§ Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Pope.]2.30 pm
§ The Minister for Energy and Competitiveness in Europe (Mr. Peter Hain)
I am pleased to open the debate and to set out our progress and the way forward to meeting our targets. By increasing the use of renewables, we can, first, reduce harmful greenhouse gas emissions and help to lessen the effect of climate change. Secondly, we can improve the security and diversity of our energy supplies. Thirdly, we can help Britain to move towards more sustainable forms of energy. However, renewable energy alone is not enough, but with reduced transport emissions, energy efficiency, increased use of combined heat and power and reductions in waste, it can play an important part in developing a more sustainable future. Experts predict that global emissions may need to be cut by 60 per cent. or more if we are to avoid dangerous climate change.
The Government have set a target to obtain 10 per cent. of our electricity from renewables by the end of the decade. That target is challenging for the Government in setting the right policy framework and for industry in terms of delivery. It is estimated that it will result in a saving of about 2.5 million tonnes of carbon towards the United Kingdom's climate change commitments. We shall have to reduce our dependence on fossil fuels and turn more and more to non-fossil sources and energy efficiency to reduce greenhouse gas emissions. The key role of renewables will be for the longer term, but it is important to establish a strong foothold for them in our energy sector over the next few years.
We are starting from a base of about 2.8 per cent. renewables in electricity generation in 1999 and we want to accelerate the rate of their deployment. At the end of last year, just under 350 live renewable projects were commissioned under the non-fossil fuel obligation—NFFO—with a capacity of 912 MW. In capacity terms, the top three technologies were landfill gas, energy from waste and wind energy. Taken together, they accounted for about 80 per cent. of the capacity installed under NFFO, which accounts for almost all the renewables projects commissioned in the United Kingdom so far.
We have made significant progress. We announced our intention to impose an obligation on licensed electricity suppliers, which will increase availability and use of electricity from renewable sources. We are developing a series of regional strategies and targets for renewables. We are consulting on a streamlined consents process for offshore energy. We have played a full part in the negotiations on the European Commission directive on renewable energy to help to make it a practicable instrument. We have introduced new electricity trading arrangements and published a
132WH report from the embedded generation working group. In a couple of months, we shall review how well NETA is working to ensure fair and equitable treatment for renewables and CHP under NETA. I attach great importance to that and was discussing it only this afternoon with the regulator, Callum McCarthy, on behalf of the Office of Gas and Electricity Markets.
The first United Kingdom offshore wind turbines and the first energy crops power plant have been commissioned. Last month, I announced the freeing up of NFFO contracts to move to other locations when planning difficulties are encountered at the original site. That will ensure that many more proposals are brought to fruition. 1 also made provision to safeguard NFFO contracts in future.
On 1 April, we implemented exemption of renewables electricity from the climate change levy, which is another important driver. In recent months, we have announced a package of direct support of more than £260 million for renewable energy over this and the next two years, including more than £100 million for offshore wind and energy crops, £100 million for green energy projects recently announced by the Prime Minister, £10 million for solar energy and more than £50 million for research and development. That represents a serious move forward by the Government to give real impetus and support to renewable energy, from research and development and scientific exploration right through to production.
That support is additional to the market for renewables that is being created mainly by the renewables obligation, which represents sales of perhaps £1 billion a year and will require investments of £3 billion or more. That will undoubtedly bring renewables right into the mainstream of our energy industry and can be expected to lead to more jobs in that important sector. Today's announcement of proposed offshore wind projects of up to 1,500 MW capacity will in itself lead to investment of £1.5 billion if all 18 sites are developed as planned. I shall return to that in a moment.
The British Wind Energy Association estimates that the demand for wind turbines could create up to 35,000 manufacturing jobs, many of them using the expertise that is already well developed in Britain because of the offshore gas and oil exploration and development industry. Such experience, expertise and, in some cases, jobs, can be transferred to the important offshore wind initiative.
I saw for myself, as a Foreign Office Minister, how photovoltaic installations could transform the lives of communities in Africa that were otherwise without any electricity. They have huge potential in schools, hospitals and clinics in remote areas and could bring much-needed modern education and health care to people who would otherwise have only much more basic facilities, or none at all. Driving forward PV solar on the African continent is an anti-poverty initiative, and renewables can help to alleviate poverty and improve quality of life for vast numbers of people. It is a sobering thought that, outside South Africa, only 9 per cent. of Africans have access to electricity—533 million do not. Frankly, there is no prospect of them getting access unless they have stand-free energy sources, of which PV solar is an ideal example.
133WH I am delighted that our Government are taking a leading role in the G8 countries' renewable energy taskforce, which reports to the G8 in the summer. In just 15 months, that is really good progress that demonstrates the Government's strong commitment to renewable energy, of which I regard myself as a champion. We are delivering, and the work to drive forward the renewables agenda is a top priority for me.
Our most important single instrument is the renewables obligation, which is scheduled to begin in October. It means that licensed suppliers will be obliged to provide a specified proportion of their power from renewables in future—10 per cent. renewables by the end of the decade. The obligation will provide an assured market for renewables from the autumn, lasting right through until 2026, and offer industry an established framework, market stability and confidence, so that investment can take place at a faster pace and on a larger scale.
Through the renewables obligation, the renewables market is expected to be worth £1 billion a year or more by 2010. That is big business in anyone's terms. I would advise any British company waiting for the details of the obligation to be finalised before they decide on new investments to be quick off the mark and get ahead of the competition. I recently met representatives from oil and gas companies and was pleased that they were so positive about the prospects for renewables for their companies, principally in terms of transferring their experience and expertise to a new environment. They have business and engineering skills that are extremely valuable in the further development of renewables—for instance, in offshore wind energy and wave energy.
Some technologies, such as hydro, landfill gas and onshore wind energy, are already well developed commercially. Others have reached the commercial demonstration stage: offshore wind and energy crops fall into that category. Others, such as wave power, need further research before large-scale commercial deployment is possible. I recently gave evidence to the Science and Technology Committee, which is looking into prospects for wave energy and tidal stream, and I look forward to its report. At this early stage, we are working hard to support companies and universities that are researching wave energy in the hope that that may prove to be a useful and commercial source of energy, which I am sure it can be.
We are expecting a significant contribution to the 10 per cent. target from offshore wind and energy crops, and we shall part-fund early demonstration schemes for those two technologies. It is encouraging that each has one project on stream. Off Blyth, we have the UK's first two offshore wind turbines, while the Arbre project at Eggborough is based on energy crops.
Green, clean energy is the future. Rapid development of offshore wind farms is a key element in the Government's strategy for renewable energy. I am extremely pleased by the news that we heard earlier today from the Crown Estate of the great success of the first competition for sites for offshore wind farms. Indeed, 18 proposed developments have passed the pre-qualification stage, which means that they have satisfied the Crown Estate of their financial viability and have
134WH been offered an option on a site. If those proposals go ahead as planned, which I hope they will, the combined generating capacity will be between 1,000 MW and 1,500 MW. That represents a huge increase in renewable generating capacity, which would be more than doubled and, indeed, nearly trebled.
The Government have given a clear green signal that wind energy is the way forward. Now, 18 offshore wind developers are ready to invest in providing green energy for Britain. The streamlined consents procedure will take away the hassle of making those projects happen, and each one will contribute the equivalent of about 50,000 households' supply. In total, they will provide the equivalent of about 1 million households' total energy use, which is a significant contribution to our agenda of reaching the 10 per cent. target by the end of the decade.
§ Mr. Gareth R. Thomas (Harrow, West)
Does the Minister accept that another issue that will enable us to go even further in developing renewable energy capacity is the need to modernise the energy industry's infrastructure, which was highlighted in the embedded generation working group report published in January? Is he aware of the problems that some wind developers have had with infrastructure? Last year, for example, a proposal was made for a wind farm on the Isle of Wight, but the local distribution company presented the developer with a bill to upgrade the grid capacity on the site that could have reached more than £1 million. Does my hon. Friend accept that that long-term issue must be tackled if we are to develop greater renewable capacity?
§ Mr. Hain
Yes, indeed I do. I pay tribute to my hon. Friend's active stewardship of the all-party group on renewable and sustainable energy, a recent meeting of which I attended. I expected to meet the usual Back-Bench committee of a dozen Members of Parliament, half of whom leave to go off and vote or do something more important. However, there was standing room only, even though the meeting was in the Thatcher Room. There were 80 or 90 people from the industry and non-governmental organisations in the Room, and the initiative and energy that my hon. Friend puts into the group is welcome.
My hon. Friend's substantive point, of which we are aware, is real and important. If we manage to drive forward embedded generation renewable energy in such a way as will be necessary to meet the target, we shall need five to six times the number of connections to the wider transmission and distribution system. That will require a more proactive and sympathetic attitude from the industry, about which I have spoken to Ofgem. Indeed, a specific issue that I raised this afternoon with Callum McCarthy, its head, is that no renewable energy project or developer should face the kind of obstructionism to which my hon. Friend referred, and of which we are well aware. If hon. Members hear of such obstacles, please let me know and we shall see what we can do.
We are supporting offshore wind farms through the new renewables obligation and through capital grants worth up to £49 million. That is just the beginning. We will take offshore wind from the margins into the mainstream, helping to contribute to cleaner, greener energy. We must move away from the "not in my back yard" attitude that still prevails over onshore wind projects.
135WH We must make serious choices about our future energy sources. Developers can help enormously by selecting sites more sensitively, taking account of local concerns, and through being prepared to modify their plans. Offering flexibility to NFFO contracts that have had planning difficulties, allowing them to be sited elsewhere, will lead to a rapid increase in deployment. I do not want any project to trample over local opinion, and each must conform to the highest environmental and planning standards. However, if we want cleaner, greener energy, every community in Britain must take its responsibilities and duties seriously.
§ Mr. David Chaytor (Bury, North)
I want to raise the controversial issue of onshore wind farms in environmentally sensitive areas. A place near my home in the Pennines has a view of two major wind farms and a planning application is pending for a wind farm that lies in the other direction. The issue has preoccupied me for many years, and I have been involved in previous controversies over planning applications for Pennine wind farms.
Does the Minister agree that a move towards wind turbines rather than wind farms might overcome problems with developing renewable energy in environmentally sensitive areas
Environmental concerns might be fewer if it were easier for individuals in rural areas, not just farmers, to have individual turbines in their gardens or on their land, from which output would be lower than from a major wind farm.
§ Mr. Deputy Speaker (Sir Alan Haselhurst)
Order. Even in the relative informality of Westminster Hall, that intervention is becoming extremely long. If the hon. Gentleman wants to develop an argument, he should seek to catch my eye later in the debate.
§ Mr. Hain
I get the gist of my hon. Friend's argument. I cannot comment on the examples that are near to his home, but, in general, I suspect that future generations will look back at controversy over wind farm sites and wonder what all the fuss was about. They will be part of our landscape and seascape and we will be pleased to have them. Although it is important to take local wishes into account, we should not allow a NIMBYist stance to impose a veto on onshore wind farm developments. However, I encourage my hon. Friend's suggestion that individual farms, and perhaps companies and factories, could have their own local windmills. The current regulatory regime and direction of policy would support such a move.
We have made changes that will aid the resolution of problems such as that in the Pennines: allowing wind farms to be sited off the top of mountain and hill ranges; the NFFO transportable initiative, which allows developments to be sited in places that are less environmentally sensitive; and the reduction of buy-up prices. There will be less commercial pressure to place projects at the highest point to gain the most benefit from the wind. Our initiative has been designed with such aims in mind.
§ Mr. Chaytor
I shall be brief. Mr. Deputy Speaker. Would not the introduction of net metering for individual households constitute an important policy 136WH change that would expand use of individual wind turbines? That is what is needed to give households the incentive to construct their own wind turbines.
§ Dr. Alan Whitehead (Southampton, Test)
Is my hon. Friend the Minister aware of developments in underwater current turbine technology, involving inverting offshore wind turbines and placing them under, rather than above, the sea? Is that not the perfect solution for those who object to the sight of a blade anywhere? Is he also aware that the conversion rate of underwater current technology is far greater than that of turbine-to-air technology, and is his Department actively pursuing that option?
