§ (Seventh Day)
§ Tuesday, 10 February 2004.
§ The Committee met at half past three of the clock.
§ [The Deputy Chairman of Committees (Lord Lyell) in the Chair.]
§ The Deputy Chairman of Committees (Lord Lyell)
I remind the Committee that if there is a Division in the Chamber we shall adjourn for 10 minutes. The usual rules for a Committee in the Chamber apply.
§ Clause 90 [Other amendments consequential on Chapter 1 of Part 2]:
Baroness Miller of Chilthorne Domer moved Amendment No. 109C:
Page 73, line 37, at end insert—
( ) In section 8 of the Food and Environment Protection Act 1985 (c. 48) (licences), before subsection (1) insert—
§ The noble Baroness said: I start from where we left off on the previous day in Grand Committee. The Minister was giving me a helpful reply to Amendment No. 109C. For the record and so that the matter is more comprehensible, I shall speak briefly to it again.
Amendment No. 109C would ensure that the rules are developed correctly for making and considering applications under the Food and Environment Protection Act 1985 that relate to offshore renewable energy installations. At the same time, I shall speak to Amendment No. 109D, which would give other competent authorities the opportunity to submit representations to a committee constituted under Schedule 3 of the Food and Environment Protection Act 1985.
As the Energy Bill amends the Electricity Act 1989, it is not entirely clear exactly what status actions will have under the Food and Environment Protection Act and whether all the provisions that we are considering 484GC in this Bill will apply to the Food and Environment Protection Act. I believe that the Minister was saying that his department would consider regulations during this year. I look forward to hearing his explanation. I beg to move.
§ Lord Williams of Elvel
I apologise to the Committee for intervening at a late stage in the Committee's deliberations, but I have a serious reservation about Section 36 and Schedule 8 of the Electricity Act 1989, which I shall explain.
§ [The Sitting was suspended for a Division in the House from 3.33 p.m. to 3.43 p.m.]
§ Lord Williams of Elvel
Before I was interrupted, I was about to say that the amendment moved by the noble Baroness rightly referred to Sections 36 and 37 of the Electricity Act 1989. I support what the noble Baroness said, but I would like to go a little further. That Bill was passed when I sat on the Opposition Front Benches. I opposed and still oppose this particular section.
I shall be brief. Section 36, accompanied by Schedule 8, of the Electricity Act allows the Secretary of State to overrule almost every planning decision, when an installation with an installed capacity of 50 megawatts is presented to him or her. I do not need to go on about mid-Wales and wind farms, but we had a case where the local council, which is entitled under Schedule 8 to require a public inquiry, voted—for all sorts of reasons that I will not go into now, but which are quite obvious if one knows Ceredigion—not to demand a public inquiry on an enormous installation in the Cambrian hills. The Minister of Energy, as he was then, overrode any objections from the National Assembly for Wales, which has no powers to require a public inquiry, and simply passed the matter.
If Clause 90 in the present Bill sets out to regulate the conditions under which offshore installations should be regulated, I do not see why—failing repeal, which I would like, of Section 36 of the Electricity Act and Schedule 8—that should not become part of this Bill for onshore installations as well as offshore installations.
§ 3.45 p.m.
§ Lord Dixon-Smith
The noble Lord, Lord Williams of Elvel, has, in a sense, taken my subject. I also have a real concern about Sections 36 and 37 of the Electricity Act 1989, but for a slightly different reason. I came to it almost by accident because I happened to read the Planning and Compulsory Purchase Bill at precisely the same time. If one reads Clause 150 of the Bill that we are considering and—I believe—Clause 44 of the Planning and Compulsory Purchase Bill, which is being dealt with on the Floor of the House, one finds that the wording of the two clauses in the two Bills is almost identical. I thought, "Hang on a minute, what's going on here?". What is going on is that the electricity industry apparently has its own planning system.
It seems to me that the real issue behind this is very serious, although I understand more or less how it came about. A lot of history is involved, and I wanted 485GC to deal with the matter and go into the background when we debated the Question whether Clause 150 shall stand part of the Bill. However, the real issue— the noble Lord, Lord Whitty, has been forewarned—is whether it is appropriate for a government department that is, in a sense, a promoting department for a planning application to be judge and jury in its own case. I have gone back as far as the Town and Country Planning Act 1962, and I have not got to the bottom of it yet. It appears that the system dates back to when there were public utilities, and it was deemed appropriate for the relevant Secretary of State to grant permission to his own department. So far as I can make out, that is more or less the background to the issue.
For heaven's sake, we are now in the 21st century; we are not in the middle of the 20th century. In any other sector of life, this type of conflict of interest would require, at the least, a huge and very strong Chinese wall to be built—so huge and so strong that no one could get through it, under it or over it. Apparently, we do not have that, and there is still a duality of planning systems. I would rather deal with the matter when we debate the Question whether Clause 150 shall stand part of the Bill. However, it is relevant to this amendment, which touches on those clauses. I believe that a very serious—almost constitutional—dilemma lies behind the issue, and it is one that we need to consider.
Apart from that, I believe that the noble Baroness is correct and she should be supported for the way in which she has raised the detail of the issue. However, somewhere and somehow, we need to get away from the system, if we can, and separate what I would call the generality of planning judgments in the planning system from the generality of the electricity industry, which is now privatised and should be in the same position as other industries.
§ Lord Williams of Elvel
Would the noble Lord agree with separating planning decisions from the executive?
§ Baroness Carnegy of Lour
My noble friend says that he would rather deal with the matter under Clause 150. He is talking about an extremely important issue, but that clause does not apply to Scotland.
§ Baroness Miller of Chilthorne Domer
Before the Minister replies, perhaps I may intervene in the light of that very informative short debate. I am grateful to the noble Lord, Lord Williams of Elvel, for providing the background to the matter. He has been involved in this area far longer than I have.
If the Minister is inclined to reply in the same vein as he did last week—that is, by saying that the issue will be dealt with by regulations somewhat later in the year—I sense that the Committee will be very 486GC unhappy, because we are raising fairly fundamental issues. Of course, I shall wait to hear the Minister's reply, but I sense that the Committee will be keen to see this measure in the Bill. Will the Government reconsider the process in the light of the comments about the DTI being judge and jury of the applications rather than simply expecting us to be happy with regulations? Noble Lords on these Benches and the noble Baroness, Lady Byford—we have encountered it with several Bills—are not happy with that way of dealing with matters.
§ The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Whitty)
Somewhat wider issues have been raised in the debate, but the amendments as such would require the Secretary of State to make regulations to amend the Act; they do not spell out in any detail how those regulations should be drafted. As for whether they should apply onshore as well as offshore, Clause 80 is relevant only offshore and makes no changes to Schedule 8 that would affect any onshore applications.
The issue that the noble Lord, Lord Dixon-Smith, raised—it was reflected in other comments— concerned the powers of the Secretary of State in relation to planning for electricity generating stations. Clearly, there has to be a different balance here than there is between the planning system and central government in relation to housing development or commercial development, as we have a national energy policy that has to observe all kinds of national criteria. We believe, broadly speaking, that the current balance is correct.
I shall address the terms of the amendment, which is what I tried to do the other night. The department is already proposing to bring forward within a few months separate proposals to amend the Food and Environment Protection Act 1985. That Act indirectly incorporates parts of the Electricity Act that we are talking about. The proposed amendments to regulations will meet our obligations under the environmental impact assessment directive. Hitherto, we have not met those obligations through statute or secondary legislation; they have been met by a combination of administrative practice and reliance on similar regulations under other legislation. It is important that we tidy that up.
The drafting of the regulations is well advanced. Not only do they make provision for changes that embrace those set out in the amendments—as distinct from what anyone has said in the debate—but they apply them to the generality of projects to which the directive applies, rather than restricting them to energy-related applications. The food and environment legislation has a wider remit than just electricity supply.
The changes to Clause 90 proposed by the noble Baroness would duplicate in a piece of partial legislation dealing with energy something that we are addressing more comprehensively under the forthcoming proposed changes to FEPA.
487GC Amendment No. 109D would also introduce changes to FEPA. It would extend the current provision whereby an applicant can make representations about the decision taken by the licensing authority to refuse to grant a licence or about any terms and conditions which may be attached to a licence granted. The right to make such representations is restricted solely to the applicant. The amendment would extend the provisions such that when the licensing authority takes action to constitute a committee to consider representations from an applicant, it shall serve notice on all regulators and other specified public bodies exercising functions in the area and invite them to make similar representations to the committee. That would give a much wider range of potential engagement.
Under the proposed regulations to which I referred in relation to the first of the amendments, consideration is already being given to how the representations procedure might be revised to make it more broad-based and inclusive. Therefore, we consider that that is the context in which any change in the pattern of representations should be addressed—in the regulations to FEPA, rather than in an amendment to a specific clause of this Bill.
§ Baroness Byford
I wonder whether I could add my concerns. The noble Baroness was right in saying that she would have my support. The Minister said that the drafting was well advanced—if I have got his words exactly—and that it would generally apply to other remits as well, which I believe that we would accept. However, if it is generally well advanced, why can it not be put into the Bill now? It would not mean that it would not go in generality into the slot that the Government had in mind. What precludes the Government from introducing it into the Bill at this stage?
In that way, I support the noble Baroness, Lady Miller of Chilthorne Domer, and hope that the Government will at least give a second thought to the matter. Unless the Minister's words were not quite correct, that is something that they have considered. I urge the noble Baroness to consider what the Minister has said and perhaps press the matter more forcefully at a later stage.
§ Lord Williams of Elvel
I am grateful to the Minister for acknowledging that there is at least a problem. The problem that the noble Lord, Lord Dixon-Smith, and I set out is that one cannot have the executive being judge and jury. If the Government, who on most occasions I support, wish to devolve government to Wales and to local authorities, the planning process must take priority. All that the Government should then do is say that they have an agenda and that in the course of the planning applications that agenda will be considered—but it will not be considered at the expense of destroying half the landscape of mid-Wales, nor at the expense of destroying a number of birds in the Irish Sea.
488GC I ask my noble friend to consider my remarks, because if he does not I am afraid that at a later stage in the Bill we may have problems.
§ Baroness Miller of Chilthorne Domer
I thank the noble Lords who have spoken. We were led to table the two amendments by the fact that we do not have a marine Act. The amendment is necessary because of the range of legislation applying to the marine environment. There are many Acts, as listed, that the Bill will have to take into account, but no spatial planning framework against which those Acts can be measured. Our lives in this Committee would be so much simpler if there were such a marine Act. In its absence, and without an amendment such as Amendment No. 109C, it is difficult to see how the applications will work—notwithstanding the Minister's comment that regulations will be introduced, which gives me fairly cold comfort, because we cannot see them before us now.
The other debate that we considered is very interesting, and I look forward to returning to it. I shall withdraw the amendment now as is customary, but I shall discuss the matter with the other Members of the Committee who have spoken and expect to return to them on Report. In the mean time, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ 4 p.m.
§ [Amendment No. 109D not moved.]
Baroness Miller of Chilthorne Domer moved Amendment No. 109E:
Page 73, line 37, at end insert—
( ) In section 34 of the Coast Protection Act 1949 (c. 74) (restriction of works detrimental to navigation), after subsection (2) there is inserted—
§ The noble Baroness said: Amendments Nos. 109E and 109F would amend Clause 90. Amendment No. 109E requires that the Secretary of State shall have regard to environmental matters under Section 34 of the Coast Protection Act 1949, yet another Act that pertains to the Bill. It will require that the Secretary of State has regard to environmental matters when considering applications made. Most, if not all, offshore renewable installations, both inside and 489GC outside the territorial waters, will require consent not only under Section 36 or 37 of the Electricity Act 1989, but under Section 34 of the Coast Protection Act. However, the Coast Protection Act may not pay—I believe it does not, unless the Minister tells me differently—sufficient regard to environmental issues. Where is it more important for applications to be subject to that kind of consideration than in our marine environment?
Amendment No. 109F would require the development of rules determining how applications under the Coast Protection Act 1949 that relate to offshore renewable energy installations should be made and considered. It is surprising that we have a Bill before us allowing offshore installations, but no idea of how applications should be made and considered. Therefore, the amendment would bring in a clear definition of the types of matters that should be considered during the course of an application. I beg to move.
§ Lord Dixon-Smith
On Wednesday of last week, we had an interesting discussion on the issue of bringing ashore energy and the point at which one had to consider whether, where and how the planning system becomes relevant. The amendment introduces another aspect of that problem.
The electricity industry will always have the option of trying to bring ashore electricity if there is already a major power station on the coast. That will unquestionably simplify the situation, especially when one considers Sizewell or Dungeness. One can think of a number of places where it would be relatively straightforward to bring major power lines ashore. Of course, the planning regulations will still apply at the low-tide mark, as we learnt from the Minister last week, so one would have to go through the system. The issue of wider environmental problems certainly needs to be considered, particularly any question—it is difficult to believe that there would be any question— of possible interference with navigation rights and so on.
