'. The Secretary of State shall, at least once per year, publish an analysis of the proportion of electricity produced from each type of generation over the previous 12 months, together with a statement by him of the Government's policy in relation to each of those types of generation.'.—[Mr. Gibb.]
§ Brought up, and read the First time.
§ Mr. Deputy Speaker (Sir Alan Haselhurst)
With this it will be convenient to discuss the following: Amendment No. 28, in clause 48, page 48, line 36, at end insert—';—Government amendment No. 3.
- (c) to facilitate the development of embedded generation;
- (d) to support the achievement of the Government's national renewable energy targets by facilitating small—scale renewable generation through net metering.'.
§ Mr. Gibb
The purpose of the new clause is to ensure that the Government have a coherent energy policy. It would require the Secretary of State to publish each year an analysis of the proportion of electricity generated from each source. About 30 per cent. of our electricity comes from gas; about 30 per cent. from nuclear power; and another 30 per cent. from coal. The remaining 10 per cent. is made up of electricity imported through the interconnector with France and renewables.
On Monday, it became obvious—if is was not already—that the Government do not have a clear energy policy or long-term strategy. If I am wrong, perhaps the Minister will set that strategy out, for the benefit of the House and the public. The Government's last known pronouncement on energy policy generally was their energy White Paper, published in October 1998, but, as everyone knows, it was simply an exercise in ex post facto rationalisation of a politically driven decision to impose a moratorium on building new gas-fired power stations.
1003 The justification for that decision was based on the bogus notion that companies would invest hundreds of millions of pounds in new gas-fired plant simply in response to temporarily high electricity prices, resulting from the fact that the electricity pool was not the right mechanism for the electricity market as it had developed since privatisation.
Given that the industry has known for many years that revised electricity trading arrangements were being developed, it was clear that prices would fall in the medium term. Investors will not invest on the basis of the price of a product in the short term, so the suggestion that there needed to be a moratorium to prevent investors from responding to this short-term price hike is absolute nonsense, and everyone in the industry knows that. No doubt that is why the Secretary of State took the earliest opportunity to lift the moratorium.
It would be interesting to hear from the Minister whether she has received legal advice about the legality of the moratorium—the stricter consents policy. I should be grateful for a confirmation of that.
The notion that all the problems highlighted in the White Paper will be solved when the new electricity trading arrangements come into effect in October is bogus. The White Paper implied that the Government want to see the new electricity trading arrangements working to ensure that they deliver lower prices before lifting the stricter consents policy. However, the Secretary of State has now announced that the moratorium will be lifted as soon as NETA become law this summer, if the Bill gets Royal Assent. This legislation will be in place by October.
Even the Labour-dominated Select Committee on Trade and Industry says:We do not believe that this moratorium on section 36…consents…will assist the coal industry in the short run…we look to the Government to ensure that…the moratorium is lifted as soon as practicable.The moratorium was introduced by the Secretary of State's predecessors to pacify Labour constituencies and Members with mining interests. It is a policy based on the internal politics of the Labour party rather than on what is in the best interests of Britain's energy needs. It is a piecemeal, ad hoc policy, rather than part of an overall energy strategy.
The new clause is designed to help the Government to focus on developing a proper long-term energy policy for Britain. We need a statement from the Minister about how the Government believe Britain's energy needs can be met, by what sources and how that ties in with the Government's Kyoto commitments and their domestic commitment of reducing carbon dioxide emissions to 20 per cent. below 1990 levels by 2010.
That brings me to the great deceit in the Government's energy policy as enunciated in their White Paper, which states that the Government would expect to see a decline in CO2 emissions from the power generation sector over the period covered by the Kyoto protocol, even on scenarios that retain the gas moratorium in 2008–12. Carbon dioxide levels have already fallen considerably below the 1990 levels.
The key issue about the 2008–12 Kyoto protocol target date is that from 2010 onwards—and even earlier—the United Kingdom will have significantly reduced its nuclear 1004 capacity as Britain continues to decommission Magnox nuclear power stations. Of course the Government will meet the 2008–12 target date for reducing CO2 emissions to 12.5 per cent. below 1990 levels, but the key issue is what happens from 2012 onwards. The whole of the Government's strategy is aimed at that date. They have given little thought to what should happen beyond 2012.
On the basis of the Government's energy policy, it looks as though CO2 emissions will begin to rise from 2012. They need to set out their policy on nuclear power as more and more of the older stations are decommissioned. Will they authorise the building of new nuclear plant? If not, how do they intend to ensure that CO2 targets are met without the nuclear component? What is their policy on this matter? No doubt the right hon. Lady will say that she has received no requests from the nuclear industry to build new nuclear plant, because at the moment it does not regard doing so as economically worth while. The Kyoto commitments, however, impose on the market an artificial constraint to which Governments must respond. That is why there are provisions, in the Bill and elsewhere, that artificially nudge and encourage the free market to produce power by methods that it would not otherwise use, in order to help the Government and the country as a whole to meet the carbon dioxide emissions targets.
Nuclear energy plays a key role in fulfilling our carbon dioxide commitments, and in keeping our commitments at low levels. It is essential for the Government to respond to what happens when the nuclear power stations begin to be decommissioned. What is their long-term policy on nuclear energy?
What is the Government's policy on the granting of section 36 consents after October 2000? Will everyone who applies to the Department of Trade and Industry to build a gas-fired power station be given permission, now that the stricter consents policy is to be lifted in October, or will the Government apply different criteria—the same criteria that enabled them to support the building of the station at Baglan bay? Will those criteria now obtain across the country, or will the Government simply bring back the stricter consents policy in another guise? We need a statement from them.
In preparing an application to the DTI, industry incurs considerable costs. It must know what it is up against—what hurdles it needs to convince the Government about. Indeed, it needs to know that there is no point in applying for a section 36 consent in certain circumstances, and it needs to know precisely what those circumstances are.
What proportion of Britain's energy needs do the Government expect to be met by gas, coal and nuclear energy in 2020? What proportion do they expect to come from renewables? We need to know what they have in mind for each of those sources of electricity. If the target percentage for renewables is met, will that be sufficient for Britain to continue to show a decline in carbon dioxide emissions from electricity generation?
Those are the questions that the Government have so far refused to answer—or, more likely, are unable to answer. However, they need to be answered if industry is to be able to plan ahead. The Minister now has a chance to set out her energy policy: if she is on top of her brief, she should not find that very difficult. Will she give us, for example, her Department's estimate of the likely proportions of electricity generation by gas, coal and 1005 nuclear energy in 2005, 2010 and 2020? What is her estimate of the reserves of discovered and undiscovered gas in the North sea?
§ Mr. Gibb
That is a revelation. There are estimates of undiscovered gas reserves in the North sea. An appendix to the Minister's own energy White Paper gives figures for the likely number of years of undiscovered gas reserves in the North sea. Companies will not investigate and prove that gas reserves exist until they are needed; they start to "firm up" on where reserves are only once the figure falls to a certain number of years.
Those are important questions about a vital area of industrial and environmental policy. We await the Minister's response with great interest.
§ Mr. Andrew Stunell (Hazel Grove)
New clause 2, amendment No. 28—which stands in my name and those of two of my hon. Friends—and Government amendment No. 3 are closely related.
Almost for the first time during the debates that we have had in and around the House, I find myself in substantial agreement with what was said by the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb). The United Kingdom lacks a national energy policy. That lack has not cropped up suddenly; it is long-standing. For a long time, decisions have been either deferred or made on a short-term basis, and the long-term investment strategy that is so clearly needed has not materialised—not least because industry has been given no clear signals or pointers towards the direction in which it should go.
At the lowest level, new clause 2 introduces a sensible monitoring procedure, so that the Government's intentions can be clarified and the energy industry's performance in relation to the Government's intentions can be determined.
§ Mr. Ian Bruce
The hon. Gentleman will probably recall that, in Committee, I tabled an amendment on the diversity of supply. We have all been accused of having short memories. I wonder whether he remembers that Ministers resisted giving special treatment to fuels, particularly coal, yet the Secretary of State for Trade and Industry on Monday and the Prime Minister today at Prime Minister's Question Time specifically said that they wanted to help coal to have such a position in the marketplace. Now that it is Wednesday, does the hon. Gentleman agree that we would like to hear from Ministers exactly what their policy is on fuel supplies, given that they have changed policy on that issue so many times in the past few weeks?
