§ Order for Second Reading read.9.36 am
§ Brian White (Milton Keynes, North-East)
I beg to move, That the Bill be now read a Second time.
Last November, I decided to work on a Bill to promote sustainable energy for two simple reasons. The first was that the issue had been debated before and there was a need to restore some credibility to Parliament following the events that surrounded the Home Energy Conservation Bill, promoted by my hon. Friend the Member for Brighton, Kemptown (Dr. Turner). The second was to raise the profile of aspects of energy policy that I thought had been long neglected. We had had report after report, but no follow-through action. The performance and innovation unit's report had been out for several months, but even that very good document left several questions unanswered. The royal commission on environmental pollution made its recommendations on carbon dioxide emissions in June 2000, and I am promoting the Bill in that context. Since that time, we have had guidance to the regulator on social and environmental issues. More recently, we have had a White Paper, not to mention a few more reports.
My Bill seeks not to replace those other documents but to build on them. Its timing could not be better, given the Government's commitments in the White Paper. The Bill also seeks to build on the work of several hon. Members on both sides of the House , and in the other place who have promoted Bills on similar subjects. The hon. Member for Southend, West (Mr. Amess), Baroness Maddock and my hon. Friends the Members for Sherwood (Paddy Tipping), for Harrow, West (Mr. Thomas), for Nottingham, South (Alan Simpson) and for Brighton, Kemptown—to name but a few—have either introduced private Members' Bills or initiated Adjournment debates on these important issues.
I am most grateful for the support of the sustainable energy partnership, which is a wide coalition of groups that have campaigned forcohesive structures, resources, legislation and statutory targets for the use of low and zero carbon technologies and energy efficiency, to counter climate change and fuel poverty by strengthening and extending Government commitments to achieve in the longer term the 60% CO2 reduction by 2050".The royal commission recommended that reduction. Early-day motion 910 sets out the long list of supporters. It includes companies, voluntary groups, campaigning groups and the green movements of the three main parties.
Powergen is running a television advert. It asks, if we were starting from here, what type of energy policy we would promote. It answers the question by saying that it would involve renewable energy—in the case of Powergen, wind power. The same idea could apply to our energy policy. If we had a blank sheet of paper, we would design a policy that was primarily built on renewables.
§ Mr. Win Griffiths (Bridgend)
Is my hon. Friend aware of the exciting project that will begin shortly in 567 Swansea bay for tidal lagoon energy? Tidal Electric, the sponsors of the project, believes that such energy can supply 10 per cent. of our renewable energy in the short term and 25 per cent. in the long term. Its cost will be competitive with the cheapest forms of energy currently available. Would my hon. Friend like that form of renewable energy to be much more strongly promoted?
§ Brian White
I was not aware of the scheme to which my hon. Friend refers. One of the things that is important, as I hope to demonstrate in my Bill, is the need to create innovative schemes such as that to which he refers. If we do that, we have a chance of changing the energy balance in this country and achieving the renewables target, but it is only through innovative, imaginative schemes that will we get there. I therefore welcome the work that is being done in Swansea.
We can all agree about the motherhood and apple pie statements. As my hon. Friend has just said, however, the challenge is how we turn them into reality. I do not pretend that my Bill is a panacea, but it is a key first step in delivering the goals of the White Paper.
Before I say what my Bill does, perhaps I can mention two things that it does not do. Some have suggested that it is designed to undermine the Utilities Act 2000. I refute that, even if I shudder at the memory of its Committee stage. I shall talk about that when we deal with combined heat and power issues. Neither is my Bill an attack on nuclear power—I hope to make that clear in particular to the right hon. Member for Bromley and Chislehurst (Mr. Forth). I concede that there are opponents of nuclear power who are supporters of this Bill, and there are even supporters of nuclear power who are supporters of this Bill. We need a debate about the role that nuclear power has to play in this country, and whether it has a role. Countries such as Finland have shown that there is a major debate to be held, but I am clear that my Bill is not the appropriate vehicle for that debate.
Some will say that, now that we have the White Paper, action will automatically follow. Experience under all Governments, however, teaches us that words are one thing and changing the actions at the operations end of a Department another. The White Paper says:Leaving action until the last minute is not a serious option. If we do not begin now more dramatic, more disruptive and more expensive change will be needed later on. We need early, well planned action to provide a framework within which businesses and the economy generally, including the skills and jobs base, can adjust to the need for change".It continues:Energy producers, investors, business and consumers need a clear settled long-term framework within which they can plan and make decisions with confidence".I hope that my Bill will allow the early start that has been called for, which is vital and which gives producers that clear framework.
§ Mr. Tim Boswell (Daventry)
The hon. Gentleman is making a powerful case. Does he agree that clear and unequivocal targets must be set if any progress is to be recorded, registered or achieved?
§ Brian White
The hon. Gentleman leads me neatly on to my next point. I was going to say that, when I proposed the Bill, all anyone saw in it was the word "targets". I ought to say a few things about targets.
568 I am a great believer in targets, but we must recognise their limitations. I am currently sitting on the Public Administration Committee, and this week we concluded an investigation into targets. I assure the House that the report will be well worth reading, as it deals with targets throughout the public sector. The key point about targets, however, is that they change the way in which people behave. A good target will redirect resources. If we are not serious about redirecting resources, there is no point in having targets. Targets are also about changing the culture of an organisation. They can turn a service that is coasting into one that is delivering action. They have great symbolism: they send a message to policy makers, to front-line staff, to users, to businesses and to others that the Government regard the matter concerned as vital. They also focus attention on the barriers to change and, as I said to my hon. Friend, they allow for innovative thinking.
§ Bob Spink (Castle Point)
I am here to support the hon. Gentleman's initiative, even though I support nuclear power. He mentioned good targets, and I agree that they are essential. Does he agree that part of the definition of a good target is that it is achievable and is perceived as being achievable? Is he aware that the target being set by the Government for renewables in five, 10 and 20 years is widely perceived as not being achievable? Nor does any international evidence suggest that those targets could be achieved, and nor does the level of investment—
§ Brian White
I do not accept that we should set targets that we know that we will achieve. We should set targets that are challenging and stretching and that require a change in what we do in order to achieve them. If we simply set targets that we knew we could achieve, it would not achieve what the hon. Gentleman wants. The targets that we set need to be demanding. It is interesting that one of the things that the Select Committee considered was that, in the private sector, people who achieve 80 per cent. of their targets are considered to have done really well, whereas, in the public sector, people who achieve 80 per cent. are slaughtered because they have not achieved the remaining 20 per cent. The key point is to set targets that change people's behaviour and the way in which they operate. We must allow renewables to grow and become a far bigger proportion of the energy sources in this country. Whether it is 9 per cent., 10 per cent., or whatever figure people choose, is less important than the fact that the target will change behaviour and the way in which people perceive things.
§ Mrs. Anne Campbell (Cambridge)
Like many Members here, I also support the Bill. A moment ago, my hon. Friend talked about barriers to progress. Does he agree that, over the past few years, one of the problems has been objections to planning applications 569 for wind farms? We must change our attitude to wind farms and examine much more carefully what benefits offshore wind can bring.
§ Brian White
I entirely agree with my hon. Friend. One of the great underused resources is wind power. In fact, the PIU report said that Britain has the greatest potential for renewable energy of any country in Europe. I had lunch with a constituent who is a property developer and is involved in schemes in Germany, and he told me that, as part of the conditions of a scheme that he is working on in Germany, he has to install a solar power plant to provide renewable energy for the development. The Department of Trade and Industry, however, primarily has a policy of capital grants. The policy in Germany, however, is to deliver that extra energy through green tariffs and low-interest loans and through the planning system. Germany has achieved the 200 MW target to which the DTI aspires by 2012. It is therefore possible. My hon. Friend raises a key issue—it is not simply about money; it is also about removing the barriers in the system through regulation and other measures. Targets, as I said, are key because they transform the way in which a Department operates.
§ Mr. Andrew Dismore (Hendon)
Like many Members, I am also here to support the Bill, but I am concerned that we should not throw the baby out with the bath water. When we talk about projects such as wind farms, it is important that we are environmentally sensitive, for example, to wilderness areas, few of which remain, and that we do not end up destroying our natural environment for the purposes of energy, as has happened in some parts of continental Europe.
§ Brian White
My hon. Friend highlights a problem that needs to be addressed, but it can be addressed through the planning system. It is a question of reconciling different interests and differing pressures, and that system has been very good, over 50 years, at balancing those different needs. My hon. Friend can therefore rest assured that having a wind farm policy is not irreconcilable with good environmental practice.
§ Mr. Crispin Blunt (Reigate)
That issue affects many people throughout the country who are presented with the prospect of a wind farm on their doorstep, often in areas of outstanding natural beauty. At what stage of the planning system does the hon. Gentleman think that the real decision should be taken? Who should make the trade-off between the environmental impact on the local community and the wider energy needs of the country?
§ Brian White
Local plans, such as county structure plans or unitary development plans, are the key to that debate. They would set a framework that would last for the duration of the plan, which may be 10 or 15 years. A debate about different types of renewable energy should be held during the public inquiry that forms part of the planning process. The local community could give its input and express its concerns about such things as the natural beauty of the landscape, which my hon. Friend the Member for Hendon (Mr. Dismore) talked about, yet make the point that it also needs renewable and green energy.
§ Mr. Gareth Thomas (Harrow, West)
Does my hon. Friend accept that the forces of conservatism that have 570 tried to use the planning process to delay decisions on eminently sensible wind farms must be prevented from inhibiting the development of such a sustainable energy industry? Does he also accept that serious planning reform is needed urgently so that quicker decisions are made, although the local community should nevertheless have a say on whether those projects go ahead?
§ Brian White
I was chair of the Local Government Association's planning committee before I entered Parliament. The committee tried to speed up the planning process to deal with the issues that my hon. Friend mentions. I am well aware of the concerns that he raises.
The Bill focuses on only five areas of sustainable energy. I could have made it a lot wider but I had to draw the boundary somewhere, so it does not include transport.
§ Mrs. Jackie Lawrence (Preseli Pembrokeshire):
Does my hon. Friend agree that hon. Members' comments reflect the incorrect perception in the public's eyes that renewable energy means only wind farms? There are many other types of renewable energy, such as biomass. I am especially interested in how that may help us to reach sustainable energy targets and encourage our farmers to diversify, which would secure a good future for farming in this country.
§ Brian White
My hon. Friend makes an important point. I talked to representatives of BP a little while ago who told me that the company could produce biofuel in its existing refineries. However, there is a regulatory problem due to Customs and Excise. My Bill would highlight such problems and allow for the removal of barriers. I agree that making progress on biomass and biofuels is a key issue.