That all illustrates how wonderfully complex is the system through which we are trying—constructively, I hope—to work our way. We all want the new system to work and to work well in everyone's interests. We have to fit it into an existing legislative framework that is immensely complex. We have to get the balance right. Although I would like to see far less legislation and regulation, if we do not get the matter right we shall be blamed by the public. We need to consider the noble Baroness's amendment with care.
§ Lord Triesman
Perhaps I can pick up the point that the noble Lord, Lord Dixon-Smith, just made. Plainly, we are dealing with matters of some complexity. I suppose my instinct on such occasions is to see whether it is at all possible to inject a degree of simplicity—not simple-mindedness.
§ [The Sitting was suspended for a Division in the House from 4.5 to 4.15 p.m.]
§ Lord Triesman
I shall risk believing that my appeal for greater simplicity had been made before we adjourned for the Division. The point I wanted to make by way of introduction is that the more duplication we have between a number of interfacing Bills, the less likely it is to be intelligible to anybody. That is quite likely to be a problem that Members of the Committee share.
None the less, I shall deal with the issues quite properly raised in the amendments. Amendment No. 109E would put certain set procedures into Section 34 of the Coast Protection Act, as the noble Baroness, Lady Miller of Chilthorne Domer, said. It has none of those provisions at present. Subsection (2A) seeks a statutory instrument to spell out how applicants should submit their applications and what documents they would have to provide, the process for considering the application and who will be statutorily consulted, and how appeals against refusal to consent or perhaps even against approval for consent can be made. Subsection (2B) proposes that a statutory instrument under subsection (2A) shall be subject to the negative resolution procedure in the House.
From reading these amendments and the original clauses, I am fairly clear that there is no need to set out this procedure under the Coast Protection Act, as doing so would, in this case, serve only to duplicate the procedures that already exist in Schedule 8 of the Electricity Act 1989.
§ Baroness Miller of Chilthorne Domer
I thank the Minister very much for giving way. Perhaps I could explain more clearly why I think that this is necessary so that if he thinks it relevant, he can include it in his reply.
It is not simply that under the Coast Protection Act the Secretary of State does not have to take account of the environment. Section 34(3) of the Act defines when the Secretary of State may refuse an application— when it will cause or is likely to cause obstruction or danger to navigation. In other words, he cannot refuse it just because it will be damaging to the environment. That is probably the most important point. If it came to it, I wonder whether the licence applicant could challenge any decision of the Secretary of State to refuse an application on environmental grounds under the original Act, because it defines so exactly the only grounds he has for refusal.
§ Lord Triesman
I intend to cover that ground in the course of my reply. If noble Lords feel I have not done so, no doubt they will raise the matter again.
I was making the point that the procedures already in Schedule 8 of the Electricity Act 1989 need not be duplicated. They are a strong set of procedures which we are confident will do a great deal of the work that is suggested in the amendment, notwithstanding the desire I have just heard to repeal or at least to modify Schedule 8 of the Electricity Act. However, I speak on the basis that the schedule is in existence, that it has 491GC provisions, and that those provisions need to be considered when we decide on the adequacy of the legislation we have. I wonder whether I could explain the argument a little more fully and respond to some of the points that have been made when I reach Amendment No. 109F.
The proposed changes would add considerable confusion rather than greater simplicity to the Coast Protection Act consents process. It would result in two different routes for developments that required consent under the Electricity Act and those that did not. That would be difficult to administer in practice and would obscure the Secretary of State's clear role in considering Coast Protection Act applications. There would be plain confusion between the two routes.
Amendment No. 109F seeks to impose a duty on the Secretary of State for Transport to have regard to the conservation of the marine environment when considering applications for consent under Section 34 of the Coast Protection Act 1949 that are also applications for consent under Sections 36 or 37 of the Electricity Act. I hope to reassure the Committee that the proposed amendment is not necessary. It adds no further provision to those already in existence under the requirements of the Electricity Act and would only duplicate the existing procedures.
Developers of offshore renewable energy projects are required to apply for consent under Section 36 of the Electricity Act, as well as requiring consent under Section 34 of the Coast Protection Act. The purpose of the Coast Protection Act consent is to ensure that proper consideration is given to the potential impact on navigational safety. The Electricity Act consent is subject to a requirement that an application for development consent for an offshore renewable energy installation must be accompanied by a comprehensive environmental impact assessment, which is set out in the Electricity Works (Environmental Impact Assessment) (England and Wales) Regulations 2000. I repeat the point—I hope the Committee does not feel that I am labouring it—that there must be a comprehensive environmental impact assessment at that stage and under that procedure.
Once a renewable energy zone has been designated, the regulations will be extended to apply to consents for development within it. The environmental impact assessment must consider the project in its entirety. It must do precisely that which we have been asked that it should do. The regulations make it clear that the environmental impact assessment must be comprehensive in its coverage and would routinely include all the aspects identified in subsections 3B(a), (b) and (c) of the proposed amendment.
While the requirement of the environmental impact assessment arises from the Secretary of State for Trade and Industry's responsibility, consideration of the environmental statement is snared by all departments with an interest, including the Department of Transport, in relation to the impact on navigational safety, and Delhi, in relation to the impact on the marine environment. Statutory consultation procedures ensure that advice from all appropriate 492GC bodies is taken into account in the Secretary of State's determination of an Electricity Act consent application. I do not think that the proposed amendment would add anything to the process, which we believe is fully comprehensive. The existing procedures provide for a certain degree of administrative streamlining in the consultation process, and, as I said at the beginning, they avoid duplication, which the amendment would create by having consultees asked the same question twice by two separate departments.
I should stress that the most crucial point in the consent process is not who "owns" the consultation process, but that all the right people are consulted during the process and that their views are considered fully by the right people. That is exactly how the process works. Consultation responses are assessed by the department with appropriate policy responsibility, so that the Department of Transport considers the issues relating to navigational safety. Defra provides advice on the potential impact on the marine environment. The Secretary of State for Trade and Industry and the Secretary of State for Transport do not consider applications and the advice from consultees in isolation from one another, but together.
All relevant factors are taken into account in reaching a decision. It would not, for example, be possible for a wind farm developer to have an Electricity Act consent and not a Coast Protection Act consent. If there were overriding reasons why one of the consents could not be granted, the development would not be able to proceed. On that basis, I hope that I can persuade noble Lords that the amendments are not necessary. This may be one of those occasions when avoiding further duplication will be of great merit to those who will have to find their way through the issue in reality and practice.
§ Lord Dixon-Smith
On a technical point, the Section 36 route deals only with the need for permission to generate above a permitted capacity—that is, 50 megawatts. Let us suppose that some devious-minded person comes along with a series of 40-megawatt capacity generating fields and separates them suitably. Who will have to give permission for that, because it is outwith Section 36?
§ Lord Triesman
I am happy to be able to answer that point instantly. The noble Lord, Lord Dixon-Smith, bowled me a googly there, but happily it was wide. Offshore wind farms are one megawatt by statutory instrument.
§ Baroness Miller of Chilthorne Domer
I thank the Minister for what I considered to be an illuminating reply about how the Government see the Bill working. So far as obtaining a vague idea of how it might work, his reply provided far more illumination than did reading the Bill, even with the good Explanatory Notes.
I can still see some difficulties arising from all the parallel processes that the Minister described. I can well understand his point that the processes should not 493GC be duplicated, but each department will be working in parallel, and I have some difficulty seeing who will make the final judgment. I intend to read carefully what the Minister said and, if I return to the issue, it will be with the idea of making it clear how such a parallel process can come together. In the mean time, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 109F not moved.]
§ Clause 90 agreed to.
§ Clause 91 [Interpretation of Chapter 1 of Part 2]:
§ [Amendment No. 109G not moved.]
§ Clause 91 agreed to.
§ 4.30 p.m.
§ Clause 92 [Requirement to prepare decommissioning programmes]:
Baroness Miller of Chilthorne Domer moved Amendment No. 109H:
Page 76, line 1, at beginning insert "Subject to subsections (3) to (11),
§ The noble Baroness said: This may appear to be a rather fearsome group of amendments. I have grouped them together because they all deal with particular aspects of the decommissioning programme. I thought that it might be for the convenience of the Committee if we discussed all aspects of the decommissioning programme, which takes us into Chapter 2 of the Energy Bill, at the same time. Therefore, I shall briefly run through the purpose of the amendments, and I hope that we shall then be able to debate the generality of the decommissioning programme.
The amendments would give the Secretary of State a duty to serve a notice on offshore renewable energy installation applicants to produce a decommissioning programme, as specified in the notice. The requirement to produce a decommissioning programme applies only to installations in the marine environment. Of course, in Part 1 of the Bill we spent a long time discussing nuclear decommissioning. We can appreciate how important it is to think in detail about decommissioning before agreeing to something. Therefore, I feel strongly about this part of the Bill.
The amendments would require applicants to consult relevant competent authorities and others where specified, such as English Nature, the Countryside Council for Wales and Scottish Natural Heritage, before submitting the programme to the Secretary of State for approval. In addition, applicants would need to include within their programme details of how it would be financed. Looking back to Part 1 of the Bill, I appreciate that decommissioning offshore wind installations is not likely to be as expensive as nuclear, but it is an important consideration.
It is important that a duty on applicants to have a decommissioning programme exists, to avoid the possibility of redundant offshore installations or parts thereof being left in the marine environment when they have reached the end of their operating life. I believe 494GC that the view of the DTI is that there is already a decommissioning programme for such installations which is working well—that may be the case—but that is not set down in statute. These amendments would put that on the face of the Bill and ensure that duties are applied consistently into the future—for example, for the life of the installations. The current lack of a provision in the Bill requiring decommissioning of installations is contrary to Article 60 of the UN Convention on the Law of the Sea, which I shall not read out as I am sure noble Lords are aware of it.
To ensure that the requirement for a decommissioning scheme is not seen as a deterrent to those applying to develop offshore renewables, the Secretary of State would serve a notice only when consent had been given for a scheme to proceed or when it was clear that a scheme was very likely to proceed.
I understand that the current wording in the Energy Bill which states that the Secretary of State "may"— rather than "shall"—issue a notice to require production of a decommissioning programme, is phrased to reflect that, in some cases, it might be the responsibility of the Welsh Assembly to issue such a notice. However, that is far from explicit in the Bill. I look forward to the Minister clarifying that particular point. Imposing a duty on the Secretary of State as envisaged in the amendment does not appear to cut across any responsibilities of the Welsh Assembly. Further clarification from the Minister would be helpful.
Amendment No. 110B would allow the Secretary of State to choose whether to require the submission of a new decommissioning programme if he rejects an earlier such programme. One programme may be deemed not to be satisfactory, and he may need to require a new one. It would be a nonsense if he were to turn down an existing programme but have no powers to require the commission of a new programme.
Amendment No. 110C would impose a duty on the Secretary of State to publish decommissioning programmes after approval. That is an important point—given transparency—so that everyone is clear what is happening. A number of people may be affected by decommissioning programmes. I believe it is extremely important that the Bill requires any approved programme to be made available for public inspection. If there have been substantial changes to the original submitted programme, any revised programme should equally be publicised and available for public inspection. I do not believe that the Bill as drafted covers that point.
Amendment No. 110D would impose a duty on the Secretary of State to publish details of a decommissioning programme that he has developed. That is fairly self-explanatory. Amendment No. 110E would impose a duty on the Secretary of State to consult relevant bodies when developing his own decommissioning programme. At present Clause 93 of the Bill requires the Secretary of State to consult Scottish Ministers where an installation is within Scottish waters before making a decision concerning 495GC the decommissioning programme. However, as far as I can see, there are no other requirements in the Bill concerning a wider consultation of relevant competent authorities—for example, English Nature, the Government's adviser on the marine environment, or the Countryside Council for Wales. I believe that these amendments will address that shortcoming.
Finally, Amendments Nos. 110F and 110G would impose a duty on the Secretary of State to consult relevant interests concerning proposals to amend a decommissioning programme. That is a small point, but it could be substantially amended and would not be subject to consultation with the relevant bodies whose advice should reasonably be sought. I beg to move.
§ Lord Dixon-Smith
I wonder whether I could invite the Minister, in replying to the amendments, to explain the background to this a little more. Early in my career in the House, we carried out an examination of the problems of decommissioning the oil rigs. It is a matter of fact and misfortune that at that time, the decommissioning of oil rigs and the undersea pipelines was not adequately taken into account at the time of their installation. It is good that decommissioning is being considered at the point of installation in the Bill, because it is very important.
If I understand the construction of these wind turbines in the sea bed correctly, it seems that the bases are likely to have a much longer life than the pylons and generators on top. I may be incorrect about that, but I would be delighted if I were. I would be delighted to know that once a base was installed, it might see through three or four generations on the top before it had to be taken out of the sea bed. They are, fortunately, fairly simple structures; if they can be knocked into the sea bed, it would be nice to feel that they could be extracted. Can the Minister advise us whether that is so? I rather assume that it is, which will leave a clean sea bed. But if there is any question of their having to be cut off, leaving a residue, that could be most unfortunate. However, some might think that if the sea bed was left rough and fishermen could not get at it again, that would be a positive advantage.