§ Mr. Stunell
I thank the hon. Gentleman for his comment. I have received no advice on what the Government's energy policy for Wednesday is. As far as I know, it has not been issued, but, as he says, it would be interesting to hear that. The point is well illustrated by the Government's announcements this week. I am sorry that my right hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith), who was with us a few 1006 minutes ago, is not here at the moment because he clearly has a strong constituency interest in the future protection of the coal industry and I know that he welcomed the announcement.
On overall energy policy for the UK, may I pick up some of the issues that the hon. Member for Bognor Regis and Littlehampton outlined about the share that different fuels will have in the electricity market? It is clear that there will be substantial changes not just in the next 10 years, but in the next 20 and 30 years. No one would have predicted 30 or even 10 years ago that gas would be the fuel of choice for generating electricity. It is difficult to be sure what the fuel of choice will be in 10 years' time. Energy policy needs to set some markers, which are hinted at in the Bill, particularly through its support in one form or another for the renewable energy generation industry, but the policy is not set out strongly enough.
I accept that one could not insert a new clause that included an energy policy, but the hon. Gentleman has usefully introduced a mechanism for that policy to become more transparent and self-evident. Should he press the matter to a vote, we will be happy to support him.
Amendment No. 28, in the name of the Liberal Democrats, amends clause 48, whereas Government amendment No. 3 amends clause 60. Amendment No. 28 places two additional duties on electricity distributors: first, to facilitate the provision of embedded generation within the transmission and distribution network; and, secondly, to facilitate small-scale renewable generation through the implementation of net metering.
Government amendment No. 3 is to reverse the amendment that was accepted in Committee: amendment No. 745. Were we to accept the Government amendment, we would delete Labour's manifesto commitment to renewables. My hon. Friend the Member for Lewes (Mr. Baker) may seek to catch your eye, Mr. Deputy Speaker, to comment on that.
The two amendments pull in diametrically opposite directions. I shall confine my remarks primarily to amendment No. 28, which relates to the additional duties that we seek to impose on distributors within the electricity market.
The Bill has some laudable aims. It certainly seeks to liberate the forces of competition and to bring benefits to consumers. Liberal Democrat Members have, when appropriate, supported those objectives. The Government claim that the Bill will produce lower prices, and there is some evidence to underpin that claim. It could also produce better service for consumers, as competition hots up and competitors are forced to provide better prices and service, which consumers will increasingly value.
§ Mr. Gibb
I understand the hon. Gentleman's point about the evidence showing that the long-term price of electricity is decreasing—it does seem to have decreased because of the proposed new electricity trading arrangements—but I am surprised that he believes that the Bill will increase competition. The Bill specifically demotes the promotion of competition to a second-order objective, whereas it is currently a prime, first-order objective.
§ Mr. Stunell
I shall have something to say in a moment about the difficulties that new entrants may face under the new arrangements. Nevertheless, the hon. Gentleman has made a useful point.
1007 The market can be used to reduce prices and to improve service, and it is a sensible mechanism for achieving those objectives. However, there are problems—which the Bill recognises, at least partly—with unrestrained and unregulated competition. One of the problems is that social and environmental obligations are not easily fulfilled in a completely open-market, competitive economy.
There are some specific situations in which competition is a poor driver in achieving the Government's desired results, the first of which is when profit is increased by selling more product at a higher price. As competition can keep prices down, the argument against competition on the basis of higher price is defeated. However, competition will increase sales volumes. In a fiercely competitive environment, more profit is made by increased sales, not decreased sales.
The electricity market has a hierarchy comprising the levels of generation, transmission, distribution and supply. At every level, profit is increased by selling more product to the next level down in the hierarchy. Each level certainly gains value from selling more product to consumers. They all want more, not fewer sales. Their market-driven imperative is wholly hostile to the idea of decreasing the amount of energy that they produce and supply and to the idea of ensuring that their consumers use energy efficiently.
Amendment No. 28 recognises the fact that competition is entirely hostile to diversification in the sources of energy used to generate the electricity used by consumers. The market mechanism will not deliver diversification of supply. Therefore, if the intention of public policy is to achieve better conservation, greater efficiency in consumers' energy use and more renewable products in the market, the regulatory framework has explicitly to state those objectives. If the framework is not explicit, it will not achieve those objectives.
Interestingly, one of the companies that responded to the DTI's own consultation on licensing changes stated:The obligation to maintain an efficient distribution system potentially conflicts with the proposed obligation to facilitate competition in generation and supply…distribution networks have been laid down in a co-ordinated fashion over many years…each proposal for embedded generation must be considered individually and on an economic basis, rather than under any kind of blanket obligation.In other words, those whom the market—and, currently, the Bill—requires to facilitate embedded generation are precisely those who have no interest in facilitating such generation and for whom the market is not a valid implement in achieving the objective.
Therefore, embedded generation—that is, generation that is at the lower end of the transmission and distribution hierarchy, at a lower voltage and nearer to the consumer—is in no way facilitated. Nor is net metering, whereby a small generator can supply electricity to and receive it from the distribution system, and pay a net price for it.
Amendment No.28 and the additional duties that it would impose on the distribution industry would lead to cost reductions rather than increases. However, it would not result in increased profits for the distributing companies, so they would have no incentive. The cost reductions would result from lower transmission losses on the electricity generated and, in the longer term, a reduced 1008 requirement for major investment in trunk electricity transmission. It would also result in fewer sales by those who are already in the market.
Our amendment could have been written by the DTI, because the DTI's consultation document on "Electricity Network Management Issues" states:In the medium and longer termthe aim is toencourage distribution companies to design networks so as to facilitate the accommodation of future embedded generation.The amendment would reduce costs to the consumer in the short and the long term. It would also conform to the Department's intention in respect of the promotion of renewable energy. The losers would be the existing generation, transmission, distribution and supply players. That is why the provision needs to be within the regulatory system and not left to the market.
I have a number of questions which I hope that the Minister will address.
§ Mr. Gareth R. Thomas (Harrow, West)
I share the hon. Gentleman's aspiration in respect of the promotion of embedded generation, but his amendment appears to be in advance of Government policy. In Committee, the Minister stated thata working group of representatives from the Government, Ofgem and the industry is examining the issues that surround embedded generation.—[Official Report, Standing Committee A,14 March 2000; c. 486.]Should we not wait for that report instead of trying to amend the Bill today?
§ Mr. Stunell
I have no problem with being in advance of the Government in respect of energy policy. In fact, it would be a major gymnastic feat to be behind them. Nor do I have any difficulty with proposing an amendment that conforms with the DTI's thinking, if not with its willingness to proceed, that goes some way towards providing a mechanism for the Department to develop its energy policy and, perhaps most importantly, that brings clearly into focus the fact that the market has value, but not in delivering those particular objectives.
I hope that the Minister accepts that embedded generators have serious problems in gaining fair access to the grid and to the market. I have heard a number of anecdotes from those who seek to be embedded generators about the difficulties that they face in dealing with the existing players in the market.
If the Government feel that the amendment is premature and that they do not wish to proceed with it, will they say specifically how, through legislation, they plan to open the door for embedded generation? If now is not the time, as the hon. Member for Harrow, West (Mr. Thomas) suggested, when should it happen? How can we ensure that the incentive for existing players in the electricity market to make more money by sending more electricity through their wires to suppliers is counteracted by a regulatory system that promotes conservation, efficiency and the introduction of renewable players at the most appropriate level?
The Minister has an obligation to answer those questions, in terms of this debate, but I hope that in 1009 default of doing so she will feel—as the Government felt in Committee with amendment No. 745—that she can accept that amendment No. 28 conforms with the Labour party's intention and the Government's declared policy. I shall not comment on Government amendment No. 3, because I hope that my hon. Friend the Member for Lewes will catch your eye, Mr. Deputy Speaker. From a personal point of view, I might say that the debate on that subject was one of the high spots of the Committee and it would be a great pity if it were lost at this time.