The Bill covers not only renewables, but combined heat and power, energy efficiency, carbon dioxide emissions and fuel poverty. I shall outline how it would address that, and I shall try to be brief because many hon. Members may wish to contribute to the debate. Clause 1 requires the Government to produce an annual report on the steps they are taking to reach the targets. I chose my wording to give maximum flexibility on the way in which they produce the report, which would highlight and identify problems. The Government have committed themselves to a reporting duty in the White Paper and my Bill would give statutory backing to that pledge.
There are four key areas of activity, the first of which is renewables. I originally planned for the Bill to cover only the Government's existing commitments, but I changed the target for the amount of energy to be produced from renewable sources by 2020 from 20 to 25 per cent. on the basis of three key reports from the Sustainable Development Commission, the Institute for Public Policy Research and Future Energy Solutions. They all argued that 25 per cent. was a better figure, and although the Government might want to amend the target back to 20 per cent. in Committee, there is a strong argument for why the Government should be challenged to adopt a target of 25 per cent.
I am glad that the White Paper reaffirmed the targets for CHP by 2010 and 2020. It is important to send a clear signal to the CHP industry because after two years of 571 waiting, it urgently needs a series of measures that reflect more robust support from the Government. It is rather disappointed by the renewables obligation in the White Paper despite the fact that Ministers have stated that CHP is one of the most cost-effective technologies. The Bill would remove the renewables obligation from CHP because it is one of the cheapest carbon-saving technologies, as the PIU report identified. The White Paper could have promised more for CHP and I hope that we will return to that in Committee.
§ Mr. Christopher Chope (Christchurch)
What sanctions would the hon. Gentleman introduce if a CHP target were missed? The Government have missed the CHP target but they do not appear to be liable for sanctions as a result. What is the point of having targets if there is no sanction for missing them?
§ Brian White
The Bill would require the production of a report within a year of its enactment and annual reports thereafter. If the Government are forced to produce such reports, it will become apparent when targets are missed. Any action that follows will come from the House. It is important to have transparency and for information to be available publicly. We must understand why targets are missed because there might be valid reasons for that. Targets might be exceeded, so it is important that the whole picture is available. If targets are missed, it is up to us to introduce measures to change the situation.
§ Mr. Blunt
My hon. Friend the Member for Christchurch (Mr. Chope) raised an important point on the absence of sanctions. One of the problems of relying on targets and the availability of information in the public domain is that the Government may change the basis on which they provide the information. They have done precisely that in the White Paper when addressing energy efficiency because it uses measures of how many million tonnes of carbon are saved rather than the percentage change to energy consumption. It is even more difficult to assess whether the Government are achieving their targets when the basis of the figures changes.
§ Brian White
I have an assurance on the way in which the Government presented the targets in the White Paper. The hon. Member for Guildford (Sue Doughty) received a parliamentary answer stating that 5 million tonnes of carbon is equivalent to the 20 per cent. target identified by the PIU. I am happy to amend my Bill to detail the target in such terms. The key point is that the annual report will set out what has happened and how the Government are moving toward reaching the targets. It will also identify barriers so that action can be taken against them. We did not know what constituted the barriers in the past; we have had only an assertion of what the target is. As the target should be reached in several years' time, there is currently no mechanism to identify how close we are to it. The Bill would allow for such a mechanism.
Clause 1(2) sets out different methods and technologies that are applicable to the report. The report should outline aspects of the generation of heat 572 and electricity so that it will be clear which parts are working. If anything is not working, that can be rectified. I believe that the vast majority of the measures will work, demonstrating to the business community that there is a tremendous opportunity for investment and for new industries to move forward. As my hon. Friend the Member for Bridgend (Mr. Griffiths) said a moment ago, there are great opportunities for innovative schemes. One of the problems, under all Governments, has been the lack of a clear indication of how the different technologies fit into the overall picture. The reporting structure should address that concern.
Clause 1(3) is designed to ensure progress in the early implementation of the EU directive on the energy performance of buildings. The Government are to be congratulated on the early introduction of that directive. The Bill allows annual assessments of progress to be made, to ensure that no time is lost in implementing the directive.
One of the key parts of the Bill is clause 2, which gives statutory backing to domestic energy efficiency targets.
§ Mr. David Chaytor (Bury, North)
Does my hon. Friend agree that energy efficiency measures are the quickest, cleanest and most effective way of reducing carbon dioxide emissions? Does he accept that, in contrast to the renewables policy, energy efficiency measures enable individual businesses and householders directly to influence their energy bills because they control the introduction of those measures? Does he welcome the use of capital allowances for businesses to implement energy efficiency measures, and does he think that capital allowances could also be used to allow individual householders to offset against personal taxation the cost of installing new boilers or insulation? Is there some mileage in that idea, and will my hon. Friend raise it with the Chancellor?
§ Brian White
I am sure that the Chancellor will have heard my hon. Friend's intervention. I agree that capital allowances for businesses are crucial, and I am sure that they could work for domestic use as well. He is right to identify energy efficiency as the key to achieving the Government's targets on CO2 emissions. Even though the White Paper talks about 5 million tonnes of carbon, I think that the 20 per cent. target set by the PIU is crucial. It is worth remembering that the White Paper says that energy efficiency is likely to be the cheapest, cleanest and safest way of achieving the Government's energy policy objectives. That is why clause 2 is important.
§ Dr. Nick Palmer (Broxtowe)
Does my hon. Friend agree that energy efficiency measures also tackle the fuel policy agenda championed my hon. Friend the Member for Nottingham, South (Alan Simpson), which, unlike some energy measures, combines social action with environmental action?
§ Brian White
My hon. Friend makes an important point. It is interesting to note that the PIU report identified micro-CHP as a significant way of tackling fuel poverty. It is important that we use energy efficiency measures to reduce the energy use of local authorities 573 and domestic households, and I pay tribute to the work of my hon. Friend the Member for Nottingham, South (Alan Simpson).
§ Alan Simpson (Nottingham, South)
On energy efficiency measures, does my hon. Friend accept that there is a case for extending, rather than reducing, the warm front programme? We should look at the lessons learned in Scotland, where additions to the programme have been made. Given that there are 1.7 million fuel-poor households who are not eligible for the programme and 1.4 million households who are not fuel poor but are eligible, we should look at the allocation process. We need to be able to target energy efficiency gains more effectively so that those in the greatest fuel poverty are the greatest beneficiaries of the programme.
§ Brian White
My hon. Friend is absolutely right. The Government have made a good start, and they have already met many of their targets for removing people from fuel poverty, but there is an awful lot more to do and there are lessons to be learned from Scotland. It is important that we do far more over the next 20 years than we have done over the last 20.
§ Mr. Gwyn Prosser (Dover)
I am pleased to be here this morning supporting my hon. Friend's important Bill. On domestic energy efficiency targets, which I agree are the crux of the Bill, does he agree that there is scope to go beyond 2010 and consider more ambitious aims?
§ Brian White
Absolutely. There are different definitions of fuel poverty, and it is important to use the widest definition.
Other parts of clause 2 stem from Government amendments made to the Bill introduced by my hon. Friend the Member for Brighton, Kemptown last year, so hopefully they will be relatively uncontroversial.
I have already referred to clause 3 and to the lifting of the renewables obligation from the CHP industry. Clause 4 imposes on Ofgem a statutory duty to have regard to the sustainable energy policy when discharging its functions. There is guidance on environmental and social issues, but it is important that Ofgem has statutory backing. Clause 4 also takes on board the proposal in the White Paper that the regulator should publish an environmental impact assessment for any significant new policies.I have had discussions with the regulator on those issues.
§ Mr. Gareth Thomas
Clause 4 is important, and if, as I hope, the Bill is given a Second Reading, the clause stand part debate in Committee will be an excellent opportunity to discuss Ofgem's performance on renewables, given its complete failure since the introduction of the new electricity trading arrangements seriously to address the concerns of CHP and renewables generators.
§ Brian White
As someone who tabled amendments to that effect in the Standing Committee considering the Utilities Bill, I would be delighted to have that debate. However, it is important to recognise that Parliament, not the regulator, sets out the framework of the regulator's job. Regulators will do what Parliament tells 574 them to do, and it is up to us to give Ofgem the powers to consider sustainable energy policies, renewables and CHP if that is what we want it to do.
Clause 5 also responds to the White Paper, and it allows the Gas and Electricity Markets Authority to fund the capital costs of new sustainable energy schemes. Clause 6 helps to tackle fuel poverty by ensuring that the policies of local authorities and the Government will be co-ordinated.
§ Ms Debra Shipley (Stourbridge)
In defining fuel poverty, the terms "total income" and "disposable income" are very important. In the White Paper, the Government have moved from the standard assessment, which is 10 per cent. of disposable income, to 10 per cent. of total income. Will my hon. Friend comment on that?
§ Brian White
Both definitions are important. The Government have used the narrower definition for the first initiative, and it is important that we now begin to use the wider definition to which my hon. Friend refers.
§ Mr. Chope
Does the hon. Gentleman accept that one of the many problems faced by pensioners is that they cannot invest in insulation for their houses because of the high burden of council tax? There are now more than 1 million pensioner households who pay over 10 per cent. of their income in council tax. Will the hon. Gentleman say something about that?
§ Brian White
Given that Tory councils have a higher council tax than Labour councils, I wonder why the hon. Gentleman does not raise that point. If I strayed too far down that road, you would rule me out of order, Madam Deputy Speaker.
To conclude, my Bill is a modest step towards turning the White Paper's aspirations into reality. In the Prime Minister's words:By working with others, the costs of action will be acceptable—and the costs of inaction are far greaterin the long run.
My Bill has widespread support from a broad coalition of renewables organisations, environmental non-governmental organisations, homelessness and housing charities and, as I said, the green movements of all three major parties. I believe that taking action on renewables and energy efficiency provides the best way forward. With the help of my Bill, renewables and energy efficiency will have the chance to "prove themselves", as the Minister for Energy and Construction said when he launched the White Paper. Sustainable energy does not have to come at the expense of prosperity. Indeed, there are clear economic advantages in moving this sector forward, so I trust that Parliament will give its backing to the Bill.
§ Sir Sydney Chapman (Chipping Barnet)
I am grateful to speak in the debate, not least because I am privileged to be one of the sponsors of the Bill promoted by the hon. Member for Milton Keynes, North-East (Brian White). I congratulate him on his good fortune in drawing sixth place in the ballot. I have to say that in all 575 the years that I have been a Member of the House, I have been successful in the ballot only once, when I drew 10th place back in 1970 AD. I wish the Bill Godspeed and greatly hope that the House will support it. The hon. Gentleman tells us that all the political parties support the Bill, so once again we may be in danger of having a political love-in during the debate.
The Bill admirably seeks to enhance the Government's commitment to achieve energy efficiency, including targets for renewables, combined heat and power and so forth. Let us remember that when the Government introduced their White Paper on 24 February this year, one of its four objectives wasto ensure that every home is adequately and affordably heated"—a noble aspiration. As the hon. Gentleman said, the Bill has massive support from many prestigious organisations throughout the country.