§ Mr. Hain
Yes, we are. Indeed, I discussed the matter with the Science and Technology Committee when I recently appeared before it. My hon. Friend's description is absolutely right—an offshore wind turbine is like a windmill turned on its head, as it were. In essence, it is a tidal stream project involving technology that allows us to take maximum advantage of movement in the tide. The problem is that the technology and the projects themselves are in their infancy. However, because the technology has great potential—particularly off the shores of Britain, where there are many ideal sites—we are supporting research, development and scientific and technological advance in a number of ways.
The renewables obligation is clearly the right way forward. We get the benefit of a Government-set framework, with all the added value that the market can bring in selecting which technologies to deploy in implementing the obligation and helping to meet targets. With the obligation in prospect, and given other measures and funding that we have set in train, I believe that renewables are well placed to grow rapidly in this country in the coming decade and beyond. I want British technology, expertise and scientific advance to lead the way, so that we can set an example to the world.
§ Mr. Nick Gibb (Bognor Regis and Littlehampton)
I begin by declaring an interest. Last summer, I visited the United States to meet oil industry representatives, the regulator and the Secretary of Energy, Bill Richardson, at the expense of a consortium of oil companies. This autumn, I joined the all-party group that is concerned with energy and renewables on a trip to Denmark, led by the hon. Member for Harrow, West (Mr. Thomas), to see wind energy at first hand. National Wind Power paid for the trip.
Denmark produces some 13 per cent. of its electricity through wind energy, and every other field contains two or three wind turbines. In keeping with the point made by the hon. Member for Bury, North (Mr. Chaytor), one or two wind turbines scattered throughout farmland do not look as bad as a densely populated wind farm. The technology is expensive, but there is clearly something attractive about a system that produces electricity for 137WH nothing, other than the capital outlay and small maintenance costs. We welcome the Minister's announcement and the Crown Estate's decision to issue licences for turbines on certain offshore sites around the UK. We are beginning to see the glimmer of an emerging energy policy.
Everyone is surely in favour of the concept of renewable energy, but the problem is the cost. Electricity is the foundation of a modern, developed economy and will continue to be so. Any significant increase in the price of electricity will, therefore, have a serious effect on the economy as a whole and the standard of living of us all. Of course, it is always those at the bottom of the income scale who suffer most from a reduction in living standards in the economy as a whole.
We must do as much as possible to take advantage of renewables and develop systems that provide incentives for renewables and renewable technology to be developed, so that the cost per unit can fall towards market spot prices. However, if we believe that renewables are the answer to meeting future international climate change obligations, we are living in make-believe land. The facts are harsh. As the Minister said, only 2.8 per cent. of our electricity is generated from renewable sources, and the vast majority of that is represented by hydro-electricity. The Government have set a target of 5 per cent. of electricity from renewables by 2003, which effectively means doubling the capacity of renewable energy in 20 months. As most of that capacity is hydro, that means a colossal increase in wind, solar and other forms of renewable energy regimes, and not enough plans are on the drawing boards for completion in 20 months' time to deliver that.
The next target, of 10 per cent. by 2010, seems sufficiently far away to be achievable, but industry experts say that it is not. The Government's obligation includes a nice table that shows how the target will be achieved over a period of years. It is easy to draft such a table, but difficult to deliver what it shows. However, even if that target is achieved, the Government's own figures show that achieving it will add 3.7 per cent. to the cost of electricity generation, which would increase exponentially if the percentage target were raised.
The Minister touched on the Royal Society's demands for a 60 per cent. reduction in CO2 emissions as necessary to affect the climate. However, even if the 10 per cent. renewables target is met, the Government will be way behind their target of reducing CO2 emissions to 20 per cent. below 1990 levels by 2010. According to the Government's own figures in the climate change programme document, Cm 4913, CO2 emissions in 2000 were 8.2 per cent. below 1990 levels, falling to 8.4 per cent. below 1990 levels by 2010, but rising again thereafter to reach only 4.4 per cent. below 1990 levels by 2020. According to page 52 of the climate change programme, those figuresinclude the emission reductions expected from some policies that the Government has introduced since Kyoto, such as the climate change levy, the fuel duty escalator to 1999, and the 10 per cent. renewables target.Therefore, even if the 10 per cent. renewables target is met, according to the figures CO2 emissions will still rise from 2010. However, I suspect that CO2 emissions will rise next year as the Magnox decommissioning takes off.
138WH It is interesting to witness how the Government assiduously manipulate all Government figures that have a political content. The draft climate change programme that was published last year showed a 9.4 per cent. reduction on 1990 levels in CO2 emissions in 2000, but a 7 per cent. reduction in 2010. According to the Government's projections in that draft, therefore, CO2 levels rose in this Parliament, under this Government. Lo and behold, in the final climate change programme. the 9.4 per cent. becomes 8.2 per cent., and the 7 per cent. becomes 8.4 per cent. In other words, CO2 levels are still falling in this Parliament under this Government, but only just, and some assumptions seem to have changed between the two drafts of the climate change programme
Many Opposition Members need to understand why those figures were published, and growing anxiety is being expressed about the integrity of facts and figures in the Government's documents and parliamentary answers. That requires urgent action. The Red Book provides an example of the manipulation of the CO2 figures. The section on the climate change programme refers to several blue-sky policy proposals, such as a reform of building regulations, and if the consultation proposals are fully implemented it is predicted that there will be a 1.3 million tonne reduction in CO2 emissions. Similar early-stage policy proposals are set out in the accompanying table and, lo and behold, their estimated effect is to produce a 19 per cent. reduction in the 1990 figures for CO2 emissions. That figure does not quite reach the 20 per cent. target, but it is sufficiently high to acquire a flavour of credibility and it is the figure that the Red Book highlights, rather than the 4.4 per cent. figure that is also mentioned. That will not wash, and it feeds the public's mistrust of any advice or facts, particularly on scientific issues, that emanate from the Government.
I will now return to the projections that CO2 emissions are rising, which are based on Great Britain achieving its 10 per cent. renewables target. Those figures are founded on assumptions about electricity use over the next 20 years. On 19 March 2001, at the Chamber of Commerce conference in Washington in the United States of America, Spencer Abraham, the new Secretary of Energy, delivered an excellent and wide-ranging speech on the importance of having an energy policy. That is a matter that the Minister is, at last, beginning to ponder. In his speech, Abraham made a particularly important point:Over the next 20 years, the Department of Energy estimates that electricity demand in the United States will increase by 45 percent … Furthermore, there is reason to believe that this could turn out to be a conservative estimate. During the 1990s, electricity consumption far outstripped projections, driven by the energy-hungry information economy. Some experts calculate that the demands of the Internet already consume some 8–13 percent of electricity.Great Britain might experience a greater increase in demand, as internet use in our country is not yet as advanced as it is in the USA, but we are heading in the same direction. I think that the Government's projections are based on figures that underestimate electricity demand. If that is the case, we would experience a significant rise in CO2 emissions. Renewables could not adequately compensate for that, unless the Government introduced a significant hike in electricity prices, which would cause huge damage to our economy. Yet, we could generate all our energy 139WH from renewable sources, if we were prepared to pay double or triple for our electricity. The Government have not yet addressed how they intend to respond to that matter.
The Government have also failed to address the consequences of the decommissioning of the ageing Magnox nuclear power station. Nuclear energy saves the equivalent of half of all CO2 emissions from motor vehicles. Therefore, the decommissioning of nuclear power stations will have a huge impact on future environmental policy. The Government have not yet developed a realistic strategy to address that. Their only major pronouncement on energy policy has been the energy White Paper on the gas moratorium, which has resulted in millions of tonnes of carbon being released into the atmosphere.
§ Mr. Gareth R. Thomas
What are the hon. Gentleman's plans for an energy policy? How does he propose that we should respond to the challenge of the reduction in nuclear capacity between 2010 and 2020? I invite the hon. Gentleman to engage in fantasy politics. If he were to become the Minister responsible for energy following the next election, would he strike a deal with the shadow Chancellor to ensure that, despite his party's plan to make £16 billion of savings, he will not cut the £260 million that is available for renewable energy projects at the moment?
§ Mr. Gibb
None of the figures in the Red Book will be altered, apart from the £8 billion of savings that my party has clearly explained. Savings will not be made in the area under discussion.
The best way to deal with emissions is to enhance the use of the market. The Government propose a complex emissions trading system, but it should be simplified. That would harness market forces and ensure that we employ the most cost-effective way of introducing renewable energy.
§ Dr. Whitehead
I have listened carefully to the hon. Gentleman's exposition, but I am not entirely clear about the conclusions of his analysis of the feasibility of renewables and climate change targets. Is he suggesting that those targets should be repudiated, as the American Government have suggested, and that, inter alia, the Kyoto protocol should be abandoned? Is he saying that his party, were they in power, would support those targets but seek to achieve them by other means?
§ Mr. Gibb
We are clear about our view of Kyoto. We would stick by and deliver any international obligations into which we have entered. After all, it was Conservatives who went to Rio and agreed all the initial arrangements. It was not a Labour initiative. We are fully behind reductions in CO2 emissions and the programme dealing with climate change concerns.
The Government are coming out with a huge amount of humbug. The decommissioning of the Magnox nuclear power stations will present Britain with a large problem. We can meet our Kyoto targets in 2008–12 because of the move to gas-fired power stations over the past 10 or 20 years, not because of some great achievement by the Labour Government. With all the scientific evidence at their disposal, it is up to the 140WH Government to devise a strategy for how they will deal with the decommissioning of Magnox. They have been in power for four years without producing an answer to this key question.
§ Mr. Gibb
If I may, I will finish.
We believe strongly in what we have coined as a blue-green agenda, which means using the market to encourage development of more environmentally friendly energy generation. However, we do not pretend or kid ourselves that renewable energy and energy efficiency will deliver the reduction in CO2 sufficient to deliver the Government's 20 per cent. target, especially with the decommissioning of Magnox. It is a harsh reality of elected office that the Government must devise a strategy to tackle the problem that does not involve simply manipulating the presentation of figures so targets appear to be met. We need real answers to these real issues. The Government should tell us that they intend to develop a full energy policy, of which we heard the glimmerings today.
§ 3.6 pm
§ Dr. Desmond Turner (Brighton, Kemptown)
I am almost lost for words after listening to the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb). I must remind him that we have always regarded humbug as a monopoly held by the Conservative party, and he has just demonstrated why that is so.
The end of the Magnox reactors has been approaching for years, yet I do not remember hearing a word from the previous Government about plans to meet that eventuality. I remember no targets or obligations for renewable energy production from the previous Government, and no recognition that a real problem was on its way. That is why I am lost for words.
§ Mr. Gareth R. Thomas
Is not my hon. Friend being too generous to the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb)? Does he recall that the previous Government axed the research funding for wave energy projects? Does he remember the plan to reduce research funding for renewables in general from some £15 million at the end of their term to some £11 million if they had stayed in office?
§ Dr. Turner
Yes, indeed. My hon. Friend is right. I was going to come to the sad decline in wave energy under the previous Government when I reached the point of making my own remarks, as opposed to responding to those of the hon. Member for Bognor Regis and Littlehampton.
I want to focus on the potential for wave and tidal energy. The Science and Technology Committee has taken evidence on this topic. My comments do not represent a preview of our report, but my personal reflections on the evidence that we have taken, which has impressed me deeply.
In the UK we have allowed ourselves to be self-disadvantaged. We sat with plenty of cheap carbon fuel on our doorsteps and revelled in it. We did nothing to address the approaching end of cheap carbon fuel, let alone the environmental consequences of depending on the carbon fuel economy.
141WH At the end of the previous Labour Government, wave energy research was starting promisingly in this country and we were world leaders in such research. Shortly after the Thatcher Administration came to power, the plug was pulled on the research because of market pressures—there was not an obvious market for it. That Government had a short-sighted attitude towards the economics of power, which, regrettably, the Opposition do not appear to have grown out of.
There was a loss of impetus about renewables. For instance, we missed the boat on wind power. In contrast, Denmark was worried because it did not have cheap carbon fuel on its doorstep and had to look for alternatives. It took the lead on wind power, developed it as a commercial proposition and now leads the world in the production of wind turbines. It exports about 90 per cent. of the world's wind turbines and that industry has grown with the creation of 15,000 jobs. Denmark saw energy as a challenge, not a market by-product.
