done a first-rate job in debating the Bill. They have not only scrutinised it, but improved it.

I also pay tribute to my hon. Friends the Members for Sunderland Central (Julie Elliott) and for Hyndburn (Graham Jones), who have provided invaluable support for those on the Opposition Front Bench; to my hon. Friends the Members for Southampton, Test (Dr Whitehead),

4 Jun 2013 : Column 1478

for Brent North (Barry Gardiner), for Wansbeck (Ian Lavery) and for Ynys Môn (Albert Owen), who served on the Bill Committee; and to my hon. Friend the Member for Glasgow North West (John Robertson). They have all brought a great deal of expertise and experience to bear.

I thank the Ministers and officers in the Department. There have been some personnel changes on both fronts, but we have managed to get through the process. I thank the Secretary of State for the briefings that he facilitated with officials in his Department, as well as the Clerks and the ever-helpful staff in the Library, who have advised us on some of the finer points of detail and parliamentary procedure.

I made it clear on Second Reading that we would not oppose purely for opposition’s sake, and on that basis we have sought to find areas of agreement with the Government when that has been possible. We have supported the provisions to establish an office for nuclear regulation, as well as those relating to the Government pipeline and storage system and to offshore transmission systems.

As the Secretary of State has just said, Ministers have accepted some of our amendments, including those concerning the transparency of investment contracts and the structure of the counterparty under contracts for difference, and I welcome that. We have not yet managed to persuade them to accept amendments relating to other issues, such as carbon capture and storage, support for community energy and access to the market for independent renewable generators, but we have noted their commitment to considering our proposals, and we hope that colleagues in the other place will return to them.

The Secretary of State referred to the redress framework. We are disappointed by the rejection of amendments that would have ensured that consumers were compensated pound for pound and that compensation was paid in respect of any breach of the rules that came to light, because that has left a massive loophole. The best way of protecting consumers is not to provide a redress framework—much though we need that—but to prevent companies from ripping people off in the first place, and I am afraid that on that count the Bill falls badly short.

The Prime Minister told the House 12 times that he would force the energy companies, by law, to put everyone on the cheapest tariff, but, although the Bill consists of nearly 200 pages, not a single one of them contains legislation to put every customer on the cheapest tariff automatically, which is what the Prime Minister promised. Ultimately, unless the energy market is genuinely reformed through the wholesale side—as we have proposed—there will be nothing to prevent the energy companies from raising all their tariffs in any event.

Whenever I meet investors, the single most important thing that they tell me they want is certainty. They should gain confidence from our support for the substance of the Bill. When it comes to contracts for difference, there are clearly many important details still to be worked out, but, in principle, if CFDs are executed correctly, they should provide investors with long-term certainty, and we will therefore support them.

There are also many important details still to be worked out in regard to the capacity market, but in principle we

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believe that it could work, and have supported it. We also support the principle of an emissions performance standard, and welcome the commitment to reviewing it in five years’ time. However, as my hon. Friend the Member for Brent North said yesterday, we are concerned about the particular standard that the Government have chosen to adopt, and we hope that the other place will scrutinise it carefully.

That is some of the good news, but I must also be candid about where the Bill fails, and how we would seek to remedy that after the next election if it is not rectified in the other place. The Government’s stated purpose was to reform the electricity market to deliver secure, clean and affordable electricity, but there are no two ways about it: the Bill will fall short of its stated purpose unless it puts Britain’s electricity system on a pathway to decarbonisation, and unless it genuinely reforms the electricity market to make it more transparent, liquid and competitive.

We have had a full debate on decarbonisation this afternoon. I pay tribute to the hon. Member for South Suffolk (Mr Yeo) for tabling his amendment, and for the work of his Select Committee. I also pay tribute to the work of my right hon. Friend the Member for Doncaster North (Edward Miliband), who was the first leader of a main political party to commit himself to decarbonisation. The Bill does not contain a decarbonisation target because the Liberal Democrats, with a few honourable exceptions, did not have the courage to vote for it.

