§ Motion made, and Question proposed, That this House do now adjourn.—[Mr. Ainger.]
10.40 pm§ Dr. Alan Whitehead (Southampton, Test)I want to put to the House tonight a straightforward and relatively simple argument about the way we live now and the future of our energy supplies.
The way we live now is straightforward to describe. Some 90 per cent. of us live in urban areas—that is, in built-up areas of more than 10,000 people. We are one of the most urbanised countries in the western world. We got into that position as a result of the transportability of energy supplies, which allowed the urban areas to which we were moving to be powered.
That urban growth has been supported all along by more sophisticated methods of energy supply. At most stages in the advance of that sophistication, the means to transport energy from the large centres of energy production to the large centres of consumption—domestic or industrial—were developed by non-market means. The national grid, the national gas pipelines, the road system and much of the modern railway system were all integral to the ability to deliver that energy over substantial distances. All were developed by non-market means, usually through some form of direct or indirect state assistance.
As a result, energy in huge quantities flows through these delivery systems, making it possible to service our grossly over-centralised urban way of life. That is also why this energy is cheap: the development costs of delivery have been written off or discounted, and the sheer volume of supply permits economy of scale.
So the next question is, what about the future of our energy supplies? That looks decidedly worrying. In short, we cannot go on with this system. It is not sustainable, for three reasons.
First, it is estimated that by 2050 or so the world is likely to run out of mineral energy supplies. We might last a bit longer if we countenanced a nuclear-powered future, but we must remember that that, too, would be dependent on mineral supplies, and would also leave behind an environmental residue that would be impossible to sustain.
Secondly, even if we could use all the mineral energy supplies known to us, or even find some more, the act of burning them could not be sustained by the planet in terms of the CO2 emissions that that burning would generate.
Thirdly, well before 2050, the diminishing availability of what is left of mineral energy supplies will ensure one of two things—and probably will ensure both. Either the price will rise dramatically, or there will be conflict over security of supply. The United Kingdom is poorly placed to secure its own supplies. Indeed, the recent performance and innovation unit report on energy strategy suggests that, by the middle of that run-in period—exactly when conflicts on security are likely to become intense—we will be dependent on gas for 70 per cent. of our energy. It also suggests that 90 per cent. of that gas will have to be imported, probably from parts of the world that even now are not exactly stable.
757 Before 2050, therefore, we will have to have in place, an energy economy that delivers to our urban areas supplies of energy comparable with those of today, but predominantly from non-mineral sources. The opportunity is there, in principle, and renewables, of course, are secure. They can be obtained from all around us, and not by means of the transport of liquid fuel over vast distances. However, it is literally a race against time for our urban areas, and at present we are not winning it.
As the saying goes, what is to be done? Much is being done, I know, by the Government. We have a climate change levy, we have a renewables obligation, and we have a target for the percentage of renewables as the source of electricity by 2010. At present the target is set at 10 per cent., but the PIU report suggests a target of 20 per cent. by 2020.
That is good progress. Many of the mechanisms are in place, but we are not there yet. We will have difficulty in obtaining the delivery of 10 per cent. of energy from renewables by 2010, let alone the more ambitious target of 20 per cent. by 2020 if the PIU report is accepted. Moreover, we have to set that against the argument that I have advanced about the availability and security of mass energy supplies, and against the recommendations of the royal commission on environmental pollution. The commission stated that, in order to have a serious chance of stabilizing our atmosphere against global warming in the long term, we must reduce our CO2 emissions by 60 per cent. by 2050.
This suggests for both reasons that the 20 per cent. target by 2020 is probably modest and that we should perhaps be looking at 35 per cent. by 2030, 50 per cent. by 2040 and 70 per cent. or more by 2050. That looks logical so far, but two powerful objections have been raised against it.