Even if carbon fuel continued to be cheap, there would be enormous environmental costs in continuing to depend on it. We desperately need the green revolution, to which the Prime Minister referred in his speech.
Our country has superb renewables assets. We have wind—quite a lot of it—but wind energy is limited because wind is unpredictable. We have fantastic energy sources in waves and tides. One of the world's best energy resources is available on our western seas and could be developed by our science base, which is equal to that task. Fortunately, it managed to survive the deprivation of the Thatcher years and even Professor Salter is still in Edinburgh and back in business with wave energy. It was pleasant to hear his evidence.
Our assets of exploitable energy should not be underestimated; they are enormous. If wave or tide is fully exploited, there is the potential to produce sufficient electrical energy to satisfy the country's entire needs. Obviously, it would take a little time to develop that, but the natural energy potential is there. That potential is very predictable. Weather forecasting can tell us pretty accurately what type of waves we will get. However, tidal streams are wonderful. They are totally predictable and operate like clockwork. One knows exactly what the flows will be at any given time and at any point around our coasts. They could be used precisely to deliver a baseline power load in the manner that nuclear power stations do. If a replacement is needed for Magnox reactors, look no further than fully implemented tidal stream power.
I shall address the point of the hon. Member for Bognor Regis and Littlehampton about cost. He tried to tell us that renewables were too expensive and that their use would hurt our economy because the price of the electricity supply might go up by a few per cent. He is ignoring one point—once technologies are exploited on a truly commercial scale, the costs come rocketing down. Wind energy is a perfect example. When the Danes started with wind turbines, the generation costs were approximately 13p a kW hour—which is very expensive—so the Danes used subsidies to encourage is development. Now, the cost is less than 3p, which is 142WH competitive with fossil fuels. As far as wave and tidal power is concerned, the estimated costs for present planned demonstrating machines are already down to approximately 5.5p per kW hour. If fully exploited, the projected costs are 2p per kW hour—well within the current commercial range. The hon. Gentleman's arguments on cost do not stand examination. He is looking at the issue from a very short-term perspective. To do that is to be doomed to failure, because we would use only what is immediately to hand and never reach out for something that is only a little further away, but well worth having.
If we throw our energy into the development of wave and tidal power, the prize is immense and well worth having: clean, predictable energy and a new manufacturing industry with enormous export potential. It could create thousands of jobs and last for at least 50 years, or the foreseeable future. We cannot afford to miss that opportunity.
What is the Government's role? We need to examine that this afternoon. Fortunately, since the glorious revolution of 1997, there has been a change in Government policy towards renewables. It was a little slow in coming, but that is in the nature of the Department of Trade and Industry, which two years ago was still making assessments that tidal stream energy would be of no interest for 30 years. There is plenty of evidence to dispute that. The DTI is starting to change its tune.
The Engineering and Physical Sciences Research Council, which we could reasonably expect to support research into the issue, is, frankly, being rather feeble. It is pathetic that the EPSRC is putting so little money into wave and tide research compared with wind and photovoltaic projects. We were appalled to hear from representatives of the EPSRC that they did not fund any tidal stream projects. We were also worried when one of our Committee advisers told us immediately afterwards, "They are funding a project in my department so they do not know what they are doing".
Given the order of ascendancy of the availability of natural resources in this country, it is extraordinary that we should be funding wave and tidal power in inverse proportion to its availability. We must urgently revise those priorities and do all that we can to bring on wave and tide energy. We have the technology, which is not as much in its infancy as it might be thought. Indeed, different demonstrator machines are going to sea. More will be joining them over the next few years, so the technology is ready for exploitation.
We have another great advantage in this country. Thanks to the history of the North sea oil industry, we have a great deal of engineering expertise that can cope with the rigours of the marine environment. That is no longer a problem. No technical barrier exists to exploiting wind and tidal power. It is a question of getting on with it.
I want the Government to give a clear, unambiguous lead, as the Danish Government gave a lead to Danish industry, which led to development of the wind turbine industry in Denmark. The Government need to set more ambitious targets and obligations—a target of 10 per cent. is highly achievable. We need to aim for a much higher target thereafter. A target of 30 per cent. by 2020 should be attainable. Once we have commercially 143WH useable machinery, it is merely a question of installing it. If there is a market, industry will invest and machinery will be installed.
Targets are essential, but I would question one aspect of the Government's targets, which include energy from waste and biomass. A non-carbon target should be set, which would be a further driver towards developing the kind of technologies to take us out of the carbon economy altogether. That is what we need for the long-term future.
A good slice of the Prime Minister's £100 million should be allocated to wave and tide. That is essential. The Government should give grant aid to the production and testing of commercial prototypes, which will allow them to get off the ground. The lessons to be learned from real exploration in the sea can therefore be used.
The Government need to do all that they can to ease the granting of planning consents. Happily, the Minister mentioned that point. One of the tidal stream experimenters to whom we spoke described his difficulties in trying to obtain consents to put trial machines in the Solent. Seven bodies had to be consulted, which would have taken two years, so he gave up and went elsewhere. Other experimenters will go to Iceland to install their prototype machines rather than install one in Britain. That is bad. It does not help the development of the industry in this country. Streamlining is, therefore, needed.
Fortunately, the Minister referred to the problems of the grid. One of the unhappy aspects of wave and tidal power is that the best natural resources and most obvious sites for exploitation are where the grid is at its weakest. The Government will have to engage in hard negotiation with the National Grid Company, and perhaps even invest with it to beef up those connections.
Another step that the Government could take, which is easily attainable and would cost a modest sum, is to establish a national test centre with a grid connection. That would allow companiesx2014;which are normally small and medium-sized enterprises—to install their machines on the seabed or wherever is appropriate at the location, connect them to the grid and put them to the test. At the moment, there is a danger that those companies will go elsewhere—Iceland, Portugal and even Denmark, which has established such a centre. It would cost only an estimated £10 million to establish such a centre which would be extremely useful and productive.
From all that I have gleaned, both technologies are ready to begin the process of exploitation. Their costs are about 5½p per kW hour, but it is predicted that they could decrease to less than 2p per kW hour when the technologies are fully exploited. The history of technological development suggests that that would be no more than an average performance profile for a new technology, so we can probably depend on those figures.
The environmental impact of wave or tidal stream energy is much less than those of land-based wind farms or any other renewable. We would hardly see something that had been placed a mile or two offshore. If it were a tidal stream turbine, we would see a little pole standing a few feet above the water, depending on the type of machine. With other possibilities, we would see nothing. The technology has everything going for it.
144WH We have a golden opportunity that British industry will not have again in a long time, and we would be an extremely foolish nation to let it pass. Tidal stream and wave energy give us an opportunity to escape from the carbon-fuel economy, dramatically reduce CO2 emissions and produce totally clean energy. Unlike burning biomass or energy from waste, with which there are potential pollution and environmental impact problems, there are no emission problems with tidal stream or wave energy. They could be used to provide baseline supply and so replace ageing Magnox reactors. They give us an opportunity to grow a new manufacturing industry for the 21st century. The Government need to give a lead to this country and the rest of world.
There is an international dimension, because those technologies could be exploited in many parts of the third world. There is a real fear that industrialised economies in the rest of the world will continue to increase CO2 emissions, but there are technologies that could be used to help avoid that. We must grasp that fantastic opportunity and act vigorously now to make the best of it.
§ Mr. Tom Brake (Carshalton and Wallington)
I welcome today's announcement of 18 new sites available for wind farms and their potential to provide 1 per cent. of the total electricity supply. That 1 per cent. is balanced by the expectation that electricity use will rise by 1 per cent. In the next 15 years, but the announcement is still a welcome and long overdue boost to a fledgling industry.
In the past, getting permission to build wind farms was a stupidly convoluted process. Anyone who has read The Guardian today will know that consent was needed under the Electricity Act 1989, the Food and Environment Protection Act 1985, the Coast Protection Act 1949, the Town and Country Planning Act 1990, the Water Resources Act 1991 and the Transport and Works Act 1992. Most amazing is the length of time that it has taken finally to tidy up that process. Wrapping up an industry in red tape is certainly not a way of encouraging it to thrive, as I am sure any small business would tell the Minister. Will a maximum time be allowed for processing planning consents and, if so, what will it be?
According to the Department of Trade and Industry's digest of UK energy statistics, only 1.3 per cent. Of British energy is produced through renewable energy sources, which is both a challenge and an opportunity. The contribution of wind farms to increasing that proportion is an important, but small, step. When does the Minister expect wind farms to be up and running? How much will they contribute to the target of 10 per cent. renewable energy by 2010? Presumably, the hon. Gentleman has estimated when the wind farms will come on stream and how many will do so. There are planning consents for 18 sites, but there must be an estimate of how many are likely to proceed. The Government will have factored those assumptions into their plan for achieving the reduction target of 10 per cent. by 2010.
Renewables have the potential to be a huge growth industry, and now is the time when they need the most Govt support. The development and success of the 145WH renewables industry has an integral role in tackling climate change and reducing our reliance on fossil fuels, which damage the environment.
As a nation, we have started to take responsibility for our actions as the evidence mounts of the damage that we are doing to our environment. George Bush may want to bury his head in the sand about global warming, but it is starting to have a huge impact on our lives, our children's lives and those of people in many other countries, and we must take action now. Reducing our share of greenhouse gas emissions by using alternative energy sources is a vital part of that action.
The United Kingdom has an obligation to reduce its output of greenhouse gases by 12.5 per cent. in the period 2008 to 2012, which is the Kyoto target. The Government have promised to do even better: to reduce carbon dioxide emissions by 20 per cent. by 2010. Those are noble aspirations but, as a report in the Financial Timesstated in February, according to Cambridge Econometrics the Government expect to miss the target by a considerable distance. Liberal Democrats agree with the higher target; Kyoto is just the beginning. As the Minister said, in the long term it is vital that emissions are reduced more significantly than that, to 60 per cent. or thereabouts. That is why the strategy should go beyond 2010 if we want to achieve the target set by the royal commission of 60 per cent. by 2050.
We have an effective strategy to tackle climate change that we believe could achieve emission levels of 50 per cent. of 1990 levels within 40 years—the document is in the public domain, on the Liberal Democrats' website. It is possible for 20 per cent. of electricity supplies to be provided by renewables within the next 10 years. If I had been on a sponsored trip to visit the oil companies in the United States, I might have thought that the target of 20 per cent. was not realistic, but we have set out clearly how it can be achieved.
Today's announcement is a start, but it is not enough. Now that the Government have sorted out the planning restrictions, are they willing to reconsider their targets for renewables, as one hon. Member suggested, and to go for more ambitious targets? If planning consent was a major brake on the expansion of the renewable energy industry, now that the brake is off, there is scope for a much more ambitious target. As I said earlier, there is potential for enormous and sustainable growth over the next 50 years. That growth will create additional jobs, which is good not only for the economy but for the environment. The development of renewables should be seriously considered.
There are no simple answers. The renewables industry faces many challenges. It is not a dream solution that will solve all our problems overnight. For instance, as other hon. Members have pointed out, some renewable industries create their own pollution. It is regrettable that so much emphasis is put on creating energy from waste. The Government should remember that many—hon. Members and members of the public—have expressed concern about the potential for growth in incineration and our capacity to create energy from waste. The Government should certainly not take that route to deliver its 10 per cent. target for renewables. Their priority should be the development of more 146WH environmentally friendly parts of the industry, such as wind and wave energy, as other hon. Members have suggested.
The Government should aim for a target of 10 per cent. of our energy coming from renewable energy sources within the UK. They have not requested that that target should be delivered with renewable energy created within the UK. We suggest a target of a 1 per cent. increase in renewable energy from 2010 onwards. We want to see clear progress being made beyond 2010. We want the target to be met in 2010, but we want to be sure that plans are made long before then for what should happen afterwards.
The hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) illustrated the failure of the previous Conservative Administration to tackle the problem. At the end of their term of office, we were at the bottom of the EU league table for renewable energy. The hon. Gentleman should consult more widely with electricity suppliers. A few weeks ago I visited Unit E, an electricity supply company, which told me that it expected soon to have a renewable energy product on the market that would cost no more than normal electricity. The reason on is because an admittedly small group of domestic users actively search for renewable energy sources. Because people are willing to search, the electricity company can reduce its advertising costs. It believes that it will be able to offset those reduced costs against the slightly increased cost of electricity generated from renewable sources. The customer should, therefore, see no difference in price. I hope it comes forward with that product soon. It is a large company and could make a significant difference to the renewable energy market in the UK.