These are peripheral issues. The other factor I remember regarding the oil industry investigation was that originally the oil rigs were thought to have a particular life, as were the oil pipelines. There was particular concern that whatever happened to the oil rigs, the oil pipelines should be left in situ because developments in oil extraction techniques would mean that the pipelines could subsequently be used again if it were possible to extract more oil from the fields. Oil extraction is not a 100 per cent process—it has its built-in inefficiency, if I can put it like that. I do not know whether the same consideration would apply in this case. Clearly, we could continue building new wind farms on the sites of old wind farms for a very long time. It is probably not so much a question of decommissioning as of ensuring that the original specification and the quality of the installation is sufficiently robust to have a much longer life span than the presumed life span of the original installation.
496GC These are significant considerations, and I would be most grateful if the Minister could give us the Government's thinking on the background.
§ Lord Whitty
I am grateful to the noble Lord, Lord Dixon-Smith, for recognising the importance of this aspect of the framework for consents— decommissioning is an important dimension of it. Very important international obligations are involved as well—the United Nations Convention on the Law of the Sea requires that any installation which is abandoned or disused should be removed to ensure the safety of navigation. Such a removal is to have due regard to fishing as well as the protection of the marine environment. So there are a lot of complicated requirements under the convention which, admittedly, only applies in our case to installations in the renewable energy zone. Of course, we would want to ensure that all sites, wherever they were located, were subject to similar standards in relation to decommissioning.
The UN Convention itself is not prescriptive about how a contracting state is obliged to carry out its obligations. We believe that the Bill gives us a scheme which is efficient, which provides the controls necessary to ensure that installations are decommissioned, and sets appropriate standards including environmental standards and protection for the various elements to which I have referred. It also builds in an appropriate level of consultation. I believe that the way in which we have approached the issue is sufficient. We do not want a process that is unnecessarily slow, cumbersome and inflexible. There are aspects of the noble Baroness's amendments that would have that effect or would lead us significantly in that direction.
On the point made by the noble Lord, Lord Dixon-Smith, as to whether we are dealing with decommissioning of the installation at the top or underneath, and whether we could add more powerful machines at some later stage, we probably could do so in most circumstances. However, a new Section 36 consent would be required in those circumstances, so the issue of decommissioning or adding arises at all points when changing the nature of the installation.
As for the process, which is what the amendments deal with, Amendment No. 109J would take away the discretionary nature of the power of the Secretary of State to issue a notice requiring a person to submit a decommissioning plan. Instead, the Secretary of State would be obliged so to do in all cases. The discretion provided by the Bill is not an attempt on our part to slide out from under our obligation under international law but to give the Secretary of State a degree of flexibility. We expect that all installations will be decommissioned using the statutory scheme. However, there may be rare circumstances when it may be more appropriate to use other routes to achieve the same end. For example, renewable energy installations that have already received development consent are subject to separate decommissioning requirements, and it is not our intention to undo those 497GC arrangements. There may be other circumstances in future in which we would not want the power to be too rigid.
The next group of amendments deals with the issue of consultation. We agree that consultation is important, but it is also important to ensure that the process does not become too bogged down. The Secretary of State will need to consult under the regulations made under Clause 98. Those regulations will set important standards, particularly in respect of environmental matters. The Secretary of State has a duty at Clause 98(5) to consult. She can also require the person who has the duty to submit a decommissioning programme to consult whoever she directs him to consult. Our intention is certainly that there should be such consultation, and our statutory advisers would be obvious candidates for inclusion in the list. However, we need a measure of flexibility, so that when it is not necessary to consult the developer is not forced to go through an unnecessary exercise.
I note that the noble Baroness's amendment seeks to install its own flexibility by requiring consultation with the "competent authority" only,so far as reasonably practicable".That seems to build in a possible loophole. The amendment would mean that the Secretary of State would have to designate those whom the developer should consult. I do not believe that it is necessary for the Secretary of State to consult when a programme is modified; the modification can in some circumstances be a very minor one. It is also important to bear in mind that the Secretary of State has a duty to review the decommissioning programme, under the terms of the clauses.
Clause 95 also deals with situations in which a project is sold on and the provisions are designed to ensure there is a smooth transition. I am not sure what separate form of consultation is needed in these circumstances. I do not believe that it is necessary to impose an obligation on the Secretary of State to consult when she herself has prepared the programme, in accordance with the standards already laid down in the regulations, which include the consultation. Of course, there is nothing to stop the Secretary of State engaging in wider consultation but I do not believe that it would be necessary to do so for something on which there has been consultation in the course of drawing up the regulations.
In relation to these clauses, the noble Baroness raised the issue of the Welsh Assembly. The Welsh Assembly is not given powers under this part of the Bill to issue a notice requiring the submission of a decommissioning programme. The Welsh Assembly already has devolved powers under the Transport and Works Act which can be used to give consent for offshore wind farms. Part of that consent could be to include decommissioning arrangements as a condition of such consent. That is a matter for the Welsh Assembly and its existing powers. We would not use this clause to override them.
498GC Amendment No. 110ZF places a specific obligation on the developer to provide certain information in support of his decommissioning programme, whereas the existing text states that the Secretary of State may require such information. Again, it is a discretionary power which may not be needed if that information is already held.
Amendment No. 110B tries to complicate the position as regards the provision of new or revised decommissioning programmes. It overlooks the provisions that are already in Clause 94 where the Secretary of State decides to prepare her own decommissioning programme.
On publication of programmes, Amendments Nos. 110C and 110D would require the Secretary of State to publish approved decommissioning programmes. I believe that that degree of requirement is unnecessary. Our intention is that the developers themselves should put approved decommissioning programmes on their websites for public inspection. I do not envisage a problem in that respect.
Amendment No. 110ZE deals with environmental pollution and requires that there should be no environmental pollution when offshore installations are decommissioned. A more reasonable approach is to ensure that environmental pollution is reduced to the minimum. Clause 98(2) provides for regulations that will address the issue of environmental pollution relating to standards of decommissioning and safety. I believe that these amendments over-complicate the situation by removing discretion from the process. The process itself is fairly robust. I would advise the noble Baroness not to pursue the amendments.
§ 4.45 p.m.
§ Baroness Miller of Chilthorne Domer
I assure the Minister that I have absolutely no wish to make the process slow, cumbersome or over-complicated. I shall read carefully what he has said about the details of my amendments concerning publishing information, consultation, and so on. Despite his explanation, the more difficult area for me to understand is why there should be such a degree of discretion about the very basic principle that the Secretary of State may require an applicant to submit a decommissioning programme. I do not feel that the Bill has the right emphasis. The word "may" is very wishy-washy. Given what the Minister has said about the need for discretion, I would have felt more comfortable with the words "shall" or "unless a set of circumstances". As it stands, the Bill comes down heavily on the side of discretion and very little on the side of obligation. I expect to return to this matter on Report. In the mean time, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No. 109J not moved.]
Baroness Miller of Hendon moved Amendment No. 110:
Page 76, line 3, at end insert—
( ) Before issuing any notice under this section or approving, with or without modifications or conditions, any decommissioning programme, the Secretary of State shall have
regard to the existence and terms of any other decommissioning programme in respect of a relevant object, with a view to minimising additional costs or obligations of decommissioning.
§ The noble Baroness said: With this amendment, we are talking about the requirement to prepare decommissioning programmes. Clause 92 gives the Secretary of State a discretionary power to impose an obligation on various persons to submit a costed decommissioning programme for renewable energy installations and their associated electric lines. The power is exercisable in territorial waters, the seabed of which is owned by the Crown Estate, and in the renewable energy zones to be created on the United Kingdom continental shelf.
The decommissioning programme may require security arrangements, financial or otherwise, that the person subject to the decommissioning obligation must put in place to ensure that funds are available to carry out the decommissioning programme. A non-exhaustive list of things that will constitute security for that purpose is given at Clause 101(2). I shall give the Committee a couple of examples. The clause mentions,
a charge over a bank account or any other asset
a performance bond or guarantee".
The power can be exercised when the renewable energy installation or related electric line is at the proposal stage—provided that at least one of the relevant statutory consents has been granted or has been applied for and is likely to be granted—and, subsequently, when the installation or the line is actually being used. The drafting applies, therefore, to future installations and to those that have already begun under round one. However, round one installations are already subject to decommissioning programmes imposed either under leases granted by the Crown Estate or under consents granted under Section 36 of the Electricity Act 1989. The Department of Trade and Industry has apparently indicated at industry seminars that it would not apply Clause 92 to round one projects.
The amendment would ensure that there should be an integrated approach to decommissioning obligations. It would also give greater assurance to proposers of installations in further rounds that future decommissioning obligations that may be imposed under, for example, leases of parts of the territorial waters will not be duplicated by the requirements of the clause. Failure to give that assurance may act as a disincentive to proposers to invest. In turn, that will hinder the Government's attempts to meet their renewable energy targets.
As failure to comply with the requirements of a decommissioning programme will be a criminal offence, it is suggested that the amendment contributes to Better Regulation Task Force principles in ensuring the clarity that everyone wants about the scope of the prohibition. I beg to move.
I probably ought to start by declaring a past interest. I was a member of the Better Regulation Task Force for some time. One of the tasks that we set ourselves was to try to make sure that, in complex areas, everyone at least knew at the beginning 500GC of any enterprise in which they were liable to make an investment what the full weight of the obligations on them might be. We cannot always avoid complex regulations, and decommissioning may be an area in which, as several noble Lords said, there will be complex requirements to be met. It is best that everybody knows what they are from the start.
The Secretary of State will need to be mindful of the decommissioning standards which are generally applied in drawing up the regulations. Clause 98 sets out what they are. These are standards for installations decommissioned under this scheme. They are rigorous, for all the reasons of safety and the environment which have been explored in earlier debates in Committee. There is absolutely no doubt that costs will be an important factor in setting those standards. It is not because there is a desire to goldplate the standards simply for their own sake; it is because in due course under this legislation, should it be passed, the Committee and the Secretary of State will have to bear it in mind that the United Kingdom has international obligations with respect to decommissioning which are precise and onerous.
The United Nations Convention on the Law of the Sea requires us to ensure that installations are removed so that they do not present a hazard to navigation, for example. Members of the Committee have asked whether that involves those parts of them that stick out of the water or the structures in which they are embedded in the sea bed. In all cases, where they are decommissioned, they must not be allowed to continue to present a hazard to navigation.
We have to be certain that the decommissioning programmes that are approved by the Secretary of State meet all the objectives set out in international law. Other decommissioning programmes might not have the same objectives; they might have lesser objectives and therefore fall foul of that law.
In direct response to the point of the noble Baroness, Lady Miller of Hendon, the Government will not use the Bill procedure to apply to projects which have an existing Section 36 consent under the round one arrangements. All these projects already have a decommissioning programme, so we do not feel that it is necessary to set this out in the legislation. It is already there and does not need to be reproduced here.
I hope that this persuades Members of the Committee that the amendment is not necessary. I respectfully ask that it should be withdrawn. The critical point is that the international obligations obviously must be expressed in ways which mean that anybody responsible for decommissioning works to the same set of standards, and that those standards are thoroughly observed.
§ Baroness Byford
I wonder if the Minister would clarify something for me. He said that there are existing restrictions. Are the new arrangements exactly the same for new-build or is there a difference? Are the regulations that apply now the ones that have been superimposed on to this Bill?
§ Lord Triesman
If I am wrong about this, I shall ensure that I write to the noble Baroness, but my 501GC understanding is that the projects that were approved under round one had thorough decommissioning schemes. They were not statutory schemes; in fact, because of the early nature of round one, they were probably more comprehensive, because people wanted to make sure that no mistakes were made. Here we are trying to set out what those schemes ought to be for the long term and the future. I have no doubt that a good deal will be learnt from round one in that process, but my advice is that the statutory scheme will be more comprehensive, based on learning from the round one schemes. I realise that I probably inverted that explanation in my earlier sentence—I hope that Members of the Committee will forgive me. The statutory scheme will be more comprehensive, based on the lessons that are learnt from round one, which were a very preliminary start to the process. I apologise for any confusion.
§ Baroness Miller of Hendon
It is very interesting because this again deals with decommissioning programmes. I know that on debates on earlier amendments moved by the noble Baroness, Lady Miller of Chilthorne Domer, there was a suggestion that there were already enough Acts and that she did not want any duplication. Now the Minister is saying that the Government do not want to goldplate any other decommissioning programmes because under international provisions, the decommissioning programmes that have taken place may not meet the standards required to meet international obligations. That may very well be so; I would not argue with that issue. However, my amendment says,the Secretary of State shall have regard to the existence and terms of any other decommissioning programme".If the terms of "any other decommissioning programme" did not go far enough, of course it would be necessary to have separate provisions to meet these obligations. However, if they did, I see no reason at all why anyone should have to go through this whole procedure again. Having said that, I shall obviously read very carefully what the Minister has said, but I believe, if I may say so, that he has not had regard to the fact that I did not table a prescriptive amendment. I sought to avoid a process which in some cases might not be necessary. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendments Nos. 110ZA to 110ZF not moved.]