§ Mr. Brian White (Milton Keynes, North-East)
My right hon. Friend the Minister will know that I raised several issues connected with embedded generation and CHP throughout the Committee stage. I was concerned that the Government did not have enough weapons in their armoury to deal with renewables and embedded generation. I am still worried that the Government's armoury is deficient and I have a few questions for my right hon. Friend, the answers to which will—I hope—allay my fears.
In some areas, embedded generation faces problems with access to the grid. I understand that the working party mentioned by my hon. Friend the Member for Harrow, West (Mr. Thomas) will address those network management problems. Will my right hon. Friend confirm that the working party will consider the issues of embedded generation and ensure that distributors will have the proper incentives to facilitate its development?
Net metering is well established in the United States of America and elsewhere. If the Government will not accept net metering, will they outline their reasons for that? As the hon. Member for Hazel Grove (Mr. Stunell) said, the current market is about volume distribution, and several of the embedded generations are by small-scale operators. They face a barrier to entering the market because of the difference in volume. How will the regulators remove that barrier if net metering is not made compulsory?
The CHP and renewables industry has strongly welcomed the Government's approach, so when it makes criticisms they are usually valid, unlike some of the spurious criticism we heard earlier, especially from the hon. Member for South Dorset (Mr. Bruce) who repudiates his own manifesto when he condemns the telecommunications auction.
§ Mr. Andrew Robathan (Blaby)
The hon. Member for Milton Keynes, North-East (Mr. White) made some sensible points, but he let himself down by attacking the Opposition. I realise that one has to show loyalty to one's own side and the Whips, but my hon. Friend the Member for South Dorset (Mr. Bruce) speaks, as I do, in disappointment with the Bill. We expected rather more on renewables from the Government.
I should say that I am a vice-president of the Combined Heat and Power Association, which is not a paid task nor very onerous. I am also vice-chairman of the Parliamentary renewable and sustainable energy group, and I see that the chairman is in his place. Perhaps he will 1010 also speak about how the Bill is a missed opportunity for renewables, because the Government could have done so much more. Are the Government really serious about meeting the Rio and Kyoto targets and about reducing carbon emissions and tackling global warming, which is—as I am sure we all agree—an enormous problem?
The Government are putting lots of money into coal, which will never be a clean fuel, but they could have done much more for renewables and I hope that when the Minister winds up this debate she will tackle that issue. Many people want to know what the Government will do to encourage renewables apart from talking about how much they would like to see 5 per cent. of energy coming from renewables by 2003 and 10 per cent. by a later date.
The particular question that many people have raised with me is that of net metering and it beggars belief that the Government have not been willing to take that issue on in this major Bill. Net metering should surely have been included. We heard from the hon. Member for Milton Keynes, North-East that net metering is much in demand in the US. Why cannot we start introducing it in this country? It might bring down the price of photovoltaics and make them more attractive for installation on roofs that cover a small area.
What exactly is the Government's problem with net metering? I see no problem at all with it.
§ Mr. Ian Bruce
Is it not amazing that the Government constantly want to bring in new legislation that has no purpose? The Bill is a case in point. A small group of people says that the current system is not working properly. The Government have set their face against all the sensible amendments tabled in favour of net metering.
§ Mr. Robathan
I agree. I had hoped that I might agree with the Government about renewable energy, but I am disappointed because they have not done more. The previous Conservative Government introduced the non-fossil fuel obligation, but this Government could do more to support renewable energy. The Secretary of State for Trade and Industry talked a couple of days ago about combined power and heat. The fact that he got the phrase wrong was a little sad.
§ Mr. Gibb
My hon. Friend was not a member of the Standing Committee considering the Bill, so he may not have known that the Opposition tabled an amendment to what is now clause 60, which deals with renewables. We wanted to add combined heat and power to the definition of renewable sources, as we believed that it made sense to add that to the percentage of renewables that the Government are requiring suppliers to purchase. That would have been a real boost to the combined heat and power industry. My hon. Friend will be disappointed to know that the Government resisted that amendment.
§ Mr. Robathan
I am grateful to my hon. Friend for that information. I wanted to be a member of the Committee but, given that it sat 22 times, I might have regretted it.
1011 In this world of joined-up government, the Government have excluded combined heat and power from the climate change levy. Why do they not believe that CHP is a remarkably good way of generating energy more efficiently?
§ Mrs. Liddell
The hon. Gentleman is known for his interest in renewables and in combined heat and power. Will he explain how those elements of CHP that derive from fossil fuels are renewable?
§ Mr. Robathan
That is a good point, but it rests on semantics. Combined heat and power is a much more efficient way of generating energy—
§ Mr. Robathan
I understand how the power of CHP is generated, but it contributes to the carbon emission targets from power generation set at Rio and Kyoto. That is why CHP seems a sensible way forward. The Minister shakes her head, but it would be helpful if she could explain by what other means the Government's targets for combined heat and power generation will be met.
We should encourage the development of renewable energies now. An enormous industrial potential exists that we might be able to meet. For instance, a representative of a firm called Solar Century has been in touch with me on several occasions with some really good ideas on photovoltaics. I am not plugging that company, but some encouragement in that sector might allow Britain to have its own industry. We used to be rather good at producing wind generators, but it has all gone to the continent because the industry was not given sufficient support in this country—apart from on the Floor of the House of Commons. The story is the same with fuel cells.
The Minister said that CHP was not renewable. Of course it is not necessarily generated by renewables, but micro-CHP could be of enormous benefit in this country, where it could be suitable for 4 to 6 million homes. However, the Bill does not deal with it, and so does not encourage it. We should encourage such methods of electricity generation, as they would benefit the environment. That is what I would think of as joined-up government.
I understand that the net metering debate was lost in Committee, and I shall not dwell on it. However, it would surely be sensible if I were to install in my house what amounted to a small power station, for me to be able to sell electricity for the same sum for which I bought it from the grid. That would not cost the Government, or anyone else, anything, but would reduce the amount of energy that we need to generate from fossil fuels. Why will the Government not open their ears? I see Labour Members nodding at that, but I shall not name them. What we propose is a sensible method to encourage renewable energy and small-scale schemes in a way that the Bill does not.
The Bill is a missed opportunity on renewables. It has been a bit of a mess all round. It once covered four utilities; it now covers only two. I appeal to the Government to consider, even at the 11 th hour and in the other place, the inclusion of some encouragement towards 1012 renewable energy, which might result in better take-up of renewable energy schemes and help the Government to meet their stated targets.
§ Sir Robert Smith
I have a constituency interest in the amendments, and I am also vice-chairman of the all-party offshore oil and gas industry group, which is committed to renewables and their potential to provide a future for the industry. Constituents have told me that if we encourage renewables, the industry has the skills to develop offshore wind technology to which our country is well suited. The industry has the infrastructure and experience that come from working offshore, and, being out of sight, it gets over many environmental and local concerns about the positioning of wind farms. It is also easier to farm the wind offshore, because air currents are more stable and generation is more reliable and less directionally dependent.
The construction industry and others in the doldrums as a result of the downturn in the oil industry could also face a better future. The oil industry is used to tying platforms and cables back to the shore and would be well placed to develop offshore wind technology. It would be an added benefit for the United Kingdom if we led the way in generation, because we could develop it as an export industry. As with the oil industry, if we have a home base, an export market can be exploited.
Given the structure of our energy markets, it would be sad if that never happened. There are entry costs because of the barriers to entering the technology, but when it is up and running, the costs of production will start to fall. My analysis of where profits come from may differ slightly from that of my hon. Friend the Member for Hazel Grove (Mr. Stunell), because profits can be made even if the price stays the same and supply does not increase, but production costs are reduced.
Entering the market for offshore wind generation could be both attractive and commercially viable, but the Government need an incentive, which is why they should resist their own amendment No. 3. They should keep pressure on themselves to ensure that the environment encourages development so that we can cross the entry barriers and see generation as a growing industry that can build on its experience in the North sea.
§ Mr. Ian Bruce
Three quite different provisions are before us, although it is clearly for the convenience of the House that they can be discussed together. I shall make a short speech on each of them because the critical issues that we wish to revisit are important.