It is clear that the Conservative party has now set its face against decarbonisation. Its choice is to lock Britain into a high-cost, high-carbon electricity supply for decades to come, but there is still a clear majority in this House in support of decarbonisation. The Labour party supports it, and the Scottish National party, Plaid Cymru and the Green party all support it, too, and I thank colleagues from other parties who joined us in the Lobby this afternoon. With a Government majority of just 23, there is no doubt that if the Liberal Democrats—who claim to support this, who have a party policy on it, and who have a Secretary of State who says he supports it—had voted for it, this Bill would have put us on the pathway to decarbonisation.

Let us be clear about what this Bill does and does not do. It does not set a decarbonisation target; it only says the Secretary of State may set one if they so choose. The Government could have supported just changing “may” to “must”, to give an indication of more certainty in this area.

It has been said many times this afternoon that none of the major parties had support for this target in their manifestos. However, the Committee on Climate Change has only made that recommendation since the general election, and we said we would support its recommendations. We must be able to do that. Things change from one general election to another, and we must listen to that advice. The truth is that even if the Secretary of State decides to set a target, 2016 is the earliest date at which it could be set, but it could be set at any later date—2026, 2036, 2046—or not at all. There is also no specification about what the target should be, so the Secretary of State could issue an order

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for a target that is totally inconsistent with decarbonisation, or do nothing at all, and still have fulfilled the requirements of the Bill. We would put that right.

Andrew Percy (Brigg and Goole) (Con): Will the right hon. Lady give way?

Caroline Flint: I enjoy many train rides from Yorkshire with the hon. Gentleman, but I will not give way to him as he has not been present all day for this debate. If he gets a chance, he can make his comments later.

Her Majesty’s Opposition are absolutely committed to decarbonisation of the power sector. The reasons for that are simple. First, the biggest driver of soaring energy bills is rising global gas prices. Cleaning up our power supply and investing in energy efficiency would lead to lower, not higher, bills. Secondly, the best way of improving our energy security is to take advantage of the natural energy sources in our own country. This is the windiest country in Europe, and when it comes to marine energy, Britain really can rule the waves, but businesses will only invest, and bring jobs and growth to this country if they see that the Government back decarbonisation. As my hon. Friend the Member for Wansbeck said, we should give confidence to those who wish to invest in carbon capture and storage and put us at the forefront of clean coal. Thirdly, if we cannot decarbonise the power sector, we will not be able to reduce the country’s carbon footprint, and if we cannot do that, we will face a future of chaotic weather, rising sea levels, flooded homes, failing harvests and drought.

If the other place is not able to rectify the omission of a decarbonisation target from this Bill, we will do so in government. Our determination to clean up the power supply is matched by our commitment to reform the energy market and to make it work in the public interest. So, on decarbonisation and fairer bills for consumers, we regret what is missing from this Bill, and make a commitment to put it right.

Investors should draw confidence, however, from the fact that there is broad cross-party support for many of the provisions in the Bill, and, on our part, there is the political will to deliver a lasting framework to bring forward investment in low-carbon electricity generation. On that basis, we will not oppose the Bill on Third Reading, but it is to be regretted that a dirty deal with the Liberal Democrats has once again blocked the path to clean energy and all the benefits it could bring.

6.28 pm

Mr Brian Binley (Northampton South) (Con): I am grateful for this chance to speak on Third Reading, and I will be brief.

In bringing forward these measures, the Government have identified a genuine problem whose consequences could be severe—indeed, the lights could go out. Security of supply is imperilled through the decommissioning of resources. The shortage of available public funds requires that the private sector delivers, but uncertainties and market conditions have created a blockage. Above all, we need to keep a close eye on the price of energy, and this Bill has proved to be an important opportunity to do that.

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I do not doubt that some of the measures in the Bill will contribute positively, but the bigger issue remains an abiding concern that the cost to British industry will be disproportionately high, and the price we pay will be of even greater magnitude. I have seen nothing to indicate that the Government have taken seriously the question of the costs from this Bill to our economy and our businesses compared with our major competitor economies.