We have a long way to go to catch up and meet the targets. I hope that the Minister will set out a longer-term time frame and say what targets the Government are beginning to work on to take us beyond 2010 and the 10 per cent. target. I hope that the Minister can muster his green Ministers to press for renewable energy within their respective Departments. If the electricity company to which I referred can supply renewable energy to domestic customers at the same price as normal energy, it may be able to supply it for much larger consumers of electricity.
The renewable energy industry is in a lucky position. It has the opportunity to give a lot back to society while remaining profitable, which is good for us all. I hope that it will rise to the challenge, and that the Government will help the industry to do so.
§ Mr. Gareth R. Thomas (Harrow, West)
Two years ago I was lucky enough to be at Wembley stadium as Scott Gibbs scored a magnificent try for Wales and the peerless Neil Jenkins kicked the conversion to see Wales beat England by one point—a fantastic and wonderful day. Today's announcement that 18 sites have been identified and that developers are in a position to take advantage of them is similarly great news for those who have been advocating the benefits of offshore wind power.
To take the rugby analogy further, the win against England was one isolated victory, but in future I do not want only to hope that Wales might beat France; I want 147WH to know by how many points France and other teams will be beaten. Similarly, I am not satisfied with the knowledge that 18 sites have been earmarked for offshore wind; I want to know that many more wind sites will follow and that there are also plans to develop capacity for other forms of renewable energy.
I join the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) in declaring my visit to Denmark last year. His speech was notable for its lack of any solutions to the challenge of climate change. He made no attempt to suggest what Britain's energy policy should be. When he reads his speech in Hansard tomorrow, I hope that he will be embarrassed by the fact that it was effectively a tour around the annexes of various Government consultation documents.
The hon. Gentleman is, however a nice and intelligent chap. After the general election, when the cull of shadow Cabinet Ministers takes place, he is my candidate for the Trade and Industry job. He must recognise that he will not be able to hide then as he has sought to hide today behind Government statistics. He will have to be clearer about his plans for renewable energy in particular and energy policy in general.
Sustainable energy is where the market meets the environment. This new industry can advance the causes of modernisation, sustainable development and social justice; help manufacturing and industrial competitiveness; create significant new employment opportunities, particularly in manufacturing and engineering industries; offer alternative sources of income for hard-pressed rural areas, and provide huge opportunities for business from the growing world markets for renewables.
My hon. Friend the Minister touched on the environmental imperative, which should drive renewable energy capacity expansion, and the hon. Member for Carshalton and Wallington (Mr. Brake) touched on the regrettable actions of George Bush in repudiating the Kyoto treaty. Despite that, pressure will grow to go beyond the 5.2 per cent. greenhouse gas emission levels currently on the table under Kyoto.
A recent report by the insurers, Munich Re, for the United Nations Environment Programme indicated the high cost of inaction in abating greenhouse gas emissions. It concluded that:losses due to more frequent tropical cyclones, loss of land as a result of rising sea levels and damage to fishing stocks, agriculture and water supplies, could annually cost around $US304.2 billion".Where will that cost fall? It will fall on those who are on low incomes, yet the hon. Member for Bognor Regis and Littlehampton used such people as an example to try to justify a lack of progress on renewable energy.
There is a consensus on the need to take action but, clearly, there is no political consensus yet on the magnitude of the greenhouse gas reduction that is necessary to stabilise the climate. The intergovernmental panel on climate change and, more recently, the royal commission on environmental pollution suggested minimum cuts of at least 60 per cent. from 1990 levels. Even that might be an underestimate, but it is a useful starting point. The implications of such reductions are that we will need to reduce carbon intensity by more than 1 per cent. per annum, year on year, for the next 50 years: a sustained level of 148WH improvement over the next 50 or 60 years that is unprecedented, except perhaps in times of war, oil price shocks or other national emergencies.
To compound the challenge to the UK, nuclear power will start dropping rapidly out of the electricity system in 10 years' time—the one comment of the hon. Member for Bognor Regis and Littlehampton that I agreed with—unless it is replaced, which is not likely on economic or political grounds. The Department of Trade and Industry estimates that nuclear output will fall by approximately two thirds between 2010 and 2020, and carbon emissions could rise significantly unless that part of our energy supply is replaced, at least in part, by renewables or other zero carbon emission technologies.
The imperative driving the expansion of the renewable energy industry is not about the environment only; it is also about regeneration and fuel poverty. The Government are quite rightly spending millions of pounds to regenerate estates and areas of the country that were left to go to rack and ruin under the previous Government. How can we make such regeneration schemes even more attractive? In the long term, we could reduce the on-going energy costs of the houses and buildings that we are regenerating, by making buildings more energy efficient, and by building in sources of power—combined heat and power installations, solar panels, district heating schemes, even the occasional wind turbine, where appropriate—so that energy does not have to be purchased from traditional sources. As my hon. Friend the Member for Bury, North (Mr. Chaytor) suggested, why not allow the owners of those houses and businesses to sell any excess power that they generate back to the national grid to reduce their costs further?
Greenpeace and the Peabody Trust installed 30 solar panels on three low-income houses in Silvertown, east London. It is projected that each home will save one third—almost £60 a year—off its electricity bill as a result. That is an example of renewable energy tackling fuel poverty and reducing the energy costs of those who are on low incomes.
When he was at the Foreign Office, my hon. Friend the Minister promoted renewable energy to facilitate economic development. Renewables can be used to power irrigation schemes to improve crop growth and tackle famine or to provide power for health clinics. Solar panels and wind turbines offer small, cost-effective energy solutions that can drive economic development and help achieve the Labour party's goal of greater social justice.
The other imperative behind renewable energy is the huge potential for new jobs. Solar photovoltaics is already a £1 billion global industry and is growing at 30 per cent. a year. The wind industry is growing at 25 to 35 per cent. a year. Overall, the global market for new renewables, excluding hydro, is worth about £40 billion a year and expected to grow. Work that has been done by Energy for Sustainable Development suggests that an additional 96,000 jobs, over and above the 4,000 that already exist in the UK in the renewables industries, could be created if we make progress and reach the 10 per cent. target that we have set. In Europe, 500,000 net jobs might be possible. Many of those new jobs will be in rural areas, which are hard pressed, as we all know. Offshore wind, for example, provides opportunities in 149WH fabrication and manufacturing industries to replace jobs in an offshore oil and gas industry that has passed its peak in opportunities.
Until recently, few in the renewables industry believed that we were on course to meet the 10 per cent. target. Modelling carried out by Forum for the Future and Cambridge Econometrics suggested that, assuming current policy measures, less than 6 per cent. of UK electricity would come from renewable energy by 2010. I recognise that the announcement by my hon. Friend of an extra £200 million over 12 months might help us to reach that target later, but the huge numbers of jobs that can be created will not be created if we allow slow progress in developing renewables capacity. We must inject greater urgency into developing the renewables industry.
The hon. Member for Carshalton and Wallington mentioned green energy suppliers. Fewer than 20,000 UK consumers—0.075 per cent. of the total—have signed up to green energy. In contrast, there are 150,000 green energy consumers in the Netherlands and 250,000 in Germany. According to Yorkshire Electricity advisers, the big problem in Britain is the lack of available renewable energy capacity. Many consumers are unaware of green energy and are not being given the choice that they want.
The final imperative in championing renewable energies is the point about diversity and security of supply. One key consideration for British energy policy has always been to ensure that energy comes from a range of diverse and secure sources. The hon. Member for Bognor Regis and Littlehampton spoke about the increasing acceleration of gas production during the past 20 years, and our dependence on it. I understand that current Department of Trade and Industry projections suggest that, by 2020, the UK will obtain 70 per cent. of electricity through gas. The UK's gas production is expected to peak in a few years, which will mean a steady rise in imported gas. According to the recent Ministry of Defence paper, "The Future Strategic Context of Defence",by 2020 we could be importing as much as 90 per cent. of our gas supplies".That is a cause for concern, especially when one considers that the main sources of that supply could include Russia, Iran and Algeria. It is logical that we should boost the domestic renewables capacity, in order to reduce our dependence on fuel imports.
Business competitiveness could also benefit from development in renewables capacity. The Ford factory in Bridgend meets some of its energy costs by the solar panels on its roof, and BP Solar has championed the use of building voltaics as a way of businesses bringing down their costs and making their products cheaper. If we want to develop the renewable energy industry's capacity, we must modernise its infrastructure. The joint DTI-Ofgem report that was published in January highlighted the important issues. The report concluded thatwithout significant changes, renewables and combined heat and power plant…will continue to be at a disadvantage when compared with generation connected to the transmission network".150WH Among the report's main findings is the fact that electricity distribution companies are charging renewable and combined heat and power generators too much for connecting to power networks. The report suggested a new regulatory pricing structure to limit the connection charges for renewable developers and give more financial incentives, to the National Grid Company for example, to encourage green power projects. We need urgent movement on those recommendations if we are to have the infrastructure to tackle the problems and allow the range of embedded power sources to expand considerably. We have almost 1,600 sites, but if we are to meet the 10 per cent. target, we need 4,400, If the working group's recommendations are not implemented, we will struggle to meet it.
Will my hon. Friend say more about making non-fossil fuel obligation contracts more portable? We are all familiar with the problem of NIMBYism in relation to planning issues; enabling developers who have won NFFO contracts to move the sites may help them solve such problems and thus draw down the income stream of an NFFO contract, so that new renewable energy capacity can be brought on line more quickly.
If negotiations with the Ministry of Defence over offshore wind sites are not already taking place, they should be. Whole swathes of possible sites for offshore wind have been ruled off limits because of MOD concerns that planes can hide from our radar defences behind offshore wind sites. What are the Minister's views on that? What it research is under way and what discussions are taking place to resolve those problems?
The biggest problem that needs to be addressed is that of lack of ambition for renewables—of which we had a graphic illustration in the contribution of the hon. Member for Bognor Regis and Littlehampton. We need to go beyond the targets of 5 per cent. and 10 per cent. Why are we not announcing targets of 20 or even 30 per cent. beyond 2010? When will we publish regional targets? Should we not incentivise regional development agencies to meet such targets and to help industry plan further investment in renewables? A key institutional change for which the Minister may recognise the need is the one-stop shop for offshore wind permits.
Responsibility for renewables is still split across several Departments: renewables with DTI, energy crops with MAFF, CHP and energy efficiency with DETR; planning policy crucial to the development of all three Departments is also with DETR. The Green Alliance identified 16 different Departments or agencies involved in promoting sustainable energy. A sign of the need for change is the fact that both DTI and DETR now have sustainable energy units. It does not seem sensible in terms of the sustainable energy agenda to split the talent in our civil service. A sustainable energy agency with a tsar-like figure of a chief executive who has the confidence of the Minister for Energy and the Prime Minister would be helpful.
I invite my hon. Friend the Minister to speculate with his officials, as he walks back to his office after the debate, on what he could do in terms of renewables capacity if he had not just £260 million but £1 billion. Could he allocate £200 million to more investment in solar energy? If 50 per cent. grants were given, that would get a 40,000-roof programme and 175 MW of capacity. One could have perhaps £300 million for offshore wind, with nearly 60 MW of capacity and 151WH £450 million for biomass, with possibly 850 MW of capacity. When the civil service, with its natural caution, suggests to him that that is quite a lot of money, maybe he would acknowledge that, while that is true, it must be compared with the recent allocation of £100 million over three years to help the coal industry, the £500 million to help BAE Systems develop new technology, or the £1.5 billion that it would take to subsidise around 2,000 MW of new nuclear capacity.
The announcement today of the 18 sites for offshore wind is an example of the excellent progress and the huge steps that the Government have taken in terms of renewable energy. It marks the end of a beginning, the final step towards respectability for those of us who have advocated renewable energy. There was always a worry that renewable energy was seen as the preserve of lentil-loving, bearded eco warriors, but in fact renewables have great potential to solve a huge range of problems facing Britain. I congratulate the Minister on the progress represented by the announcements that he has made today, but I urge him to look beyond that.
§ Mr. John Horam (Orpington)
I was not present at Wembley when Wales beat England by one point, but I was in front of my television set when England beat Wales by 40 points.