New clause 2, tabled by my hon. Friends and me, is intended to tease out where the Government are going on diversity of supply and what their energy policy is. The Government constantly say that they have an energy policy and that they intend to do all sorts of things in line both with Kyoto and with planning the economy as Labour Governments love to do.
I have been genuinely confused during the period of our discussions in Committee about the announcement made on Monday, and backed up by the Prime Minister, about the coal industry.
Labour Members were surprised that a free-marketeer, right-wing Conservative such as myself should table 1013 amendments that would ensure that industries such as coal could be protected under the Bill. We now find that an authority will decide how electricity is generated. If the Government are sincere about the Utilities Bill and really want to take decisions as to how electricity should be produced for the good of the consumer, the climate and so on—although they are concentrating only on gas and electricity—and if they want to intervene in markets to decide that a particular fuel or technology should be used in order to reduce carbon dioxide, then the means to manipulate the market should be included in the measure.
In Committee, I was pleased that the Government rejected that approach. The Minister for Competition and Consumer Affairs, who represents a south Wales constituency, referred to the harmful effects of coal. He suggested that to continue to try to support the coal industry was a terribly old Labour policy, because of the harm caused to the environment and to people's health by burning coal. That was surprising. By "Yes, Minister" criteria, it was a brave statement. He was fortunate that the general press did not report the Committee proceedings on that occasion, although there were some good exchanges in which we were able to tease out the issues.
However, lo and behold, a leak was made in the usual way—on Radio 4, where we hear Parliamentary announcements—that the Government would make a statement to the House that up to £100 million would be allocated, by some mechanism outside the Bill, to support coal mining and the continued use of coal. The price of coal would be kept down, so that it could be used for generating.
We need to know whether the Government really want to establish such mechanisms. The Government should not be leaking announcements about their support for the coal industry with an electoral bribe of £100 million, just because the industry is in Labour areas and they know that they will lose hundreds of seats in the local elections. We should be determining what the Government's policy is, based on the amendments before the House and those tabled in Committee.
Most of us would accept that, as the Labour Government have constituency interests in the coal-mining industry and as they have criticised previous Governments for allowing that industry to decline—as did many Back-Bench Conservative Members—they would include in the Bill provisions to protect the interests of their constituents in mining areas. However, those provisions are not in the Bill.
Although the Government will not tell us what they want, our new clause would offer a simple mechanism whereby, at least every year, a report would be produced of what they had done, with details of their possible interventions in the market.
If I had decided to sell gas to an electricity generator and was undermined by the Government's offering the generator £100 million to use coal, under an improved pricing structure, I should be most annoyed. Having made that announcement, the Government should put their money where their mouth is—the policies should be up front. If they believe they have an energy policy, they should accept the new clause; they should produce yearly reports on what has happened in the past and on their proposals for the future. When we made these points in Committee, Ministers said, "No, that would mean that we 1014 were picking winners," in that they would be deciding which fuels should be available, and that diversity of supply and having many different suppliers would no longer be part of the Government's policy. However, they have contradicted themselves.
The Government suggest that they had a change of heart in respect of the moratorium on gas-fired power stations. I understand that they have been told by lawyers that they are subject to judicial review, and that if they had not changed their mind, they would be before the courts. They may even now find themselves before the courts, and lose a lot of money.
The Bill could have provided mechanisms to allow the Government to intervene. I am not selling that point and I do not want them to intervene. Instead, I am saying that if they take certain actions they should do so by using legislation and be up front.
§ Sir Robert Smith
One would hope that the Government had learned the lesson and understood that their policy was leading to the importing of cheap coal at the expense of British coal.
§ Mr. Bruce
That may be the situation.
I do not want to go too wide of the new clause and the amendments, but the Government might report to the House under the clause the action that had been taken to ensure that the unfair subsidy of coal in Germany and France was being acted upon. I had a short meeting with a former Conservative Minister who had been doing the sort of jobs that are now being undertaken by the Minister for Energy and Competitiveness in Europe and the Minister for Competition and Consumer Affairs. He told me that towards the end of the Conservative Administration he had instituted proceedings to ask the Commission to inquire into the misuse of the subsidies, which were being used to restructure the German and French industries. They allowed those countries to lay off miners, for example. As I understand it, the inquiry has not taken place. We need to know regularly from the Government precisely what they are doing.
The Government have come forward with a non-sensical climate change levy. It does not address the issues of reducing the amount of CO2 It seems that it is intended to make manufacturing expensive in this country, and perhaps we shall not burn so much fuel overall, or we might not use so much nuclear electricity, for example. However, that does not reduce the CO2 load in the atmosphere throughout the world. It merely sends jobs elsewhere.
The clause would provide an auditing mechanism to ascertain how the climate change levy was working. I contend that it will not work, but a report would make the reason clear. That would have been an excellent way of bringing things forward.
Amendment No. 28 was tabled by the Liberal Democrats. I found myself in the strange situation of being a friend of the Friends of the Earth. I have always made it clear to that organisation that I am not its friend. However, I continue to receive very pleasant faxes from it. I am telephoned by a charming young lady. Perhaps it is because she is so charming that I tell her that I will do my little best to help the Liberal Democrats in what they are trying to do.
1015 An increasing number of Conservatives are saying that there are market mechanisms and sensible ways of going forward. I am attracted by the amendment because, in effect, it is saying to every individual, "You can be your own generator." We have to pay a generator if he sends us electricity, and the amendment is saying that there should be a mechanism to allow electricity to be sent the other way. I am not saying that whenever amps are sent in the other direction the same prices should prevail, and the clause does not specifically ask for that. I am happy to take advice, but I believe that it would ensure that a mechanism is put in place that enables amps to be sent in the opposite direction.
§ Mr. Stunell
The hon. Gentleman's interpretation of our amendment is entirely correct. There is no direct requirement on the pricing or tariff structure in such a net metering arrangement.
§ Mr. Bruce
I am most grateful for that explanation; it is appropriate to make that point clear.
The number of Conservative Members on the Committee was limited. It is interesting that the Minister suggested that there were not many Conservatives on the Committee, and she is absolutely right. There were only five Conservative members on the Committee and, for the majority of the time, all five were present. Usually, 50 per cent. of the Liberal Democrats turned up, but occasionally none of them did. [Interruption.] The sedentary intervention is surprising, because—believe it or not—the same Ministers and their silent Back Benchers regularly seemed to think that I spoke too much about these issues and that I spent too long moving amendments that they did not want to discuss. I have some difficulty with that suggestion.
§ Mrs. Liddell
Perhaps, the hon. Gentleman can explain to the House where the invisible men on the Committee were on 21 and 28 March? The hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) was left completely isolated.
§ Mr. Deputy Speaker
Order. I just wonder whether the hon. Gentleman will return to discussion of the amendments.
§ Mr. Bruce
I always follow to the letter your advice, Mr. Deputy Speaker. I should not have been drawn by the Minister's intervention.
When we discussed net metering in Committee, there was a great flurry among the Labour ranks. The Trappist tendency in the Labour party started to make some comments. We thought that some of the soft words that we heard from Ministers were a sign that they would go away—
§ Mr. Bruce
The Minister says that she never gives us any soft words, but she did on occasions act out of 1016 character and say soft words to the Committee. The Minister for Competition and Consumer Affairs says nothing but soft words. I do not wish to destroy his career, because I look on him as a friend. He was always in good mood in Committee and always good value.
Members are trying to distract me, but I return to the point that Labour Members suddenly became impassioned when the term "net metering" appeared on the amendment paper. In fact, some amendments were tabled in their names. I am sorry that the hon. Member for Milton Keynes, North-East (Mr. White) is not here now. He made a short speech, and perhaps he had a deal with the Whip so that he could speak for a minute or two as long as he absented himself—
§ Mr. Deputy Speaker
Order. The hon. Gentleman is wool gathering again. Let us get back to the substance of the amendment.
§ Mr. Bruce
I am sure that wool and insulation are not appropriate subjects for debate.
On net metering, Ministers first appeared to misunderstand what we were trying to do. I remember them saying that net metering would create a cross- subsidy from electricity consumers in general to electricity consumers with some generational capacity for their own purposes. That was a complete misunderstanding of what we intended. I do not know whether it was deliberate, or whether they had not done their homework. Earlier, we heard that they tended to speak from prepared briefs, so they may not have been listening to the arguments.