We need to ask whether the true cost of the zealous attachment of Liberal Democrats to renewable energy solutions, endorsed by and, sadly, imposed from Europe, should be pursued seemingly at any price. A recent report by Civitas articulated many of those concerns, saying that the relentless drive to renewable energy is stifling innovation in the sector and costing a fortune, with the risk of reversing the long-term trend of improved living standards. It estimates that the cost to households of the renewable energy fixation will be about £600 each year by 2020, with the economy bearing a cost of about £200 billion—more than £16 billion each year, which exceeds 1% of our GDP. That is an enormous cost and a massive burden. The report also demonstrates that we risk bearing a quarter of the target of the EU renewables directive, as we plan to create the largest single increase in renewables to achieve compliance. The renewables obligation already costs us around £2 billion each year, a figure predicted to rise to £8 billion to meet these targets. Taking that money out of the economy will impede our growth, reduce prosperity and cost jobs.

Although decarbonisation is a worthy ambition and a desirable destination over time, fuelling subsidies for expensive and inefficient renewable energy technologies risks taking us further from, not closer to, achieving that ambition. The cost we pay in promoting the renewable energy sector could prove damaging to the development of our own innovative response to the challenge of decarbonisation. It could harm our prospects for rapid and sustained economic recovery, and it could drive enterprise away from this country. If decarbonisation is our goal, we should be far more prepared to encourage innovation in a range of different technologies and systems. This is not about whether we have a decarbonisation target in the Bill; it is about approaching the issue without the prejudice and the dogmas that have characterised the Secretary of State’s rhetoric and approach in office—he has been only moderately less rabid than his predecessor.

The energy challenge that we face is acute. The previous Government failed to do what was necessary. The time to act has almost passed; it is possible that even these measures may be too late to avert a harmful crisis. However, my overwhelming anxiety is that this Bill is not the answer to the energy questions we face, not least because of the impact that will confront businesses in this country. I wonder whether, in approving these measures, we are supporting good politics within the coalition but at a far greater cost to our economy than we can either sustain or afford.

6.32 pm

Mr Weir: I said at the outset that SNP Members did not oppose this Bill on Second Reading and we will not oppose it tonight. We recognise the need for electricity

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market reform and support much in the Bill. I understand the Minister’s point—I understand that contracts for difference could well be a good way forward—but I remain concerned about the lack of much of the detail, and I say that for two reasons.

In Committee, I raised the issue of the closure of the renewables obligation system in 2017 and whether that could have an impact on investment in the meantime. Many companies that are considering investment are still unsure about how the CFD system will work and are concerned about the changeover. More thought should have been given to how the interim period could be dealt with, perhaps by extending the RO system. Regrettably, the Minister was not prepared to accept that.

The other point about CFDs is that we still do not know what is being negotiated between the Government and EDF in respect of Hinkley. Whether or not I am anti-nuclear, that is important, because whatever those details are they will inevitably become the template for future CFDs in the nuclear industry. If the price is set too high and the contract is too long, that could have huge implications for the public purse in the future. None of those details are available. We are told that they will be available in July, presumably when the House is in recess, but we have no opportunity to look at these things, and that is a shame.

Late in the proceedings, the Government introduced amendments on consumers, including the Prime Minister’s promise to put them on the lowest tariffs. I do not think they were strong enough and I tabled amendments on Report that, unfortunately, were not reached because of the time available.

I also tabled an amendment to deal with a question that I have often raised about winter fuel allowances and the need to provide small-scale practical help for consumers, but it fell into the last group tonight.

Jim Shannon: On that subject, statistics show that in the past year 24,000 people died from cold-related causes. That was due in a big way to the inability of the system to address people’s needs early. Does the hon. Gentleman feel that it is not too late for the Government to take that on board and that ensuring the early payment of such money at a time when oil is cheap would be a good way forward?

Mr Weir: That is an excellent way forward. The Minister of State, Department of Energy and Climate Change, the right hon. Member for Sevenoaks (Michael Fallon), has convened a round table on oil-fired heating. The first meeting was held in May and I welcomed that. It was a useful meeting and might perhaps be a way of dealing with that industry, but we need small-scale help as electricity market reform is not the only way of dealing with energy markets. Small-scale things can be done that make a real difference and the Government must grasp some of those issues, rather than simply considering massive measures such as this Bill.