I particularly welcome clause 1, which places a duty not only on the Secretary of State but on the appropriate authorities to report progress in achieving specific targets. I shall return to them in a moment. I also welcome clause 2, which requires the Secretary of State to achieve improvements in domestic energy efficiency—by at least 20 per cent. by 2010 on the baseline of 2002. Clause 4, which amends the Utilities Act 2000, requires the regulator Ofgem to have regard to sustainable energy policy. Also welcome is clause 6, which is designed to help eradicate fuel poverty by ensuring, among other things, better co-ordination between national and local action.
I support targets, though they can be overdone. Apart from supporting this Bill, the hon. Gentleman and I share several things in common, one of which is membership of the Public Administration Committee, which has recently completed an inquiry into targets. He will correct me if I am wrong, but I believe that we discovered that the Benefits Agency had either set itself, or had imposed on it, 152 targets. There is a danger of over-targeting. Nevertheless, I am a keen supporter of targets because they help to focus not only the Government's intentions but public support. It helps if everyone knows what the Government are trying to achieve on a specific issue by a particular time.
Several aspects of the Government White Paper disappoint me. Strangely, it does not provide an energy efficiency target—that is why I am particularly pleased that the hon. Gentleman's Bill does and specifies the mechanisms for delivery. As already mentioned, the White Paper says:The cheapest, cleanest and safest way of addressing our energy policy objectives is to use less energy".That is why it is especially strange that no specific energy efficiency targets were set in the White Paper. Indeed, the more one reads it, the more confusing it gets. The Government seem to provide a firm target for combined heat and power, but only an aspirational target for renewables and no target at all for energy efficiency. The White Paper's reticence about setting firm targets is strange.
With the indulgence of the House, let me examine the targets more carefully. The performance and innovation unit stated in its energy review that the Government 576 should aim to have 20 per cent. of electricity production to be provided by renewable sources by 2020. The hon. Gentleman will know that the Sustainable Development Commission increased the target to 25 per cent. The Environmental Audit Committee backed the performance and innovation unit's target, and I am delighted to see that the 25 per cent. target appears in the hon. Gentleman's Bill.
It will certainly be difficult to reach 10 per cent. by 2010—the first mile post for renewable production. The Minister may be able to confirm that currently only about 3 per cent. of electricity production is through renewables. The hon. Member for Preseli Pembrokeshire (Mrs. Lawrence) referred to the different forms of renewables. I shall not list them all, but we have been talking about onshore or offshore wind power, solar power, tidal power, wind and wave power, geothermal, biomass and so forth. It seems to me that the Government have simply said, "You out there must reach 10 per cent. by 2010," but I believe that specific targets should be set. I realise that they have to be flexible: there may be good developments in one form of renewable energy, but difficulties encountered in others. Nevertheless, the Government should provide much more specific advice and establish targets for the different forms of renewable energy.
On combined heat and power, the target is to achieve an increase in installed capacity of at least 10 GW by 2010, and of a further 10 GW by 2020. I did not gain A-level mathematics at school but I understand that a gigawatt is 1,000 million watts.
I have some worries about carbon dioxide emissions. The target is a 20 per cent. reduction by 2010 on 1990 levels. The White Paper says that the Government want to move towards 20 per cent., which does not sound like a specific and firm commitment. Labour Members will know that I am an avid reader of their party manifestos. I simply remind them that both the 1997 and 2001 Labour party manifestos included a firm commitment to a 20 per cent. reduction in carbon dioxide levels by 2020. Let us remember that the royal commission on environmental pollution advocated the 20 per cent. target and I certainly welcome the far-sighted and specific target in the hon. Gentleman's Bill of aiming for a 60 per cent. reduction in such emissions by 2050. Worryingly, the Department's own estimates suggest that carbon dioxide emissions increased in 2000 and 2001. To pluck a figure from the air, since 1997, there has been an increase of 1.2 per cent. in carbon dioxide emissions. There is therefore a serious challenge ahead, and I hope that the Government are laying plans to try and reverse that trend—we hope that it is just of the moment—and achieve the target of a 20 per cent. reduction.
I applaud some of the things that the Government have done in this area. As the hon. Member for Milton Keynes, North-East said, the promotion of sustainable energy has all-party support, but I wish that the Government would try to be a little more open. I believe that there is great support among the public for making sustainable development a reality. The Government would do themselves, as well as the House, a good turn if they shared those targets, added them specifically to the Bill, and approved them. We could then work together to try to achieve them.
577 I have the great privilege of serving as chairman of the sustainable development committee in the 44-nation Council of Europe. The Bill is a small but important step towards bringing about sustainable development.
§ Mr. Gareth Thomas
I broadly congratulate the hon. Gentleman on the way in which he has supported the Bill promoted by my hon. Friend the Member for Milton Keynes, North-East (Brian White) and on his chairmanship of the committee to which he has just referred. Will he consider trying to find a place on that committee for Bernard Ingham to educate him about the benefits of sustainable development, particularly wind power. He seems to be one of the key figures on the hon. Gentleman's side still opposed to wind power.
§ Sir Sydney Chapman
I have learned something from the hon. Gentleman, but I am afraid that Sir Bernard Ingham is unlikely to be able to secure a place on my committee, simply because the Council of Europe consists of parliamentary representatives from 44 nations.
§ Mr. Chope
Given my hon. Friend's great knowledge of the situation in Europe, will he enlighten us as to why domestic electricity prices in Denmark are about 70 per cent. higher than they are here? Denmark is just about the only country in Europe to rely heavily on wind power generation, so are the two connected?
§ Sir Sydney Chapman
I do not think they are, but I would not claim to be the expert that my hon. Friend thinks that I am. To be serious, when we talk about biodiversity and sustainable development, do electors know exactly what we are talking about? Are we talking about vital things in a language that they can understand? I attended the world summit on sustainable development in Johannesburg last year as chairman of that Council of Europe committee. I addressed parliamentary representatives at the conference, and gave a prize to the person who could explain in the fewest words exactly what sustainable development is. I got it down to seven words—not that the shortest explanation won, but the one that was easiest for the public to understand. I defined sustainable development as "conserving earth's finite resources for future generations."
§ Ms Shipley
I know that the hon. Gentleman's CV includes an interest in architecture. In the context of his remarks on sustainable development, does he agree that the Government have a massive house, school and hospital building programme, and there is a major opportunity to introduce all the green measures that many of us want and make them an integral part of that programme? With the hon. Gentleman's architectural background, would he like to comment on that?
§ Sir Sydney Chapman
I would be delighted to respond to that request from the hon. Lady, who is chairman of the all-party group on architecture and planning. In passing, we have a saying in the Royal Institute of British Architects that some of the most successful architects are sent to the other place—the failures come to the House of Commons. There are very few failures in architecture, because I am the only architect in the House of Commons at the moment.
578 In conclusion, I feel strongly that the Bill is thoroughly commendable, and is a small but useful step towards promoting sustainable development, which is vital for the future of our eco-system. I qualified as an architect many years ago, and believe that design is an integral part of sustainable development—that is the point that I wish to get over. It is amazing, in a country which boasts the fourth-largest economy in the world, that not all our people live in warm homes. That is a blot on any nation which calls itself civilised.
§ Sir Sydney Chapman
The issue of nuclear generation is controversial, but it would be of immense help in meeting those renewables targets if we had a second generation of nuclear power stations in this country. However, that argument is for another day. I am grateful to be called to speak, and I wish the Bill of the hon. Member for Milton Keynes, North-East all good.
§ Dr. Desmond Turner (Brighton, Kemptown)
It is a great pleasure to congratulate my hon. Friend the Member for Milton Keynes, North-East (Brian White) on introducing his Bill in the House. It was a wise choice on his part to use the opportunity to raise a subject that is particularly close to my heart. I expect that hon. Members remember the chastening experience of the Home Energy Conservation Bill, which I introduced in the House last year. Happily, the key measures on energy conservation and fuel poverty in my Bill are included in the Bill that we are considering today. I hope that they will be endorsed by everyone in the House and will reach the statute book.
I was going to give a longer speech, but the Whips have prevailed on me to give a shorter one.
§ Mr. Blunt
No—I am extremely grateful to the hon. Gentleman for giving way on the note of the Whips prevailing over him.
Is it not the case that an amendment to the hon. Gentleman's Bill tabled by my hon. Friend the Member for Bexhill and Battle (Gregory Barker) is part of the present Bill? When the hon. Gentleman talked out his own Bill in the House, he said that the amendment was effectively a wrecking amendment. Will he explain why he now appears to be a supporter of that measure?
§ Dr. Turner
I am happy to put the hon. Gentleman right. The agreed content of my Bill—agreed, that is, with the Government—is the same as that of the present Bill. There is no conflict whatsoever. The hon. Gentleman must know that that amendment was a wrecking amendment not because anyone disagreed with it but because, as the hon. Member for Bexhill and Battle (Gregory Barker) must have known perfectly well, the Government were not prepared to accept it. It is as simple as that.
579 My hon. Friend the Member for Milton Keynes, North-East tabled an early-day motion asking people to support his Bill. I did not sign that motion, not because I do not support the Bill enthusiastically, but because it began by endorsing the policies set out in the White Paper. I could not subscribe to that.
My speech is now much shorter, because I had prepared a piece-by-piece demolition job on the White Paper. Like an awful lot of papers, it is not worth the glossy paper on which it is printed, not because it does not contain much good factual material—it does—but facts are facts, and there is no particular disagreement about those. The crucial issue is that it is effectively a policy-free White Paper. It does not present any significant new policy; it does not commit to any significant new Government expenditure; it does not propose any new legislation that is not already in the pipeline. The Bill is a significant advance on my own because of the provision for Government reporting annually on progress towards the achievement of a sustainable energy economy.
The hon. Member for Castle Point (Bob Spink) pointed out that most people in the field are agreed that the aspirational targets of 10 per cent. renewable energy by 2010 and 20 per cent. by 2020 will not be fulfilled if we proceed as we are doing at present. The White Paper offers no measures to address that situation. That is the nub of the problem. The annual reporting process will expose for all to see the fact that we are not on course to meet our targets. We clearly will not reach 10 per cent. by 2010 unless progress is vastly expedited above its present rate, and 20 per cent. by 2020 is a pipedream unless we do something serious.
The very notion of sustainable energy development in as ruthlessly liberalised an energy economy as we currently have is an oxymoron. It is pointless to worry about whether Denmark's electricity prices are 7 per cent. higher than ours. That is trivial.