§ Mr. Horam
A sad day for the Minister, obviously. The genius of Jonny Wilkinson eclipsed even the peerless Neil Jenkins on that famous occasion. I must admit that, unlike the hon. Member for Harrow, West (Mr. Thomas), when I read this morning about the wind projects that have been announced, I did not leap into the air with exaltation, as I did at the moment when England beat Wales by 40 points. Nevertheless, I genuinely and warmly welcome the news, which is thoroughly to be applauded.
I welcome the Minister's remarks, which he made with his usual conviction and style. I also welcome the contribution of my hon. Friend the Member for Bognor Regis and Littlehampton (Mr. Gibb), who made an important point to which I hope the Minister will pay serious attention: the need for honesty and clarity in the figures that the Government present. The integrity of Government figures is an important national asset. Suspicions have developed over the years in that respect, and it is important in this context, as in many others, that the Government take that seriously.
I agree with the many hon. Members who have highlighted the vast potential of this area, which is one in which we should not lack ambition. As the Prime Minister has said, it is a win-win situation. A huge global industry is developing, and we must be part of it if Britain is to play its true role—not only on an environmental and sustainable development front, but on a business front. I have before me a table of figures produced by the European Commission—if the Minister has not seen it, I commend it to him—showing the percentage of electricity generated from renewable sources by various countries in 1997. It shows Austria with more than 70 per cent., Sweden with 50 per cent., Portugal with 38 per cent., Finland with 25 per cent. and 152WH Britain right at the bottom with 2.8 per cent. I accept that those figures relate mainly to hydro-energy, which has a history that we are not part of. However, the energy technology support unit, the Government's official advisory body on renewable energy technologies, has produced figures that show that the UK could meet 100 per cent. of its electricity demand from renewable sources. That is an area in which we can be really ambitious.
The brilliant record of previous Conservative Governments—especially in tackling climate change, reducing CO2 emissions and the dash for gas—put the Government in a wonderful position further to develop our successes, which has been rather marred by what they have done so far. For example, they introduced a moratorium on gas-fired power stations and subsidies for coal, which was exactly the wrong thing to do from the point of view of the environment and CO2 emissions.
The Government have not lived up to the Prime Minister's welcome words at the beginning of his term of office, when he said that he would put environmental considerations and sustainable development at the very heart of policy making—something that he has palpably failed to do. I was glad that he returned to the subject last November, when, as a kind of mea culpa, he gave a notably ill-received speech. In March, he made a much better speech that was more focused and clearly engaged his enthusiasm more strongly. That reversal of thought, by which the Government are starting to treat the environment as an important issue, is rather late in the day—and, I note, just before a general election—but it is welcome, given that for three and a half of their four years in office they were facing in exactly the opposite direction. We welcome the conversion, although there is a long way to go.
I welcome the £100 million for renewable energy that the Prime Minister announced in his March speech, just as I welcome his comments on the important issue of sustainable agriculture, although we are not discussing that today. The Environmental Data Services report, however, which is authoritative on all matters relating to sustainable development—I am sure that the Minister is becoming familiar with it in his new capacity—said the other day:The extra money will add to the confusion of funding sources for the sector, and may revive demands that they be brought under a sustainable energy agency".The hon. Member for Harrow, West raised that issue, and I know that he has pursued it in a sustained way during the past two or three years.
The Government announced last summer that £13 million per year from the climate change levy will go to the DTI over the next three years to provide grants for offshore wind and biomass projects. However, the EDS report says that that is now destined only for offshore wind. Will the Minister confirm that?
The EDS report continues:The £100 million pledged by the Prime Minister in March will come from three sources: £60 million from the Treasury's capital modernisation fund, £20 million from the performance and innovation fund, and £20 million from a reallocation with the DTI's budget.153WH The report further comments:The DTI has claimed that the £100 million will be available over the next three years. But this appears inaccurate. Mr Blair said on 19 March that a report from the Cabinet Office's Performance and Innovation Unit will set out how the money will be allocated between technologies".I understand, however, that that report is not due until the autumn, so we do not yet know whether what the Prime Minister said is accurate.
The EDS report also said:The DTI will provide £10 million over three years to support the solar PV industry. It is not clear whether this is separate from the other funding sources".There is considerable confusion about the funding sources. That is, I am afraid, endemic where energy is concerned.
When the Environmental Audit Committee, which I chair, was producing its report on energy efficiency a couple of years ago, we visited Nottinghamshire and Derbyshire, where there is an excellent energy partnership. After that visit, the Committee concluded thata major complaint was over the time and effort it took to achieve coherence between the various sources of funding available. There were also significant procedural barriers and we heard of a number of examples where Government rules and regulations had to be outwitted to achieve Government objectives".That was a kind way of putting it.
The hand of the hon. Member for Harrow, West can be detected in the report's conclusion, which stated:We recommend that the Government review its arrangements for developing and implementing sustainable energy policy and the potential for synergy between efforts to promote energy efficiency and efforts to promote the development of renewables. In particular it should consider carefully the concerns that have led to calls for…for example, the establishment of an independent sustainable energy agency. It seems clear that while Government believes its arrangements can be made to work, this view is not shared by significant partners outside Whitehall".We continued:We recommend that a new unit with a dedicated staff be given specific responsibility for driving and coordinating policy on energy efficiency".In other words, we did not go the whole hog in advocating a sustainable energy agency, but we pointed out that there is real need, as the hon. Gentleman said, for proper co-ordination and synergy inside Government. Otherwise, however much money is spent, it will not achieve the full monty, as it were. The Government must face that problem.
Further to the confusion that I have outlined, funding is not very great. The £10 million for the solar photovoltaic industry, 50 per cent. of which will be paid out as grants, will support only 2,000 installations by 2004. The Government say that they want the UK to be a major player in the market, but the plans compare poorly with Germany's goal of 100,000 solar roofs by 2007 and Japan's planned 70,000 by 2002. Our efforts are, frankly, small beer.
Last year, 65 MW was commissioned in the UK wind sector, which has been discussed extensively this afternoon. In the meantime, according to the American Wind Energy Association, Germany added 1,668 MW, 154WH bringing its capacity to 6,113 MW. Next in the global market was Spain, with 775 MW of new turbines, and Denmark, with 400 MW of capacity. They are big players in an area in which we are almost non-existent. The figures underline the effort that we must put in, with the Government co-ordinating. It is certainly true that we have a significant advantage in terms of offshore wind, which is why this morning's announcement is welcome. We are beginning to get off the ground in that regard, and it is offshore wind that could enable us to take a significant step forward.
We should not ignore biomass and energy crops, which have not been mentioned much in today's debate. Given our informal discussion on renewable energy a couple of weeks ago, the Minister will be aware of the comments of my hon. Friend the Member for Boston and Skegness (Sir R. Body), who is himself a farmer. As my hon. Friend pointed out, it is not a question simply of subsidies. These days, farmers are very suspicious of subsidies, because they know that they can change from year to year or end suddenly, so they cannot necessarily plan a long-term future. Before turning over their fields to energy crops, they want to know that there is a real commercial future.
Energy crops pose special problems. It is not simply a question of clearing the old crops, putting in the new ones and hoping for the best. Should one decide that the venture has failed, it takes several years to bleed energy crops out of the system and return to ordinary crops. A farmer who converts some of his fields is taking a big risk. None the less, given the current state of agriculture and the rural crisis, we should bear it in mind that energy crops could play a significant part in the future of renewables. I hope that the Government will not neglect them.
In our informal discussion, I asked the Minister whether he would co-ordinate with Lord Sainsbury, the Minister for Science. In terms of co-ordinating effort and assessing current developments, the forward-looking arrangements that are in place, which the previous Government initiated, are valuable. We should combine developments in academia, Government and business, and recognise the achievements that a properly co-ordinated, machinery-of-government approach could bring about.
I understand that the Government are reviewing public and private funding for renewables. In particular, they are considering whether there are gaps in private funding that need to be supplemented by Government funding. That is a sensible move, which I entirely support. I should like to know what the state of play is in that regard, and whether the Government intend to publish their findings.
Finally, as Chairman of the Environmental Audit Committee, I can assure the Minister that we will take a close look at his work in the next few months. We believe that this is an extremely important issue, and we shall closely monitor what he says.
§ Dr. Alan Whitehead (Southampton, Test)
I welcome this afternoon's debate, which, as many hon. Members have noted, reflects the coming of age of renewables, not only as a serious part of any UK energy programme, but as a serious subject for discussion. Indeed, I suspect that they will be central to any future discussion on this country's energy policies.
155WH The need for renewable energy relates primarily to what we do about greenhouse gas emissions. During the past century, we have been profligate with the release of long-stored CO2 into the atmosphere. At the beginning of our debate, I heard someone saying that the usual suspects are present, so there is no need for charts on the atmospheric concentration of CO2 the enormous concentration over the recent industrial period in parts per million of CO2 in the atmosphere Very few scientists or public figures now dispute the link between the rise of CO2in the atmosphere and mankind's doings, or the onward march and apparent increased effect of global warming beyond recent predictions.
It is unfortunate, as some hon. Members have said, that one of the few global politicians who repudiates that hypothesis is President Bush, and the only politician of any standing in this country who repudiates it is the hon. Member for Billericay (Mrs. Gorman). I am not sure whether she and President Bush can be closely bracketed together, but it is something for us to ponder on.
My hon. Friend the Minister referred to the IPCC estimate of what we must do to mode towards climate stability for the planet. He referred to a reduction in CO2 emissions from 1990 levels of 60 of 70 per cent., and other hon. Members explained what that means in terms of the progress that we must make. It is certainly more than our current progress. That also gives us cause to reflect on what we mean by a renewable energy policy. Such a policy should not be an add-on to other energy policy considerations, or something on which we may make a little progress because it is a bit cleaner than some other energy policies. It has to be a central imperative if we are to get anywhere near the sort of reductions that most leading scientists in the world say are the minimum starting point for climate stability. In that context I was concerned to hear the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) saying that we must worry about the cost and so on. We should debate that, but it should be done in the context that a reduction strategy is an imperative and not an add-on to something else that we are doing.
It is interesting to reflect on the notions that we had a few years ago when we thought that we should move to renewable energy because we would run out of non-renewable energy resources. In the 1960s and 1970s, we had various prognostications that we would run out of oil in a short period. New methods of exploration then gave us the idea that we had more oil reserves than we had thought, and some people thought it unnecessary to discuss renewables to the same extent. We now know that if we used all our known mineral energy resources, we would comprehensively poison the atmosphere. Using our known reserves of oil and mineral fuels is no longer the option we thought it might be prior to the introduction of renewable energy. Renewable energy is the alternative way forward, and a substantial proportion of our known reserves of mineral fuel can remain in the ground.
It is important to remember that, apart from the environmental considerations, the planet has passed the historic point at which we have used more than half the likely reserves of mineral energy. It is downhill all the way, and it is likely to be at a faster rate than our ascent up the curve of the mineral energy economy in the past century. Furthermore, the majority 156WH of the remaining reserves of oil are in the hands of five or six countries, and that concentration will increase as the curve goes downwards. In terms of geopolitics, I am unsure whether it is a good idea to mortgage our future on reserves in the hands of such a small number of countries. For several reasons, it is important that we get on with re-equipping ourselves to wean our economy away from its dependence on mineral fuels.
It is also interesting to see how far the debate has come. A few years ago, anyone who suggested that a substantial proportion of a nation's energy supply could be obtained from renewable sources would have been considered certifiable. Now that has changed, and the hon. Member for Orpington (Mr. Horam) mentioned an energy technology support unit study that demonstrated that if we properly harness the resources available in this island of ours, most of our energy could be obtained from renewable sources. That is not to suggest that we have to go around in handcarts to have our energy from renewable sources. As far as I understand the ETSU report, it states that we could live similar lives to those that we lead now. That is a fundamental breakthrough in the debate. A high-tech, high-industrialised, comfortable modern society could be sustained on this island using energy supplied from renewable sources.