Ministers then said that, on reflection, their Green Papers and discussion documents contained exactly the same type of suggestions as we had made. It is amazing how the Labour party was converted by the last general election. It had all sorts of interesting ideas that it said that it would introduce, but it came to government and took three years to introduce the Bill. Its scope was then halved and all the so-called good ideas that it said that the nasty Tories would never think about were wiped off the map. That is a waste of a Government with enthusiasm whom Members on both sides of the House were willing to support in trying out new ideas. We were even willing to consider making Friends of the Earth happy, which is seldom possible because the organisation likes to campaign only in a negative way. For once, it might have thought that we had a good idea.
I do not want to steal the thunder of the Minister for Competition and Consumer Affairs, who has yet to speak to the new clause, but I want to comment on Government amendment No. 3. That seeks to remove from the Bill the target, which has been Government policy since the previous Administration adopted it, of meeting 5 per cent. of our electricity requirements from renewables by 2003 and 10 per cent. by 2010. Friends of the Earth has made the interesting point that a future European Union directive will impose targets that will be legally binding on the Government.
§ Mrs. Liddell
The hon. Gentleman might recall, if he was back from Puerto Rico at the time, that we had a discussion about the failure of the European Union to introduce a renewables directive. An Energy Council will 1017 be held within the next few weeks, but we still have no directive. If anyone has managed to magic such a directive into existence for Friends of the Earth, I must say that it is a dubious and fraudulent document.
§ Mr. Bruce
I am grateful for that advice, and I am sure that Friends of the Earth will listen to it carefully. Perhaps we will not have such a European directive, but the Minister who responds might want to deal with the point made by Friends of the Earth.
When one is in opposition, one tables amendments, forcing the Government to do one thing or another, and there is a standard reply from Ministers. In this case, Ministers might say that if the Government amendment were not made, it would mean that in 2003 a policeman could say to the Secretary of State, "I have noticed that you have not generated enough electricity from renewables. You are under arrest and will be prosecuted." There is no mechanism for prosecuting the Government because they have not fulfilled a target in a Bill but, if that were possible, it would explain why the Government are so determined to make amendment No. 3.
If an EU directive is agreed, how will it be enforced? Will the Government of the day simply implement it because they have agreed to its terms, or will it be legally enforceable?
§ Mrs. Liddell
Why is the hon. Gentleman talking about hypothetical issues? The directive does not exist.
§ Mrs. Liddell
The hon. Gentleman seems completely to have missed the point. Perhaps that is the effect of his having been away from the Committee for a while. One of our criticisms of the European Union is that it has not introduced a renewables directive. If renewables are to have a proper impact on international climate change, it is important that we have international agreement. Perhaps the hon. Gentleman would care to reflect on that fact.
§ Mr. Bruce
I am grateful to the right hon. Lady because she replied as I wanted her to reply. If we have a directive that is, supposedly, enforceable on the Government, which would be the effect of the new clause, how will we ensure that other nations are keeping to its terms? Clearly, we want to reduce CO2 throughout the world and not just in our skies, which of course move across to other countries, and that is the important issue.
Liberal Democrats are usually embarrassed to blow their own trumpet, so I shall have to do it for them. I remember the look of surprise on the face of the hon. Member for Lewes (Mr. Baker) when the Labour Front Benchers in Committee were not up to shouting "No" to his amendment. I was surprised by his surprise, because it had been clear throughout our proceedings that the entire Bill was a shambles. Earlier today, I raised a point of order relating to the fact that my amendment relating to the consolidation of the Bill had, unnoticed, been recorded in Hansardas having been agreed; the Minister for Energy and Competitiveness in Europe, who must read 1018 Hansard every night, and thousands of Department of Trade and Industry staff had not noticed the mistake. Even in Committee, after the hon. Member for Lewes had got the amendment made that we are now being asked to remove, we had to nudge the Government before they realised that they had made a mistake. It is rare that I congratulate the Liberal Democrats, but I congratulate them on showing what a total shambles the Labour Government really are.
§ Mr. Norman Baker (Lewes)
I apologise to the House and to the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) for having been slightly late in arriving for the debate. I plead paternity leave in my defence, and add that my presence here today is not entirely understood or even supported at home.
§ Mr. Baker
That is an ingenious suggestion, but one that I shall probably ignore when the time—fast approaching—comes to sort out a name.
I could not miss the opportunity to return for the debate on Government amendment No. 3. I am at a loss to know what to make of it. The Government's policy is set out in "New and Renewable Energy: Prospects for the 21st Century: Conclusions in response to the public consultation", which states:5 per cent. of UK electricity requirements should be met from renewables by the end of the year 2003 and 10 per cent. by 2010.That relates closely to the amendment that was tabled in Committee by my hon. Friend the Member for Hazel Grove (Mr. Stunell) and me. We were trying to be helpful to the Government by inserting in the Bill a Labour party policy that had obviously been omitted by mistake during the process of getting the Bill up and running.
I thought that our help had been acknowledged because, when it came to the vote in Committee, the Government Whip, the hon. Member for Hyndburn (Mr. Pope), was so keen to support the amendment that he added his voice to mine. Such was the force of the argument and the fact that the amendment indisputably represented Labour party policy, that not a murmur of opposition was heard—the amendment was passed nem con. Both Ministers now present acceded to the amendment, and I was pleased to see that they accepted the policy of their own party.
Therefore, I am at a loss to know why the Government are attempting to reverse my amendment—I can think of no explanation other than that it must be a mistake. It is certainly a slap in the face for the Labour Whip—a free-thinking, sensible person and a paid-up member of the human race who is much too good for the Whips Office—and for the Ministers who were present in Committee and implicitly acknowledged that my arguments had force and that my amendment should be accepted. It is extremely odd that it required a Liberal Democrat to introduce a Labour party policy whose removal requires Labour party action now.
I wonder whether anything occurred between Committee and Report to justify such action. Nothing has changed, so the only explanation that I can offer is that 1019 Ministers have been leaned on by forces higher up in the Government than they are. I cannot believe that the Labour Whip in Committee made a mistake and all the Labour members of the Committee were asleep when my amendment was voted on.
§ Mr. Ian Bruce
Does the hon. Gentleman remember that he congratulated Government Front Benchers on their actions in Committee and that they did nothing to disavow his congratulations—in fact, they appeared pleased?
§ Mr. Baker
I remember that well. Ministers and Government Back Benchers present on that occasion appeared happy with the amendment when it was made, so I cannot understand why it is now to be reversed.
If the Government intend to pursue that action, it calls into question their commitment to renewable energy. This week, £100 million was plucked out of nowhere for the coal industry, despite the fact that, as the hon. Member for South Dorset (Mr. Bruce) says, that is hardly picking a winner. A Parliamentary answer I received on 24 March tells me that £9.6 million was spent by the Government on research, development, dissemination and demonstration for the renewable energy programme in 1998–99, which is the most recent year for which figures are available. That is less than the sums spent by the Conservative Government, who regularly spent between £20 million and £25 million each year. The Labour Government have drastically cut the amount of money put into renewable energy. In fact, spending for 1998–99 was the lowest in the 10-year period covered by my question, and it was the first time that spending dropped below £10 million a year. A question mark hangs over the Government's commitment to renewable energy.
§ Mr. Bruce
The hon. Gentleman might be surprised to learn the contents of a message that I have just received about the European Commission's renewables directive. Our friends in Friends of the Earth tell me that it was released on 10 April and widely reported. Therefore, there must be an EU directive. Does the Minister for Energy and Competitiveness in Europe recognise that Friends of the Earth was right and the Government were wrong?
§ Mr. Baker
I draw two conclusions from that intervention. First, that the hon. Gentleman is closer to Friends of the Earth than he sometimes appears to be, which is a good thing, and secondly, that the Minister appears to have been briefed badly, which has not been unusual during proceedings on the Bill.