First, it is suggested that we simply cannot generate enough energy from renewable sources to substitute the quantities that we are consuming from mineral sources. A renewables energy economy, it is claimed, would return us to the age of the handcart. That is simply not true. The sun provides 15,000 times the energy use of the planet's human population every year, even if we discount the effect of that energy tied up in plant growth or the effect of tides and wind. The question is how to get hold of this energy, how to deliver it, and at what cost.
Secondly, it is suggested that even if the energy were available, the logistics of installing the capacity to generate it would be unacceptable in terms of how our landscape would look and what we would have to put up with. For example, figures have been quoted showing that to replace a medium-sized nuclear power station it would be necessary to cover an area the size of East Sussex with the vegetation necessary to fuel the equivalent biomass power stations. Alternatively, we would have to cover the landscape with wind farms or much of our coastline with wave and tidal power plants. If the choice were between no power and power derived by these means, I guess that some people might be persuaded that covering Sussex with elephant grass or coppiced willow would not be a bad thing, but there is some substance in the complaint. We know, for example, that the siting of onshore wind farms is running into serious planning problems.
The second objection highlights an aspect of our future energy policy that has been neglected. The planning of the infrastructure of future energy supply 758 will be as important as what it consists of or how much it costs. Indeed, if the prognoses about the future of mineral energy supplies are right, planning probably will be the main issue, precisely because renewable energy is all around us. We will be looking at a different kind of energy economy—not one that unloads large quantities of liquid stored energy in one place or pipes it ashore in one place, but an economy of thousands of energy sources jointly contributing to the provision of energy in situ or exporting from a localised source to the national grid.
What are we doing to plan the emergence of such an economy? We are, it is true, bending the market with the exemption of renewables from the climate change levy. That will, we hope, tilt the market towards them, as will the renewables obligation. Within that, we appear to be standing by the market to mature the renewable technologies that will—eventually, we hope—provide most of our energy supplies. All this is supposed to happen in less than 50 years, when we are still relying for most of our current energy supplies on the generation—even in nuclear energy—of energy that derives from steam technology, a method that is 200 years old.
We say that we will not pick winners among renewables, and, in effect, that within the overall tilt towards renewables that the levy and the obligation provides, we will rely on the market to bring particular renewables to market. It will make them work when they are market-ready and the volume of supply drives costs down, but the market will not, I fear, bring the range of renewables necessary to market if it is left to its own devices, any more than it has brought previous energy technologies to market.
Here is what Anthony Giddens, no less, has to say about markets. He says it in a book entitled, coincidentally, "The Third Way and its Critics", but that should not be held against the quote. He says:
Market economies generate externalities, whose social implications have to be dealt with by other means. Environmental damage, for instance, can't be dealt with purely by market mechanisms".What we are doing by not picking winners is exactly that—we are not dealing with the externalities of the market by other means. For we are envisaging a renewables expansion that essentially picks where renewables are to be generated from—that is, from rural areas, not the urban areas in which 90 per cent. of us live.We will, we hope, generate power from wind farms, from tidal power and from biomass—all very important technologies and potential winners, but only in combination with other forms of renewables that we can obtain from urban sources, which on present logic we are not going to do. That is strange as we already deal with, and are considering dealing more rigorously with, another market-led commodity that often pops up in the wrong parts of the country and at the wrong price: housing.
We are in danger of bypassing the huge energy resource represented by urban generation, of which there could be two kinds—or, more precisely, two and half kinds. The first two are fully renewable and the half is almost renewable.
The first two derive from the sun, which shines on every roof in every town. Most houses could supply up to half their internal energy requirements from installed 759 photovoltaics and/or from evacuated-tube solar water heating. The half is the potential of combined heat and power, which, increasingly, can be installed locally or even, with sterling engine technology, house by house. Of course, I realise that CHP is not strictly a renewable source—although it may be, depending on the fuel that is used—but it represents, as the PIU report notes, a low-cost option for carbon abatement.
For example, small CHP plants on landlocked sites behind a close of houses have the proven ability to supply all those houses with heat and power and to export some energy to the profit of the close. The capacity is immense.