The idea that we can run an economy substantially provided by the planet's revenue resources, rather than the planet's capital resources, has begun to percolate down into policy making. The Government know that we must make giant strides in our capacity to generate energy from renewables, and are beginning to deploy the policies and resources to allow that to happen. The mechanisms must be there, and, in my view, they must be more than market mechanisms, which I heard with some incredulity as the sum total of the Opposition's policy on renewable energy development. The Opposition have, of course, shamefully pledged to scrap the climate change levy, which is a key starter mechanism. It is a vital tool in our toolbox, because it encourages the efficient use of energy and, if possible, the reduction of energy use.
Indeed, the exemption from the levy for renewables creates a further mechanism for the creation of a reliable market for renewable energy by 2010. The target of 10 per cent. of energy supplied by renewables gives shape to our ambitions. My view is that the climate change levy and the target for renewable energy are important first steps, but, as my hon. Friend the Member for Harrow, West (Mr. Thomas) and the hon. Member for Carshalton and Wallington (Mr. Brake) have underlined, they must be followed up with long-term commitments on what happens next. I anticipate that both the levy and the renewables target will rise in the second decade of the century. As the market for renewables expands, the attainment of new targets will become easier and the pressure on costs will be taken off industry by the sourcing of energy supply from renewables: a virtuous circle, which we can create if we have the will to do so.
The Government have also taken firm steps to develop the technologies that will supply those markets. The Prime Minister's recent announcement of £100 million for renewables development was a superb shot in the arm for the industry, as were today's announcement of 18 offshore wind projects and the 157WH Minister's wise decision to allow stalled renewable projects access to NFFO money, which was in danger of disappearing if the projects had not matured by particular dates.
All that is excellent news, but I want to concentrate on one aspect of renewable energy: photovoltaics. Until recently, the DTI regarded it as a long-term research technology. In the Green Paper on renewable energy that was published in 1998, photovoltaics is down for longer-term consideration in the United Kingdom after 2010, but In the recent White Paper, "Opportunity for all in a world of change", I was encouraged to see the following statement:Solar photovoltaic PV systems, which generate electricity from daylight, are a renewable energy form with enormous potential. Their current contribution to electricity supplies is small, but growing rapidly with the aid of substantial support and investment around the world. PV tiles and modules can be incorporated into the roofs of homes and the facades of offices, enabling buildings to generate their own electricity".It is interesting that the statement emphasises the fact that PV generates electricity from daylight. The DTI nomenclature of PV as generating electricity from the sun seems to have undergone an important change. All that is required for PV is for it not to be night. A continuous and reliable current can be produced without strong sunlight.
The important point about the recent change in thinking is that PV is a mature, not a fringe, research technology. With developments in thin foil PV technology, the conversion rate of solar tiles is now four times greater than five or so years ago. The installation of solar or PV technology in roofs is now a realistic proposition. The technology does not need a great deal more research, but it needs to be brought to market.
With a south-facing roof with embedded PV, most households would be able to support sufficient cells to supply approximately 75 per cent. of their electricity needs. I am hoping to have a substantial PV installation on my roof by the end of the year, and I hope that the Minister will visit me to enjoy a cup of tea heated by the daylight that we will see through the windows. Indeed, other hon. Members may care to join us.
PV is fundamentally different from other forms of renewables, because it is not site specific. If anything, it is urban specific. There is no need for tides, hills with lots of wind or large fields to grow willow coppicing—just lots of roofs, and as anyone can see, there are many roofs in towns in the United Kingdom. The roofs do not even need much doing to them. As hon. Members have mentioned, if solar energy is embedded into roofs when houses are built, PV becomes virtually a common-sense part of daily living. At a recent conference, I was struck by a photograph taken by another speaker of a converted barn that had a complete solar tiled roof. Apparently, the next-door neighbour was curious about why someone should be taking photographs of the roof, and was completely unaware of the embedded installation.
However, there are problems, and we must be realistic about them. The cost of PV electricity is relatively high, mainly because of the cost of the installation and of the cells, although once installed, the electricity is virtually free. The price of the cells is the real cost, and their 158WH amortisation over 25 years—the life of the system—provides the price of the electricity. The cost is largely because there is no mass production of PV cells in the UK. Virtually all PV installations in the UK rely on imported cells. One large PV factory in the UK would, in its own right, bring the cost of PV down the price per kilowatt to something like that of traditionally generated electricity. That is especially important because of the capital investment required.
Indeed, a PV roof mortgage market might develop over the next few years—one would pay a mortgage for one's roof, which would be paid back with the savings made as a result of the free electricity supplied. If that system had a payback period of, say, 10 to 15 years, it would be a realistic, proposition—any building society or bank will lend on that basis—but if it pays back in 40 to 50 years, that is not so realistic. We must bring solar to market, and not just do the research, so that such mechanisms can develop.
The way in which electricity is imported when the PV system does not supply enough through its own mechanisms is important. My hon. Friend the Member for Bury, North (Mr. Chaytor) mentioned two-way metering. During daylight hours in the summer, an average domestic PV installation will produce much more electricity than it needs, so it can be exported to the national grid. If it is night time or winter, it will produce less, so it will need to import. A single meter that runs forwards and backwards should be part of standard installation. Electricity companies should not demand that two meters be installed in a house for that purpose. In addition, a fair price should be paid for electricity exported. It is not acceptable for electricity companies to claim that, because the electricity has to be carried to the national grid, the charge for electricity imported and electricity exported should be at a ratio of 5:1.
Training in PV plumbing is needed. As far as I know, no college runs courses, let alone offers qualifications, in PV plumbing. If even some of the targets in the White Paper are to be achieved, a swathe of skilled installers will be needed to undertake widespread domestic retrofitting, and embedded fitting in new housing estates. Currently, there are simply not enough people with such skills. However, such skills are likely to be much in demand in the future—it will be, literally, a sunrise industry career. That must be investigated in the wake of establishing mechanisms that will bring PV to market and make it work well.
I look forward to a future in which we pay our way in energy supply. By that, I mean that we use the energy that the world makes for itself as it goes along, rather than using the capital of the fabric of the planet. That is the key difference about renewable energy. I congratulate the Government on the steps that they have taken so far. However, a certain phrase keeps coming into my hind: "A lot done, a lot left to do." Those are the watchwords for our debate this afternoon.
§ Mr. David Chaytor (Bury, North)
I congratulate the Minister on the announcements that he made in his opening statement, which was hugely encouraging to many hon. Members who have had a long-standing interest in renewable energy. I also congratulate the 159WH Government on the increasing interest that they have shown in the matter during the second half of this Parliament.
All hon. Members present are aware that renewables are crucial to this country, not only for its economic future, through the enormous potential for the revival of the British engineering industry, but for the way in which we respond to climate change, which remains the biggest single threat to the survival of human beings on this planet, and because of important geopolitical issues surrounding the development of renewables and the rundown of fossil fuels. That was hinted at by my hon. Friends the Members for Harrow, West (Mr. Thomas) and for Southampton, Test (Dr. Whitehead).
It has been said many times that the stone age did not end for lack of stone nor the steam age for lack of steam. The oil age will probably not end for lack of oil, but it will become increasingly difficult to extract the remaining global oil reserves. Such extraction, whether it occurs in Alaska or the Arctic, will cost increasingly more, and become more environmentally dangerous. The world's remaining oil reserves will be increasingly under the control of a small group of countries—among them Iraq, which will have the largest single supply of oil reserves after 2010. The prospect, after 2010, of depending on Iraq's fossil fuels, or gas supplies from Algeria or Russia, should concentrate our minds on the geopolitical issues.
The development of renewables is the key not only to managing climate change and reducing our emissions but probably to resolving the largest blockage in the Kyoto protocol negotiations: the American Government's refusal to ratify the protocol and the decision of the new President of the United States not to support it. There is an argument that the Americans object not necessarily because they are reluctant to reduce their emissions per se, but because they are reluctant to reduce them when, over the next 20, 30 or 40 years, they anticipate the threat of competition from developing countries such as those in southern Africa. Competition may also come from China, which is particularly relevant because of the present conflict in the South China sea.
Advanced industrial countries, with the engineering capacity to develop the wide range of renewable technologies that we have discussed, are crucial. The technology could be sold to the enormous markets of China and southern Africa. If we can build a future and map out a scenario in which industrial development in China and southern Africa does not depend on fossil fuels, and in which the United States can see that it will not be at a competitive disadvantage to such countries, that may be the way to clear the blockage in the Kyoto negotiations and persuade the United States that ratification is possible, on certain conditions.
The development of renewables has enormous global implications. My only regret is that this debate is being held in the smaller Chamber. It should be held in the main Chamber, within the context of a wider debate about the green industrial revolution, which the Department of Trade and Industry is currently promoting, thanks to the initiatives of the Secretary of State, whose presence we would welcome at such a debate in the weeks and months ahead, because we need 160WH to consider seriously all aspects of that industrial revolution. Such a debate should occur in Government time and in the main Chamber.
I was impressed by the ability of the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) to recite an apparently interminable list of statistics, and equally depressed by his complete lack of vision about what the world will be like in the future. I suspect that if we had sat here 200 years ago, he would have told us that there was no future in coal, and if we had sat here 100 years ago, he would have told us that there was no future in oil. We sit here today, and he tells us that there is no future in renewables. I do not know his prospects of ascending to the role of shadow Secretary of State after the election—who knows what cull will take place after 7 June—but if he is to ascend to a high position, he should provide more vision on behalf of the Opposition. The Opposition must spell out their policy on renewables, and on energy in general.
§ Mr. Gibb
The hon. Gentleman should have listened to me. I pointed out that renewable energy is not the answer to the Kyoto targets, the greenhouse gas emission problem and climate change, because it will not deliver the cuts in CO2 in the time required or at a realistic cost. If the Government are serious about reducing CO2 emissions to the levels agreed internationally for 2010 and beyond, they must start thinking about energy policy more seriously and find a realistic and urgent answer to Magnox decommissioning.
§ Mr. Chaytor
I listened carefully to the hon. Gentleman earlier, and I am glad that he has reiterated his argument, because it confirms my belief that he lacks vision. The 2010 targets can be reached not simply by using renewable energy but by improved energy efficiency—but only if the political will is there. The targets for after 2010 have yet to be decided. We accept the recent recommendation of the royal commission on environmental pollution that we shall need to consider targets of 60 per cent. or even higher by the middle of the century.
We need now to develop a climate change strategy for beyond 2010, with a progressive increase in targets for CO2 emissions, and as those targets are increased, the benefits of the renewable technology will increase progressively to compensate. If we look at the development of technology over the past 100 years—for example, the development of the internal combustion engine and motor vehicles, of computers and mobile telephones—it is obvious that once a market is developed, once the thrust of scientific research is put behind those technologies, once they have taken off, they develop exponentially.
I ask the hon. Gentleman to think of the state of development of computers 10 or even five years ago and consider how quickly they have developed. Renewables in 2005 or 2010 will be vastly different from now, because of the amazing discoveries and developments that have been made in wave and tidal power, in photovoltaics and in wind turbines, as my hon. Friends have said. I intend to construct a single wind turbine in my back yard and I, too, will invite the Minister to join me and inspect it in due course.
161WH I know that time is short and that my hon. Friend the Member for Stafford (Mr. Kidney) wishes to speak. Simply expanding renewables is not the total solution. Other factors must be considered: the most important—it is almost a prerequisite—is energy efficiency. I was delighted that the Minister gave an important speech in the Queen Elizabeth conference centre two or three weeks ago to mark the publication of the Government's fuel poverty strategy. Significant commitments and enormous investment are being made to improve energy efficiency in the homes of the poorest people in the UK.
As we go about our work on the Parliamentary Estate, when we examine what happens in our homes and offices, when we visit schools, factories and hospitals in our constituencies, we can see that the scope for making further improvements in energy efficiency is phenomenal. It is not simply a question of a little more insulation, but of developing new technology and energy management. We must persuade the Government to start investing in energy efficiency on a much broader front.
I make the categorical claim that the Kyoto target—the Government's ambitious, voluntary 20 per cent. target for a reduction on 1990 levels—could be met by improved energy efficiency measures alone, but that will need political commitment. It will also need a campaign of public information and education, with appropriate support for the low-tech solutions necessary to deliver those efficiency measures.
We must pause a moment to define renewables. Some people—including, I suspect, the hon. Member for Bognor Regis and Littlehampton—define nuclear energy as renewable. In the debate on climate change, it is important to say loud and clear that nuclear energy should not be so defined, whatever the nuclear lobby has tried to argue in the past two or three years. It has taken them a long time to wake up to the point. Although it is indisputable that individual nuclear stations do not emit carbon dioxide, the infrastructure of the nuclear industry as a whole emits vast quantities of it.