§ Clause 92 agreed to.
§ Clause 93 [Approval of decommissioning programmes]:
§ 5 p.m.
Baroness Byford moved Amendment No. 110A:
Page 77, line 37, leave out subsection (4).
§ The noble Baroness said: This is a probing amendment designed to find out in general terms what is the meaning of the phrase "such security". On page 84 of the Bill "security" is defined in terms of kinds of money; for example, deposits, bonds and so on. What the Bill does not do is to provide any clue as to how much money is involved. Will it be X per cent of the value of the completed installation? Will it be a proportion of the estimated decommissioning cost and, if so, will that proportion be predefined in guidelines or statute?
If the security takes the form of a money deposit, will it go straight to the Consolidated Fund? Under what conditions will a security be redeemed? Will the value of a security be the same for everyone in relation to a given decommissioning size, or will certain companies or organisations pay less than others? If that is to be the case, will the Minister indicate how any difference will be calculated? I beg to move.
§ Lord Triesman
Amendment No. 110A, which would remove the Secretary of State's power to impose obligations on developers to provide the necessary security to cover the cost of decommissioning an offshore installation, could not work in practice.
This power is an essential part of the decommissioning scheme. It is necessary to ensure that assets will be in place to meet the costs of decommissioning the installation at the end of its life. That means meeting the full costs—the costs that are actually required to meet the decommissioning of the installation. It is to little purpose to impose an obligation on someone to decommission an installation only to find when the time comes to implement the programme that no funds are available. We need to ensure from the beginning that the costs of decommissioning and the decommissioning programme are fully covered. So the security arrangements will be designed to achieve that objective, no more and no less, case by case. "Security" is a customary definition of securities and not just money; it can be a variety of things. As Members of the Committee look down the list in Clause 101 they will find that—for example—letters of comfort, if sent by credible people and thought to be creditable, will equally be securities in this case, as one would expect them to be in other business circumstances.
The Government have an obligation under the UN International Convention of the Law of the Sea to ensure that the installations are decommissioned so that they do not present a hazard to navigation; and, of course, protection of the environment is also a powerful reason for requiring installations to be removed. Both reasons are very important. We are not—as I am sure no one is in this Grand Committee— half-hearted about the arrangements that must be put in place to meet the obligations.
A further factor is that we must ensure that the costs do not fall on the taxpayer by the Government having to pick up the bill when the developer fails to meet his obligations. That would give rise without question, and quite understandably, to the most profound objections.
503GC Noble Lords will see from the types of security listed in Clause 101 that we envisage a range of instruments, which are dependent on circumstances—as I said earlier—case by case. A key factor here will be the financial standing of the person who has the obligation to decommission the installation. We are not trying to be prescriptive; indeed, the list, as the noble Baroness said, is not exhaustive. Each case will be looked at on its merits.
I hope that persuades the noble Baroness that this amendment is not necessary and might in fact turn out to be—I use the word cautiously—short-sighted when considering all the different kinds of circumstances that would occur. Accordingly, I ask her to withdraw the amendment.
§ Baroness Byford
I thank the Minister for his response to my probing amendment. It was certainly not intended to be short-sighted in any way, but we need to somehow get answers to questions that run through our minds when we are looking through the Bills. Certainly I had no doubt that the amendment would actually fully cover the costs that would be incurred; so that was not a problem.
However, the Minister did not answer my questions. Does the security take the form of the money deposited? If it does, will that go into the consolidated fund? Where does it go? I have looked down the list quite carefully. There is a,charge over a bank account".Is that money then left with the person involved? There is "a deposit of money", but it does not say to where it is going. Presumably,a performance bond or guarantee",would go into the department concerned. I am not sure where,a letter of credit; and … a letter of comfort",go. I was seeking to find the detail on what happens and where the money goes. It may be that the matter is already set down in other legislation and I can be pointed in that direction. I thank the Minister for his words, with which I have no quarrel. However, his response did not clarify where these various securities go. The noble Lord said that the issue is flexible and that it would be taken case by case, which I can understand. That makes good sense. But even on a case-by-case scenario is it a proportion of the total cost, or how are these things decided upon? Having read very carefully through the provision I am none the wiser. I assure the Minister that my intention is not to denude the strength of the need for this provision, but to seek clarification. I do not know whether he would like to respond before I decide what to do with the amendment.
§ Lord Dixon-Smith
Perhaps I may intervene because the matter is very important. If the Government were—and I am sure they are not—to demand the deposit of moneys upfront at the start of the construction period to pay for the decommissioning, we would be dealing with a, frankly, preposterous and unbusinesslike situation. I am sure the Government do not have that in mind.
504GC I want an assurance from the Government that there is a recognition—and obviously such recognition must apply equally to the firm installing a wind farm—at a point presumably 25 or 30 years in the future, that there is an absolute liability that will have to be met.
It seems that what is required is an annual charge against the revenue stream, building what I would call a decommissioning fund—I nearly said a "sinking" fund, but that might be an unfortunate phrase—over the time. What the Government really require is a legally binding document showing that this kind of an arrangement is in place.
I infer that—although it is not easy to read this definitely into Clause 101, the interpretation clause— providing the Government have that sort of arrangement in mind, and assuming that one is dealing with reputable people, of course there should be no problem. But it seems that it would be very complicated if an invitation were being made to someone installing a wind farm to put the decommissioning money upfront on day one. That would be a preposterous situation. I am sure that it is the last thought in the Government's mind, but I would welcome an assurance that that is so.
§ Lord Triesman
It would certainly not be the Government's intention to impose such financial strictures at the beginning of an enterprise to make it impossible to conduct the undertaking. Plainly, that would be to no purpose.
In Clause 101(2)—the non-inclusive list—as a number of noble Lords have commented, there are a variety of different methods. Of course each one is capable of answering in a slightly different way the questions of the noble Baroness, Lady Byford. I do not think it is anyone's intention to rule out mechanisms such as charges against revenue streams being an appropriate way of achieving that over a period of time. I shall take further advice on that, and if I am wrong, I shall say so.
Charges held against accounts, access to bonds or guarantees, letters of credit and letters of comfort can be lodged with the appropriate authority in government and held, as they would be in any business where those were the guarantees of performance or future financial undertaking. Moneys can—and most likely will—be held in trust-fund form for the period in which they are required.
So in each instance, case by case and depending on the kind of security involved, there is an appropriate destination for each of the forms of security provided.
§ Baroness Byford
I thank my noble friend Lord Dixon-Smith for his good contribution. On my notes, although not on the notes that I have, I had written "upfront" and "unspecified amounts". My noble friend was quite right to raise the issue about "upfront"; but the Minister says that that is not so. On the other hand, one has to bear in mind that the costs will still need to be covered should anything happen to go wrong. I am glad to have on the record that the moneys are not upfront.
505GC I am intrigued that the money might go into a trust fund. Why would it go into a trust fund? I am getting more and more intrigued by this humble amendment. Why would it not go into a consolidated fund? What is so special about a trust fund?
§ Lord Triesman
I was trying to make the point, not that no money might be required upfront, but that the total and final bill that might be presented 25 or 30 years hence could scarcely be lodged at the beginning in all probability. The argument for placing the money in a trust fund would be that it would then be held absolutely and securely and for the purpose for which it was originally intended, and not used for any other aim. That should give everyone a degree of confidence about the intention rather than believing that it might disappear in some other way.
As the Committee can see, the precise arrangements are not defined in the Bill. I imagine that there might be others. That arrangement is one which I am advised would give a good deal of confidence.
§ 5.15 p.m.
§ Baroness Miller of Hendon
I accept totally what the Minister said—that everything will be dealt with on a case-by-case basis. The whole idea of the security is that it simply includes those aspects that have been mentioned; there may be many other ways that are not specified here. However, although there is nothing wrong with a trust fund, I find it rather strange that nothing has been put down with regard to the question of the deposit of money, which my noble friend asked about.
Much earlier—so many Committee sittings ago that I cannot remember where it came—there was quite a discussion about whether money all had to go into a consolidated fund or whether for specific purposes it could go into a segregated fund. The Government resisted all those amendments, saying that it needed to go into a consolidated fund. Nothing has been said on that at all—apart from a line from a note that came from the officials, perhaps. The Minister suggests that the money is in a sense going into a segregated fund, because it is going into a trust fund for that purpose. I find it strange that that has just come to light, as that is different from anything that we have heard before on the subject.
§ Baroness Byford
I shall not press the Minister any further, but perhaps he might write to me with a little more detail, as I do not want to delay the Committee any further. When he does that, perhaps he could answer my query on the range of money. He has said that the total cost will not be upfront but that a proportion of it may be. If that could be clarified before Report stage, I would be grateful. It may seem a small detail, but those who are going into the business need to know where they stand.
I accept the comments of my noble friend Lady Miller of Hendon, because I remember the long discussions that she mentioned, when the Government said, "No, you can't do that". However, at this stage, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendments Nos. 110B and 110C not moved.]
§ Clause 93 agreed to.
§ Clause 94 [Failure to submit or rejection of decommissioning programmes]:
§ [Amendments Nos. 110D and 110E not moved.]
§ Clause 94 agreed to.
§ Clause 95 [Reviews and revisions of decommissioning programmes]:
§ [Amendments Nos. 110F and 110G not moved.]
§ Clause 95 agreed to.
§ Clause 96 agreed to.
§ Clause 97 [Default in carrying out decommissioning programmes]:
Baroness Miller of Hendon moved Amendment No. 111:
Page 81, line 19, leave out "due" and insert "reasonable
§ The noble Baroness said: Clause 97 provides for a situation in which someone or, more likely, some company, involved in a decommissioning programme fails to carry out his or its responsibilities, particularly pursuant to the requirements of the Secretary of State. Under the provisions of the clause, this failure constitutes an offence punishable by law. Of course, we have no quarrel with that. Subsection (4) rightly provides a defence, which is described as the exercise of "due diligence". We also have no quarrel with the provision of such a defence but, in my view, the words "due diligence" are a misuse of the phrase.
"Due diligence" is a term of art employed in the world of accountancy, and sometimes in legal affairs, in relation to the duty of the seller of shares in a company to make full disclosure of all relevant facts and is coupled with the responsibility of the buyer adequately to investigate the information provided. I have never seen that phrase used outside that particular context. We certainly do not want to use a phrase that may have a very narrow specialised meaning. I believe that the correct phrase is "reasonable diligence". For some reason, in the six years or so that I have proposed amendments from these Benches using the word "reasonable", there has been some sort of Pavlovian reaction against the word.
The subsection proposed by the Government rightly negates the suggestion of an absolute offence under the clause. Clearly, the Government intend that any defence should be that the person concerned has acted reasonably. It puts the onus of proof on the defendant. The terms of the defence and the burden of what the defendant must prove must be clear and unequivocal—namely, that he has acted reasonably in the particular circumstances.
With due respect to the draftsmen, I have no idea why they have chosen to use what I consider to be an inappropriate term of art from a different context, instead of using the plain, ordinary word understood by everyone—"reasonable". I do not know whether the Government are suggesting that there is a difference between "due diligence" and "reasonable diligence", but, if there is, I would be interested to hear 507GC the Minister's explanation, even though it may entail a different amendment to define the unusual use of the phrase in the circumstances. In the mean time, I beg to move.
§ Baroness Byford
Amendment No. 111A is grouped with Amendment No. 111. The reason for the amendment is to try to get from the Government some idea of the length of delay that there might be before proceedings are taken against a person. As far as I can see in the Bill, it is open-ended; it could be six months, a year or two years. Over the years, it has been a matter of concern in the National Health Service, for example, that there is sometimes up to two or three years' delay in the investigation of doctors. That is unfair not just to the hospital concerned but to the individual involved, who is limbo for all that time. I chose three calendar months not for a specific reason but to ask the Government to state their intention in the matter.
Baroness Miller of Mention
Before the Minister replies, I must apologise to my noble friend. I cannot pretend that it is because my glasses are not any good: they are brand new. I missed out the first two lines of the sentence in which I was going to say that I would speak to Amendment No. 111 and my noble friend would speak to the other amendment.
§ Lord Whitty
We appreciate the double act anyway.
I do not agree with the amendment moved by the noble Baroness, Lady Miller of Hendon. "Due diligence" is not simply an accountancy term; it appears in a significant number of legal and legislative contexts. It is v/ell understood and has an implication of proportionality, as well as reasonableness. By any definition, "reasonable diligence" is less strong than "due diligence". It is a serious matter for a person to fail to take remedial action in such circumstances, and the phrase "due diligence" is appropriate.
Amendment No. 111A would require the Government to instigate court proceedings against an offender who failed to carry out remedial programmes within "three calendar months" of the period of the original requirement for remedial action having elapsed. I understand the noble Baroness's concern, but I think that three months is somewhat tight. In many circumstances, it will be a complicated matter. We want justice to be done and be seen to be done as swiftly as possible, but we need a bit of flexibility. Three months would be a little bit tight for anyone preparing a legal case, let alone the Government. That is not to say that I am tempting the noble Baroness to suggest an alternative. Three months would not be acceptable to the Government.
