Combined Heat and Power (Hansard, 24 June 1997)

§ The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Baroness Hayman)
My Lords, the Government are now making a detailed assessment of combined heat and power potential, and will set the new target in the light of that assessment and the role of CHP in combating climate change. The case for increasing the UK's CHP capacity to 10 gigawatts was set out in the 1994 Labour Party policy document, In Trust for Tomorrow. My right honourable friend the Deputy Prime Minister recently wrote to leaders of major industrial companies underlining the benefits of CHP in improving industrial competitiveness and reducing carbon dioxide and other harmful emissions. We are very pleased that the CBI has agreed to endorse the campaign.

§ Viscount Mersey
My Lords, I thank the Minister for her reply. As a former president of the Combined Heat and Power Association, I certainly wish the Government luck in achieving their target. However, is the noble Baroness aware of the actual scale of engineering work required if we are to raise our combined heat and power percentage up to 20 per cent. of total generating capacity? In particular, can the noble Baroness give me an assurance that the present formula rating scheme will not be abolished in 2000 AD? That would actually increase rates on combined heat and power plants—I gather by up to 70 per cent. in some cases. That would certainly not be conducive to this massive and rather welcome planned expansion.

§ Baroness Hayman
My Lords, I am grateful for the support of the noble Viscount for the general thrust of 1466 government policy in this area. We recognise that this is an important issue for those involved in CHP projects, which, as I have said, we are committed to encouraging in the review of the rating system. We are actively considering a range of options to ensure that CHP schemes do not face unnecessary increased costs as a result of the proposed changes to the rating system.

§ The Earl of Lauderdale
My Lords, does the noble Baroness realise that when she speaks about detailed assessment she is repeating language which we have heard over and over again in this House from a Tory Government and now from a Labour Government and which has the effect of delaying decisions? I say to the noble Baroness in the nicest possible way that we are getting rather tired of that kind of answer.

§ Baroness Hayman
My Lords, I am not sure I should like to hear the noble Earl when he is speaking in a nasty way! That comment was a little unfair when one considers that the Deputy Prime Minister has already written to 300 major industrial companies to explain how important the Government consider combined heat and power to be. We have already received an extremely encouraging response to that exercise. Schemes have been announced, such as that announced in today's Financial Times by Heinz. Those schemes show the economic and environmental advantages of combined heat and power. We are making progress in this area and the Government are intent on making further progress.

§ Lord Ezra
My Lords, I declare an interest, in that I am chairman of a company which promotes combined heat and power. My question relates to the recently published government report on the private finance initiative. To what extent will the streamlined PFI be used in support of the Government's proposals? I draw the Minister's attention in that connection to the fact that a new task force should sign off the commercial viability of all significant projects before they go through the normal commercial processes. Many of these combined heat and power projects are fairly small. How will they be dealt with?

§ Baroness Hayman
My Lords, I am grateful for that question. I talked earlier about the initiative we have taken with industry, but we believe there is enormous scope for these kinds of projects in the public sector. There is already an interesting combined heat and power scheme in Whitehall, in Downing Street. There are vast possibilities for establishing such schemes in the health service, in education and particularly in housing. We are considering how the capital receipts initiative and yesterday's announcement on public/private partnerships could provide new opportunities for combined heat and power schemes in the public sector.

§ Baroness Gardner of Parkes
My Lords, is the Minister aware that the Royal Free Hospital Trust, of which I am chairman, has introduced a combined heat and power scheme which will save the hospital about £1.5 million a year? We hope that it will shortly generate an additional half a million pounds a year from the sale of 1467 surplus power to the National Grid. Does the noble Baroness support similar schemes in the health service, as I believe she said she did?

§ Baroness Hayman
My Lords, I am certainly aware of the connections of the noble Baroness with the health service, having had the opportunity to work with her in that area. These kinds of scheme have great economic benefits in areas of the public sector such as the health service. However, we should not underestimate the environmental benefits. In this area environmental and economic benefits go together.

§ Lord Moynihan
My Lords, I declare an interest as president of the British Wind Energy Association and a director of Enron Renewable Energy Corporation. The Minister will know that government support for CHP is closely tied to government support for renewable energy. Will the Minister confirm therefore that it is the Government's intention to introduce a further round of the non-fossil fuel obligation?

§ Baroness Hayman
My Lords, we recognise that if we are to meet the challenging targets that exist with regard to decreasing pollution levels, we shall have to consider a whole range of issues. CHP is the measure that this Question refers to, but we shall also have to address the use of renewable energy sources.

§ Viscount Mersey
My Lords, in six months' time the United Kingdom will have the presidency of the European Union Council of Ministers. Do the Government intend to secure a Europe-wide target for CHP during their presidency?

§ Baroness Hayman
My Lords, we believe that our presidency will provide opportunities in this field. We shall certainly wish to encourage other countries to maximise the social, environmental and economic benefits of CHP. We also believe that there are opportunities for British firms and British technologies in an international context.