Renewable Energy Bill [H.L.]

HL Deb 14 January 2005 vol 668 cc469-95

Lord Redesdale

My Lords, I beg to move that this Bill be now read a second time.

The purpose of this Private Member's Bill is to remove difficulties faced by those wishing to become involved in the renewable energy sector. Presently, development of a potentially lucrative and important part of our economy is being stunted. This is in turn hampering the Government's efforts to meet Kyoto and their own targets for carbon abatement.

I applaud the Government for their rhetoric in the area of climate change. However, without action it is unlikely that the major breakthrough in reducing carbon emissions will be achieved. To achieve even some of the minimum targets it will be necessary for us all to embrace some form of renewable technology.

The Bill offers straightforward and practical steps that can contribute to our attempts to create the low carbon economy proposed by the 2003 energy White Paper.

The first three clauses are concerned with microgeneration. I wish to point out that the Distributed Generation Co-ordinating Group was set up and is jointly chaired by Ofgem and the DTI. Its paper entitled System Integration of Additional Micro-Generation notes the significant benefits of a high microgeneration scenario by 2020. Economically, it estimates a possible net benefit of £35 million per annum. Environmentally, there would be significant gains as a result of reduced loss through distribution and the fact that most microgenerators are high efficiency or utilise renewable, low carbon energy sources. For example, a small domestic wind turbine of, say, 6.5 kilowatts could save 4.5 tonnes of carbon dioxide per year.

The Government can be commended for recognising these benefits. The inclusion of the microgeneration clause in the Energy Act is testament to that. I await with interest the forthcoming publication of a strategy for the promotion of microgeneration in Great Britain. Unfortunately, there is still over a year until publication of this strategy, and one suspects that further delays will be incurred before implementation.

The measures proposed in the Bill do not constitute, nor do they in any way pre-empt, a promotion strategy. They are intended to be common-sense measures that remove a few unnecessary barriers that microgenerators currently have to overcome.

The fourth clause aims to resolve an apparent oversight by the Government. Energy used for heating represents approximately a third of the UK's demand. However, this fact is not reflected in the incentives being offered by government to renewable generators.

I shall now explain each of the clauses of the Bill in greater detail. Clause 1 deals with metering for domestic microgeneration. It relates to the fact that microgenerators such as photovoltaic panels and wind turbines during some periods produce more energy than is needed for the households which operate them. This extra energy can be dissipated on site; this is referred to as "rate limiting". Alternatively, this energy can be spilt on to the local network for no reward. The Distributed Generation Co-ordinating Group in its paper Reward Mechanisms for Micro-Generation points out that neither of these options "promotes economic efficiency".

The DGCG recommends the implementation of a third option—rewarding owners of domestic microgenerators for the output that they contribute to the grid. Should this option be taken up there would be two principal benefits. First, it would increase the incentives for individuals to install microgenerators; and, secondly, it would fulfil the moral requirement that providers should pay for electricity that they can benefit from.

According to Ofgem, the current situation is one where the electricity suppliers can purchase the excess electricity if they wish. The results of this state of affairs are threefold; low levels of participation, confusion and the inhibition of competition.

Of 12 electricity providers I contacted, only four were able to tell me that they had any reward mechanism whatever in place. Of the four that did offer any reward mechanism, two in their customer literature, contrary to Ofgem's statement of the current situation, announce to their customers that they could not really legally "buy" electricity produced by microgeneration. This is a fact as yet untested in the courts, but is an issue hotly disputed by the industry body representing the sector, the Micropower Council, set up last year by my noble friend Lord Ezra and now presided over by another of my noble friends Lady Maddock, who, I am very glad to say, will speak later this morning.

Most seriously, the current stale of affairs represents a failure of the regulator Ofgem to fulfil its function. Ofgem's stated role is to, protect and advance the interests of consumers by promoting competition where possible, and through regulation only where necessary". By failing to stipulate that the providers must have a mechanism in place through which they can reward microgenerators for the electricity they receive from them, Ofgem is failing either to promote competition between large and small-scale generators of electricity or to advance the interests of those consumers who own microgenerators. It would appear in fact in this case to be promoting the interests of the oligopoly of the large electricity suppliers through regulation and preventing progressive consumers competing.