Let me return to the question of the right hon. Lady's commitment to renewable energy. In Committee, she told me that if I read "New and Renewable Energy: Prospects for the 21st Century: Conclusions in response to the public consultation", I would seethe extent to which we are moving towards fulfilling our manifesto commitments, and our commitment to ensuring a proper foundation and strong future for the renewable energy industry.Who can complain about that? Later, she told me:The Government have every intention of using the new powers to meet the declared target of 10 per cent. of renewables by 2010—but if the Government have every intention of following their own policy and doing that, what can be the objection to writing that into the Bill? That is all that we did in 1020 Committee. Is it not the truth that the Government are not really committed to that target? I ask that because the right hon. Lady added the proviso,provided that the cost to consumers—no doubt, widely drawn—is acceptable."—[Official Report, Standing Committee A,30 March 2000; c. 580.]
I suggest that the Government are only superficially committed to renewables. They are committed to sending the right message to environmental groups, to saying the right things, and to writing nice words that can be trailed out when they meet representatives of Friends of the Earth or Greenpeace, but they are not committed to delivering on the policy—quite the reverse. If they were committed to that, they would be happy for it to be written into the Bill, but they are not. The Government want to tell the green groups that they are committed to wonderful renewable energy, but they also want to be able to tell industry not to worry because there is no real target, and to give some sort of reason for reducing their commitment even further. That is a slightly dishonest position for the Government to have adopted.
The other relevant point about renewables is that, in Committee, the Government refused to accept the EU definition of renewable energy as excluding the incineration of waste. In response to a question from me, the Minister declared that a substantial amount of the renewable energy generation target—loosely defined—would be met from incineration capacity. That is the basis not for an argument for or against incineration, but for the argument that waste which is incinerated is not a renewable energy source. That is clear.
It was all very well for the Minister to criticise the hon. Member for Blaby (Mr. Robathan), saying that combined heat and power was not renewable energy, but the Government are perfectly happy to describe incineration capacity and waste burned in that way as renewable energy, which it patently is not—not least because it encourages the production of waste in the first place, which is not environmental, and because it leaves a huge toxic deposit to be disposed of. Bottom ash and fly ash are highly toxic. How can something be declared renewable when it produces such toxic waste? The Minister is all at sixes and sevens on the issue.
The reality is that the Government got it wrong and there was a mix-up in Committee. Such things happen, but the measure introduced by my amendment was directly in line with Labour party policy and with the Government's stated intentions in their own documents. We must now ask why they are removing it. I have had no proper explanation for that. Unless they can give one today, the only conclusion that any fair-minded Member can reach is that they are not really committed to that renewable target.
§ 6 pm
§ Mrs. Liddell
I, too, congratulate the hon. Member for Lewes (Mr. Baker) on the birth of his daughter. May I suggest the name Anita, after NETA—new electricity trading arrangements? Having gone through the experience that the hon. Gentleman and his wife are now going through, and knowing that they will probably have many sleepless nights, I commend to the hon. Gentleman 1021 the speeches of the hon. Member for South Dorset (Mr. Bruce). I am sure that they will be a superb antidote to insomnia.
§ Mr. Ian Bruce
I thought that the right hon. Lady was about to say that I sounded so sweet that the child would not cry when listening to one of my speeches.
§ Mrs. Liddell
Perhaps it is the obsession with marble pillars. That is an in-joke for Committee members.
It is not often that the hon. Member for Bognor Regis and Littlehampton (Mr. Gibb) gets something right, and he has got it wrong again. New clause 2 concerns the publication of information. My Department already has annual and monthly energy publications that contain the information that the new clause seeks to have published, and a great deal more beside. I commend those publications to the House. The Government will continue to communicate their energy policy through clear and timely announcements.
Is it not a measure of the bitterness among Opposition Members about the coal industry that we heard such bile about the Secretary of State's statement on Monday? It is the Government's duty, and my specific duty as the Minister with responsibility for energy, to ensure security and diversity of supply. That was something to which the previous Government paid little attention in their vendetta against the coal industry. The move that my right hon. Friend made on Monday to ensure that the management of change in the coal industry—which has gone to great lengths to improve its effectiveness and efficiency—will allow a future for an industry that the Opposition sought to destroy.
§ Mrs. Liddell
I am surprised that Liberal Democrats should attack the coal industry, particularly as the hon. Member for West Aberdeenshire and Kincardine (Sir R. Smith) represents a constituency that will directly benefit from the steps taken by my right hon. Friend the Secretary of State. I am sure that Liberal Democrats' remarks will be much reported in the communities that have suffered as a consequence of the previous Government's policy on the coal industry.
There is no reason to accede to new clause 2. The publications of the Department for Trade and Industry contain detailed and comprehensive data and statistics which underpin the analysis of UK energy within government and beyond. The sixth annual edition of the DTI's energy report was published in December, and I commend it to the hon. Member for Bognor Regis and Littlehampton—[Interruption.] He says that he has it on his desk. It would be quite useful to open it. I have many things on my desk that would occasionally come in handy if they were opened. I also have quite a few things under my desk, which I guarantee will never be opened. Copies of that publication are in the Libraries of both Houses. That gives not just a national view of energy issues, but an international view, which is particularly important in a modern and complex world.
1022 Chapter 3 of that report addresses energy policy and answers all the questions that the hon. Gentleman put; chapter 8 contains full facts and figures about electricity generation; and I suspect that the rest contains any additional information that any hon. Member might reasonably want to know about energy policy. It is available on the DTI website, or from the Stationery Office and reputable bookshops for £39.50.
§ Mrs. Liddell
The hon. Gentleman may or may not—one can never be certain—be aware of the announcement that was made by British Nuclear Fuels plc yesterday in relation to the closing date for the Magnox stations. That will be a determining factor in the future proportion of electricity generation from nuclear energy. I cannot second guess the outcome, but the Government's policy on new nuclear build is that it is for the market to come forward with its proposals. Companies may come forward with proposals for nuclear generation and they will be looked at in the usual way. At the moment, there is no suggestion that any companies are coming forward with new nuclear build, here or internationally.
§ Mr. Stunell
Does the Minister accept that, if the market comes forward with a solution that adds to the carbon dioxide burden on the atmosphere, the Government have a problem?
§ Mrs. Liddell
The Government do not have a problem, because it is for the Government to decide whether any application should go ahead. In taking a decision about the future of a specific energy proposal, we have to take into account all sorts of factors, not least our commitment to the Kyoto targets. That explanation also serves in relation to gas-fired power stations. Each proposal will be looked at on its merits. The hon. Member for Lewes referred to the Baglan bay proposal. That involves a high-tech specification, and that is one reason why the Government acceded to it. Hon. Members on both sides of the House argue effectively for gas-fired power stations. Regardless of from where the case comes, it will be looked at by the Government in some detail.
New clause 2 is unnecessary. Quite apart from the energy document to which I referred, which was published in December, there is also the Digest of United Kingdom Energy Statistics.That is not a new publication; it has been published by the Government every year for the past 50 years and it includes further information on electricity generation. All of that is supplemented by a monthly publication "Energy Trends", which is available on subscription from my Department. Any hon. Member who wished to receive it could contact the Department; perhaps we could even waive the cost.
Several points have been made about amendment No. 28, which would establish duties in relation to embedded generation and net metering. Those points have been debated in depth in Committee. Again, I must ask the House not to accept the amendment. Much embedded generation is from renewables; the Bill already acknowledges the importance of renewables. However, 1023 the measure separates supply and distribution. It places a duty on distributors to facilitate competition in generation and to develop and maintain an efficient, co-ordinated and economical system of distribution. It places a duty on the authority to promote consumer interests by encouraging effective competition.
I expect the duty to be effected through regulatory action, which will give all forms of generation, including embedded generation, a fair crack of the whip. Embedded generation should not be disadvantaged. If that means that the distributors have to provide readier access to their systems—that is the point of difficulty—and their databases, I expect regulation to ensure that that happens. However, it would not be right for consumer or environmental protection to give special advantages to embedded generation.
We have had several discussions about net metering. The hon. Member for Blaby (Mr. Robathan) takes a considerable interest in that, and I believe that he genuinely misunderstands the position. The Bill is neutral on net metering, which is one method of supporting embedded generation. I do not believe that it is necessarily the right method because it implies a cross-subsidy. It would require suppliers to pay more for electricity supplied through embedded generation than it was worth to them. It would relieve embedded generators of the cost of maintaining the transmission and distribution networks. Prices for other customers would have to reflect that.