§ Dr. Turner
That still does not matter much. If we look at the economies with which we are in competition in the world marketplace, there is very little correlation between cheap energy and their competitiveness. It is clear that electricity prices per se are not a significant factor in competitiveness. If a modest increase in the wholesale price of electricity—remember that it is very low in this country at present: 1.6p per kilowatt-hour, but the consumer benefits very little from that—brought us the opportunity of a sustainable future, that would be the big benefit.
If we go on as we are doing, we will never get anywhere near the 60 per cent. CO2 reductions, and coming generations will simply fry. We all know that the most moderate climate change scenarios for the future that are predicated on the 60 per cent. reduction are still quite serious. Anything less than 60 per cent. starts to move into the disaster area. Against such a compelling driver, the odd 0.5p on the wholesale price of electricity becomes trivial.
580 The annual reporting process will reveal for all to see what progress we are making towards achieving sustainable energy. The 10 per cent., the 20 per cent. and even the 25 per cent. targets or aspirations are all perfectly technically feasible if we go about it in the right way. The Government have a leading role to play in that. We have seen from the example of Denmark and wind power what can be achieved by a determined Government, but in the White Paper there is no evidence whatever of such determination. The Government behave like a bystander, saying, "Oh, look. All these things are happening. If we stand back and let them happen, they may happen." They will not happen unless the Government adopt a much more determined approach.
§ Ms Shipley
I return to the subject of the building programme and the construction industry. Does my hon. Friend agree that we have a once-in-a-generation opportunity to build houses with green qualities on a mass scale never known before in Europe? Such building exists on a small scale, not on the mass scale that the Government have the opportunity to achieve with the unit price driven down by mass production?
§ Dr. Turner
I entirely agree. I have seen the future in terms of zero energy housing—in effect, housing that can feed back into the grid surplus photovoltaic energy. The technology is available. My hon. Friend is right. If it is exploited on a mass production basis, it will be affordable and the benefits will be enormous.
What do the British Government do? They spend all of £60 million investing in energy research and development and deployment. How does that compare with our international competitors? France spends seven times as much, Germany about four times as much, the United States 30 times as much and Japan 40 times as much. We will not get into any big league with that sort of spend. The level of spend in industry is abysmal. Since the privatisation of the energy utilities, their research and development investment has plummeted, so the money is not there. The major impetus for R and D in renewables is coming from small and medium-sized enterprises, which do not have the levels of finance needed to drive that on a major scale.
Our present energy policy is fragmented. Research and development is spread across five research councils. We have about four independent bodies such as the Energy Saving Trust and the Carbon Trust, none of which has very much money to play with, all doing their own thing. There is no central driving vision to make the aspirations come about.
On Thursday my Select Committee, the Science and Technology Committee, will publish our report. "Towards a Non-Carbon Fuel Economy". I am a little sad that the Energy Minister is not present in the Chamber today, but I ask his representative on the Front Bench, the Under-Secretary of State for Trade and Industry, my hon. Friend the Member for Edinburgh, South (Nigel Griffiths), to point out to the Energy Minister that the policy vacuum in the White Paper will be filled on Thursday if the Government have the wisdom to adopt the recommendations contained in the report, which convention prevents me from revealing now.
581 I can say, however, that there will be in the report a coherent, affordable, comprehensive and workable energy policy which, if the Government adopt it, will mean that when they come to write their annual report—assuming the Bill becomes law, as I very much hope it will—the Government will be able to present it to Parliament with pride, rather than shame. I hope that hon. Members will give the Bill a safe passage.
§ Mr. David Amess (Southend, West)
I congratulate the hon. Member for Milton Keynes, North-East (Brian White) on his good fortune in winning a place in the ballot for private Member's Bills. It is a great honour for me, along with others, to be a sponsor of the Bill. When I say "good fortune", I had a conversation with an hon. Member recently who told me that the average length of service of Members of Parliament is seven years. If that is the case, many of us are living on borrowed time, and I cannot believe that.
§ Mr. Amess
I shall ignore the Minister's jibe from a sedentary position.
Whatever the situation, it is unlikely that a Member of Parliament will be successful in the ballot for private Member's Bills, so the hon. Member for Milton Keynes, North-East has been fortunate. I was fortunate after 18 attempts, and until my name was drawn in the ballot, I never realised how popular I was. Every lobbying organisation in the country had the temerity—not thinking that after 18 years I would have my own interests—to press on me their particular concerns. I had no expertise whatever in the field, but I am pleased that I decided to go with the Warm Homes and Energy Conservation Bill.
I think that I know how the hon. Gentleman feels. It is all very well being successful in the ballot, but then the fun begins, as the hon. Member for Brighton, Kemptown (Dr. Turner) found last year, and I wholeheartedly endorse every word of his speech. I congratulate the hon. Member for Milton Keynes, North-East and I hope that hon. Members will make relatively short speeches so that we can ensure that the Bill reaches Committee.
I do not know whether the Minister has drawn the short straw in being here today or is thrilled to bits to be listening to us all, but if the House of Commons is to be taken seriously, and if we are to be concerted in our efforts—without passing around the sick bag—to save the planet and improve the quality of the lives of women and men, this sort of legislation should be at the heart of our endeavours.
An oral question of mine earlier this week caused some amusement among hon. Members because I asked what was the point of any of us being sent to Parliament to legislate when the laws that we make are not adhered to, and that is the crux of my contribution this morning. We should have aspirations and ensure that this mother of Parliaments sticks to them. Those who are cynical and say that the Bill is a waste of time are completely wrong. The hon. Member for Milton Keynes, North-East is trying to make this a better country in which to 582 live, and I support him in that and am particularly proud that he happened to reside for a considerable time in Southend.
I want to focus on clause 6, which deals with fuel poverty, and clause 2, which deals with energy efficiency, because they are the matters in which I was interested in the Warm Homes and Energy Conservation Act 2000. As has already been said, clause 2 is an essential part of the Bill. It fills a large and perplexing hole in the White Paper, on which the hon. Member for Brighton, Kemptown spoke eloquently. That document, which is long on aspiration but short on hard policies to achieve those aspirations, is also stunningly illogical as regards domestic energy efficiency. Let me explain.
In paragraphs 1.19 and 3.2 energy efficiency is stated explicitly to be the cheapest, cleanest and safest way of addressing all four objectives of the Government's energy policy, and I suspect that few would disagree with that. But let us consider how the White Paper deals with energy efficiency and compare how it deals with other methods of reducing carbon emissions, to which my hon. Friend the Member for Chipping Barnet (Sir Sydney Chapman) referred, and delivering on the objectives of energy policy.
At paragraph 4.17 the White Paper sets a target of 10 GW of electricity being generated by combined heat and power by 2010. Renewables are also mentioned. I am keen on those—wind, wave and tidal power—simply because those of us representing Thames estuary constituencies can see the huge benefits that will accrue from such sources of power. My next-door neighbour but one, who is not a mad professor but invents all sorts of things, has huge expertise in such energy matters. I recognise that we are talking about huge Government investment, but I hope that the Government will take renewables seriously and come up with some positive plans on the way forward. At paragraph 4.11, the White Paper sets an aspirational target of 20 per cent. of electricity being generated by renewables by 2020.
Paragraphs 3.5 and 3.6 of the White Paper deal with energy efficiency. Paragraph 3.5 explains measures that may achieve certain carbon savings by 2010, and paragraph 3.6 gives carbon savings from energy efficiency that can come from households by 2020. But nowhere is it stated that those carbon savings from energy efficiency are targets, objectives, goals, aims or even Government policy. They are simply stated as being what is possible. That is true, but when the Minister replies, will he say whether the achievement of carbon savings from domestic energy efficiency, as stated in paragraphs 3.5 and 3.6, is a target, Government policy, or what? I hope that he can clarify that point.
Let us be clear. There may be different views in the House about targets—we have had a flavour of that this morning—but there can be no different views on the absurd situation in the White Paper whereby what the document itself calls the cheapest, cleanest and safest way of addressing all four objectives is treated less favourably than other ways of delivering energy policy. That is crazy. I hope that the Minister will clarify the situation.
That is why clause 2 is fundamental. It places on the Government a duty to take reasonable steps to move towards achieving the energy efficiency targets 583 recommended by the performance and innovation unit of the Cabinet Office, also backed by the Sustainable Development Commission and the Energy Saving Trust. That is particularly important. Again I ask whether the Minister will confirm that the Government support those targets. Energy efficiency is not just about reducing carbon dioxide, it is also about home warmth. In fact, it is the one policy approach that can do both. Cutting carbon dioxide can end fuel poverty.
Clause 6 requires local authorities to contribute to ending fuel poverty when carrying out their functions under the Home Energy Conservation Act 1995. That is necessary because I am alarmed by what is happening on fuel poverty. The Act that I was privileged to pioneer through the House places on the Government a duty to end the disgrace of cold homes, but what is happening? There are three serious concerns about the measure.
Chapter 8 of the White Paper specifically deals with fuel poverty, but it fiddles the definition so as to define at least 1 million people as no longer being in fuel poverty. For goodness' sake, when we considered the previous Bill in Committee, we spent a great deal of time on the definition of fuel poverty. I had no idea that the Government would not only ignore that definition, but suddenly change it so that 1 million people were no longer included. Those people will still live in cold homes, but they will have been defined out of the problem.
How did that happen? The answer is simple. The standard definition of fuel poverty is that it exists where a household needs to spend 10 per cent. of disposable income—income after housing costs—on trying to keep warm. I pay warm tribute to the Minister for the Environment, who was absolutely magnificent in his support of the previous Bill, with which I was delighted to be associated. For instance, he gave repeated assurances to the National Energy Action conference in September 2001 that fuel poverty would be ended on the basis of the specific definition that we agreed in Committee. However, the White Paper completely ignores that definition and talks of ending fuel poverty only on the basis of the Government's new and bogus definition, under which a household needs to spend 10 per cent. of total income to keep warm. That is not the same as disposable income. Thus, 1 million people are, by sleight of hand, removed from fuel poverty.
The second of my three concerns is about social housing. Fuel poverty in all social housing has to be ended by 2010 in the strategy drawn up under the Warm Homes and Energy Conservation Act 2000. To achieve that, the Government have required all social housing to meet a decency standard by 2010, but that standard is set so low—for instance, loft insulation standards are one quarter of those required by the building regulations—that National Energy Action estimates that 1 million households are currently in social housing that complies with those low standards, but are clearly still in fuel poverty. Another 1 million people are therefore defined out of suffering from fuel poverty. The White Paper does not deal with that issue at all.
584 Finally, the recent first annual report of the Government Fuel Poverty Advisory Group clearly states that resources will need to be increased by at least 50 per cent. if fuel poverty is to be ended in vulnerable sectors—old people, disabled people and families with young children—by 2010. I again ask the Minister whether he has seen that advice, as the White Paper makes absolutely no reference to it. There are enormous holes in the White Paper, and as the hon. Member for Brighton, Kemptown said, they are plugged by the Bill that the hon. Member for Milton Keynes, North-East is piloting through the House.