§ Baroness Byford
I did not expect the Minister to agree, and the amendment has provoked the reaction that I thought it would. I mean that in a complimentary way.
Nowhere in the Bill is there any guidance on how long a period would elapse. That may be deliberate or there may be bits of the Bill that I have missed, but I did not find any. That is why I tabled the amendment. 508GC The amendment was designed to say to the Government that the period must be three months; I wanted to find out whether there would be guidance on what will be considered a reasonable time to allow to elapse before such action is taken.
§ Lord Tombs
In relation to Clause 111, perhaps I may ask the Minister whether he envisages due diligence being unreasonable.
§ Lord Whitty
No. I said that due diligence carries the connotation of proportionality as well as reasonableness, and it is therefore stronger than "reasonable". It subsumes reasonableness With regard to the point raised by the noble Baroness, I should say that it is very rare in statute to lay down a timescale on proceedings. Therefore, I am not really encouraging her to go down that road.
§ Baroness Miller of Hendon
I thank the noble Lord for bringing a little lightness to the subject of the amendment, which one could not pretend to be the heaviest one that we are moving. I shall read very carefully what he said. However, I have to tell him that, interestingly, it was two lawyers who told me that they felt that "due diligence" was improper in this context. Having said that, I shall obviously reconsider the matter carefully and go back to my legal representatives. But, at this stage, I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendment No 111A not moved.]
§ Clause 97 agreed to.
§ Clause 98 agreed to.
§ Clause 99 [Duty to inform Secretary of State]:
Baroness Miller of Hendon moved Amendment No. 111B:
Page 83, line 17, at end insert—
The noble Baroness said: Amendment No. 111B would simply provide a more precise definition of the word "participate", which appears in Clause 99(2)(g) of the Bill. It reads:
For the purposes of this section a person becomes responsible for a relevant object if…(g) he begins to participate in any of the following activities".
According to my trusty Oxford English Dictionary, "participate" means,
to share or take part in".
In my opinion, that is a very loose definition for a word that could involve the person in question in the very serious consequences of Section 99. The consequences would require positive actions by anyone caught by the section, with possible criminal sanctions and penalties in default.
509GC In my view, and in the view of the same two different lawyers who advised me on this point, the wording is wide enough to catch, for example, bankers and funders. It is perhaps not too fanciful to suggest that it might catch wholly subordinate people—employees who take part in the activities in the sense that they work for the company involved.
I draw your Lordships' attention and, in particular, that of the Minister to the Energy (Northern Ireland) Order 2003. I quote from Articles 8(4) and (5) of the order. Article 8(4) states that,
a person participates in the transmission of electricity if
Article 8(5) of the order states:
Where different people have different interests in anything which forms part of a transmission system, only the person in actual possession of the thing may be regarded for the purpose of paragraph (4) as making it available for use".
Your Lordships will have noticed that my first proposed new subsection paraphrases the Northern Ireland order. It simply adapts it to correspond with the main text of the clause. The second new subsection follows the order word for word. The Northern Ireland order is carefully worded so as to avoid catching what I might call "innocent bystanders". I have absolutely no doubt that the Government have no intention of doing anything such as that in the present Bill. This is not a question of my pedantically preferring my wording to that of the Government. Sometimes I do, but that is not the reason in this case. It is a matter of my preferring the better wording of one parliamentary draftsman over that of another. I mean no disrespect whatever to the very nice ladies and gentlemen sitting behind the Ministers. I hope that, in the interests of consistency, the Government will accept the amendment. I beg to move.
§ 5.30 p.m.
§ Lord Triesman
The noble Baroness, Lady Miller of Hendon, is absolutely right that there is no intention of catching innocent bystanders. I hope that in general it is not intended to catch bankers, either, who may or may not be innocent bystanders.
All the examples in Clause 99(2) show that the person responsible will have a serious executive role in respect of the activities. I do not think that any of those descriptions could really apply to someone in a subordinate role. In most cases, it seems clear to me that they apply to someone whose role is one of responsibility in relation to the activities.
I can understand that there may be a preference for the drafting technique of different pieces of legislation, but I hope that I can persuade the noble Baroness that the drafting here is reasonable in the circumstances to meet the objectives and that it is fit for purpose.
It is vital that the scheme we have included in the Bill for the decommissioning of renewable energy installations and electric lines works properly. 510GC Members of the Committee will recall that last week we discussed the important issues of protecting the environment and making sure that renewable energy installations are not a hazard to navigation. We must make sure that installations which have come to the end of their productive life are not left to corrode, causing a potential threat to passing ships by falling over and possibly polluting the sea.
A key feature of the decommissioning scheme in the Bill is the ability of the Secretary of State to identify correctly the person or persons who should be given a duty to prepare a decommissioning programme under Clause 92. The issue of a notice by the Secretary of State requiring the submission of a decommissioning programme triggers the whole decommissioning programme—that is the point from which it starts. The duty placed on persons who become responsible for the renewable energy installation to inform the Secretary of State is necessary so that she always, at any moment, has the information that is necessary for her to decide who should receive the notice. For those reasons, she must obviously be in a position to know to whom to send the initial notice and subsequent notices over the life of the project.
Given that these projects can have a very long life and that it may be 25 years or possibly more before the actual decommissioning takes place, it is very important to know at every stage who is responsible for each of the things listed in Clause 99. The project may be sold on; there may be changes in the ownership arrangements and assets over the time. The Secretary of State must be kept informed of all such changes so that she can decide whether she needs to issue a new notice requiring a decommissioning scheme and programme to be submitted. Otherwise, there is really no control over the process and the Secretary of State would have lost that control. This is the purpose of Clause 99(2), particularly paragraphs (f) and (g).
§ The Deputy Chairman of Committees (Baroness Cox)
A Division has been called. The Committee stands adjourned until 5.45 p.m.
§ [The Sitting was suspended for a Division in the House from 5.35 p.m. to 5.45 p.m.]
§ Lord Triesman
I resume my speech. This is almost beginning to take on the character of a soap opera. I feel that there should be dramatic music when I get to the really exciting bits and we shall resume the story later.
I repeat that it is critical that the Secretary of State knows who is responsible and whether any changes have taken place in the enterprise. That was the burden of the point that I made before the Division was called. Furthermore, the Secretary of State will want to review whether the arrangements for providing security to ensure that the decommissioning programme is carried out continue to be adequate across the entire lifetime of the project. Information about the ownership of the assets to be decommissioned is of key importance.
Clause 99(2)(f) seeks to identify the persons who are directly responsible for the construction, extension, operation, use or decommissioning of the installation. 511GC Clause 99(2)(g) is drawn a bit wider by referring to persons who begin to participate in these activities. What we have in mind here is situations, for example, where there is a special company which is set up solely to build or operate the installation with few assets other than the installation itself. That company will in turn be owned by one or more other companies. The Secretary of State needs to know who these companies are and keep track of all the ownership arrangements.
That is just one example and there may be many other kinds of ownership arrangements over the lifetime of a project of this kind. New kinds of ownership models may develop over time. It is very difficult for us to be more specific on the face of the Bill as it would be impossible to capture all the possibilities although experience shows that new things emerge. If we failed to cover all of them there is a risk that there would be a loophole in the scheme which someone who is determined to evade their decommissioning responsibilities could exploit. In these circumstances the tax payer might have to pick up the decommissioning bill.
We have made it clear at Clause 99(8) that, "participation in activities" does not include participation on behalf of another person or participation by acting in pursuance of an agreement to provide services to a person carrying on those activities. As I said at the beginning of my reply, if they are responsible for a matter that is covered by the legislation, a banker or an employee might be caught. However, under Clause 99(8)(b) bankers would not be caught if they were acting in pursuance of an agreement to provide banking services. They will plainly not be the hapless victims that it was feared might be the case. Employees acting on behalf of the employer are also excluded by Clause 99(8)(a) so they could not become hapless victims in the sense that we were discussing earlier.
The amendment would restrict very considerably the categories of persons falling under Clause 99(2)(g) to those who,co-ordinates, and directs, the activity; or … makes a relevant object available for use".In fact, we take the view that those persons will be more likely to fall under Clause 99(2)(f), which is why we cannot accept the amendment. We need to make the scheme watertight so that we can all rest assured that decommissioning will take place in a proper way. That is in all our interests.
As with other aspects of the Bill, the decommissioning clauses provide only the bare legislative framework. It will be necessary to provide guidance notes on how the whole scheme will work in practice, and we shall certainly provide guidance on what we mean by "begins to participate" in certain activities, so that there can be no ambiguity about that. In that light, I ask the noble Baroness to withdraw the amendment.
§ Baroness Miller of Hendon
The Minister had a good shot at that explanation, given that it was interrupted by the Division. That is a matter for the Government, who like having Grand Committees at the same time 512GC as the passage of Bills in the Chamber, so such interruptions will happen more and more often. I cannot help saying that; when the Minister knows me better, he might know that I very often say things like that.
When I was interrupted, I forgot the flow of what I wanted to say, but when I was listening carefully to the Minister I realised why I did not accept his explanation, able as it was. We totally accept that, the Secretary of State must have notice of all the things mentioned in the clause; there is no question about that. She has her job to do, and she certainly has to do it. However, subsection (1) says:A person who becomes responsible for a relevant object must notify the Secretary of State that he has become so responsible".Therefore, the word "responsible" is important. Then there are several explanations of what it might be that the person is responsible for.
The Minister quoted paragraph (f), which is not part of the amendment but says,he begins in such waters to construct, to extend, to operate or use or to decommission the object".I would have no objections to any of that, because clearly he does those things and that is the end of the matter. However, paragraph (g) goes on to say,he begins to participate in any of the following activities".The activities are quite important, consisting of,the construction, extension, operation or use or decommissioning of the objectI come back to where I started, which is the normal use of the word participate, meaning, "to share or to take part in". That is all; it does not mean to be in control of, whereas the amendment that we have tabled, copying the Northern Ireland order, makes it clear that a person participating in the transmission, for example, co-ordinates and directs the flow of it and gets involved in it. That is far more important than someone who is simply sharing in an activity.
I have heard the Minister's comments, and I shall read them carefully, but at this stage I do not really and truthfully accept his argument. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clause 99 agreed to.
§ Clauses 100 to 103 agreed to.
§ Clause 104 [GEMA's power to act on behalf of Northern Ireland regulator]:
§ 6 p.m.
Baroness Miller of Hendon moved Amendment No. 112:
Page 86, line 11, at end insert—
§ The noble Baroness said: In the absence of my noble friend Lord Jenkin of Roding, I shall speak to this group of amendments.
513GC With regard to Amendment No. 112, at present there are two separate buy-out funds under the renewables obligation—one for England and Wales and one for Scotland. Suppliers, when complying with their renewables obligations, can choose to redeem ROCs in different proportions between England and Wales and Scotland. Therefore, Scottish ROCs can have a different value from England and Wales ROCs. This is not helpful. By the way, I hate using acronyms, but I think everyone knows that ROC stands for the renewables obligation certificate.
When an obligation is introduced in Northern Ireland, there will be three separate buy-out funds and therefore even more scope for unhelpful variance of ROC values. Each of the three relevant Governments would have to amend their existing renewables obligation orders to address this issue. It would be preferable if the Energy Bill were to create a single Great Britain fund and ultimately, when Northern Ireland introduces a renewables obligation, a single United Kingdom fund.
The Energy Bill's regulatory impact assessment already states that the intended effect of the Bill is to create a single obligation system throughout the United Kingdom. Paragraph 3.28 makes that quite clear. The ideal solution would be a single UK obligation, as this would reduce both the current administrative burden and market distortions. However, this may not be possible, perhaps for political reasons. The Department for Enterprise, Trade and Investment in Northern Ireland has already exercised its autonomy in choosing to sell the Northern Ireland obligation at 6.3 per cent by 2010, rather than the 10.4 per cent target employed by Great Britain. This differential will further exaggerate the distortions in the value of individual buy-out funds.
This amendment, which requires that the buy-out funds from all three obligations are pooled prior to recycle, thereby addresses the disparities in the recycle value of ROCs. This should help improve the functioning of the ROC market. This process would be undertaken by Ofgem, or possibly an independent market operator, as the administrator of all three funds.
I mentioned earlier that I was having a bit of difficulty with my eyes. I clearly am, because I did not say when I started my remarks on Amendment No. 112 that I wanted to speak also to Amendments Nos. 122, 123 and 144. The subject is the securitisation of the renewables obligation funds. I apologise for not saying that at the beginning.
With the leave of the Committee, I would like now to speak to Amendment No. 144, although that is slightly out of order in the group. If a supplier defaults and is unable to fulfil his obligation, a shortfall in the buy-out fund arises. Compliant suppliers receive less from the recycling of the buy-out fund than they would otherwise have anticipated—indeed, less than they may very well have relied upon receiving, thus putting themselves in some financial difficulty or, at the least, financial inconvenience.
514GC The effect of TXU and Maverick Energy's combined non-payment of £23.6 million to the buy-out fund has been a reduction in the level of recycled payments of around £4 per renewables obligation certificate. This is the type of material problem that the amendments seek to address.