Subsection (1) is intended to enable the Secretary of State to eradicate confusion by giving him power to establish a specific scheme to allow electricity from microgeneration to be sold. Subsection (2) is intended to solve the problems of participation and competition. It creates an obligation for all suppliers to purchase electricity from microgenerators that they will be supplying electricity to for the periods during which their microgenerator is producing less power than they need.

Clause 2 deals with microgeneration and local authority targets. Both the energy White Paper and PPS22 call for central government to work in partnership with regional and local bodies to achieve the targets—though revised recently, unfortunately— which they have set themselves. Unfortunately, there have been failings in the achievement of this, as evidenced by ODPM's failure to use the property performance indicator information for benchmarking purposes and its subsequent decision to no longer require these figures.

There appears to be a range of levels of commitment from local authorities. Few can boast of achievements equal to those of Woking and Merton. Clause 2 is intended to reduce the size of the problem. It is based on the belief that the variation is caused by differing degrees to which local authorities are informed about microgeneration. The first subsection requires local authorities to set their own targets. The purpose is simply to ensure that local authorities consider microgeneration and its implementation in their communities. That, in turn, will assist the diffusion of knowledge about those valuable technologies.

These targets would also give us the opportunity to develop a much clearer and less anecdotal picture of the state of microgeneration in the nation. In that respect they would contribute to the forthcoming strategy for the technology's promotion. Moreover, the second subsection proposes that the targets should then constitute a minor part of the forthcoming promotion strategy. Although I appreciate that the Government may be cautious about imposing too many rules and targets on local government, allowing local authorities to set their own targets will limit the cost of the operation while still achieving the main goal of raising awareness.

A further good reason behind the clause is that, although local authorities can set their own targets under the remit of PPS22, it does not mean that it happens automatically. It requires a great deal of lobbying by the microgeneration industry of every local authority to get them to set such targets. Although the more progressive local authorities— Merton and Woking being obvious examples—will voluntarily set such targets, a statutory requirement is the only way to ensure that it is given the priority it deserves throughout the entire country.

Clause 3 is concerned with small renewable energy developments. It is designed to contribute towards solving a problem highlighted by Brook Lyndhurst during a study that it conducted for the ODPM. It noted that: A general barrier within the planning system is that not all local authorities treat planning for renewables in a uniform way". Clause 3 is expected to provide part of the solution to that at microgeneration scale. In addition, obtaining planning permission for a microgenerator creates further unnecessary barriers and costs, which may jeopardize the completion of the project, a highly undesirable state of affairs for a country aiming for high microgeneration.

The third clause would render certain specific types of microgenerator permitted developments, putting them into the same category as swimming pools and satellite dishes for which, in most cases, it is unnecessary to apply for planning permission. There are, however safeguards against what some may consider inappropriate developments. Although I would happily see photovoltaic panelling adorn all our historic buildings, out of sight of the roof line—I say that advisedly as the secretary of the All-Party Group on Archaeology—I appreciate that others may not. In this case, individual authorities can issue Article 4 directions for specific areas and listed buildings, which would result in these types of development still requiring an application for planning permission. Perhaps I should mention a personal interest: I have recently applied for planning permission for a small wind turbine.

Clause 4 deals with energy from non-fossil fuel sources. I praise the Government for their implementation of the renewables obligation. It has added a significant incentive to promote the development of renewable electricity generation in this country. Unfortunately, there is also a criticism. Despite the significant share that heating constitutes of our energy usage—it contributes up to one-third of domestic usage—incentives for the implementation of renewable technologies in this area are extremely limited. A dedicated and adequate incentive scheme is needed. In the light of the apparent success of the renewables obligation, Clause 4 proposes the setting up of a parallel scheme to deal with heat energy in the same manner in which the renewables obligation deals with electricity.

In addition to its significant economic promise, microgeneration has significant potential to address climate change, not only through the direct impact of each installation in reducing carbon emissions but also because it can act to engage the public in ways that have so far eluded us. It is essential to capture the people's imagination and offer visible evidence that, individually, they can make a difference.

The measures in this Bill are simple, practical ways of addressing regulatory barriers that currently stand in the way. Allowing consumers to be paid a reasonable rate for their power generation, streamlining the planning system centrally and recognising the need to offer proper incentives for renewable heat as well as electricity will go a long way towards achieving the targets set out in the Kyoto protocol and the Government's carbon abatement goals. I commend the Bill to the House.

Moved, That the Bill be now read a second time.— (Lord Redesdale. )

11.17a.m.

