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Richard Younger-Ross (Teignbridge): My constituents are particularly aware of the importance of this debate in two ways. They are aware of the problems of climate change. The main line from London to Penzance passes along the sea wall between Dawlish and Teignmouth, and services have frequently been interrupted in recent winters by severe storms. We are only too well aware that if the sea level rises by half a metre or a metre, the closures on that line will be more dramatic and more regular. It is clear that we need to act to cut CO 2 .
We are also aware that there are solutions. At Newton Abbott we have an excellent company called Centrax, which tries to make and market combined heat and power units. I use the word "tries" because although the company makes excellent units, it is not helped by the Government's legislation at the moment.
The Combined Heat and Power Association says that that is largely due to the impact of the new NETA electricity market and the loss of local generators. The net effect has been the loss of more than 1,500 jobs directly from the industry, the virtual collapse of new CHP investment and the departure from the CHP industry of major companies, including Powergen, Innogy, Northern Electric and Scottish Power. The Government's formal target of 10,000 MW of CHP by 2010the current capacity is only 4,600 MWwill be difficult to achieve unless those issues are addressed. Their carbon targets have already been undermined: carbon dioxide emissions have risen during the past two years.
The CHPA and its member companies have been lobbying the Treasury and other Departments to support the industry in order to balance the impact of the unfair market conditions under NETA. I know that the Government have listened to representations about the climate change levy, but they have not yet acknowledged the need to reform the NETA agreement.
The full climate change levy exemption has been welcomed by the CHP industry as a much needed shot in the arm, after two years of unrelenting damage to its prospects. The CCL exemption for power exports will assist companies exporting significant electricity as part of the design of their CHP system or those which need to import and export power to meet the energy needs of their customers during the year. The full exemption will especially help the food and horticulture industries, hospitals using CHP and major industrial sites serving a number of customers.
However, as I pointed out earlier, not everyone is helped by the CCL. Some people are counting on reform of NETA. The CHPA argues that other measures will be needed if we are to accelerate new CHP investment. Such measures include removing the unfair balancing penalties under NETA for CHP and wind power, extending enhanced capital allowances to improve finance-based leasing, and introducing arrangements for CHP similar to those for renewables.
CHP needs to secure financial benefit for the carbon savings that it delivers. That will help to get the industry moving again and could deliver the Government's CHP target. The CHPA has submitted a NETA action plan to the Government. When the Minister sums up the debate, will he address the following points from the plan? The CHPA calls for
Dr. Brian Iddon (Bolton, South-East): Governments initiate many important debates, and this is certainly one of themrightly so, because, like food and shelter, energy is a basic human need. I am pleased to be able to take part in the debate, albeit briefly.
The publication of the UK fuel poverty strategy by DEFRA last year, and of the PIU energy review this year, have catalysed the debate. It is spreading across the nation, and I hope that everyone will be aware of it before the Government take decisions that will be among the most important that they take. Those decisions will lock future generations into an energy policy for decades, so it is important that we get them right.
I am pleased to announce that next Tuesday, the Royal Society of Chemistry is holding a parliamentary links day in the House, to which all Members have been invited. We have chosen as our theme the future of energy, and I hope that many Members will take part in it.
Three Select Committees are already considering the energy debate. The two most important considerations should be security of supply and diversity of supply; the first can be achieved through the second. All options should be left open. We should not put too great a reliance on any one energy source, as we tend to do at present. In the past we thought that we could rely on nuclear power, but for various reasons, we were wrong in that assumption. Then there was the dash for gas. Following privatisation, it was not surprising that the industry turned to gas, because combined cycle gas turbines can be built with very low capital costs and give far faster returns, owing to shorter construction times.
As a chemist, I have always objected to the burning of fossil fuels. That is not only because it produces carbon dioxide, which has become more significant because of climate change, but particularly because our fossil supplieswith the possible exception of gas, but especially coal and oilare the sources of the chemicals from which we prepare our pharmaceuticals, paints, dyestuffs and other products that we take for granted. It is important to leave those fossil fuels in the ground for as long as possible for the benefit of future generations. That is why I strongly support non-carbon methods of generating energy. Energy conservation, too, must play a large role in the future, and I am pleased that the PIU report recognised that.
Just as Denmark led the way on wind power after our lack of investment caused us to lose out, so we must invest in wind and tidal power. Some people believe that the winds and tides could provide all our energy requirements if we tapped into them. I am pleased that the Government are now turning towards investment in wind and tidal power, although whether the process will be fast enough remains to be seen. Another reason for investing in wind and tidal power is that, despite the Minister's announcement today about the discovery of a new field in the North sea, the North sea oil industry will decline rapidly. A great deal of manufacturing expertise is invested in that industry, which could be transferred to the generation of wind and tidal poweras Denmark employed agricultural equipment manufacturers to manufacture equipment for generating wind power.
The big debate this year will be about the role of the nuclear power industry and the future of renewables, although gas and its future will obviously play a part in the discussions, too. There is no doubt that renewables, including wind and tidal power, could supply our entire energy needs. Rapid and considerable investment in basic and applied research will be necessary to deliver a range of demonstration projects in the renewables sector. Later, we will need to provide new infrastructure and bring existing infrastructure up to this century's standards.
I have great doubts about whether we can bring renewables on board fast enough to replace the declining fossil fuel-burning industries. Those doubts are echoed in the PIU report. That is why I am a strong supporter of keeping the nuclear power industry going. Its expertise needs to be maintained, for a reason that other hon. Members have mentioned: we are not too far away from nuclear fusion. It has reached phase 2, and the Select Committee on Science and Technology is going to Japan in the autumn to look at the new fusion experiment that is to take place there. Most commentators think that we are about 50 years away from nuclear fusion, which is not long in historical terms. The chief scientific officer, David King, believes that that period can be cut down to about 30 years, and he is very keen on investment in nuclear fusion.
The nuclear power industry is already losing personnel, and it is critical that the Minister and the Government send the right signals to those who remain. They must be retained at least until the Government have made a decision on nuclear energyand, in fact, until long after that, so that they are there eventually to introduce nuclear fusion. It is a sad reflection of the present situation that new graduates are not choosing to work in the nuclear power industry and it is already suffering from a shortage of skills. It is important that the Government send out strong signals from this debate about the future of the nuclear power industry.
An energy research review group, under the chairmanship of the chief scientific officer, has met and identified six key areas of research that need investment. I hope that the Minister has noted those six areas and will get together with Treasury Ministers to find that investment.
I was a housing chairman for 10 years, which has given me an interest in energy efficiency. Not one contributor this afternoon has mentioned the condition of the housing stock in connection with the debate about energy efficiency. Bolton has 22,000 unfit houses, of which some 5,000 to 6,000 are irredeemably unfit, and they are pumping energy into the atmosphere. I ask the Minister to join other Ministers in an effort to ensure that the condition of the housing stock is improved. I hope that the comprehensive spending review will put housing further up the agenda, so that we can tackle the poor energy efficiency of the clapped-out houses that still exist throughout the country.