This loss falls entirely on the compliant suppliers who are supporting the renewables obligation. Those who bought out their obligation by paying the buy-out are not affected. The risk of default by those due to pay discourages suppliers from purchasing ROCs. This, in turn, undermines the whole principle of the renewables obligation scheme. If suppliers favour buying out of their obligation over submitting ROCs as a compliance strategy, demand for the ROCs will be weak. The short-term impact on price and demand will have a long-term impact on the rate of new renewable development, something in which everyone is interested. As a result, consumers will end up paying the same amount for the renewable obligation but for a smaller amount of renewables generation. That is the problem. It could—perhaps "will" is a more accurate word—undermine the economic efficiency of the obligation. The solution proposed in Amendment No. 144 is to give the authority power to take security in various forms. That, as I mentioned previously, could perhaps be given the shorthand description of "securitisation".
However, it is right for me to point out that at least one other alternative suggestion has been floated by interested parties. This could loosely be called "mutualisation". It is a kind of group insurance, perhaps along the lines of the International Air Transport Association or British travel agents protecting their customers from a bankruptcy by a travel agent. Presumably it would be funded by a levy on suppliers. So far as I can tell from my post bag— I have received many different briefings and views on this—it is the solution preferred, in particular, by many smaller generators. However, those who object to that method point out that it entails the good paying for the defaults of the bad, that it is wrong to expect compliant companies to pay for the default of others, and that paying into what would amount to a mutual insurance fund will inevitably result in an increased expense ultimately to the consumer.
The amendment that I have proposed, which is far more on the securitisation line, is the solution to the problem suggested by the Renewable Power Association. It has told me that it believes the Government are not adverse to that way forward. However, I thought it right to put everything on the table. The association and I both concede that it is but one solution to the problem of default. If the Government have a different, viable and effective solution, we shall be glad to hear from the Minister what it is, preferably at this stage if possible. Doing nothing about this is not an option.
Amendment No. 122 in this group is a consequential amendment to Section 32C of the 1989 Act necessitated by the previous amendment. The value of a renewables obligation certificate to a supplier when presented to the authority in satisfaction of its 515GC renewables obligation comprises two elements: first, the buy-out payment that it would have to pay but for the presentation of the ROC; and, secondly, a share of the moneys paid by suppliers not presenting ROCs— that is, the buy-out fund—which are recycled to those who do present.
Thus, if a supplier defaults in making its buy-out payment, other suppliers who present ROCs to discharge their renewables obligation can suffer a loss. The intention of Amendment No. 122 is to enable provisions to be put in place to protect the value of ROCs from the failure of a supplier to make a buy-out payment. The proposed amendment contemplates at least two possibilities, which will need to be studied in much greater detail in due course since neither is without cost.
The first approach contemplates that suppliers could be required to provide security to ensure that all or part of their obligation is met. The second, alternative, approach envisages that in, it is hoped, the rare event of supplier default, the remaining suppliers would pay additional amounts as necessary to ensure that, over an appropriate period, the value of the buy-out fund remained whole. So there one has it: securitisation on the one hand or, on the other, mutualisation as an alternative.
If suppliers were required to provide security, the value of the ROC would be more secure. However, the measure should not distort competition. That may be the case if certain suppliers are able to present security in the form of a credit rating while others must provide a cash deposit. The costs of this additional layer of insurance, which ultimately would fall to customers, whether or not an event of default occurs, is also a legitimate area of concern. The payment of additional amounts by all suppliers in the event of default is likely to be achievable only if spread over an appropriate period. Unlike the case where security is demanded from suppliers, the cost to customers in this approach is incurred only when an event of default actually occurs. Although neither method provides a perfect security, enabling them at this stage leaves open the option, together with other options, of making the value of renewables obligation certificates more secure.
I now come to Amendment No. 123. The renewables obligation is a tradable market mechanism to increase the amount of electricity generation coming from renewable energy sources. If it is to work properly, an effective market for renewable obligation certificates (ROCs) is essential.
Ofgem administers the renewables obligations and operates the market for ROCs. How it does so is laid out in the renewables order. The fact that the details of the operation of the market are set out in legislation limits Ofgem's flexibility to manage the obligation efficiently. There are many aspects of the ROC market that can be optimised. As it is a relatively new concept, there are, no doubt, many wrinkles that need to be ironed out. At present, any changes have to be made through secondary legislation with mandatory prior consultation. To date, the DTI has run two 516GC consultations relating to provisions of the renewables obligation; and it will shortly have to conduct a fu rther one to implement the recently announced increase in the quota to 15.4 percent by 2015.
In my submission, the present procedures are far too inflexible to enable a speedy improvement to detailed administrative procedures involved in running the ROC market. Indeed, Ofgem has more than enough to do to administer the market alongside its other heavy legislative duties.
It is possible that it might be better to delegate the operation of the ROC market to what the amendment calls, "suitably qualified persons" or to an organisation. Ideally, that would be a body which included representatives of the industry. Such revocable delegation would not affect the legislative basis for the obligation, the eligibility of the technologies or the price of the buy-out. At present, the obligation does not cater for the situation where a supply company defaults.
My Amendment No. 144, to which I spoke first, is intended to deal with that in part. However, it is quite likely that other things will need to be clone to minimise the risks of supplier defaull, thus undermining the obligation, as I have already said. The fact is that the size of the obligation and the sums of money may grow in time. It might be thought advisable to shorten the compliance period as one way of reducing the risk and removing the temptation for a cash-strapped supplier from using the money for some other purpose. We are all familiar with the small employers who use the PAYE that they collect to pay their trade creditors' more urgently and more vigorously demanded debts. The essential thing is that the RO and the ROC system should be governed efficiently and effectively.
Amendment No. 123 is not entirely prescriptive. While it stresses that the authority is to perform its obligations efficiently—which noble Lords might say goes without saying—it adds the alternative of delegation. It does so only as a discretionary option and does not seek to interfere with Ofgem's primary management obligation.
I have taken rather a long time to describe that whole group of amendments because it is a complicated matter and I thought it was not right just to talk about "securitisation" without letting the Committee know that there are others who think there is an alternative. In responding, I very much hope that the Government will be able to tell us what it is. I beg to move.
§ Lord Ezra
I support what the noble Baroness, Lady Miller of Hendon, has said about Amendment No. 144, which deals with supplier defaults in connection with the renewables obligation scheme. This issue was highlighted, as everyone will know, by the TXU and Maverick cases. There could be further cases in the future. In a scheme of this sort, one has to learn from experience. Here is an opportunity to legislate and to put in place a way to provide further securities than 517GC presently exist it there are detaults in the future, as I am sure there almost certainly will be. I therefore support that amendment.
§ Lord Davies of Oldham
I am grateful to the noble Baroness, Lady Miller, for the constructive way in which she moved the amendment. She put forward several proposals which, as we all recognise, relate to a current difficult situation.
§ [The Sitting was suspended for a Division in the House from 6.10 to 6.22 p.m.]
§ Lord Davies of Oldham
Lest anyone should think that the Division was engineered by me to collect my thoughts and that I have that kind of influence in the Chamber, I should say that it has made my situation chaotic as I have forgotten one or two of the key questions that the noble Baroness asked. However, she will prompt me as we go along and I shall do my very best to respond to the debate.
I was saying how much I appreciated the constructive way in which she had approached what we all recognise is a difficult issue. I want to assure her that we have considered some of the constructive proposals and that we shall continue to do so. I hope that the noble Baroness will forgive me for replying to the amendments in numerical order rather than the order in which they were spoken to.
At present, there are buy-out funds for England and Wales on the one hand and Scotland on the other. It is suggested that a system of separate funds offers the potential for abuse—in particular, that opportunities would be gained for certain suppliers—and that that would be prevented by creating the single Great Britain-wide buy-out fund which the noble Baroness advocated. We have no evidence that any abuse in that respect has occurred thus far. The Government are certainly willing to consider such a move. We consulted on that when we held our technical review of the renewables obligation order last year. However, we do not yet have sufficient information on which to base a decision on whether to merge the separate funds.
I listened carefully to what the noble Baroness said and I understand the points that she made regarding merging the funds. We do not have a closed mind on the issue; in fact, we have a very open mind on whether that is a desirable way forward. However, it is too early and we do not have the requisite information that convinces us that this is the way forward. After all, the obligation has been in force for less than two years and we need more time to see how it is working. It would be premature to reach a final policy decision at this stage. We are certain that taking a decision now under the Bill would be the equivalent of setting a policy in concrete when we are by no means convinced that that is the certain route down which we should go.
Although we have not used them so far, we already have powers to operate the two existing funds as though they were one. We also intend that Clause 103 will allow the principle of operating the separate funds as if they were one to be extended to the fund that we expect to be established under Northern Ireland 518GC legislation. In future, it should be possible for the three potential funds to operate as though they were one, if decisions to that effect are taken. I recognise the force of the noble Baroness's advocacy, but, with the Bill, we have in place a framework within which that decision can be taken, if it proves to be the advisable choice to make.
We are also enacting legislation under the Bill to allow mutual recognition of Northern Ireland renewables obligation certificates and Great Britain renewables obligation certificates. That paves the way for a Northern Ireland obligation to be put in place at a later date, modelled on the Renewables Obligation Order 2002 for England and Wales and the Renewables Obligation (Scotland) Order 2002. We plan to table government amendments on Report that will comprise additional clauses to complete the mutual recognition of the two sets of renewables certificates. The intended result is that although ROCs will be issued separately in Great Britain and Northern Ireland and although suppliers will be obligated under three separate orders—for Scotland, England and Wales and Northern Ireland, depending on where they supply electricity—any supplier will be able to buy and use any ROC under any of the obligations.
The Government and the devolved administrations are taking a consistent approach to renewables development in the UK and the achievement of the renewables targets set in the energy White Paper. I hope that my comments on the proposed amendments give confidence that we will revisit the issue of a UK-wide buy-out fund when, as I have already explained, we are better placed to make a decision.
That almost concludes my remarks on Amendment No. 112. I shall have to come back to the Committee on the others.
§ [The Sitting was suspended for a Division in the House from 6.27 to 6.37 p.m.]
§ Lord Davies of Oldham
I had just completed the remarks I wanted to address to Amendment No. 112 and I had indicated that in certain crucial areas the Government had an open mind on certain propositions in the amendment.
On Amendments Nos. 122, 123 and 144, while the Government supports the aim of safeguarding the renewables fund against default, there are a number of problems that need to be overcome before we can accept amendments to the Bill to address the issue. I recognise the concern expressed by the noble Baroness, Lady Miller, in moving the amendment on the current issue. Companies can and do fail and as the renewables obligation is a market-driven mechanism, there is a limit to the extent to which the Government should intervene. When the problem of the shortfall occurred in the autumn, the Government made it clear that they had no plans to make good the shortfall as that would undermine the concept of a free market in renewables obligation certificates. I note that, although the amendments are constructive—they were moved in a constructive manner—none of them addresses the current shortfall, which is the cause of considerable concern and anxiety.
519GC We are working with the industry to consider ways of minimising the impact of a future shortfall. The Government are already committed to taking action to address the issue of late payments and are bringing forward changes to the renewables obligation order to effect that change. I should also emphasise the Government's commitment to the renewables obligation as the most effective mechanism for delivering our renewable energy targets at an acceptable cost to the consumer. We have demonstrated that commitment by the announcement last December to increase the level of the obligation for the years between 2010–11 and 2015–16.
A number of options for addressing the shortfall have been put forward in our discussions with the industry, and we had the advantage of some of those being voiced today when the noble Baroness, Lady Miller, moved the amendment. Most of the options are contained in the framework of the three amendments that we are discussing.
While securing the buy-out fund, as suggested by Amendment No. 122, would no doubt provide some additional confidence in the market, it would do so at a high price. To require suppliers to put in place such security measures could have a harmful effect on competition by discouraging new entrants through the requirement to provide additional upfront funds. That burden would bear particularly heavily on smaller suppliers. The noble Baroness emphasised her concern about small suppliers. We also need to consider the costs to consumers. Noble Lords will be aware that those are very real problems with no obvious solutions within the timescale of the Bill. While we are therefore unable to accept these amendments, we recognise the spirit in which they have been moved. We are continuing discussions with the industry, given the seriousness of the problem, and the importance of a properly functioning renewables market.
Amendment No. 123 envisages the widening of Ofgem's powers into areas that we do not believe fall naturally to it as a regulator. My most negative response is to Amendment No. 123, which seems to produce a series of functions for a regulator that are difficult to encompass.
§ Lord Tombs
Perhaps I may challenge the Minister on what appears to be an uncharacteristic inconsistency. Does he agree that the renewables obligation itself constitutes an intervention in the free market?
Lord Davits of Oldham
Certainly, in one sense it creates a special market. If I live long enough I probably could not think of a free market in economic affairs anywhere in the world. I hear what the noble Lord says; he has made an obvious point: there is an aspect of the renewables that is managed. I was seeking to emphasise something rather different from suggesting that the regulator should take up functions that would give the capacity for a whole range of very significant interventions in the market that would not normally fit in with the concept of regulation.