Lord Hunt of Chesterton

My Lords, I welcome the Bill. It urges the Government to encourage individuals and communities to play their part in using the Earth's natural resources more efficiently, and in doing so to reduce greenhouse gas emissions. That will reduce the rise in global temperatures, whose devastating effects we are already seeing, particularly in high temperatures but also in relation to food—in China, for example—and eventually in sea levels. Higher sea levels mean that coastal communities are much more susceptible to the kind of earth-shattering events of the past month.

The Government should use the Bill to show how Parliament is supporting their mission to highlight climate change during the G8 presidency and the EU chairmanship. I am very pleased that the Bill constitutes practical support by the House of Lords to endorse the unanimous and cross-party recommendations of the two House of Lords committees that urged the Government to take seriously the examples and practical developments of Woking Borough Council and other local authorities, which have introduced community-based combined heat and power systems.

The Greater London Authority has now appointed Mr Allan Jones from Woking to its climate agency and is now pursuing those policies. While the noble Lord, Lord Redesdale, moved the Motion, I saw some noble Lords on other Benches shake their heads disapprovingly but there is very strong cross-party support for the measures. Greenpeace has also written to make some of those points.

It was remarkable that in Woking Borough Council's own facilities, after 15 years of sustained effort it reduced energy consumption by 45 per cent and carbon emissions by 70 per cent. Use of combined heat and power and other renewable energies was one aspect of the programme, but it also required a new approach in the distribution of electricity by going off the National Grid and using its own grid. That enabled it to use other renewable energy systems more effectively and indeed to reduce the cost of electricity in the borough by a proportion that is 20 per cent lower than in other areas, and to make their electricity more reliable. When the lights went out in the rest of the south of the UK in August 2003, they did not go out in Woking. An intelligent approach to long-term funding was also a vital part of the council's success.

I think that the other point is fairly obvious. There is much greater public involvement in Woking, which one might not imagine as the world's greatest revolutionary centre, in this extraordinary programme, showing therefore the point also made by the mover of the Bill that it will require a great deal of public involvement to be effective and is a very good first step.

As regards the detailed clauses, I have already emphasised that a local authority having targets is clearly an important way forward, as in Clause 1. Perhaps that may be refined to require local authorities to meet more stringent energy efficiency targets across their estates. Interestingly, the Scottish Executive has committed £20 million to energy efficiency measures that it

calculates will generate £70 million of savings over three years. That again makes the point about the economic benefits of that approach.

It is important to lift planning permission for microrenewables, as the mover of the Bill emphasised. Changing the planning permission will stimulate a culture change where, instead of divorcing energy users from energy generation, they already think about the energy source.

Clause 3 on metering is also extremely important. There is a strong case for promoting net metering as part of a comprehensive and user-friendly retail package, so that people who are introducing new energy-saving methods can see exactly what they are doing. The Government are very keen on targets and measurements in every aspect of their programme. Energy should not be excluded. Joined-up government should go down to the individual household.

Greenpeace is concerned, as are a lot of other NGOs, to see renewable energy policies properly integrated with a sustainable design and construction agenda. There have been some Questions in this House—I have tabled some—about the need for building regulations to be integrated with energy policy.

The renewables heat obligation in Clause 4 is also important because it should emphasise the importance of thermal energy in the United Kingdom using all of the resources that we have available—for example, from biomass and geothermal energy. Currently, these policies are perhaps not working as well as they should. I understand that there is anecdotal evidence that we are importing bulky biomass from other countries as opposed to using our own. The noble Lord, Lord Palmer, often talks about biomass. He is also a noble kinsman of mine, so I need to make that point.

Finally, the House should take this Bill seriously and support it. The Government should advertise that this is the kind of Bill that has been considered in the House and by Parliament. The Government have not done a particularly good job so far in their programme of climate change in emphasising the practical steps that have been taken in the UK. They quite rightly emphasise the kind of research done at the Hadley Centre and universities, which is fine, as is the Prime Minister's conference in the first week in February. I shall probably be there. But they should also be talking about Woking: I have not heard the Prime Minister talk about Woking yet.

11.23 a.m.

The Lord Bishop of Chester

My Lords, it has been suggested that a debate on wind would not be complete without a contribution from these Benches. We should be grateful to the noble Lord, Lord Redesdale, for promoting the Bill. The sheer volume of Questions asked in your Lordships' House on the various aspects of energy policy indicates the very wide concerns that exist in all parts of the House. The Starred Questions have sometimes seemed a bit repetitive; this Bill and debate have an entirely fresh and innovative feel to them.