§ Mr. Chope
My hon. Friend has been addressing fuel poverty. Does he accept that that issue is relevant in the context of council tax poverty for pensioners? If pensioners have to pay significantly more than 10 per cent. of their income in council tax, they will have less money to spend on keeping their homes warm.
§ Mr. Amess
I think that Madam Deputy Speaker would not entirely welcome my being seduced by my hon. Friend's invitation to stick the boot into the Government about the shift in resources from the south to the north, but I am at one with him in his basic premise.
I am sure that the Minister realises that there is widespread support for the Bill among all political parties, but the key to ensuring that it is meaningful lies entirely with the Government. I hope that he will pass to his hon. Friend the Member for Milton Keynes, North-East the message that no attempt whatever will be made to water down his aspirations when the Bill moves into Committee. I wholeheartedly commend the Bill to the House.
§ Mr. Tom Cox (Tooting)
Like other speakers, I warmly congratulate my hon. Friend the Member for Milton Keynes, North-East (Brian White) on his luck in being able to present the Bill and on his presentation to the House this morning. I intend to be very brief, because I realise that other colleagues wish to speak in this important debate, and I shall concentrate on clause 2, which refers to domestic energy efficiency.
I listened with great interest to the speech of the hon. Member for Southend, West (Mr. Amess), as I am sure we all did, and I agree with much of what he said. All of us know that the more a home is insulated, whether in the loft, walls, windows or doors, the better it is for the person who lives in the property and for energy saving. At present, there are two early-day motions on the Order Paper dealing with this matter to which I want to refer. Early-day motion 79, which is headed "Reduction of VAT on Energy Saving Materials", calls for a reduction in VAT on such materials to 5 per cent., although many would say that they should be zero rated. It would be interesting to hear from my hon. Friend the Minister just what the Government's view is on that motion.
I put it to the House that it is by taking action on such matters that we can build up public confidence that the Government are committed to the kind of things that my hon. Friend the Member for Milton Keynes, North-East is seeking to achieve in his Bill. Indeed, such aims 585 were shared in the Bill that the hon. Member for Southend, West introduced some time ago. Early-day motion 147, which is entitled "Ending Fuel Poverty", states thatresources for fuel poverty programmes will need to be increased by … 50 per cent.It has been signed by some 180 hon. Members from all parties.
This week, I received a booklet from Help the Aged—I am sure that all Members of the House will have received it—entitled "Stop pensioner poverty now". On page 8, under the title, "End the outrage of 20,000 avoidable deaths every winter", it says:Despite a government initiative and some useful assistance, 'fuel poverty'—defined as the need to spend more than 10 per cent. of your income on fuel to heat your home adequately—is still very common among older people, who often live in cold, damp homes. The current system of means-testing help only for those who receive benefits is not working.We urge the Government to adopt a more humane and sensible approach. The Scottish Executive, for example, is installing insulation and central heating in all homes that do not already have it by 2006. Until that happens, many thousands of the vulnerable older citizens of this wealthy nation will die, simply because, in the twenty-first century, we cannot cope with the effects of cold weather.I fully support that statement, which reflects what my hon. Friend is seeking to do in clause 2. It makes a major commitment to domestic energy efficiency, and we all know the importance of that. However, we also know how expensive it will prove. How can we expect retired people, who live on low incomes, to find the sort of money that would be involved in installing energy-efficient systems? Who will help them to pay for that? I hope that my hon. Friend the Under-Secretary will answer that.
Many people in all our constituencies are retired and on low incomes but have a perfect right to live in a home that has an efficient energy system. The Bill attempts to deal with that. However, such systems cost money and I would like my hon. Friend the Under-Secretary to tell us what financial assistance the Government will provide. I have already cited the early-day motion that states that current funding is inadequate.
Like other Members, I believe that the Bill deserves the House's full support. It is crucial to examine energy needs not only in the immediate but in the long-term future. I have heard the comments about the White Paper. Although I have reservations about it, it contains specific guidelines to which not only the current Government but future Administrations must make a genuine commitment.
For me, there are two key requirements to fulfilling the future energy efficiency needs of our country. First, the Government must make a genuine commitment. Secondly, they must also provide financial support. It is no good having wonderful ideas such as planning the energy needs of our country up 2050. We must make a commitment and back it up with meaningful, continuing financial provision by the Government and future Governments.
I am pleased to have made a short contribution to the debate. Again, I warmly congratulate my hon. Friend the Member for Milton Keynes, North-East on promoting the Bill. Like other hon. Members who have 586 spoken, I want the Bill to receive a Second Reading, go into Committee and, in the course of the year, to become part of this country's legislation.
§ 11.2 am
§ Dr. Alan Whitehead (Southampton, Test)
Many hon. Members have described the Bill as a modest measure. I believe that it is not modest but important. Energy in the future, and especially reducing the amount of carbon dioxide, is not a project. It is not something that we simply do and subsequently leave. We must commit ourselves to it in the long term if we are to achieve the carbon dioxide reductions that the Bill mentions and that are widely acknowledged as necessary to future sustainability.
The Bill sets out methods whereby targets may be regularly reviewed. However, it would achieve more than that. Setting targets is easy; making them work is harder. Achieving targets is not only a question of money. The architecture of service provision and the framework for providing a utility can help to fulfil a target. The way in which a utility performs within a framework can help with setting a target.
Clauses 3 and 4 are especially important. Clause 3 exempts combined heat and power from the renewables obligation. In my view, CHP is important for several reasons. Although it is not a renewable, it is a near renewable. It is an immense efficiency improvement on traditional electricity generation and it is also an urban near renewable. Hon. Members have commented on the rural nature of many renewable sources of energy.
Combined heat and power can be set up in people's back gardens, in neighbourhoods and people's houses. It can power a street of homes right in the middle of cities, where other renewable sources would perhaps be inappropriate. The other urban renewable is photovoltaics and solar power. Combined heat and power can produce a series of small generators in urban areas, putting electricity into the grid. That is part of the future of energy generation.
Clause 3 exempts CHP generators from having to purchase renewable obligation certificates. That is an important step forward in generating the market. Combined heat and power is not experimental technology; it is market ready. It simply needs a fair wind to ensure that it works to provide the benefits that many hon. Members believe can be derived from a vision of large-scale installation of small and medium CHP generators across our urban landscape.
§ Brian White
When the Utilities Act 2000 was being considered, the Government did not intend to place a renewables obligation on CHP. That was down to drafting and it was not spotted at the time. It was therefore a mistake that needs rectifying.
§ Dr. Whitehead
It needs to be rectified whether it was a mistake or not. I hope that the Bill will complete its passage with clause 3 intact.
Clause 4 is important to making targets work. It places a sustainability requirement on the regulator. I agree with the comments of my hon. Friend the Member for Harrow, West (Mr. Thomas). In introducing the new electricity trading arrangements, the regulator's actions appear to run contrary to many of our aspirations, 587 which are set out in the energy White Paper, on progressing with sustainable electricity generation. It is essential that those policies go hand in hand. The electricity generation market's framework should move towards rather than away from sustainability. Clause 4 is important because it introduces the framework whereby we embed and support moves towards sustainability in the electricity generating market.
When people switch electricity on and off, they should be switching increasing amounts of renewable electricity. That should be a target. If that process is embedded in people's lives and they make the country more sustainable in terms of energy, we will have secured a victory.
The Bill is an important step towards achieving our goal. I warmly support it and hope that it receives a Second Reading.
§ 11.8 am
§ Mr. Christopher Chope (Christchurch)
It is a pleasure to follow the hon. Member for Southampton, Test (Dr. Whitehead). We both once had a common interest in Southampton and the important work in that city on energy conservation. It was sad that the geothermal project in Southampton never worked in the long run.
§ Dr. Whitehead
I must contradict the hon. Gentleman. Geothermal energy now heats most of the city centre, including the college of higher education, the civic centre, the health centre and supermarkets. It is an astoundingly successful example of a renewable energy source that municipal enterprise has taken up and made to work throughout the city. It is a good example of what the Bill might encourage.
§ Mr. Chope
I stand corrected. That shows the danger of referring to the city that one had the pleasure of representing more than 10 years ago. I was always enthusiastic about the project and I am delighted that it is so successful. I am disappointed that the hon. Gentleman needed my intervention in order to make that point in this debate. Similarly, he made a good point on clause 3 in relation to the exemption of combined heat and power from the renewables obligation.
Another point that I would throw into the debate is the issue of solar-powered heating. When new construction, particularly of social housing, takes place, we are not as imaginative as many overseas countries in incorporating systems that enable water to be heated by solar power. The Government are heavily into subsidising and promoting solar energy, but converting solar rays into energy requires much more expensive technology than using the sun to heat water. I hope that we shall see more emphasis on this issue from the Government and more financial incentives for investment in solar-powered heating, rather than just in solar energy. A company based in my constituency, Global Solutions, has been lobbying strongly for such an outcome. Perhaps that could be spelled out more clearly in clause 1(2) when the Bill goes into Committee.
I was also interested in the speech made by the hon. Member for Tooting (Mr. Cox). Going back even further than 10 years, I used to be a member of 588 Wandsworth council. The hon. Gentleman made an important point about the difficulties that elderly people are in at the moment, particularly those who are just above the benefit level. He said that the current system of means testing meant that those people found it very hard to be able to afford to invest in systems that would enable them to have more fuel-efficient homes. If that is true in Tooting, which is part of Wandsworth—even after 1 May, a band D home in Wandsworth will be paying about £600 less per year in council tax than a band D property in Dorset—I am sure that hon. Members will realise how much more difficult it is for pensioners in those parts of the country that are not blessed with councils that have kept the council tax down as much as they have in Wandsworth or Westminster.
One of the most interesting speeches today was made by the hon. Member for Brighton, Kemptown (Dr. Turner), who made a devastating critique of the White Paper. I am sure that I share with the whole House the sense of anticipation at the forthcoming publication of the Select Committee on Science and Technology report next Thursday. We shall wait to see whether it sets out a coherent, affordable and workable energy policy. I am sure that the Government will be very grateful to the Committee for the work that it has done. To describe a White Paper produced by one's own Government as "policy free" was brave, if not reckless, of the hon. Gentleman. The Government should, however, take his comments seriously, because he obviously comes to the debate with an enormous amount of experience and expertise.
I had a disagreement with the hon. Member for Brighton, Kemptown about the relevance of the pricing of electricity, but I think that he was talking about the wholesale price of electricity in Denmark and in this country. I, however, am concerned about the retail price, particularly in the context of elderly people and others being able to live in warm homes. The Government have already said that, as a result of the emphasis being put on renewables, there might be a need for individual domestic consumers of electricity to pay up to 15 per cent. more. In Denmark, they have to pay more than 70 per cent. more. There is obviously a higher proportion of energy generated by renewables there; it has the kind of level that is aspired to by many in the House and is referred to in clause 1 of the Bill. We should not think in those terms, however, without thinking through the consequences for the end users of our domestic power. That is particularly relevant in the context of fuel poverty, and pension and council tax poverty.