520GC I move on to a slightly more constructive and positive point. While the Government support the aim of Amendment No. 144 which seeks to safeguard against supplier default, the amendment does not. of itself, provide any mechanisms that would reduce the likelihood of suppliers defaulting. As I have said already, the renewables obligation is a market-based mechanism, and in competitive markets, there are inevitably risks of failure. This provision could be seen as placing a duty on the Secretary of State to safeguard against supplier default, which is not consistent with our market-based approach—I believe I take the noble Lord, Lord Tombs, with me on that.
Nonetheless, the Government take the issue of supplier default very seriously and we are working at present with the industry to develop means of reducing the likelihood of supplier default and mitigating its impact. Again, I give the undertaking to the Committee that if we make progress in sufficient time we shall bring forward government amendments to address that issue in the Bill. However, it will be recognised that the progress of the Bill is taking place against a background of a particular difficulty, occasioned last autumn. We have to address how we tackle that. In fact, the amendments are drawn from that experience, to see how we can rectify the situation for the future. I am asking for recognition by the Committee that, if we make sufficient progress before we get to later stages of the Bill, we shall introduce government amendments to incorporate an agreed solution to the issues that we are discussing with the industry.
§ 6.45 p.m.
§ Lord Dixon-Smith
The Minister has made a slightly provocative statement, suggesting that if we do not make sufficient progress, he will not introduce the amendments. I am sure that is not his intention; if the amendments are justified in their own right, I hope that he will introduce them.
§ Lord Davies of Oldham
I was suggesting that the amendments themselves do not necessarily produce the solution to the position that we need to arrive at and which we shall obtain through discussions and agreement with the industry. I am not in a position to say what we would do as a fallback position, beyond the amendments. I am saying that we shall strive to reach an agreement that enables us to table amendments at an appropriate stage of the Bill Of course, noble Lords will see the development of the position during the course of the Bill and will no doubt retable various solutions to the difficulties if they feel moved to do so.
§ Lord Dixon-Smith
I am most grateful for the explanation, but from the way in which his statement was worded, it seemed that the future of the amendments depended on the progress of the Committee, rather than the progress of negotiations outside. He has made the matter plain and there is no need to say any more.
§ Lord Ezra
I am a little surprised that there should be any qualifications about Amendment No. 144, as all it 521GC does is enable the Secretary of State to work up solutions. I am sure that if a specific solution had been mentioned in the amendment, the Government would have found many reasons why they could not be applied, because the matters are complex and difficult. It would help if we were satisfied that the Secretary of State will address the problem; that is all that the amendment says.
§ Lord Davies of Oldham
As I suggested in my initial remarks on the amendment, we are entirely in sympathy with the thinking behind it and we are already conscious of the necessity for action against the proposition. That is the action that we are carrying out at the present time. Because of the negotiations that are taking place and because we are still at Committee stage when there are opportunities to address the issue further, we are simply asking for a recognition that later we may be in a position to be categorical about our solutions to the situation and to provide exactly the right amendments to the Bill that will encapsulate the proposed solutions to the problem.
§ Baroness Miller of Hendon
I thank the Minister for what was overall a sympathetic hearing to my remarks. I am not sure whether he was just trying to be charming—although he is always charming, as my noble friend has just said. He addressed my remarks kindly, but the bottom line is that the Government are as confused about how to find an absolute solution as we were in promoting a solution. I made it clear that we believed that securitisation was probably the better route, but on the other hand the problem is not easily solved. There can be difficulties with both options.
I was interested in what the Minister said in discussing Amendment No. 122, when he said that it might interfere with the free market. I drew a deep breath and thought, "That is absolutely wonderful, the Government have come now to agree with the free market". However, the noble Lord, Lord Tombs, in his extraordinarily perceptive question, altered my point of view. The Minister then said that of course there was not a free market anyway, so we did not arrive at a situation that answered Amendment No. 122.
I thank the noble Lord, Lord Ezra, for his support for Amendment No. 144. Perhaps the Minister could point out the words in the amendment that bother him. We are saying "as soon as practical", so the Government can choose the time after the passing of the Bill to make regulations to establish a scheme. The Minister says that of course he cannot accept the amendments yet, although he has sympathy with them—that was the nice part. Then my noble friend Lord Dixon-Smith used words that I had already written down: "If we make sufficient progress we shall find some solutions". I was very glad that that was clarified.
However, the Minister said that it will take time to come to the solutions; therefore, it will be better if the passage of the Bill takes a long time so that the Minister has longer to find the solutions. The quicker 522GC we are the worse matters will be. We are taking this serious amendment in a light-hearted fashion because we do not have an absolute solution and the Government certainly do not have one either. We understand that the Government will bring forward amendments shortly. Whichever way one looks at the matter, the bottom line is that, if there is a threat that people may not be able to pay the money and those who pay will somehow be obliged to meet the shortfall, there is a disincentive to people to become involved in the system. As long ago as December or November, the Government said that they certainly would not make up the shortfall, so there is a problem. With respect, the Government have to find the solution to the problem, however difficult it is.
In a moment I shall withdraw the amendment, but first I would like to hear the Minister's response to the point raised by the noble Lord, Lord Ezra. What is wrong with Amendment No. 144? Which part of it does the Minister believe makes it impossible for him to accept? The amendment simply enables the Government, in due course—as soon as they are able—to make regulations to deal with the matter. The Minister has said that at some stage they will do something about it, but there is no timescale in Amendment No. 144 so I believe that the Minister could have been more direct.
§ Lord Davies of Oldham
I apologise if I was less than direct. Part of the problem is that I have had a scattered approach to this group of amendments due to Divisions which have disturbed the coherence of my responses. Our anxiety about the proposed amendment is that potentially it would leave the Secretary of State liable for any failure. Accepting the amendment into the Bill—
§ Lord Davies of Oldham
The amendment seeks to deal with the problems of default by suppliers. If agreement with the industry has not been achieved within the framework of the Bill and, therefore, we are not able to put forward amendments that are clear and satisfactory, we have to guard against producing legislation that would make the Government responsible for failure. That would be the implication of the issue of supplier default.
§ Baroness Miller of Hendon
I thank the Minister for giving way. I am afraid that, in my humble view, it does not do that. I accept that it is a humble view but, as I said earlier, two lawyers are advising me separately. Let us consider the issue. The amendment states:The Secretary of State shall as soon as practical".It will be for the Government to decide when it is practical. So far as concerns the Government, it may never be practical and therefore the amendment is not prescriptive in any way. It simply states that as soon as the Government are in a position to do something after the passing of the Act, they will make regulations to establish a scheme.
523GC The Minister said that the Government are to come forward with a solution at some stage. Therefore, the amendment simply seeks to ensure that one day, when possible and when the Government have considered the matter and taken soundings from everyone, they will, as they said they would in Committee, come forward with a solution. The amendment even goes on to state that supervision of the scheme can be delegated and so on. The word "may" appears in the second part of the amendment and the first part is constrained by the words "as soon as practical". If it simply stated:The Secretary of State shall after the passing of this Act",I should accept everything that the Minister is saying. But the amendment deliberately does not say that. Under those circumstances, I consider it appropriate that we understand what is wrong in answer to the question posed by the noble Lord, Lord Ezra.
§ Lord Davies of Oldham
I am no lawyer and therefore I hesitate to dispute the implications of the amendment. I believe that I can only convey to the noble Baroness and to the noble Lord who also spoke to the amendment that, despite the conditional words within it—I recognise how gently the amendment has been tabled and how constructive it is—we fear that its effect would be to place a duty on the Secretary of State which would then render him liable in these circumstances. That is our position.
I have listened very carefully to what has been said today, and we shall examine the situation further. I am making this contribution against the background of strenuous efforts on our part to reach agreement with the industry and to solve the problems in order that the Bill can be implemented in time. That work is taking place with the greatest urgency and I make these comments against that background. That is our anxiety about the amendment and that is why, at this stage, I ask the noble Baroness to withdraw it.
§ 7 p.m.
§ Baroness Miller of Hendon
I intended to withdraw it anyway, and I shall certainly not tire the Committee by mentioning it further. The Minister said all that I wanted him to say. I shall withdraw the amendment and the Government will consider the matter. That was all that was required. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Clause 104 agreed to.
Baroness Miller of Hendon moved Amendment No. 113:
After Clause 104, insert the following new clause—
AMENDMENT OF ELECTRICITY ACT 1989
§ The noble Baroness said: In moving Amendment No. 113, I shall speak also to Amendment No. 113ZA and, with the leave of the Committee, I shall touch on Amendment No. 113ZAA, which the noble Baroness, Lady Miller of Chilthorne Domer, has tabled as an amendment to my Amendment No. 113ZA. It may be easier if I deal with that while I am on my feet.
The renewables obligation obliges licensed electricity generators in England and Wales to supply a specified portion of their electricity from renewables. Suppliers who cannot meet the percentage that they should must purchase renewables obligation certificates to make up their shortfall.
While most CHP plant is intended to supply a particular industrial operation or site, if there is spare capacity the owner can become a licensed electricity supplier and sell it to the network. I would have thought that that should be encouraged, if only as a means of saving on the use of fossil fuels and reducing harmful emissions.
The supplier will be subject to the renewables obligation and will have to buy ROCs to make up for any shortfall in his use of renewables. That is ridiculous. If, instead of putting his surplus current into the grid, he allows it to go to waste, perhaps by floodlighting his premises, leaving machines running all night and investing in an ornamental fountain, he would have to pay nothing. The rule places CHP generators in the same category as other generators, such as combined cycle gas turbines and coal-tired generating plant, which are not only less efficient than CHP, but emit far more CO2 per unit of electricity generated.
The exemption of CHP from the renewables obligation is entirely justified by its energy efficiency. It will give a welcome boost to the technology now being developed. It is estimated that with the present liability to the renewables obligation it will cost the CHP sector about £100 million to support other renewable technologies by 2010, and that is hardly an incentive to get into the field. If potential CHP generators decide it is not worth their trouble to supply power to the grid, a whole slice of the Government's plans for reducing emissions, meeting our Kyoto obligations and supplementing our fuel supplies will simply be lost.
Exempting CHP would be of immense benefit, for example, to the agriculture industry. As long ago as 2000, the Rural Commission urged the recognition of the benefit of agricultural CHP facilities. On the other side of the coin, the present situation has resulted in the loss of essential skills. I have been informed, for example, that a specialist turbine manufacturer in Newton Abbot has lost 25 per cent of its work force due to a reduction in the demand for CHP. The short 525GC explanation of my amendment is that it would amend the Electricity Act 1989 so as to exempt CHP generating plants from the renewables obligation.
The wording of Amendment No. 113ZA virtually speaks for itself. It follows logically from the argument in favour of Amendment No. 113. The plain fact is that the Government have no discernible policy on CHP, except for paying lip-service to the concept. However, it is not sufficient to be vaguely in favour of it, especially when, as I pointed out with regard to the previous amendment, far from encouraging the industry and the technology, owners of CHP plants are taxed and penalised in exactly the same way as the worst smoke producer in the country. The Government indicated that they were formulating a separate policy for this important source of supply and important way of reducing harmful emissions. However, it seems a long time in coming, and I do not understand why the policy could not have come in time for the White Paper and the publication of the Bill.
The amendment is a probing amendment and is intended to extract a proper timetable from the Government. I remind the Committee, particularly the Minister, that CHP is one of the most cost-effective ways of reducing the United Kingdom's carbon emissions. Those are not my words; they are those of the Government's climate change strategy and the Performance and Innovation Unit's review of energy policy in 2002. As recently as last June, the DTI calculated that every 1,000 megawatts of electricity from CHP saved between 0.7 million and 0.9 million tonnes of carbon. CHP enhances security of supply, which is a vital consideration, bearing in mind that electricity demand is calculated to grow by up to 19 per cent by 2020, on the one hand, and gas to contribute up to 75 per cent of generating fuel, on the other. By that time, we will be talking about imported gas.
CHP helps to tackle fuel poverty, as using CHP with community heating can cut consumers' bills by up to 20 per cent. Bearing in mind the Government's fuel poverty target—apparently already at risk—I believe that it is an important factor. None other than the Prime Minister emphasised all the points that I have just made.
The Government's response to the Environment, Transport and Regional Affairs Committee's report on the climate change programme in August 2000 paid similar lip service to CHP. It states:
The Utilities Bill provides a power to the Government to secure additional use of CHP through obligations on energy supply or distribution utilities to encourage or support CHP development, equivalent to the provisions for the promotion of energy generation by renewables".
But what has happened to that high sounding ambition?
At Second Reading I referred to recent widespread losses across the CHP sector since the introduction of NETA. The failure to exempt CHP from the climate change levy and new regulatory costs being imposed on the sector by the extension of the renewables obligation are all contributing to CHP's problems.