The Bill is about the microgeneration of electricity, but the wider concerns on energy policy provide a powerful context for it. UK energy policy and use are undergoing something of a revolution. From an easy availability of indigenous fossil fuels and a policy to generate up to a quarter of our electricity from nuclear power, we are seeing a growing reliance on natural gas and imported natural gas. The DTI estimates that, by 2020, around 70 per cent of our electricity might be generated from the burning of natural gas, up to 90 per cent of which might be imported, often over considerable distances.

That reliance on the burning of natural gas raises many obvious concerns—security of supply and ever-rising costs, for example. Of course, it is a key part of the UK's strategy to meet its Kyoto obligations because the burning of natural gas generates only about 40 per cent of the carbon dioxide that is released by the burning of coal per unit of electricity. It is also relatively clean in other ways, but it seems rather short-sighted to burn so much gas to generate electricity. Future generations may well look back in astonishment at the profligate use that we are making of such a splendid and adaptable natural resource.

The need to replace our nuclear generating capacity as plants are decommissioned is adding greatly to the pressures on UK electricity supply and our attempts to meet our Kyoto targets in particular. I wonder whether a future energy mix with no nuclear component is credible. Be that as it may, those and other factors provide a powerful rationale for the Bill.

I would marshal my support under three headings. First, the level of dependency on imported natural gas, to which I have already referred, cannot be sensible. The Government, in their Planning Policy Statement 22: Renewable Energy, issued last August, called for a, prudent use of natural resources—by reducing the nation's reliance on everdiminishing supplies of fossil fuels". Prudence requires as diverse an energy mix as is reasonably possible. What diversity will mean in practice is not entirely predictable, given the uncertainty of relative costs and other factors in the future. So I see a greater encouragement and facilitation of microgeneration of electricity as simply prudent as part of a policy of having as much diversity of supply as possible.

I recognise that the Government have already taken various initiatives in this area, as set out in the speech by the Minister of State for Energy at the launch in September 2004 of the Green Alliance's microgeneration manifesto, although it was clear from his speech that the Government's thinking had yet to develop into a fully-considered strategy. Microgeneration at a basic level is just part of the prudent diversification that must be a cornerstone of our energy policy.

Secondly, the microgeneration of electricity has important environmental aspects. Obviously, any generation of electricity from renewable sources will assist the UK to meet its Kyoto and renewable obligations. Here, as is well known, we started from a very weak base. We have seen too much reliance on natural gas combustion to reduce our CO2 emissions and large wind turbines to meet our renewables obligations. Understandable as that has been in the pressing circumstances that we have faced, I look for a much broader mix in overall UK energy policy.

There has, of course, been much debate over the possible adverse impact of wind farms with their huge wind turbines. Time will tell how that debate runs, but I think that the overall environmental impact of smaller-scale electricity generation from small wind-driven propellers to small-scale harnessing of water power, photovoltaic panels and so forth, will not cause undue problems, precisely because they are small scale.

The sight of photovoltaic panels or thermal panels on roofs, of small wind-driven propellers on houses or in gardens, of small hydroelectric plants on rivers and streams may come to be seen as enhancements of our environment rather than problems—like the windmills of old.

That leads me finally to my third point; that is, the broader cultural aspects of the microgeneration of electricity. Last summer, our family holiday was spent in Denmark, where my wife has many relatives. Denmark, of course, has a considerable start on the UK in its development of renewable energy. By 2000, it was already generating 17 per cent of its electricity requirements from renewable sources, and its target for 2010 is nearly 30 per cent. The bulk of Denmark's generation is from wind, although biomass is also important.

It was interesting that, in addition to concentrated wind farms, it was common to see in Denmark wind turbines dotted across the land in ones, twos and threes. They are an accepted feature of the landscape in a country that prides itself on a high standard of design in urban and rural landscapes alike.

I was also struck by the way in which a greater environmental consciousness pervades Danish society compared with Britain, for all the strides that we have made in recent years. One could see that not only in the Danish approach to the recycling of goods, for example, but also on the roads. I would estimate that the speed of the average car on an open road in Denmark is at least 10 miles per hour less than that in Britain, and yet speed cameras and traffic police are hardly to be seen. From the perspective of both fuel economy and road safety, it is simply accepted in Danish society that a lower speed is better—for the environment and for road safety, as well as being cheaper and easier on the nerves of drivers.