§ Dr. Desmond Turner
Is the hon. Gentleman aware that the differential between electricity pricing here and in Denmark is not simply to be accounted for by the higher percentage of wind power in Denmark? It accounts for only about 15 per cent. there. Account must also be taken of the fact that Denmark does not have access to the cheap gas and coal supplies that we do; it has to import them. That is the principal reason for the higher electricity prices in Denmark.
§ Mr. Chope
I note what the hon. Gentleman says about that. All that I can say is that I have a letter here from quite a distinguished constituent of mine who used 589 to work in the energy industry and who is still very much involved with energy issues. He thinks that one of the main reasons for the very high price of electricity in Denmark is its dependence on wind power. Perhaps we shall have time to ascertain the real truth about this issue in due course. The fact that it has such a degree of wind power generation certainly adds to the costs.
The hon. Member for Brighton, Kemptown was very disparaging about the Government's target setting. He thought that it would be useful if we were able to bring the Government to book once a year by forcing them to produce a report. Although I am extremely sceptical about the virtue of producing reports just for the sake of it, if it were an additional way of holding the Government to account, I should go along with it. The trouble is that the Government wriggle when faced with targets and aspirations. Even in the Bill, clause 1(a) contains a reference tothose measure that it intends to take to move towardscertain targets, rather than to bring them about.
During this time of Lent, some people will have set themselves targets for reducing their weight, their alcohol intake or other such things. Those are firm targets, and it would not be sufficient simply to say, "I have moved towards my target by losing a pound in weight" if I had set out to lose a stone and a half. By using clever language, the Government have been able to get themselves off the hook in terms of the firm targets that were set—as my hon. Friend the Member for Southend, West (Mr. Amess) said—in the manifestos that they produced at the last general election and the one before that.
My biggest concern about what the hon. Member for Brighton, Kemptown said is that he asserted that the Bill was not an attack on the nuclear energy option. If that is so, I hope that when the Bill goes into Committee, he will include—specifically in clause 1(2)—a reference to the contribution that nuclear power can make to the reduction in CO2 emissions. To exclude the nuclear contribution would be to make our task extremely difficult, if not impossible, to achieve. Apart from anything else, the cost of nuclear energy is now becoming much more competitive. Before the privatisation of British Energy, the cost of nuclear electricity was 2.37p per kWh.
§ Dr. Turner
If the generation costs of nuclear power have become so competitive, why did British Energy have to be bailed out?
§ Mr. Chope
British Energy had to be bailed out because of its totally one-sided long-term contract with BNFL, which it was tied into by the Government. It had no option on that, and in my view BNFL was bleeding British Energy dry. Indeed, it is significant now that, because of the virtual bankruptcy of British Energy, there has had to be a renegotiation of the contract with BNFL.
As a result of that, when the new contract comes into place from 1 April, it will extend throughout the lifetime of the nuclear plants and ensure that the cash operating costs of UK nuclear stations, assuming the normal output of 67 terawatt hours—tWh—per annum, will fall to 1.45p per kWh, which, the hon. Member for Brighton, Kemptown may be interested to know, will 590 give an operating profit of £100 per MW against the losses of £4 per MW that reduced British Energy to virtual bankruptcy in the recent past. That is why the cost of nuclear electricity was not even lower and, coupled with the neater trading arrangements, it put British Energy in those dire straits.
The Government have recognised that, in the short term, they could not possibly accept the bankruptcy and closure of British Energy, as that would reduce generating capacity by about 25 per cent., which is about what is produced by nuclear. In answering questions from the hon. Member for Leicester, East (Keith Vaz) on 24 March, the Minister for Energy and Construction—I share the concern of others in the House that he is not with us to respond to the debate—said that nuclear produced 22 per cent. of electricity in 2002 from 14 plants, that 32 per cent. came from coal and 1 per cent. from oil. The targets for reducing CO2 emissions makes one immediately think that it would be more sensible to replace coal-generated electricity with nuclear rather than replacing nuclear with renewables. The Bill needs to be a lot more explicit about the important role that nuclear can play in enabling us to meet the self-imposed obligation of cutting CO2 emissions by 20 per cent. by 2010 based on 1990 levels.
I do not want to speak for much longer, but the points raised on fuel poverty warrant further comment from me. My hon. Friend the Member for Chipping Barnet (Sir Sydney Chapman) said that cold homes are the most important issue that we are addressing, and I agree with that wholeheartedly, so the Government's change to the definition of fuel poverty does them no credit whatever, although it is typical of how they set themselves targets that cannot be met and then change the definition of that target. Recently, a number of documents have been produced—by the Home Office in particular this week—in which the Government have effectively changed the definition of targets that they have set themselves. This is a blatant example of changing the set target, and it effectively strands an additional 1 million people, who cannot be embraced by the agenda on eliminating fuel poverty, which the Government have previously espoused.
This is a serious issue and I hope that the Minister ensures that the Government think again. Indeed, the Bill presents the opportunity to table an amendment redefining fuel poverty in the way that it was originally defined and putting that on the statute book. That, too, must be addressed in Committee.
The Bill has shortcomings, and the most fundamental is that targets would be set but there would be no sanctions. If the Government are prepared to impose sanctions against local authorities or other organisations that do not comply with targets that they have set, why can the Government he absolved from responsibility and liability if they fail to meet targets set by Parliament? That is my first concern.
My second concern is that the Bill is far too equivocal on the role of nuclear. I hope that amendments in Committee will enable it to re-emphasise that we believe fuel poverty is so important that it should be defined as it always was defined. We should recognise the importance of allowing our elderly people and the infirm to be able to have warm homes at affordable prices. That will be promoted if we ensure that we have good value nuclear power rather than closing down that nuclear 591 generating capability and replacing it with much more expensive and, in my view, more environmentally intrusive windmills.
§ Mr. Andrew Stunell (Hazel Grove)
First, I congratulate the hon. Member for Milton Keynes, North-East (Brian White) on his success in the ballot and, even more, on taking up such an important topic for legislation. There is no doubt that a good sustainable energy policy is the key to leaving a sustainable planet for future generations as well as to us enjoying sustainable prosperity in the meantime. The production of the Bill is a credit to the hon. Gentleman and to those who are working with him and sponsoring it.
I also congratulate the hon. Gentleman on upstaging his own Government—a point that a number of other Members have already made. So far, they have needed four Energy Ministers in five years to try to implement three different energy policies—quite often two at the same time, I may say. Apparently. we are about to embark on a fourth. Three years after the publication of the findings of the royal commission on environmental pollution, one year after the publication of the performance and innovation unit report and some months after the publication of the energy White Paper, we are still waiting for the Government to produce the money, the legislation and the vision that would lead to us having a sustainable energy policy. From that point of view, the hon. Gentleman has done the public and Parliament a service in introducing h is Bill.
If, as it seems, the hon. Gentleman has secured the Government's support, his achievement is all the more remarkable, although in view of what has happened to previous Bills dealing with this topic, finding such friends for it sows the first seeds of doubt about just how good and how radical the Bill is. The Bill is timely, however, as we need a sustainable energy policy if we are to come anywhere near achieving our Kyoto commitments and the reduction in CO2 outputs recommended as a minimum by the royal commission and if we are to do anything like enough to avoid damaging our environment and, indeed, that of the planet.
The Bill is also aimed at the right problems. It is clear in setting out what needs to be done in terms of producing energy and power, particularly electricity, and also the efficient use of power. Its intentions are of the best but the question is: will it be effective? Hon. Members have explained the Bill's provisions extensively. The hon. Member for Milton Keynes, North-East and others have outlined its advantages. Perhaps the most important thing it does is to create a new duty to have a sustainable energy policy. While the need for that may seem self-evident, plenty of commentators still doubt the need either for an energy policy or for a sustainable one. If the Bill makes progress, it will, I hope, nail that fallacy.
The Bill sets long-term targets for sustainable energy production, which is a good thing. It rightly identifies many technologies and allocates to them their respective roles. It is important to recognise that some technologies a re at or very near the market and others, while very 592 promising, are a long way short of being commercial. I hope that the sponsors of the Bill will recognise that one cannot have a once-and-for-all fix of a mixture of technologies. One has to look at the science, the technology and the market and ensure that as appropriate each technology plays its role.
The Bill sets out action to conserve energy, in particular the huge waste of energy in the domestic sector. There are plenty of good estimates to suggest that, even by the implementation of quite routine measures, most households could save about 30 per cent. of the energy that they use, and in doing so improve their quality of life. People would not have to sit there shivering and freezing in the cold.
There is a huge amount that can be done. We should go beyond the routine and look at some of the trial and pilot projects that there are—for example, the Beddington zero energy, or BEDZED, project in the constituency of my hon. Friend the Member for Carshalton and Wallington (Tom Brake), which I visited. If we work at it hard, it is possible to achieve zero carbon dioxide emissions and very low energy consumption.
All those things are in the Bill and are certainly good. My hon. Friends and I will support the Bill but we want it to be strengthened. I hope that in Committee it can be provided with additional teeth, rather than going into Committee and coming out with just a pair of gums, as happened with the Bill introduced by the hon. Member for Brighton, Kemptown (Dr. Turner). I hope that clause 2, about which the hon. Member for Southend, West (Mr. Amess) spoke strongly and powerfully, will be strengthened.
It is important to recognise that how to achieve an improvement in domestic energy efficiency is well understood. There is no magic about what needs to be done. For 30 years, Governments have had schemes to save it, to switch off the lights, to do this, that and the other but smooth words and slogans are not enough. It is a pity that clause 2 is stuck with words like "may" rather than "shall" and that it talks about encouraging, offering guidance and promoting schemes when what we need is decisive action within a clear policy framework and tough regulatory action supported by financial and fiscal measures.
We must change the culture. We are in the bizarre situation in which all of us know that we could save energy in our homes, thereby saving money and probably improving the quality of our lives, but there are no incentives, we do not have the culture right, we are not doing it properly. Clause 2, particularly clause 2(1), is somewhat tepid and falls into the same trap as the failed "save it" campaign.
There are two or three measures that would in the longer term significantly improve domestic energy conservation and efficiency and benefit us all. One is to have a requirement relating to the replacement of central heating boilers. About 1 million central heating boilers a year are replaced but there are no effective energy efficiency standards relating to them. A new generation of micro combined heat and power central heating boilers is being developed and coming on to the market. They will not only heat the home but generate electricity. The PIU report identified that micro-CHP would be the most efficient way of reducing carbon 593 dioxide emissions from homes. A simple regulatory requirement ensuring that central heating boilers were replaced by high-efficiency micro CHP boilers would be my clear preference. In 20 years it would transform the energy outputs of our homes. One could make the same point about white goods, where the efficiency standards are far too low, not achieving the best available options.