Our policy is—to use a horrible phrase—to try to provide a level playing field, not to favour one system of generation over another. The hon. Member for Bognor Regis and Littlehampton challenged us about that when we considered gas-fired generation.
§ Mr. Robathan
I did not serve on the Committee that considered the Bill and held lengthy discussions on the subject. However, the Secretary of State's announcement of £100 million for the coal industry does not constitute providing a level playing field. If we genuinely want to encourage renewables, they need a boost. I am all for level playing fields in commerce, but sometimes a sector needs particular encouragement. For good reasons, renewables need a boost, and I am genuinely disappointed that the Government are not using the Bill to do that.
§ Mrs. Liddell
I am sorry that the hon. Gentleman is disappointed. He misunderstands the Bill—I hope not deliberately. Through the 10 per cent. obligation, the Bill will take renewables from the margins and make them mainstream. However, I shall consider that when we discuss the next amendment.
Our targets for renewables are clear, and clauses 60 to 65 cater for them well. The Government and the regulator acknowledge that further regulatory action may be required to ensure that embedded generation can thrive. That is why the working group to which my hon. Friend the Member for Milton Keynes, North-East (Mr. White) referred, which comprises representatives of the Office of Gas and Electricity Markets, the Government and the industry, is examining all the issues that surround embedded generation. It will report before the end of the year, and the Government will address any specific problems that it identifies.
1024 The hon. Member for Bognor Regis and Littlehampton wanted the working group to report before the other place considered the Bill. That shows that the Conservative party is not committed to achieving a way forward for embedded generation. It is important to get things right. The Bill allows the regulator to take action when necessary to assist embedded generation.
Through the working group and other initiatives, the Department is taking steps to remove some confusion about the connection of small-scale photovoltaic generators to the electricity distribution system. That has resulted in a draft engineering recommendation—G77—which provides technical guidelines to the industry on the connection of small PV systems. On 2 May, I shall address the photovoltaics conference in Glasgow, where I shall make that point. There are difficulties with photovoltaics; they are expensive. If we followed the route that some pressure groups propose, they would become so expensive that their price would run the risk of turning the public against renewables. We must take the public with us on renewables.
The hon. Member for West Aberdeenshire and Kincardine mentioned offshore wind. One of the problems of onshore wind is the difficulty of convincing people to have generators in their gardens. I accept the hon. Gentleman's point that offshore wind offers a new opportunity to the offshore industry. However, I am intrigued by his view that the oil industry is in the doldrums. I fail to understand how that can be true when oil costs $23 a barrel. I support greater activity from the oil and gas industries, not least because of the increase in the oil price, but also because of the Secretary of State's proposal to lift the restricted consents policy.
§ Sir Robert Smith
I am disappointed that a Minister who should know more about the industry believes that a decision on Monday will affect all investment decisions in the industry by Wednesday. The industry requires long-term confidence in price and in the tax regime. The Chancellor created instability in the tax regime. Fortunately, the Government have put that behind them. The Minister could therefore have been more understanding about the difficulties in the industry and taken the constructive approach that the amendments propose rather than leading us off at a tangent.
§ Mrs. Liddell
Earlier, the hon. Gentleman asked about offshore wind. If he did not want an answer, he could have saved the time of the House.
As chairman of Pilot, the second generation of the oil and gas industry task force, I can state that we have been consulting the industry for some time about future developments in the North sea, especially in relation to gas. The industry has been vociferous in asking for the lifting of the restricted gas consents policy. We hope that that will lead to developments. The hon. Member for West Aberdeenshire and Kincardine should be aware of the Government's interest in progress in the Clair field, which could help onshore fabrication.
The hon. Member for Lewes has had his fun at the expense of Government amendment No. 3. I do not blame him; I would have probably done the same in his position. Given that the hon. Member for Epping Forest 1025 (Mrs. Laing) has excellent taste in Charles Rennie Mackintosh jewellery, she will recognise the sentiment that there is hope in honest error; there is none in the icy perfection of the mere stylist. Honest error can occur.
I concede that perhaps honest error led the hon. Member for Lewes to table amendments Nos. 235 and 236 and to omit to turn up in Committee to move them. Everybody makes mistakes. The hon. Gentleman made some valid points in Committee, and I replied to them—but amendment No. 28 was ill thought out and would not achieve his intention.
The Bill gives the Secretary of State the power to place obligations on electricity suppliers. It sets the framework for those obligations. Indeed, it takes renewables from the margins to the mainstream. However, I continue to believe that it should not prescribe the obligations. In asking the House to accept our amendment, I make one thing perfectly clear for the sake of the record and for those listening to the debate: there is no question of the Government going back on our commitment to produce 5 per cent. of electricity from renewable sources by 2005 and 10 per cent. by 2010, but all of us who are interested in promoting generation from renewables must take the cost to consumers into account. The only issue before us is whether it is right to include those figures in the Bill.
§ Mrs. Liddell
No, I said 5 per cent. by 2005 and 10 per cent. by 2010.
We have made it plain that we intend to consult further on how those powers will be exercised. They represent a big move forward and it is important that we get it right. That requires consultation.
§ Mr. Baker
I am trying to pin down the Government's position. If they remain committed to those targets, although one already seems to have slipped from 2003—[Interruption.] The Government's paper refers to 2003, but the target is now 2005. If they remain committed to those targets, why are they not prepared to put them in the Bill?
§ Mrs. Liddell
I hate to repeat myself, but it is not appropriate to include the targets because we need to consult. We have to ensure that we take the industry and consumers with us, and the provision that the hon. Gentleman sought to insert in Committee would have pre-empted that consultation. I do not know Liberal Democrat policy on listening to people, but Labour Members believe in listening. We need to consult both on the profile of the obligation that we will impose so as to reach our buy-out mechanism target, and on the cost to consumers of achieving that obligation. The buy-out mechanism will considerably assist the renewables industry, and I contend that not allowing consultation on it would be contrary to the hon. Gentleman's aims.
§ Mrs. Liddell
As far as any human being can, yes. The Government are committed to ensuring that 10 per cent. 1026 of electricity should be generated from renewables by 2010 and, to ensure that that is not a short-term blip, we intend that to continue to 2025. I hope that by that time, renewables that are far from the market will be closer to it. The proportion of renewables going into electricity generation could increase, but we can ensure that it does by getting the mechanisms right. However, that is not straightforward. We can be sure of achieving it only if we listen closely to the responses from the wide body of expertise out there in the electricity industry, including the renewables industry, and the views of consumers, who will pay for that electricity through their bills. The provision that the Government amendment will remove is wrong in principle. It is beside the point that the drafting also happens to be flawed; it has no place in the Bill.
Now I shall respond to the points on research and development expenditure made by the hon. Member for Lewes. The estimated outturn in 1999–2000 was £10.5 million. We have budgeted for £14 million in 2000–01 and for £18 million next year. That is a considerable increase on the figures that he suggested.
Conservative Members referred to our ability to meet our emissions targets. The Government are well on course to meet the Rio target to keep CO2 emissions within their 1990 levels, and the Kyoto target of reducing greenhouse gases by 12.5 per cent. by 2012. Power station emissions decreased by more than a quarter between 1990 and 1999. On a temperature-corrected basis, emissions fell by 7 per cent. between 1990 and 1999. Overall emissions from electricity generation have decreased by 28.5 per cent. The hon. Member for Bognor Regis and Littlehampton shadows the energy brief and it is important for him to take into account the fact that energy is not the only cause of emissions problems. Transport emissions must be kept under control, for example, and that is taken fully into account in the climate change—
§ Mr. Gibb
The right hon. Lady will be aware that the CO2 advantages of the nuclear component of our electricity industry are equivalent to taking half all cars and vehicles off the roads. If she intended to meet the CO2 emission target by dealing with cars and lorries, we would be talking about considerable remedies on the transport side.
§ Mrs. Liddell
I think that the hon. Gentleman does not deliberately misunderstand, but I cannot always be sure. Emissions cover energy and transport. He should read the climate change document published a month ago by my Department and the Department of the Environment, Transport and the Regions. This country's draft climate change strategy takes into account not only transport and energy, but energy efficiency, which is another key area covered in the Bill.