There will always be a small role for nuclear energy; it is extremely important that nuclear research and development continues, because it is impossible to predict what science will deliver in the years ahead. However, anyone who is persuaded by the argument that because the Magnox stations will close by 2010, there is somehow an energy gap, and thus a case for developing new nuclear plant, is living in cloud cuckoo land. Does the hon. Member for Bognor Regis and Littlehampton seriously think that nuclear energy is economically viable? He cited figures that I did not recognise, saying that renewables cost three times more than fossil fuel electricity. That is not my experience. I can ring up Scottish Power, for example, and get a contract for renewable electricity in my home for a modest extra payment. Most electricity companies offer that service.
The real cost of nuclear power, now and in the past, shows that it has never been economically viable and existed only because enormous amounts of taxpayers' money went into it. If it were viable, why are not people in Britain queueing up to run a private nuclear power station? It is because they know that they cannot make a profit from it.
162WH My hon. Friend the Member for Test had the excellent idea of mortgages for photovoltaic roofs, and my suggestion, which relates to fuel duty, complements his. I shall not go into the complicated arguments on the subject, but fuel duty has contributed significantly to the reduction of CO2 emissions in recent years. The future of the internal combustion engine will be short-lived: within 10 years it is likely that the majority of new vehicles in this country will run not on petrol or diesel but on hydrogen. The key challenge is to find a way of managing the transition from the internal combustion engine to the fuel cell engine. Fuel cells produce no emissions and there is an infinite supply of cleanly produced hydrogen.
Some years after the Government introduced the fuel duty escalator, they made a commitment that any future increase would be ring-fenced for the development of public transport, tying together in the public mind the relationship between the impossibility of continuing as we have in the past, with an economy dominated by the private vehicle, and the necessity of developing more public transport. They should consider ring-fencing the fuel duty revenues, not for public transport, as the connection for the public is too remote, but for the development of clean and renewable fuel for the private motor car. It could go into a fund that would support the research and development of fuel cells or, more usefully, one that would provide rebates for individuals buying fuel cell cars when they are marketed in 2004, 2005 and onwards.
The key to reducing the dominance of the internal combustion engine and the transport sector's high CO2 emissions is to make the transition to the fuel cell. Using fuel duty revenues to subsidise the introduction of fuel cell vehicles would be a winner. It would be effective and efficient and make it clear to the public that it is vital to wean ourselves off fossil fuel, especially in motor cars, and on to clean and renewable energy.
My final suggestion is about the need to revive British engineering. The development of renewables—whether wind power, wave power, photovoltaics or wind turbines—provides enormous opportunities for British engineering. If we want to expand renewable technologies, we should look for sites in areas that were most locked into the development of fossil fuels. If we want to find a site for an enormous photovoltaic factory—with large enough panels to make it economically viable—we should examine areas of the country that were dependent on coal. The Government—and our society more widely—have a responsibility to put something back into the mining areas that were so devastated both by the specific actions of the previous Conservative Government and by the inevitability of the running down of fossil fuels. Locations in old coalfields would be perfect for the development of clean, renewable technologies. The point also applies to old nuclear sites. The Sellafield site in Cumbria, for example, might be considered as a future location for a true centre of excellence for renewable technologies in the United Kingdom.
I congratulate the Minister once again. Today's announcement is important and I hope that, as the weeks and months go by, we shall have many more debates about renewables and the green industrial revolution.
§ Mr. David Kidney (Stafford)
My hon. Friends have set me a tricky challenge. What renewable can I install at home and invite the Minister to view? We have had solar panels and wind turbines; there are no waves near Stafford; would an energy crop do?
It has been a pleasure just to listen to our debate, and reassuring to hear such knowledgeable views about a sturdy future for our renewables industry. There will soon be an explosion of demand for renewable energy sources, and those who take the plunge now and develop the industries to meet that demand will benefit later. We could not prevent the industry from developing if Britain failed to take part, but we could lose opportunities for jobs and security of supply in the future. I hope that Conservative Front Benchers will reconsider their attitude.
I can understand why the American hosts of the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) may have felt threatened. Individual consumers developing their own energy sources and adopting net metering must sound like anarchy to those who are used to being in command of their markets—but that will happen in due course and companies will have to deal with it. The wiser ones are already adapting well to the change.
In this country there has been far too much stop-start in promoting the renewables industry. The Government are slowly moving in the right direction. The signs are there: the renewables obligation, the fund for clean energy out of the climate change levy, the regional renewable energy targets, the capital grants for offshore wind and energy crops, research and development support, money for the solar photovoltaic demonstration project and, most recently, the Prime Minister's announcement of another £100 million. I have learned from a parly answer that the money is so far unallocated. Perhaps we can have some input, through what we say today, on how it might best be spent.
This country remains disappointingly near the bottom of the league table for renewable generation. It is difficult to envisage how we can change that. Some say that consumer prices present too much of an obstacle, rather like the threat to beef producers' supplies in the meat industry. We must face down those arguments and focus on protecting the climate and reducing harmful emissions. Those should be much higher priorities and the Government should intervene to make that clear. They must get the financial regime right if they are to do so effectively.
The operators of combined heat and power units receive no tax break in this country for selling off excess power—power that is not needed—whereas those in most other countries do. That means that it is more economic to buy in heat and power separately and not bother with a combined heat and power energy unit, which is exactly what we do not want. If the Minister has heard about that problem before. I hope that his colleagues in the Treasury are addressing it.
Two hon. Members have mentioned the report from the energy technology support unit—ETSU—which said that we could go a long way towards meeting our electricity needs from renewable sources and identified solar power as the lead provider. As my hon. Friend the 164WH Member for Southampton, Test (Dr. Whitehead) said, the factor holding back the widespread installation of solar panels is cost. He made a point that I wanted to make: we could bring prices down to levels comparable to those for fossil fuel generation with one major PV factory achieving economies of scale. There are no technological barriers in the way of such a scale-up. Solar panels are expensive, so not many people buy them, so not many are manufactured and they remain expensive. The Government need to step in to break that deadlock.
The European Commission has proposed a target of 500,000 roofs in the European Union by 2010. On a per capita basis, our share would be 70,000. Germany already has a target of 100,000 roofs. This Government could help in several ways. Compulsion could be one way: building regulations for the construction of new properties could be changed. Incentivisation could be another: there could be a system of tax credits for those who carry out installations or build new properties. There are ways in which we could do well. There will no doubt be big business in future, but we are losing out on our share of it.
Other hon. Members have given a strategic overview, but I thought that I might assist the Minister by talking about the grass roots in Stafford. We have had a go at promoting renewable energy as an industry, although we have not succeeded brilliantly yet. Let me start by explaining that Stafford has quite a history of power generation. We have had watermills since at least 1164, horse-driven mills since 1561, windmills since 1585, steam trains since 1876 and petrol and diesel engines since 1903. The Dormans factory was set up in 1870.
We have had 100 years of electricity generation, turbines, transmission and distribution in Stafford, first by Siemens, which sold out to English Electric, which in turn sold out to the General Electric Company, which embarked on a partnership with Almost in France and then sold out to it. The new company was floated on the stock market and called Alstom. It is now a major employer in Stafford, but like many traditional manufacturing companies, it has been downsizing in terms of employee numbers for a long time. That came to a head a year ago, when about 1,000 people lost their jobs in six months. It was a frightening time for Stafford, because that was a big blow to the local economy.
We cast around for ideas on how to respond. I thought that, as we had 100 years' experience, we should look for the next—hon. Members should excuse the pun—generation of the power industry, by considering renewable energies. That struck a chord with local people. Renewable energy is popular with people and they want to see more of it. They certainly like the idea of jobs making things that help to produce renewable energy.
The local council was successful in a bid for single regeneration budget round 6 money, which included an element for developing renewable energy. The regional development agency—Advantage West Midlands—supported the scheme, which was excellent. However, we have encountered difficulties as a result of the lack of individuals and organisations with the vision and enterprise to make schemes work. Some people are keen. One company in Stafford is a good biomass producer and has started a waste-to-energy scheme and developed an idea about energy crops. All that is the 165WH result of one person's enterprise, but there are simply not enough individuals who can undertake the right work. The Minister may like to consider whether we could put together some successful case studies, either by sector or by place. We can disseminate such information throughout the country, giving examples to others on how to proceed.
I wish to comment on the Minister's side-by-side development in the Department of Trade and Industry of industrial clusters. There is a good possibility that there will be peer group support for renewable energy industries, if they can be clustered together and support each other through the difficult times of setting up. The mighty ideas at the top are supported at the national level to become policies, but they will not work unless someone gives them a little push on the ground.
§ 5 pm
§ Mr. Hain
I am grateful to the last two speakers for giving me a lot of time to reply to the debate—perhaps rather more than I expected, but I am delighted to have the opportunity to do so. Although it is a custom of Ministers to say that they have been involved in a good debate, I actually mean it on this occasion. It has been a good debate. I have learned a great deal from it and I am sure that my excellent officials sitting behind me have learned a great deal, too, not least because of the passion of well-informed enthusiasts in the House for renewable energy. That will give me, as the Minister responsible for such matters, extra encouragement to take forward such an agenda in the knowledge that many well-informed people will be on my back if there is an attempt to prevaricate. I hope that all the other members of the Government will read the report of the debate and be similarly responsive.
I am grateful for the invitations to visit my hon. Friends' homes. As well as a cup of tea, I hope that something more sustaining will await me if I can accept such invitations. I welcome the debate and the enthusiasm about renewable energy. Listening to the contributions, it struck me that we are just in time to avoid Britain being crucified historically for poverty of ambition and a crippling lack of vision in respect of the future of energy, especially renewable energy. We are coming at it rather later in the day than we should be and I suspect that that is the common view of those who have participated in the debate. I am not sure about the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb), but if we talked to him on his own rather than discussing matters that will be on the record, I should think that he would agree with that, too.
The Government have made gigantic strides forward, but we must do a great deal more—something that the debate will encourage us to do. I welcomed much of what the hon. Gentleman said. He is a serious student of energy policy in general and of renewable energy, but others have echoed some of my worries. I am pleased that the hon. Gentleman welcomed today's announcement. He asked about the cost of the renewables obligation. It will be about 20p a week to the average customer, which is about 3.7 per cent. on the average bill. That is small beer and, if the average customer were invited to say whether he really wanted to pay an extra 20p a week for clean, green energy, he would put up his hand with alacrity.
166WH The hon. Member for Bognor Regis and Littlehampton questioned our ability to reach the targets that we have signed up to internationally, as did the hon. Member for Orpington (Mr. Horam). It is important to recognise that we need reductions in emissions, changes in energy use and increases in energy efficiency—a point made by many hon. Members. I am not claiming that renewables are the 100 per cent. answer to reducing emissions to the target levels to which we signed up, but they will make a significant contribution.
I did not completely understand what the hon. Member for Bognor Regis and Littlehampton said about the end of the life of the Magnox stations. He is welcome to clarify his point, if he wishes to. Is he saying that a commitment will be given in the forthcoming Conservative party manifesto for new build of nuclear power stations? Is he committing himself to continuing the enormous subsidies on which nuclear power has depended and to paying the fantastically expensive clean-up bill of billions of pounds that it leaves in its wake, which comes out of the public purse? We need to know whether that is the policy of the principal Opposition. I am not making a party point; this is an important issue for the future of nuclear policy, which has implications for the public purse. Such a project or projects would create planning problems that would cause years of disputes. One has only to consider the history of the Sizewell power station. We should be told whether the Conservative party has such intentions. The hon. Gentleman may not want to jump up now—perhaps he does not have the authority to do so—but we should be told. We shall study his remarks with great care in the coming weeks and months and during any election campaign, because voters should know whether that is Conservative party policy.
I welcome the contribution made by my hon. Friend the Member for Brighton, Kemptown (Dr. Turner). He acknowledged that no previous British Government have taken comparable action on the renewables agenda and rightly castigated the previous Government—again, I say that in a non-party context—for abandoning the research and development funding for wave and tidal stream power in 1994. Thereafter the Labour Government had to resurrect it. He is right in saying that we missed the boat on wind power—a boat in which Denmark then sailed away—and that we should not do so again. I agree with him about wave and tidal stream power, too, and about other forms of renewable energy. As he rightly said, the Department of Trade and Industry has been too slow in the past on this matter, but we are trying, and succeeding in getting up to speed.