Neither solar technology nor CHP would consume Sussex. They would not keep the population awake at night, nor would they block our estuaries or clutter our coastlines; yet because wind and biomass, for example, are currently deemed cheaper to bring to market, or because the market in energy pricing is stifling the development of CHP, I suspect that we shall produce a lopsided and possibly publicly unacceptable future for renewable development.
We can and should be able to consider non-market mechanisms, which are not hugely expensive, to right the balance of renewable development between rural and urban supply. There are several such mechanisms. I shall describe two of them.
We might introduce building regulations for new housing that require each new house to generate a stated percentage of its likely energy consumption from its own construction. That would mean that builders had the option, in essence, to embed photovoltaics or to power an estate development with CHP. The Government have recently, with little fanfare, amended the building regulations to require environmentally friendly boiler design and low emissivity glass in double glazing. Between them, those changes will save almost as much CO2 as the whole of the 10-year transport plan. In principle, it is not difficult to do.
We might also enable local authorities or community groups to become legal energy generators of CHP and allow local authorities to set up, oversee and trade in energy through local CHP plants. In Southampton, there is currently a proposal, supported by a single regeneration budget grant, for 3,000 homes in the west of the city to be heated by a CHP plant, but the city requires a commercial company to make the project work. A small legislative change and some priming assistance would make a huge difference and offer a window for the development of local and micro CHP.
I know that the Government are committed to winning the battle of climate change in the UK. I know, too, that they are committed to producing an energy economy that is a key instrument in winning that battle. That is why they have my full support for that, among other aims. However, I do not want to have to tell my grandchildren in 30 years that we could have done something about climate change but we did not because the means of doing so were contrary to market conditions. I should acknowledge that I stole that line from the distinguished writer on energy matters, Dr. Hermann Scheer.
760 Dr. Scheer is right, however. If we rely on the market, we shall not gain from the cities and towns in which we live the immense benefit of providing our heat and power from the resources around us. That could be a disaster for all of us, whether we are urban or rural dwellers. With some relatively straightforward instruments, we can put it right.
§ The Minister for Employment Relations, Industry and the Regions (Alan Johnson)I congratulate my hon. Friend the Member for Southampton, Test (Dr. Whitehead) on securing the debate. He has a long-standing interest in renewable energy, especially solar power—an issue on which, as we have just heard, he speaks with great expertise, and perhaps with rather more expertise than me. My hon. Friend the Minister for Energy and Construction cannot be here tonight, but I will do my best to respond for the Government.
We are at a critical stage in the development of renewable energy. As my hon. Friend says, the Government have set ambitious targets for renewables. Our current target nationally is that, by 2010, 10 per cent. of the United Kingdom's electricity needs will be supplied from sources that are eligible for the renewables obligation.
We introduced the obligation on 1 April this year and it sets out a secure basis for the development of renewables by providing a market for renewable energy for the next quarter of a century. The value of support provided to the UK renewable energy industry through the obligation is estimated to reach £1 billion a year by 2010—a massive commitment by any standards.
Although the obligation is helping industry to take forward renewable technologies that are close to being commercially competitive—for example, onshore wind generation—we are also putting in place programmes of support for emerging technologies. The Government have committed nearly £250 million in capital grants over the next three years, together with £19 million a year for renewables research and development, mainly focused on offshore wind generation, energy crops and solar photovoltaics.
I am well aware that the 10 per cent. target is challenging and that we are starting from a low base—at present, less than 3 per cent. of our electricity is generated from renewables—but the Government are determined to achieve the target. The 10 per cent. target would represent an annual saving of 2.5 million tonnes of carbon emissions—a very worthwhile contribution to the UK climate change programme and to meeting our Kyoto target—but the 2010 target is not the end of the story by any means.