Today's debate is more about fuel economy than road safety, but I observe that more than 10 times the number of Britons likely to have been killed in the recent Indian Ocean disaster will be killed on our roads during the current year. Just as we need a much higher consciousness of road safety issues, which will come only when our society faces up to them, so the energy-related aspects of our environmental crisis need solutions that will galvanise the whole of our society.

This is where the case for encouraging the microgeneration of electricity has a wider cultural relevance. I am not sure precisely what ultimate potential exists for its contribution to the targets we are setting ourselves, but I am sure that we have yet to achieve the necessary level of consciousness of their importance in society as a whole, despite the good work that goes on in our schools and elsewhere.

So much of our lives are lived in rather artificial and abstract ways, dislocated from the realities of life in the down-to-earth, physical world that we inhabit and share. I recall the old joke of a school child being asked where milk comes from, and replying, "From the jug in the fridge". I had a recent illustration of that dislocation in my own home. I keep a few hens. They are organic and free range, although sometimes rather more free range than I intend. I took a group of school children who were at a garden party at my home down to see the hens. I showed them the boxes where the hens lay their eggs. A newly laid egg was there, still warm. I offered it to the girl at the front of the group to take home for her supper. "Oh, no", she said. "I couldn't eat that". For her, real eggs come from the supermarket, or perhaps from the fridge in the kitchen, with a little lion stamped on them.

Dust we are and to dust we shall return. Human beings are part of the earth, and whatever view we take of our ultimate significance, we are creatures of flesh and blood. In a consumerist and economically expansionist world, we need urgently and constantly to find new ways of living in greater harmony with our world and our environment. We are making ever greater impacts upon the physical environment, and the closer we can live our lives to the world in which we are set, the better. More local, small-scale electricity generation surely has an important part to play in the broader education and evolution of our society in the years to come.

For all those reasons, I hope that the Bill receives a fair wind as the Government consider their strategy for the microgeneration of electricity.

11.33 a.m.

Baroness Maddock

My Lords, I rise to support my noble friend in his endeavours with this Private Member's Bill. He has put the case very fully and eloquently, and he referred to an interest that I must declare. I am president of the Micropower Council, a lobby group of interested and like-minded people who see the value of microgeneration in supporting what I think we all want to see, a sustainable environment.

The majority of people today, not only in Britain, recognise the importance of climate change and the need to be proactive in mitigating its impact on both our global and local environments. It is interesting to note that despite the fact that America as a nation has not attached its support to world initiatives like Kyoto, in individual towns, cities and states action is being taken to limit carbon dioxide emissions and to promote the more sustainable use of resources. For someone on these Benches, I muse the fact that America has a federal constitution. It enables people to take action even if the national government are not doing so.

Even if everyone does not accept the science concerning climate change—although the majority of scientists do, of course—as the right reverend Prelate pointed out, for the good of future generations, surely we should live out our time on this planet in as sustainable a way as possible. I believe that we have a duty to look after the earth on which we all live our lives.

Like my noble friend, I am pleased that the Government, in particular the Prime Minister, have recognised the importance of climate change. I, too, applaud the Government for what they have said, for the various reports that have been produced and the committees set up, and for the way they have tried to tackle these issues. But like both my noble friend and the noble Lord, Lord Hunt of Chesterton, I am always disappointed that the rhetoric is not matched by action to make things happen. Once again, we are here with a Private Member's Bill that seeks to spur the Government to action by setting a firm framework and providing strong incentives to ensure that measures to tackle climate change are undertaken, and to ensure that we can meet the targets set by the Government, particularly their target for reducing carbon dioxide emissions.

As others have said, upping significantly the amount of heat and power produced by microgeneration could play a very much greater part in reaching the Government's own targets for reducing CO2 emissions, particularly if we can remove some of the barriers that are preventing uptake. The "expert terms" clauses in the Bill are one important way of ensuring that it will be easier for people to take up microgeneration in their homes.

Energy suppliers would be required in law to offer terms to microgeneration customers, which would have two main advantages. First, they would be forced to devote time and attention to the true economic basis for rewarding microgeneration. The onus would be placed on suppliers to offer terms rather than have customers seek to engage with them, something which many people fail to do at the moment. An obligation to offer terms is also likely to place reputational pressure on those suppliers that offer poor rates of reward.