My hon. Friend raised the issue of waste. Government policy is clear: we want to minimise waste by adopting appropriate domestic and industrial life styles and using business methods to that purpose, and to maximise reuse and recycling. That is our first principle. Secondly, we are not seeking to encourage incineration in any way but, when it is necessary and possible, it is sensible to recover the energy. I want to encourage new exciting technologies that can be linked into the waste process. After recycling has taken place, all the heavy content of waste—the metals, glass, heavy plastics and so on—might be disposed of through the new, cleaner technologies, such as pyrolysis and gasification.
167WH Those technologies were explained to me in the constituency of my hon. Friend the Member for Harrow, West (Mr. Thomas), who invited a local business along to meet me. I was excited to hear about that alternative to incineration and want to find ways to encourage that, as it is potentially a new form of energy, the biodegradable parts of which are classified as genuinely renewable. British businesses such as the one in my hon. Friend's constituency, which may have an Australian origin but has a lot of British potential, should be given support.
§ Mr. Gareth R. Thomas
I welcome my hon. Friend's comments, not least because Brightstar Environmental, the company to which he refers, employs some 90 people in my constituency. As he said, it is an Australian-owned company, and I understand that it recently opened a facility with such technology in New South Wales. Will he ensure that his officials check out the facility in Australia so that we can further understand the opportunities and potential for that technology in the United Kingdom?
§ Mr. Hain
I certainly give my hon. Friend that undertaking. Indeed, I shall ask our high commission there to check that out and report back to me, and I shall send him any information that I believe may be of value to him.
My hon. Friend the Member for Brighton, Kemptown is a member of the Science and Technology Committee, with which I had an interesting session a few weeks ago, to which he referred. As a former Minister, the hon. Member for Orpington will know the risks that I am taking in inviting a proactive and enthusiastic report from the Science and Technology Committee to encourage the DTI and this Minister on our journey for renewables.
I have tried to answer the similar questions about waste asked by the hon. Member for Carshalton and Wallington (Mr. Brake). I agree that the planning jungle is a serious problem. We must get the balance right and meet genuine local anxieties, such as those to which my hon. Friend the Member for Bury, North (Mr. Chaytor) referred in the case of Pennine wind farms—many other examples could be cited —without completely jamming up the renewables momentum by overcomplicated and obstructive planning regulations and procedures. That is why, in the case of offshore wind, I have tried to combine all those aspects on a one-stop-shop basis in the consultation that we are currently taking forward.
Although it is not official Government policy, I agree that we should consider taking the renewables targets beyond 2010, in consultation with our international partners, especially the European Union. I am not sure whether that will be possible across the Atlantic, with the United States, but I hope that in time it will. We should seriously consider long-term future targets for renewables, and we shall try to do so through international agreement so that we make more than our proper contribution but are not, if possible, disadvantaged.
The hon. Member for Carshalton and Wallington referred to the Liberal Democrats' website. I am sure that my officials will want to study that extremely carefully in anticipation of a possible Liberal landslide and his having my job after the election. We shall certainly read that document.
168WH My hon. Friend the Member for Harrow, West exulted in his Welsh roots, and I am delighted that he is proud of them. I welcome his call for what he called greater urgency, using the magnificent performance of the Welsh rugby team at Wembley to spur him on—which was, as the hon. Member for Orpington reminded us, only too sadly not repeated at the millennium stadium. He referred to President Bush's recent statement on Kyoto, which was devastatingly disappointing for us all. I hope that the United States Administration will reconsider the matter, because no one can opt out of their international obligations, for the simple reason that if they do, the future environmental consequences will be visited on them equally as on the rest of us.
I agree that NFFO portability is crucial, and we shall pursue it vigorously. I listened carefully to the pleas of my hon. Friend the Member for Harrow, West for joined-up government, especially with the Ministry of Agriculture, Fisheries and Food, the Department of the Environment, Transport and the Regions and ourselves, and we shall try to take that forward. We are working with the Ministry of Defence on the effect of onshore wind farms on its necessary operations.
§ Mr. Hain
Like everyone, I am aware of that issue and it is under active consideration.
The hon. Member for Orpington is also extremely well informed on the subject and I welcomed my informal hearing in front of the Environmental Audit Committee, although I do not think that my health was at its best. I agree that our past record in Britain has been pathetic, especially compared with other European Union countries. He quoted sources that said that renewable energy could, in principle, supply 100 per cent. of our energy needs, which we must bear in mind. I also take his point about the potential confusion of funding sources and undertake to write to him on that. He will be aware of our published statements on the costs, some of which I mentioned, and the subsidies and finance that we have put in. There is no attempt to double-count or pull the wool over anyone's eyes about the money that we are making available, but just in case there is a lack of clarity, I will write to him about it and copy the letter to other hon. Members and the Library.
I echo the hon. Gentleman's welcome for biomass and energy from crops, and the points that came up in that Committee hearing about farmers' need for security, especially in view of recent developments and with the BSE hangover. We will need to provide that security and set out a clear strategy for biomass that gives encouragement, because it is important for the future of the countryside as well as of renewable energy. I undertake to work with the Minister for Science, Lord Sainsbury on a point that the hon. Gentleman made during that hearing, and I would be happy to let him know the outcome.
Like several other Members, the hon. Member for Orpington mentioned photovoltaics. The £ million contribution would be too little if that were all it was; 169WH instead, it is an initial payment to get us off the ground and get a PV project going. Additional funding could then be drawn down from the new £100 million grant announced by my right hon. Friend the Prime Minister, once we know the recommendations of the performance and innovation unit study of renewable energy on how that money should be distributed to PV and other sources.
My hon. Friends the Member for Southampton, Test (Dr. Whitehead) and for Bury, North raised important questions about long-term security of supply and our dependence on oil and gas reserves from some fairly dodgy parts of the world, if I am allowed to use non-ministerial language. They are unstable areas that could hold countries such as ours in debt to them if we were not careful, which would have grave consequences for British and international security. We must take that into account in considering the future of energy policy.
My hon. Friend the Member for Southampton, Test made a brilliantly interesting speech on photovoltaics, including what he is doing in his own home. Only a few weeks ago, I had the privilege of visiting Northumbria university, which has an innovative research and development programme on PV, and my hon. Friend would be encouraged if he had the opportunity to visit to see what is being done. I agree that there is too much ignorance of PV. Light is the driving energy force. I was interested to find out from Northumbria university that, with current technology, milder weather is better for PV than hot weather, which is better for solar energy. In fact, PV would be ideally suited to the conditions of a climate such as Britain's—in Wales, of course, it is always sunny.
We have to crack the problem of bringing PV to market. That is a severe obstacle at present. The capital cost of PV equipment is high, and I was interested in the point that my hon. Friend made about the way in which mortgages could be reconfigured. We will certainly examine that within the DTI, and I will discuss it with colleagues in Government.
I refer to an interesting project in the eastern Cape of South Africa. Shell and ESKOM, the South African electricity generator, formed a partnership and put free installations into 6,000 properties in a poor township. Those residents would have had no prospect of funding that upfront capital cost. Using a prepayment meter system and some interesting software, that project has been an enormous success. That example should serve as a model: with donor nation funding, PV could be spread throughout Africa and thereby, through economies of scale, bring down capital costs and bounce them back to industrialised countries. We in Government should try to take that forward.
I was intrigued by my hon. Friend's reference to the need for more training schemes for PV plumbers. I will certainly look into that and discuss it with colleagues in the Department for Education and Employment. I am aware that Ministers are supposed to know everything, but I did not know that that was a problem. Obviously, it is something that we need to address.
My hon. Friend the Member for Bury, North called for a green industrial revolution and referred to our recent White Paper on the knowledge-based economy. 170WH Renewable energy is at the forefront in contributing to Britain becoming one of the most successful—if not the most successful—knowledge-based economies in the world. The field of energy offers the greatest scope for new scientific and technological development and knowledge-based expertise. I agree that it has the capacity to grow exponentially. My hon. Friend's words in that respect are wise indeed; sometimes, Governments are far too conservative in embracing new technologies and capacities, and make decisions that the markets judge as old-fashioned. That is true of the overall perception of the potential of renewable energy. The public is not aware of its enormous potential and the Government have a duty to drive forward research and development and to support the businesses that are taking the agenda forward.
I agree that the fuel poverty agenda is an important part of the greater energy efficiency that will help us meet our targets. I was pleased that my hon. Friend referred to fuel cells and their contribution to the agenda, especially in making the transition away from the internal combustion engine. His remarks about the manner in which fuel duty might be engineered—if I can put it that way—were intriguing, and I will ensure that the Chancellor's attention is drawn to them. For the sake of my career, I should not make any ex cathedra announcements in that respect.
The Government have supported fuel cell research and development for many years through the DTI's new and renewable energy programme and the Engineering and Physical Sciences Research Council programmes. Several British firms are already key players in that emerging international industry. We are urgently considering what further measures are needed to encourage the take-up of fuel cell and hybrid vehicles. A joint DETR-DTI consultation document on powering future vehicles is planned for June—perhaps a little later in June, who knows? A strategy on powering future vehicles will be finalised by the end of the year and will set out how the Government will support, facilitate and promote the take-up of new vehicle technologies.
The Government have also announced £9 million of new money for the DETR's new vehicle technology fund, £750,000 of which has already been allocated to allow London Transport to obtain three Daimler-Chrysler hydrogen fuel cell buses. I am therefore pleased that my hon. Friend mentioned that. We should think about his comments on the location of PV initiatives, with a possible production base in former coal communities, and about his interesting reference to west Cumbria. That is a way of taking the agenda forward to benefit areas that may need it in future—coal communities certainly need it now.
Finally, in response to my hon. Friend the Member for Stafford (Mr. Kidney)—
§ Mr. Gareth R. Thomas
Before the Minister moves away from the point of my hon. Friend the Member for Bury, North (Mr. Chaytor) on the green industrial revolution, I remind him that my hon. Friend talked about the rapid developments of technology and the benefits of installing PV on a range of sites. As many hon. Members have acknowledged, a crucial change is the modernisation of the industry's infrastructure. We need to take forward the recommendations of Ofgem and the DTI's working paper on embedded generation. 171WH Could my hon. Friend the Minister respond, perhaps not now, on how the DTI will take forward that working group's recommendations?
§ Mr. Hain
Those recommendations are important. Fortuitously, I was speaking to the regulator Callum McCarthy about that very matter this afternoon. He is very seized of Ofgem's responsibilities and duties in that respect and is keen to take the matter forward with us so that we get the regulatory methods as well as the infrastructure and all the other issues referred to in that report absolutely right.
In response to the points of my hon. Friend the Member for Stafford about net metering, we are making the point that the choice of whether to offer net metering is a matter for individual suppliers. At least one supplier, TXU, has already done so. Net metering, where electricity exports are purchased by suppliers at the same rate as they charge for energy consumed, is likely to result in suppliers incurring some costs—which I do not want to exaggerate. I do not want the Government effectively to force suppliers to subsidise one class of customer against another, but I want to encourage them down that road. I hope that my hon. Friend takes encouragement from that.
172WH My hon. Friend said that our PV programme should be more ambitious. As I said, this is just a start. It would be extremely unfortunate and very difficult to defend if Britain lagged far behind, or at least was not on a similar level to, the work done in Germany and Japan. We have a great deal of catching up to do on the PV programme, and we will look at his various innovative ideas about how to support that. I will send a copy of the whole debate to the performance and innovation unit so that it can take account of all hon. Members' contributions before it makes its recommendations later this year. My hon. Friend's point about the evolution of power in his own area of Stafford is an interesting one and we will certainly look at it. Any information that he wants to bring to my attention is welcome. We should take account of his idea of case studies of clusters of best practice that other areas can draw on, for their benefit and that of the wider agenda.
I thank all hon. Members for their contributions. I believe that the debate will stand the test of time as having given an important impetus to the whole renewables agenda.
§ Question put and agreed to.
§ Adjourned accordingly at twenty-nine minutes past Five o'clock.