As my hon. Friend said, in June last year, the Prime Minister asked the Cabinet Office performance and innovation unit to carry out a major review of strategic energy policy issues for Great Britain up to 2050. The PIU energy report was published in February and contained recommendations about bringing environmental policy to the heart of energy policy, including setting a 20 per cent. renewables target for 2020, but the energy review also stressed the importance of maintaining security and keeping options open.
The Government welcomed the report as a valuable input to necessary wider debate on energy and have been undertaking a consultation with energy stakeholders 761 and the public during the summer. That will lead to an energy White Paper, which will be published at the start of the new year. I cannot be expected this evening to speculate about the White Paper's contents, except to say that it will address the role of renewables into the future.
As my hon. Friend says, solar photovoltaic technology is perhaps the most suitable renewable for use in urban areas because it is clean, silent, can be mounted on buildings and requires no extra land area. It also generates electricity at point of use, thus avoiding losses through the transmission and distribution network. It is also largely maintenance free and can be integrated into roofs, cladding and atriums, making buildings more architecturally attractive.
The Department of Trade and Industry has supported the development of photovoltaics—PV—through a number of initiatives: the research and development programme, the domestic and large-scale field trials, the major PV demonstration programme and some parallel initiatives. For a number of years, the DTI has had a modest PV research and development programme, which has concentrated on addressing some of the technical and non-technical barriers to the deployment of PV, such as the lack of objective information. More recently, the programme has begun to support the development of components and systems by UK industry, and improvements in the costs and performance of PV cells and modules.
The research and development programme also involves putting about £10 million over three to four years into a series of domestic and large-scale field trials. The domestic field trial is supporting 30 projects in social and private housing schemes, new build and refurbishment, totalling about 500 homes and 750 kW peak capacity. The large-scale field trial for public buildings is supporting about 15 projects in buildings, such as council offices, sports stadiums, visitor and leisure centres, schools and universities.
In March, my right hon. Friend the Secretary of State for Trade and Industry launched the £20 million first phase of the major PV demonstration programme, which aims to install PV systems on 3,000 dwellings and 140 non-residential buildings within three years, with an average grant of 50 per cent. After the first six months, £2 million of grants had been allocated and the first dozen installations completed. If the first phase is successful in bringing down costs and building a UK industry, it is expected that it will expand into a full 10-year, £150 million programme, with a target of 70,000 to 100,000 roofs.
My hon. Friend also raised the potential of combined heat and power. The Government share his view of its significance. CHP has an important role to play in meeting our climate change goals, cutting fuel poverty and increasing the diversity and competitiveness of our energy supply, bringing considerable economic and environmental benefits. As with electricity generated from renewable sources, the Government have ambitious targets for combined heat and power. We remain committed to our target of at least 10,000 MW of good-quality CHP by 2010. Again, that is a challenging target—the current capacity is around 4,700 MW on around 1,550 sites, representing about 6 per cent. of electricity generated in the UK. With continued 762 monitoring, support measures and by taking into account the views of the CHP industry, however, that target can be achieved.
Both solar PV and combined heat and power are being encouraged by the Government and are playing a part in meeting our targets. However, achievement of our targets for renewables will require a step change in the development of renewables. That requires us to realise the potential of all our sources of renewable energy—we cannot rely on any one source. The renewables obligation is a market-led measure and will remain so. We have no plans to attempt to determine the contribution of particular forms of technology. As hon. Members will be aware, different renewable technologies are at different stages of development. Currently, the largest single contribution of electricity from renewable sources comes from hydroelectricity.
Moving a little ahead, in the period up to 2010 the major expansion is likely to come from wind power. Onshore wind is a proven technology and is close to being commercially competitive. I acknowledge concerns about individual projects but each project is subject to planning consents, and environmental and other considerations are taken into account on a case-by-case basis. On Monday, my hon. Friend the Minister for Energy and Construction opened Bowbeat wind farm near Peebles, the largest in Scotland and one where local interests have been very supportive. The Minister will shortly be launching a consultation paper setting out options for putting in place a robust framework to make sure that we make the most of the UK's rich potential in terms of offshore wind. Last month, he announced the first two grants for two offshore wind farms. A grant of £10 million went to each of the two projects: National Wind Power's North Hoyle Project off the coast of north Wales, and PowerGen's Scroby Sands wind farm off the Lincolnshire coast. Together, those projects have the capacity to provide 100,000 homes with clean electricity, and another eight applications are in the pipeline.
