§ 2.45 p.m.
§ Lord Ezraasked Her Majesty's Government:
What steps they will be taking to achieve the new target of 10 gigawatts of combined heat and power generation by 2010.
§ The Parliamentary Under-Secretary of State, Department of the Environment, Transport and the Regions (Lord Whitty)My Lords, we shall shortly consult on the draft strategy, which will include policy, fiscal and regulatory measures. The forthcoming key measures already announced for good-quality CHP include exemption from the climate change levy, eligibility for enhanced capital allowances and de-rating of plant and machinery. We are implementing a CHP quality assurance programme to determine eligibility for these benefits. We are also launching a CHP club to provide integrated support to encourage new schemes.
§ Lord EzraMy Lords, I thank the Minister for that informative response. Before asking my supplementary question, I should like to state that I am chairman of a combined heat and power company in Sheffield which generates what is known as "green" energy, or environmentally friendly energy, to many of the premises in that city. Naturally, for that and other reasons, I strongly support the Government's measures in favour of combined heat and power. However, will the Minister explain the anomaly arising from the climate change levy and the new electricity trading arrangements which would bear down on CHP? In regard to the climate change levy, why is it that if CHP electricity is supplied to users it does not bear the levy, but if it is supplied through electricity suppliers, it does? In line with the Government's strong support for combined heat and power, will they put right these anomalies, and in particular the anomaly to which I have referred?
§ Lord WhittyMy Lords, the noble Lord is correct in saying that good-quality CHP is exempt from the levy where the electricity is consumed on site, internally, and where it is sold direct to other customers. It is the treatment of CHP electricity in the grid, to use "old-speak", that is not exempt from the levy. That is consistent with all other electricity which is sold via licensed suppliers. The Government consider that the other support that we are providing for CHP among the measures to which I referred in my earlier Answer will be sufficient to allow CHP a significant advantage and will, therefore, contribute to the target that we set out in the climate change programme.