More pious expressions of support from the Government are found in a letter from the Minister of State for the Environment to the CHP Association on 20 March 2000 which said in relation to the Utilities Bill:
I can confirm that the new powers for ministers to create obligations in relation to the promotion of energy efficiency could be used to create an obligation in relation to CHP".
Despite those powers which were carried into the Utilities Act, in which Sections 58 and 79 gave the Government power to set an obligation in relation to a specific technology, including CHP, the Government have not taken advantage of this. On the contrary, as I have just said, their policies seem to militate against CHP. Why is that? The theory is that there is infighting between Defra—which has the responsibility for the Government's CHP target—and the DTI which regularly tells the representatives of the CHP industry that the CHP target is "nothing to do with them". This is even though the DTI has its hands on the levers that need to be pulled to set the UK on the path to the Government's CHP target—a target which will bring over £3 billion of investment into the CHP market and at the same time improve the competitiveness of the United Kingdom.
When I began my speech on Second Reading I questioned why what was essentially a DTI Bill was being conducted through your Lordships' House by the Parliamentary Under-Secretary of State at Defra. However, there is definitely one advantage in this arrangement. The noble Lord, Lord Whitty, with one stroke of his ministerial pen, will be able to set CHP back on the rails again. This amendment would put an end to dithering and would give the Government a firm instruction within a very short time limit to formulate, promulgate and instigate a much delayed CHP policy.
The amendment would give the Government six months from the passing of the Bill to draw up their long awaited strategy and should concentrate the Government's mind, especially if they can begin working on it this very day rather than wasting further time waiting for the Bill to complete its passage through Parliament. The proposed new subsections (2) to (4) in the new clause require the Government to implement the new policy as soon as it is formulated rather than consigning it to some pigeon hole or other. Anticipating a possible problem with the parliamentary timetable, the amendment would authorise the use of secondary legislation rather than having to wait for a full legislative slot to become available. The very minimum that I expect from the Minister today is a firm date by which the Government's policy on CHP will be announced, and details of how, and how soon they expect to put it into effect.
With the leave of the Committee and while I am on my feet I should like to mention Amendment No. 113ZAA which is an amendment in the name of the noble Baroness, Lady Miller of Chilthorne Domer, to my Amendment No. 113ZA. I was very grateful to the noble Lord, Lord Ezra, for supporting my amendment. I am interested that the noble Baroness, 527GC Lady Miller of Chilthorne Domer, has put down an amendment which may comprise a means of riding two horses at the same time.
The amendment would require the policy to be formulated by the Secretary of State to distinguish between domestic and commercial users. I believe that on the face of it, this does not detract from my basic proposal. I do not really have a problem with it; the only thing is that the Government might say that it was too prescriptive, but I know not. I beg to move.
§ Lord Ezra
I support strongly the emphatic way in which the noble Baroness, Lady Miller of Hendon, has spoken to Amendments Nos. 113 and 113ZA. My noble friend Lady Miller of Chilthorne Domer will be dealing with Amendment No. 113ZAA, in her name.
The Government's attitude towards CHP is becoming increasingly anomalous, as the noble Baroness pointed out. On the one hand, we have the strongest possible verbal support. All government publications on energy policy strongly support the concept of CHP for the reasons that the noble Baroness gave. On the other hand, the policy to support those warm statements is increasingly lacking. CHP is now going through a very difficult period, and has been for some time.
The report issued by the Government on CHP policy last year was extremely disappointing. It simply enumerated the measures which the Government had been taking without in any way indicating what further measures might be taken. Let us hope that the next report which the Government produce will show what should be done additionally to bring about the benefits which they freely admit would flow from CHP.
Meanwhile, Amendment No. 113 would correct a long-standing anomaly—that CHP-exported electricity is penalised under the renewables obligation arrangements. It seems extremely odd that the Government have effectively required one low-carbon technology—CHP—to cross-subsidise another low-carbon technology—namely, at present, wind. This just does not add up, and I should have thought that Amendment No. 113, as one step towards supporting CHP, was a highly desirable proposal for the Government to accept.
§ Baroness Miller of Chilthorne Domer
First, I strongly support Amendments Nos. 113 and 113ZA. The only reason I have not put my name to Amendment No. 113 is because there are four names to it.
Amendment No. 113ZA is really a probing amendment for the Government. It is in no way intended as a criticism of the first amendment in the group. My noble friend Lord Ezra has much greater expertise than I in matters relating to CHP and the frustrations arising from the Government's attitude to it.
My amendment is tabled simply to discover whether the Government have understood the importance of the two different sectors—the domestic user and the industrial and commercial user. Accepting 528GC Amendments Nos. 113 and 113ZA would hit a large number of their targets for the domestic user in addressing fuel poverty, as well as providing affordable warmth and cheaper electricity, as Tony Blair himself said when talking about CHP. In addition, the industrial and commercial users would reduce emissions and use less fossil fuel. My amendment is simply to indicate the two very different sets of targets that the Government claim to have for two very different sectors, and both of them can be met by the amendments.
§ 7.15 p.m.
§ Lord Whitty
I readily accept that CHP can make a significant contribution towards energy management and reducing carbons because of its recycling of heat, and that the objectives for CHP under our energy policy are ambitious. At present, we are not on a trajectory to meet them, so one could argue that CHP requires additional support to meet even the 2010 target of 10 gigawatts of CHP in operation.
The amendments, and the first one in particular, suggest a degree of support for CHP that would have knock-on effects for the rest of the energy industry. It tries to take three different approaches. First, it seeks to remove CHP from the base of those subject to the renewables obligation. Secondly, it seeks to define CHP as a renewable energy source for the purposes of the renewables obligation. Thirdly, it would redefine "fossil fuel" so as to exclude CHP.
There are serious problems with all of those proposals, although some are more substantial than others. The fact that we need to give further thought to the support and promotion of CHP is accepted by the Government. Indeed, as the noble Lord, Lord Ezra, said, we shall need to introduce a further CHP strategy very shortly. Moreover, in terms of the interaction between CHP and the ROC provisions, as we said in the energy White Paper we shall undertake a review of the obligation in 2005–06. I can give the commitment now to the Committee that part of that review will be to consider how CHP is handled in the context of the renewables obligation.
However, we need to be careful. The renewables obligation is intended to deliver a very substantial part of the energy policy in terms of the renewables figures. If we undermine that, there is no point in boosting CHP slightly. That is almost the obverse of the argument that the noble Baroness was using. We need to ensure that the renewables target is met and not undermined by anything we do for CHP, which should not be considered in isolation. If we removed CHP from the base on which the obligation is based, we would automatically reduce the size of the renewables market, which would threaten the delivery of the renewables target.
We need to maintain investor confidence in the renewables sector, as we need to remotivate investor confidence in CHP. However, proposed changes that would undermine investor confidence in renewables are not a sensible way in which to do that. Indeed, the CHP sector would not receive a huge boost were we to do that.
529GC Redefining CHP as renewable and including it under the renewables objective would have a far more major effect in relation to the renewables target. Existing CHP schemes generate far more electricity than the current level of the obligation. The output from the CHP target, if we meet the 10 gigawatts, will exceed the renewables obligation for 2010. It must be borne in mind that CHP is in most circumstances based on fossil fuel. There are exceptions; there is some CHP that is based on biomass, but in general it is based on fossil fuel. Its contribution in terms of our international obligations under the renewables directive is not allowable under that indicative target.
There is another alternative, I suppose, in that one could increase the size of the renewables obligation to take account of CHP so redefined. But that in itself would place a greater burden on the delivery of all the various strategies. Only in the circumstances in which CHP was using a renewable source could it be defined as a renewable fuel. None of that obviates the need for us to look at CHP and to see what more we can do for CHP, but I do not think that the amendments as they stand would achieve that. At least they would not achieve it without serious detriment to our other main target on renewables.
Amendments Nos. 113ZA and 113ZAA are unnecessary, in the sense that they do not do anything more than the Government are already doing. We have published the strategies on combined heat and power. We now intend to publish the final version after the Easter Recess to coincide with the publication of the first year review of the energy White Paper. That strategy will help to provide the foundation for a more secure future development for CHP.
There are a number of measures which the noble Lord, Lord Ezra, said are not sufficient. Nevertheless, there are a number of measures already in place, the full effect of which need to be taken into account. The amendments to require greater reporting than we already do on CHP I think are unnecessary. The content of those amendments are already contained in the commitments the Government have given, are in the energy White Paper and will be reflected not only in the CHP report of the final strategy we intend to issue after Easter but also in the other documentation we intend to produce at that time. Specifying one particular area of that by legislation is not particularly appropriate.
So, while recognising the essential problem and that noble Lords are attempting to find solutions to it, I do not think that the Government could accept what is contained in Amendment No. 113. Certainly, the attempt to approach it on three different bases, all of which have some implications for the renewables target, is not sensible.
§ Baroness Byford
The Minister in his response to my noble friend's amendment has highlighted the problems that we face with the Bill. The honest truth is that the Government have no strategy at all. That is why we are labouring under such difficulties. From our debates yesterday on the climate change, the 530GC Government clearly have no strategy on nuclear. They obviously have a confused strategy on CHP. We have a certain amount of wind strategy; we are not even considering other forms of renewables within the Bill. I know that we shall not reach the amendment tonight on either biofuels or biodiesel. Biomass and wave power are not mentioned.
I have to say to the Minister that I am not surprised that some of these amendments moved by noble friend have been moved in such detail and with such great difficulty. It is difficult when one is actually fighting to try and get some form of sense into the Bill and all we are told is, "We are going to think about it. There is a final version coming after Easter. More documentation will be laid". I know it is late and I am not getting at the Minister. That makes it difficult for us all. It is difficult for him, but I can assure him that it is that much more difficult for this side of the Committee. So while some of his words are encouraging, I really feel I should put on record the fact that if the Government had a strategy it would make my life much easier.
§ Lord Whitty
I have to say to the noble Baroness that, with the best will in the world, the Government have a strategy for energy, which was set out in the White Paper. She may not agree with all aspects. She clearly does not agree with how we treated nuclear energy, but there is a very clear strategy. There are certain measures in that strategy which set out to deliver the objectives. We may need to come forward with other measures, both immediately and longer term. We recognise that. That is part of making sure that the strategy is delivered.
However, a piece of legislation is not a strategy. We have a clear strategy. We have measures, as I say, to deliver it. We may need to deliver parts or all of it. But I do not think that the Government can be accused of not having a strategy. This compares somewhat starkly with the fact that we did not really have an energy strategy for the previous 20 years. Effectively, the only policy then was to get energy as cheaply as possible through various competitive measures, some of which worked. But we did not have any clear idea of where we wanted the balance of energy to work out, or how we faced up to the environmental challenges which a free-for-all in energy was bound to produce.
I feel slightly over-sensitive perhaps about accusations over strategy. I also think that the noble Baroness should be a little sensitive in that previous governments never produced any strategy whatever. While there may be parts of our strategy we still need to develop, and perhaps we can discuss those, they are at the outline of the strategy. The objectives of that strategy are fairly clear. I am sorry to make such philosophical and political points at this stage of the evening, but I doubt that we shall reach another amendment, and therefore I thought that I would place that on the record.
§ Baroness Miller of Hendon
The Minister is right to have his say, given that I seem to have been speaking 531GC for a long time, as did the noble Baroness, Lady Miller of Chilthorne Domer. I expect that the Minister wanted to get something off his chest.
I say to the noble Baroness, Lady Miller of Chilthorne Domer, that I totally understand what she said. I did not have any problems with it, other than the fact that the Government are always saying that these things arc too prescriptive, and I thought that that would give them an excuse to say no to the proposal altogether. I understand what the noble Baroness said about being on the Front Bench with the noble Lord, Lord Ezra, and I agree totally with what she said. There is the noble Lord, Lord Tombs, and last week we heard from my noble friend Lord Jenkin of Roding. Sometimes, those of us who come to energy as part of a much bigger brief feel that it is nice to have experts around us. Although we do the very best that we can without the benefit of officials sitting behind us and we try to put forward everything in the best way that we can, the fact is that these are complicated matters. We are aware of that and are trying to do the best that we can.
I shall not enter an argument with the Minister about whether the Government have a strategy or whether we had a strategy. It is too late in the evening for that. I shall say only that many people felt that the 532GC energy White Paper was deficient not only because the Minister said to my noble friend Baroness Byford, "Well, it's because you didn't say you wanted us to say something about nuclear energy; we never mentioned nuclear. Whether we did or did not want that or would or would not want it, it is for the Government to decide what they want in an energy White Paper, and that is how we are content to leave it". However, many people believed that what was in the energy White Paper would not produce sufficient energy to ensure that we had sufficient light and warmth and so on. CHP is one way in which we were trying to bridge the gap. I believe that that is important. I beg leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ [Amendments Nos. 113ZA and 113ZAA not moved.]
§ Lord Davies of Oldham
This may be a convenient moment to suggest that the Committee adjourns until 2.15 p.m. on Thursday.
§ The Deputy Chairman of Committees (Lord Hogg of Cumbernauld)
The Committee stands adjourned until 2.15 p.m. on Thursday.
§ The Committee adjourned at twenty-seven minutes past seven o'clock.