In an exchange with the hon. Member for Hazel Grove (Mr. Stunell), the hon. Gentleman asked about the status of the duty to promote competition. It is simply not the case that the authority's duty has been demoted. Indeed, the Bill makes it clear that the consumer benefits are to be achieved through effective competition, wherever appropriate. Competition is difficult to achieve in some examples, but we are trying to generate much more in respect of the fuel-poor and those who have pre-payment meters.
The hon. Member for Blaby asked about the photovoltaics issues raised by Dr. Jeremy Leggett, Greenpeace and Forum for the Future. I have answered his 1027 points broadly, but he may be interested in my Department' s more general work on photovoltaics. There are three major new initiatives, and the Department of Trade and Industry is contributing some £5 million towards a total estimated investment of £15 million. There is a call for PV systems proposals and components, a domestic PV systems field trial for a minimum of 100 homes, and a demo scheme for large-scale building-integrated photovoltaics. The 50,000 roof programme, which is always used in relation to photovoltaics, would cost the taxpayer £250 million and generate less than half of one tenth of 1 per cent. of the UK's current electricity demand.
The House should resist new clause 2 and support Government amendment No. 3, as we must ensure that we have a coherent energy policy that takes into account the needs of not only existing electricity generation but forthcoming electricity generation. Some mischief has been made concerning the Government's commitment to renewables, but that does the renewables industry no service at all, and also ignores its views. We want to put in place a framework that will move it from the margins to the mainstream.
§ Mr. Gibb
That was a disappointing debate. We tabled new clause 2 to elicit from the Minister's own mouth a description of the Government's overall energy strategy. It would have taken her no more than a few minutes to precis their energy policy—if, indeed, there is a long-term strategic objective—but it is clear that there is no long-term energy strategy. As my hon. Friend the Member for Tiverton and Honiton (Mrs. Browning), the shadow Secretary of State, said on Monday, a piecemeal policy responds to day-to-day crises and events.
The Minister was wrong to say that there is a clear energy policy for the nuclear industry. Her predictable response to my question was to refer it back to the industry. Nuclear power represents 30 per cent. of energy output. It is no good saying that reducing CO2 is not just about energy output, but about transportation. If the 30 per cent. nuclear component produced vehicle-type emissions, half the cars in this country would have to be taken off the road. If she is saying that when nuclear power stations are decommissioned she can make up for their lack of CO2 emissions through transport policies, she will have to have a hugely draconian policy on transportation.
§ Mrs. Liddell
I sometimes wonder whether the hon. Gentleman listens to what I say. I pointed out that a wide range of issues relate to emissions and affect our CO2 targets. I get the impression that the hon. Gentleman, who is a committed, right-wing, free marketeer, is now backing off from the use of market mechanisms to determine future generation. Perhaps he should make it clear whether that is Conservative policy.
§ Mr. Gibb
I should be delighted to make that clear. The market mechanism is fine, except that the previous Conservative Government and this Government have signed up to international agreements to reduce CO2 emissions. They are an interference in the market mechanism. To enable those targets to be met, the 1028 Government must inevitably interfere in the market to encourage or nudge it to deliver what they have signed up to. If there is no nudging, there is no certainty that the targets will be met. They could be met, but there is no certainty that the market will deliver them, because this is an artificial constraint on the market mechanism.
The Government are not fulfilling their duty to explain what will happen in 2012 and beyond as Magnox stations are decommissioned. This is an important point, because there is a genuine concern about what will happen. The Minister has not done herself any favours by failing to set out in straightforward terms what the Government intend to replace nuclear power with. If they are saying that energy efficiency will fill the gap and will make up for 30 per cent. of energy production, and that nuclear power stations will be replaced by gas-fired power stations, there will be a colossal increase in CO2 emissions. It is not good enough for the Minister to say that that can be dealt with by reducing transportation a little and by energy efficiency measures, because they will not be adequate to deal with the increase in CO2 caused by the decommissioning of nuclear power stations.
My hon. Friend the Member for Blaby (Mr. Robathan) expressed his disappointment at the lack of Government commitment to combined heat and power, which is important because its operation is equivalent to reducing CO2 emissions by 86 per cent. It not only produces electricity from gas, which is 50 per cent. more efficient than coal or oil as regards CO2 emissions, but it avoids the need to use other electricity sources to heat greenhouses, factories or homes.
§ The Minister for Competition and Consumer Affairs (Dr. Kim Howells)
I have a great deal of sympathy with some of the points that the hon. Gentleman makes, but I am intrigued to know whether, if a future Government decided to build more nuclear power stations, Bognor and Littlehampton would be a suitable spot to construct one. If not, why not?
§ Mr. Gibb
The Minister is going into planning issues. Places around the country already have nuclear power stations, and sites are available there, especially where plants are being decommissioned. That is an issue for the Government. They must address these concerns, and it is no good throwing them back at the Opposition.
§ Mr. Ian Bruce
I have had a long interest in nuclear power stations, and I can assure my hon. Friend that I have seen all the plans of the sites where people want to put additional nuclear power stations, and his constituency does not feature among them.
§ Mr. Gibb
I am grateful to my hon. Friend for that intervention.
My hon. Friend the Member for Blaby said that it would be wrong not to require electricity companies to purchase surplus electricity from households or small businesses that has been generated by photovoltaic energy, combined heat and power, or wind. The headquarters of The Body Shop in Littlehampton has a wind-turbine generator, which generates much of the power for the company's operations. What is wrong with that? The Minister for Competition and Consumer Affairs said in Committee that forcing the electricity industry to 1029 buy back surplus electricity would be like requiring Tesco to purchase the lettuces that he grows on his allotment. There is a difference between his lettuces and electricity, because his lettuces wilt over time but electricity is an homogenous product which lasts. It is a fungible asset, which can be sent back down the wires with no deterioration in quality.
§ Mr. Robathan
The point about the wind-turbine generator at The Body Shop is that people should be encouraged to install small-scale renewable plants—wind-generated or whatever—through net metering, because it will remove the costs. The Government seem to have ignored that. They say that we do not understand, but they seem to have missed the point.
§ Mr. Gibb
My hon. Friend makes a valid point, which I suspect that I can answer. The Government do not have an overall, long-term, strategic energy policy. They merely respond to day-to-day crises and to internal Labour party politics. That was the whole basis of the energy White Paper published in October 1998.
My hon. Friend the Member for Blaby also made the important point, which had not occurred to me, that the new clause would enable the public to assess the workability of the climate change levy, and to see how much damage it is doing to British industry and to the aims and objects of the levy. He also suggested that the Government were resisting the Liberal Democrat amendment because they were concerned that they could face court action if they failed to deliver on their manifesto promise. Perhaps we should propose that all Labour manifesto promises be put in amendments to Bills. I should like to suggest an amendment to the Finance Bill about the Government not raising taxes, as the Labour party promised time after time before the election.
I was concerned about the right hon. Lady's statement that the Government's target was that 5 per cent. of Britain's electricity requirements would be met from renewables by 2005, not 2003. My memory of the renewable energy consultation document is that the target was 2003, not 2005. [Interruption.] I am grateful for sedentary confirmation of that by the hon. Member for Lewes (Mr. Baker).
§ Mr. Gibb
It does help me, because it is consistent with the target that the Government have published in their consultation documents. I am grateful to the right hon. Lady for that confirmation.
The hon. Member for Lewes made the obvious point, but made it very well, that the phrase in the Liberal Democrat amendment was lifted from the renewable energy consultation document. It goes to show how meaningless are the Government's promises if they are not prepared to put them into the legislation when it is proposed and passed by the Standing Committee.
This has been a disappointing debate. It was an opportunity for the Government to set out in five or 10 minutes the broad, general thrust of their energy policy. It is a lost opportunity, and it goes to show how important the new clause is, because it would have required the Government to publish details of their energy policy. I am disappointed that the Government will not accept the new clause. However, given that we have had a debate, albeit disappointing, I beg to ask leave to withdraw the motion.
§ Motion and clause, by leave, withdrawn.