There is a decarbonisation target. We fully support it; I spoke in the debate on it and gave the reasons why. If Governments north and south of the border want a true, green, sustainable manufacturing base, a decarbonisation target will give companies the assurance that will allow them to invest for the future. It will enable them to be sure that they have a market as they push towards it.

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It could also provide a huge amount of sustainable, highly skilled jobs. As I pointed out earlier, growth in the Scottish economy has come largely from the energy industry and such development could be a huge boost for the future, so it is unfortunate that we do not have that target.

There are defects in the Bill, but there are some good things. We will not oppose the Bill on Third Reading, but I hope that when it gets to the other place the Government will reconsider some of the issues.

6.37 pm

Dan Byles: It is a pleasure finally to be speaking on Third Reading. I am a member of the Select Committee on Energy and Climate Change, which has carried out inquiries into energy market reform and pre-legislative scrutiny of the Bill, and I also sat on the Public Bill Committee, so it has been a labour of love getting here.

Although I support the Bill, I admit that I have some concerns. I am concerned about the level of complexity we are starting to pile on to our energy sector. Perhaps that is inevitable, as this is a highly complex policy area, but I sometimes feel that unintended consequences lead to another sticking plaster being put on, leading to more unintended consequences, so that a highly complex system evolves. I do not necessarily blame the DECC team for that, as this is a difficult and complex area, but I hope that as the Secretary of State introduces the secondary legislation he will bear in mind the need to try to minimise the complexity as much as possible, in keeping with the aims of the Bill.

The energy sector still faces huge challenges. As for the oft-quoted figure of £110 billion a year of infrastructure investment, I have seen a lot of estimates that put the figure much higher. Some people grossly underestimate the scale of change required in our energy sector, particularly in the argument about decarbonisation. The year 2030 is just 17 years away and at 10 minutes to 6 today, in real time, 40% of our electricity was being provided by gas and 35% was being provided by coal. That means that 75% of our electricity was being provided by gas and coal. Gas heats 83% of our homes. We will have a substantial slice of gas on the system for a long time, so we need to get on and start exploratory drilling for shale gas once again, so that we can ensure that the gas is provided from a domestic source. The Institute of Directors has told us that shale gas production could provide up to 74,000 jobs, both directly and indirectly, and up to a third of peak demand—and that is just the central scenario. We need to search for shale gas, and to accept that gas will be on the system for a long time to come.

We also need steadily to increase investment in renewables; I entirely accept that. Sometimes people throw at me that I am anti-decarbonisation—we have heard that from some Opposition Members—but I am not. We need to move to a low-carbon future, not through a rash, uncosted 2030 decarbonisation target set this year, but through the nuts and bolts of the contract for difference and the levy control framework, as the CBI has said.

Andrew Percy: One of the reasons why I was not here earlier is that colleagues from our region and I were with a Treasury Minister, trying to ensure that when the money for renewables comes on stream, British companies

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benefit from it. Does my hon. Friend not agree that once we get the Bill out of the way, the biggest challenge is to ensure that it is British companies, such as Tata Steel in Scunthorpe, who benefit from the additional money going into renewables?

Dan Byles: I entirely agree. This needs to be seen in a much wider context than energy; this is about jobs and investment, including inward investment.

Gas will be on the system for a long time; we need to bring forward new gas generation. We need to increase renewables on the system, and we desperately need new nuclear. There is hardly a credible scenario for a decarbonised future that does not involve new nuclear on the system. We need to incentivise generation capacity in all three. The Bill is long overdue, and I will support it this evening, because it will achieve that aim.

6.40 pm

Caroline Lucas: I am sorry to sound a negative note, but to my mind the Bill falls well short of what is needed. Ministers have had many opportunities to improve the legislation for the sake of our economy and those struggling with high energy bills, in order to create many thousands more jobs and, crucially, to demonstrate that we politicians are up to the job of tackling the climate crisis with the urgency and ambition required.