There is another matter of concern. There should be a simple regulatory requirement whereby meters are replaced by two-way meters. About 1 million meters are replaced each year. Two-way metering would make the implementation of micro-CHP easier and lay the foundations for photovoltaics in a subsequent era.
Building standards, although alluded to in the Bill, need highlighting further. All the proposals relating to domestic efficiency not only reduce carbon dioxide emissions but are vital in tackling fuel poverty. I will not go over the matters raised by other hon. Members but clearly the elimination of fuel poverty is already a Government target and the way to do it is clearly understood: the efficiency of our homes should be improved. I hope that the Bill's sponsors will be ready to accept some beefing up in those areas when the Bill gets to Committee, because pound for pound there is no doubt that improving efficiency is the way best way of cutting carbon dioxide emissions. There should be specific proposals on that in the Bill, as there are in clause 1 on energy sources.
I welcome clause 4, which amends the Utilities Act 2000 relating to the duties of the Office of Gas and Electricity Markets—not least because it is similar to the amendments that I tabled during the Committee stage of the Utilities Bill three years ago. The subsequent rigid adherence of Ofgem to the most blinkered and narrow interpretation of market philosophy has reduced wholesale electricity prices, although it has not done that much for retail prices, but also undercut investment in the electricity industry. It has undermined combined heat and power and placed small generators and renewable producers at a serious disadvantage. Getting clause 4 through and giving Ofgem a broader remit will be of great importance.
The Liberal Democrats welcome the Bill. It is in many ways an excellent attempt at delivering a long overdue policy for this country. I hope that we can strengthen a few of its weaknesses in Committee. In particular I hope that it can escape the pruning and the predations to which private Members' Bills are often subjected in Committee, often masterminded by the civil servants. I hope that the House will support the Bill today and maintain its determination to see a strong Bill emerge from Committee and pass into law.
§ Mr. Crispin Blunt (Reigate)
First, I congratulate the hon. Member for Milton Keynes, North-East (Brian White) on securing his place in the ballot and choosing this topic. I congratulate him also on the breadth of support he has achieved, not only from the dozens of organisations that have put their names to the Bill, but from Members across the House. Two of my hon. Friends have spoken eloquently in support of the Bill and I confirm that the Conservative party wishes to see it go into Committee.
The speech of the hon. Member for Brighton, Kemptown (Dr. Turner) was welcome. He said that we needed to restore credibility to the process after what 594 had happened to his Bill. He did restore credibility to the process, but also to himself. He produced a withering demolition job, although he said he would not, of the inadequacies of the energy White Paper. His analysis sits at the core of the dilemma facing the Government.
The Government have decided to proceed by a series of targets and statements in the White Paper, and they have to be held to account for what they say they are going to achieve. The Government's problem was illustrated by the hon. Member for Brighton, Kemptown and by the promoter of the Bill; the Government cannot deliver what they intend. There are dozens of policy instruments but the policy framework is non-existent. That is why I found it impossible to support early-day motion 910 tabled by the hon. Member for Brighton, Kemptown in support of his Bill. Frankly, there is no policy framework and I am not sure how he could include that in the first line of his early-day motion. It could only have been an attempt to secure the good will of the Government. There is hope for the hon. Gentleman that he will get his Bill through this place because the Bill we are debating today gives the opportunity for the Secretary of State to get her hands on money that she would otherwise not have been able to spend.
The dilemma for the Government is whether to go for a liberal market in energy or to have a regulated and directed set of policies. The Government have fallen between two stools. The House will not be surprised to hear that the Conservative party favours a liberal market solution, but that market must operate within a framework. The absence of such a framework means that the Government cannot deliver what they have set out.
The United Kingdom cannot do this alone. The main aim is to protect our planet by dealing with emissions into the atmosphere. That is the overriding environmental threat. That should provide the framework within which energy policy sits and that is what we intend to provide when we provide our response to the energy White Paper and produce our own energy policy. In the absence of a framework, we will have a gentleman in Whitehall telling everyone how much is to be produced by renewables, coal, gas and the rest. As we have seen, there has been a conspicuous lack of success with such schemes.
I note that the Minister for Energy and Construction is not here and understand that he is in Shetland meeting the Norwegian Minister in a long-standing engagement to discuss arrangements for the future supply of gas to the United Kingdom. I have had the privilege of dealing with energy policy since last July and I have concluded that issues of renewables and nuclear generation are interesting and that gas is important. Gas is rapidly taking the lead position in this country's energy market. I am loth to criticise the Minister for Energy and Construction for not being here to reply to the debate when his discussions with the Norwegian Minister are essential to the economic success of the United Kingdom.
I should like to deal in detail with the problems of definition in the Bill. Clause 8 says'sustainable energy policy' means measures which reduce emissions of carbon and methane and promote reductions in the use of energy, and, for the avoidance of doubt, does not include nuclear power, and the term 'sustainable energy' shall be considered accordingly595 There have been a number of criticisms of that definition and we must get it right. The hon. Member for Milton Keynes, North-East has not got it right yet. There is no reference to the cost of energy, and a sustainable policy has to be one that the nation can afford. That has to be balanced with the environmental objectives.
I am not sure that a definition necessarily revolves around a reduction in the use of energy. We are faced with a relentless increase in energy consumed in the UK, about 1 per cent. a year. That is not the problem. The problem is what is associated with it—the emissions into the environment. If we are talking about nuclear generation, those emissions are the radioactive waste that comes from that process. We must ask ourselves fundamental questions about how we try to improve the environment. It is not necessarily a question of reducing the consumption of energy. We must deal with the consequences of that energy consumption.
My hon. Friend the Member for Chipping Barnet (Sir Sidney Chapman), in supporting this Bill, reminded us of the commitments in the Labour party's manifesto. That is always a useful thing to do when those commitments are not being met. He then gave the House his definition of sustainable development, which I thought was as good as one could get in seven words. That is hardly surprising when we consider that he has the expertise of being the chairman of the committee in the Council of Europe. He also made the important point that it is the mark of a civilised society that people should have warm homes. The efforts of my hon. Friend the Member for Southend, West (Mr. Amess)—especially in his private Member's Bill—are to be commended on that issue.
These debates offer one the opportunity to listen and then think about what may be better policy solutions to the objectives that we all share. On the basis of the contributions by my hon. Friend the Member for Southend, West and others, I am beginning to think that we should be considering absolute standards of fuel poverty rather than relative standards of fuel poverty. For example, we should ensure that every home in the country—where, because of the minimum income guarantee, everyone has a basic income—can be heated by 10 per cent. of the disposable income in the home, to use the definition of fuel poverty. If we set that as a standard to be achieved in housing stock throughout the United Kingdom, it would be an absolute standard to work towards. We could then have targets that were based on a proper audit of the quality of the country's housing stock.
The Bill makes an extremely important contribution to energy efficiency by giving Government the targets that are so painfully obviously absent from the White Paper. The Association for the Conservation of Energy, in the welcome briefing that it provided for hon. Members, said:This makes it all the more perplexing that the White Paper contains no firm target for improving energy efficiency. It also seems clear that the Government does not have the 'commitment' to energy efficiency of which Brian Wilson spoke.The briefing quotes the Environmental Audit Committee's recommendation that there should be a sustainable hierarchy in energy, parallel to that in waste.
596 It goes on to say:By contrast, the White Paper seems to have adopted a reverse hierarchy. It has set a firm target for CHP … an aspirational target for renewables … and no target at all for energy efficiency.This Bill corrects that absence of a target, which is welcome.
The aspiration on renewables is given in paragraph 4.11 of the White Paper. The Government have already said that the target of 10 per cent. is challenging, but at least that target is backed up by the policy of the renewables obligation. However, we have to ask whether the targets are appropriate. The Government have set the aspiration of a 10 per cent. contribution by renewables to our electricity generation by 2010, and a 20 per cent. contribution by 2020. That gives one the rather horrid feeling that the Government are using a wet finger in the air to judge what the targets should be.
The fundamental question to ask is this: why do we want renewable energy to supply a share of our electricity? Is it because we want to reduce CO2 emissions? If that is the fundamental reason, are there better ways of doing it? Evidence was given to the Government by Ofgem that, because of the cost of reducing CO2 emissions by focusing on renewables, it would be economic nonsense. It is a hugely expensive way of reducing CO2 emissions. It has been pointed out that achieving energy efficiency is a much more effective way of reducing CO2 emissions. We need to consider policy in the round and decide what the roles of gas, coal, nuclear generation and renewables will be within a framework that promotes the reduction of greenhouse gases.
This Government's record on combined heat and power is, of course, appalling. It is extraordinary that, although there is no target for energy efficiency in the White Paper, there is a firm target for CHP—but absolutely no measures in place to achieve it. David Green, the director of the Combined Heat and Power Association, welcomed the White Paper with the words:There is a complete absence in the White Paper of any significant new measures to reduce the damage done to Britain's green generators over the last three years by weak and inconsistent delivery of Government policies.Page 47 of the White Paper is full of lines such as:we will undertake a review of the existing guidance on information";we will continue to emphasise the benefits of CHP";We will work with OFGEM to keep these developments under review";Over the coming months we will consider the nature and extent of such a target or targets and announce our conclusions";as we consider and consult on the expansion of the energy efficiency commitment … we will explore the opportunities for incentivising CHP technologies";andWe have invited the Energy Saving Trust and the Carbon Trust to review their current and future programmes".All that amounts to nothing but hot air. Apparently, however, there is one undertaking in the White Paper that the Governmentwill support field trials designed to evaluate the benefits of micro-CHP".597 That is very exciting: a measure actually in the White Paper. I tabled a written question to find out exactly what the White Paper would do, and what was new. By happy coincidence—
Madam Deputy Speaker
Order. I see some relevance but I hope that the hon. Gentleman will now relate his remarks to the Bill.
§ Mr. Blunt
Of course, my comments are related to the Bill, Madam Deputy Speaker, because the Bill, in clause 1(a)(ii) asks forthe achievement of the generation of 10GW of electricity by combined heat and power by the end of 2010 and a further 10GW by 2020".If no policies are being pursued by the Government to advance combined heat and power, and CHP has undergone a total disaster in the last three years, I hope that I am entitled to draw attention to that and to the fact that this Bill is inviting us to put on the statute book an analysis of the Government's policy that shows that they are entirely failing in that regard. It is therefore important to draw attention to the Government's statement in the White Paper that, as a new policy, they willsupport field trials designed to evaluate the benefits of micro-CHP".I asked the Secretary of State for the Environment, Food and Rural Affairs how she intends to meet her commitments to support such field trials, given what is on page 48 of the energy White Paper, beyond the Government's fuel poverty strategy. I asked her what was new. The answer from the Minister responsible was as follows:I understand"—"understand" not "know"—that The Carbon Trust will be working with the Energy Saving Trust and other stakeholders, including DEFRA, to undertake a major field trial for micro-CHP in order to evaluate the potential benefits this innovative technology has to offer. The trial will aim to feature a range of technologies and end use applications."—[Official Report, 27 March 2003; Vol. 402, c. 309–10W.]That was happening already. There is nothing new in the White Paper.