We cannot therefore afford to ignore the contribution of other renewable technologies if we are to achieve the increase in renewables-based electricity that we want. Looking further into the future, wave and tidal power have the potential to make a significant contribution, although the various forms of technology have yet to be proven commercially.
The renewables sector is doubly important for the UK, not only because of the urgent need for offshore renewable energy to meet targets, but as a tremendous opportunity for UK industry. Increased activity brings opportunities for jobs and investment.
The UK developed an immensely profitable supply chain industry for oil and gas, and we now have the same opportunity to develop a world-class UK renewables industry and supply chain that will create large numbers of jobs in this country. Renewables UK, the new organisation that I set up earlier this year, is working hard to catalyse change. It aims to create renewables jobs and bring renewables investment to the UK. The unit's overall aim is to maximise UK jobs and investment in renewables both domestically and worldwide by promoting enterprise, innovation and 763 competitiveness in the UK supply chain. That applies as much to solar photovoltaics as it does to other forms of technology.
Several of my ministerial colleagues have met the larger companies from the United States, Japan and Europe, and I am happy to say that there are signs that one or two of them may be interested in setting up small operations in the UK. However, that is likely to happen in the longer term, as most of the bigger players would wish to see a market of 30 MW a year before committing themselves to assembly plants here.
The total installed capacity in the UK by 2005 is unlikely to be more than 20 MW. However, we are working with companies under the research and development programme to develop building-integrated solar products such as Intersolar, Marley and Pluswall. We are also attempting to encourage electronics companies to get involved in the manufacture of charge controllers. The installed capacity of solar photovoltaics in the UK at the end of 2001 was 2.7 MW, so the main contribution of solar photovoltaics to renewable electricity is likely to come well beyond 2010.
My hon. Friend also mentioned the problems associated with planning consents for renewables, especially wind farms. I share his concerns. Department of Trade and Industry officials are currently in consultation with those of the Office of the Deputy Prime Minister on revisions to the planning policy guidance note that sets out policy on development plans for renewable energy projects. Our aim is to update and improve the planning guidance for local planning authorities, so that it aids their decision-making on applications for renewable energy projects. My right hon. Friend the Deputy Prime Minister will go out to a 764 full three-month public consultation with planning policy statement 22 on renewable energy around the turn of the year.
I should like to close my remarks by emphasising the importance of renewable energy and by again thanking my hon. Friend for using this debate to enable this important issue to be aired. Renewable energy contributes to all four strands of our energy policy. First, it contributes to security of supply, which, in today's society, is fundamental. Our industries and, indeed, our homes are dependent on reliable energy supplies. Secondly, it provides competitively priced affordable energy for business and individuals. Thirdly, it gives protection for the most vulnerable by first reducing and then ending fuel poverty. Finally, it reduces the impact of fossil fuels on the environment where renewables play perhaps their most essential role.
I hope that I have demonstrated that the Government are committed to renewable energy. This is an exciting time for renewables and it presents us all—government at both national and local level, and industry—with opportunities and with challenges. What is going on with solar photovoltaics and with combined heat and power are good illustrations of the challenges ahead and of what can be achieved. However, they are not the only examples, or of course the only renewables. Our task in meeting the demanding targets that we have set requires the vision to carry forward our objectives and to turn potential into reality. There are many barriers in our path, but the rewards are immense: reliable sources of clean energy, a reduction in carbon emissions, and a developing renewables industry. We all need to work together to lead the way into a renewables-based future.
§ Question put and agreed to.
§ Adjourned accordingly at nine minutes past Eleven o 'clock.