The Bill could have demonstrated that politicians understand the risks of locking the UK into high-cost, high-carbon gas generation for decades to come; that we listen to and act on scientific advice on the urgency of action needed to avoid irreversible climate change. The Bill simply does not go far enough. There are some positive aspects: for example, I welcome the emissions performance standard, but it is too weak, and it opens the door to a new dash for gas. As a result, we have not seen the last of people turning their backs on the politicians who listen to the fossil fuel lobby rather than climate scientists, and people instead taking action themselves in the name of what they see, and the science says, needs to be done—people such as the brave, peaceful protesters who occupied EDF’s West Burton power station last year.

If we are to avoid catastrophic climate change and the worst impacts here and elsewhere, in terms of water shortages, flooding, food price rises and drought, it is clear that around 80% of existing fossil fuel reserves need to stay in the ground. How can we hope to leave that unburnable carbon in the ground if we cannot even agree a decarbonisation target for 2030? I am not looking forward to writing yet again to hundreds of my constituents to tell them that the decarbonisation target has been rejected, against all common sense. Frankly, I find it almost unbelievable that so many Liberal Democrats voted against their own policy.

It is a scandal that the Bill does not have more ambition when it comes to renewable energy and energy efficiency. Instead, it will facilitate vast subsidies to new nuclear power stations that we do not need. There are plenty of records of how we can reach our climate change and decarbonisation targets without new nuclear. New nuclear, with vast public subsidies to support it and no real public or parliamentary scrutiny, is at the centre of the Bill. Crucially, that is diverting investment away from faster, less costly, more jobs-rich and more secure means of meeting electricity needs, including

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through harnessing the UK’s huge renewable energy resource. The enormous potential of energy efficiency and demand reduction is also overlooked, with weak amendments from the Government convincing nobody. That ignores the widespread consensus that these are the cheapest, quickest, and most effective ways to protect householders from high energy bills, and to cut emissions.

Perhaps most of all, I am disappointed that the Bill simply fails to have a vision of a different energy future. It simply entrenches the big six energy companies and their death-grip on the UK’s energy system and on the many households in Brighton, Pavilion and elsewhere who are struggling to pay ever higher energy bills. It reinforces the centralised electricity system, in which people are just passive consumers, constantly ripped off, whether or not they switch from npower to EDF to E.ON, because essentially they are all the same. Contrast that with a place such as Germany, where only 13% of the country’s 60 GW of renewable energy is owned by big energy companies. The rest is owned by households, communities, development trusts and farmers. Fully 50% is generated by community-based projects.

The Bill could have supported projects such as the Brighton Energy Coop, releasing a new wave of co-operative and community energy projects where people are so much more than passive consumers—they are active producers of energy. It could and should have set us on a path to a radically different, more democratic energy future by giving smaller independent generators and community and co-operative energy schemes fair access to the market, where people own and generate their power on a serious scale and benefit from lower energy prices as a result. I am very sorry that the Bill has not taken those opportunities.

6.45 pm

Glyn Davies (Montgomeryshire) (Con): I have sat in the Chamber for more than six hours today and heard many interesting speeches. It has been an extremely good debate. The Bill is important in many respects. It is the responsibility of Government to ensure energy availability, to ensure that energy is supplied at a reasonable cost and to pay proper heed to the need for decarbonisation of the energy generation market.

Whether or not one believes that man’s activities contribute to climate change—I do not think they make that much difference—it is perfectly reasonable to want to pursue a decarbonisation approach as a sort of insurance policy, so people will tend to agree with the general approach that the Government are taking. There is also general support for renewable energy projects, and there is a huge number of good projects all over the country. I opened a biomass project in my constituency run by a firm called Egnisco. If anybody is going to the National Eisteddfod in Wales in 2015, I recommend that they go to the farm buildings at Mathrafal where they will see a superb scheme. The buildings have been converted into factories and have all been heated by a biomass project that is taking timber from local woodlands. It is a wonderful project.