I concur absolutely with the hon. Member for Hazel Grove (Mr. Stunell) on the potential importance of micro-CHP. There are about 18 million boilers in homes in this country, which are replaced at the rate of about once every 20 years—we are therefore talking about 1 million boilers a year—and the Government have done their analysis of the boiler market with the comparison between conventional and condensing boilers that appears in the White Paper. As there has been a relative failure to introduce condensing boilers in the United Kingdom, a huge opportunity exists for energy saving and CHP—two key elements of the hon. Gentleman's Bill—by moving from a country that relies largely on conventional boilers in the home to one that can move to micro-CHP plants, which are condensing boilers that also generate electricity.
§ Mr. Stunell
I am listening carefully to what the hon. Gentleman says, and I fully agree with him. Would he accept that putting a regulatory requirement on Ofgem 598 would be a useful way of approaching the matter and would go a long way towards tackling the issues that he raises?
§ Mr. Blunt
I am very grateful to the hon. Gentleman for his intervention. In terms of how we achieve the objective, however, I part company with him. I think that there should be some form of trades description on the word "liberal" because what he proposes would be utterly illiberal and would direct people to install such boilers. I believe in the operation of the market. We should do our best to take the horse to water but if it will not drink, we should not force it to do so. The opportunity should be there, however, to enable micro-CHP to succeed in the market. I would therefore seek to add one or two things to the Bill in Committee. First, however, we should understand the scale of the potential contribution of domestic micro-CHP. The technology behind the product that will be launched by Microgen toward the end of the year will mean that a boiler can produce about 1 kW of electricity. In about five years, fuel cell technology is likely to be sufficiently developed to allow micro-CHP plants to produce about 4 kW. If such plants were put into half the homes in the country during the 17 years up to 2020, the generating capacity of the United Kingdom could be increased by about 40 GW. As electricity consumption in the UK is just over 50 GW, one starts to appreciate the scale of the system's potential. There would be further important side benefits, such as the resilience of our electricity generation capacity.
Inevitably, most micro-CHP plants will operate on natural gas, which relates to the importance of the Minister for Energy and Construction's attempts to secure our future access to gas, as we start to import it. However, generating electricity in the home is about twice as efficient as generating it at a central plant and transmitting it throughout the country. The issue is important and if the House gives the Bill its Second Reading—there seems to be little opposition floating around at the moment—I shall table amendments in Committee so that it would not only exempt CHP from the renewables obligation, but extend the benefits of the renewables obligation to micro-CHP that is installed in people's homes by energy service companies. That would boost micro-CHP, which is a necessary step because it could make an enormous contribution to energy efficiency. I know that it is not strictly a renewable but everyone knows that the renewables obligation will not be achieved because we will not achieve 10 per cent. of generation from renewables by 2010, given the current situation. My suggestion would represent a proper use of the available resources that are identified in the scope of the present renewables obligation.
There are omissions from the Bill. Clause 1(2) would require the Government to report on the respective roles of possible contributions to a sustainable energy policy. The hon. Member for Milton Keynes, North-East has been too purist by considering only renewables, energy efficiency and CHP. We must look to the future of the hydrogen economy and the contribution of fuel cells because that could make the most enormous contribution to help us to meet our climate change targets. If fuel cell technology were successfully rolled 599 out, we could easily achieve the royal commission on environmental pollution's target, provided that we do not produce hydrogen by burning coal.
Nuclear fusion would be a way to generate electricity in order to produce hydrogen. That might be a cleaner technology than nuclear fission because it would produce less waste. The successful introduction of that technology could radically change the way in which electricity is generated, and it should not be ignored. The Government should be invited to report on the progress of nuclear fusion development in the way in which they would report on other technologies, and I shall table an amendment to that effect in Committee.
I look forward to hearing in more detail what clause 5 will achieve and why the Government need that measure to obtain access to the money that I mentioned. As I said, we will want to debate clause 8 and, hopefully, to amend the definition of a sustainable energy policy so that it is more robust and takes account of affordability and economic efficiency as well as the absolute necessity of protecting the environment.
The Bill holds to account a Government whose record on manipulating targets has discredited public administration and is, perhaps, shown at its worst by the subordination of the Government's information service to Alastair Campbell. That is the disgraceful culmination of the process of twisting the presentation of Government statistics. Any measure that holds the Government to account for their overblown rhetoric is welcome, and that is why the Opposition support the Bill in principle.
§ 12.6 pm
§ The Parliamentary Under-Secretary of State for Trade and Industry (Nigel Griffiths)
I warmly congratulate my hon. Friend the Member for Milton Keynes, North-East (Brian White) on his introduction of a Bill on such an important subject. I also convey to the House the apologies of the Minister for Energy and Construction; I think that the House has accepted the explanation for his absence.
Before becoming a Minister, I represented Friends of the Earth at the international sustainable development conference in Berlin. Like many Members who have spoken, I have a long-standing interest in these matters. I was pleased to hear the contribution of the hon. Member for Chipping Barnet (Sir Sydney Chapman), the distinguished chairman of the Council of Europe sustainable development committee. I can gladden his heart by saying that my private office at the Department of Trade and Industry, which achieved the highest standards in Whitehall, was rewarded by a trip to Bilbao to see that great architectural achievement, the Guggenheim. It is great to have an architect of the hon. Gentleman's distinction in the House.
Turning to the Bill, we agree that there is a need to report progress on policy goals, as required by clause 1. We, the Government, have committed ourselves to producing an annual progress report, and we are willing for that to become a legal requirement. Households account for about 5 million tonnes of the yearly carbon dioxide saving that we expect to make, through energy efficiency, by 2010, and I understand that that is equivalent to the savings called for in clause 2.
600 I was greatly heartened by the interest in, and concern about, fuel poverty expressed by hon. Members in all parts of the House. I know that every Member will join me in welcoming the fact that around 10,000 people received the single biggest boost in the alleviation of fuel poverty—the £200 winter fuel payment, which is now in its third year.
We agree on the importance of promoting energy efficiency, which is the broad intention of clause 2. The Government are concerned not to restrict our flexibility in pursuing an overall sustainable energy goal in the most effective way. My hon. Friend the Member for Milton Keynes, North-East spoke of some of the pitfalls of setting targets, but I am confident that, through further discussion, we will be able to find a way forward that has his broad agreement and that of the House.
The proposed amendments to the Electricity Act 1999 in clause 3 would have two effects. It would redefine CHP as a sustainable energy source under the renewables obligation and exclude electricity generated using CHP from the calculation that determines how much renewable electricity each supplier must buy under it. There is a genuine worry that that might undermine the achievement of our renewables target, so I am reluctant to support this provision on that basis. We are committed to achieving the 2010 CHP target, but redefining CHP as renewable under the obligation would wipe out the market created for renewables. Existing CHP schemes, the House will be pleased to know, generate far more electricity than the current obligation.
The other proposal to exclude CHP from the baseline on which each supplier's obligation is calculated would provide a lower level of support for CHP, worth about 10 per cent. of the subsidy for renewables in 2010. It would reduce the size of the renewables market under the obligation by as much as 13 per cent., therefore threatening our renewables target and undermining industry confidence and investment.
The main purpose of clause 4, which deals with amendments to the Utilities Act 2000, is to require Ofgem to undertake environmental impact assessments for its proposals. Ofgem has undertaken to produce regulatory impact assessments, including environmental impact assessments, for all significant new policies. The Government want to provide statutory backing for those assessments. I shall ensure that Department of Trade and Industry officials draw the criticisms of Ofgem made by my hon. Friend the Member for Harrow, West (Mr. Thomas) and other hon. Members to the director general's attention for him to deal with.
Clause 5 deals with the Gas and Electricity Markets Authority. The Government greatly welcome the proposals of my hon. Friend the Member for Milton Keynes, North-East in the clause for powers to be taken to use surplus funds in the fossil fuel levy. We have estimated that the income could reach as much as £350 million in total by 2010. The provisions in the Bill would provide a legal basis for putting that money to good use. Making the funds available to support schemes promoting our sustainable energy goals is a proposal that the Government fully endorse. We are glad that my hon. Friend included that in his proposals and we intend to work closely with him to ensure that we get the detail right.
601 Clause 6 deals with amendments to the Home Energy Conservation Act 1995, which was touched on by several hon. Members. The proposed amendment to section 5 of that Act reflects similar proposals brought forward in an amendment to the sadly unsuccessful Bill promoted by my hon. Friend the Member for Brighton, Kemptown (Dr. Turner) last year. Subject to further detailed considerations of the wording, the Government expect to be able to support the clause.
Once again, I congratulate my hon. Friend the Member for Milton Keynes, North-East on introducing the Bill. I confirm that, subject to the caveats that I have summarised, the Government are prepared to support the Bill and we look forward to working with him in Committee to deal with specific points.
§ Mr. Win Griffiths
It sounds as if my hon. Friend is coming to the end of his remarks. He made one brief mention of renewables earlier. I invite him to let the Minister for Energy and Construction know that myself, some other hon. Members and my hon. Friend the Member for Bethnal Green and Bow (Ms King) would like to meet members of the Department to discuss tidal energy. We believe that tidal energy lagoons could play a significant role in meeting the Government's renewables targets.
§ Nigel Griffiths
I am grateful to my hon. Friend for raising that point and giving me a chance to praise the work of my most distinguished constituent, Stephen Salter, whose pioneering work did not receive the recognition and support that it should have done in the 1960s and 1970s. I will draw the attention of my hon. Friend the Minister for Energy and Construction to my hon. Friend's comments. As a highly co-operative Minister, I am sure that he will want to facilitate that. Again, I thank and congratulate my hon. Friend the Member for Milton Keynes, North-East, and I thank all hon. Members for their contributions to the debate. I feel sure that by working together the House can ensure an effective outcome for the Bill.
§ Brian White
With the leave of the House, I would like to thank all hon. Members who have contributed to today's debate. I look forward to the Committee, and am sure that we will have some interesting debates there. I thank officials from the Department of Trade and Industry, the Department for Environment, Food and Rural Affairs and the sustainable energy partnerships for their constructive suggestions. As I said, I look forward to the Committee, and the discussions that we will have there.
§ Question put and agreed to.
§ Bill accordingly read a Second time, and committed to a Standing Committee, pursuant to Standing Order No. 63 (Committal of Bills).