Secondly, energy suppliers would be forced to engage in the associated institutional and settlement system issues. This would be particularly valuable in developing changes to the relevant rules that currently prevent something closer to the true economic value of microgeneration being realised.

An article in the Financial Times of 18 December 2004 pointed out how much it would cost to link wind farms in this country to the national electricity network. Ofgem has upped the amount of money that can be spent on this. The sum is a great deal more than has already been allocated, and the cost is to be passed on to customers. However, in microgeneration the network is already in place. We are missing a huge opportunity. Having read the article, I am spurred on even more to support my noble friend.

It is very important that we send a message to the industries developing the technology for people to use small combined heat and power units in their homes. I declare an interest as someone who works with the Energy Saving Trust. I serve on a committee which gives out grants for innovative measures to help towards sustainability. One of those is a scheme in Northern Ireland where small combined heat and power units are being fitted into social housing. But it is not easy because the industry does not see the right messages coming from the Government. Therefore, trying to develop the capacity of the industry is quite difficult. At the moment the technology is being imported from New Zealand. I hope that this Bill will progress these issues.

As someone who now lives in a rural area of Britain, I can confirm that microgeneration is very important for those not connected to the gas network, and where we have had an enormous amount of wind over the past few days. Indeed, we had so much wind that no one could use their generators. They were in danger of being blown over.

Local authority targets are important. I believe that we should give as much freedom as possible to local authorities—I am always in a dilemma about these matters—and at the moment local authorities can set targets. Indeed, they are asked to set targets under the Home Energy Conservation Act, which I introduced into another place some years ago. Other noble Lords have also referred to planning policy statement 22. However, if local authorities do not want to be forced into action by legislation, we will have to find incentives which ensure that they take up these issues rather more positively.

The noble Lord, Lord Hunt, explained how successful Woking had been. I shall not repeat the story, but it is interesting that Woking works under the same framework as all other local authorities in Britain, including those which have not been so successful. So it is important that we should look at what it is that makes the difference. I believe that it is because successful authorities have passionate champions of the case for sustainable communities. Alan Jones is a classic example. He has been so passionate that he has been recruited to do the same in London. I know from my work in this area over a number years that, up and down the country, where you find a success story you will find behind it a champion pushing forward the cause.

Unfortunately, there are not too many champions of that nature within government. I have been active in this area, both in Parliament and before I came here, and I have come across many champions in local government but, with a small number of exceptions, very few here in Parliament.

It is even more depressing that in the legislation which comes before this House—and in recent times we have debated Bills on housing, local government and energy— the Government fail to take advantage and set a framework to enable and encourage sustainable development. It is left to people like those speaking in the debate today, through amendments to government Bills or through Private Member's Bills such as this one, to try to push the matter forward. Why is this always so?

The clauses dealing with permitted development status could have been inserted into previous government Bills, such as the Planning and Compulsory Purchase Bill which was introduced last year. I tried to do so, but with little success. But sometimes the Government listen and sometimes we win votes on the issue and they are forced to listen.

Throughout my life in this area, I and others have tried to convince the civil servants of our case, but they always brief Ministers as to why they cannot possibly do what we are asking. Let us have more champions within government corridors because that is the only way in which we will change matters. We need a "can do" and not a "cannot do" mentality in this area. The Bill encourages a "can do" mentality and it has my full support.

11.43 a.m.

Lord Berkeley

My Lords, when my noble friend Lord Lea came in and asked me why there were so many references to Woking, his answer was, "I have seen a notice on South West Trains this morning which stated 'Please do not use this lavatory at a station', and someone had scribbled underneath it 'except at Woking'". I do not know whether there is any connection, but it seemed quite funny. I am sorry that the noble Lord, Lord Hunt of Chesterton, is no longer in his place.

I support the Bill. I declare an interest as a member of the European Energy and Transport Forum. I see it as a significant contribution towards reducing the dependency on imported oil and gas, as the right reverend Prelate the Bishop of Chester pointed out. He did not name the countries where most of the gas will come from, which I think are Algeria, Russia and around the Caspian Sea—perhaps three of the most politically stable regions we can imagine these days.

Before my noble friend the Minister replies that nuclear is the answer, I should point out that, although it does not produce CO2, it will not be an answer until a solution is found to the problem of disposal of the waste. Long ago, I worked on nuclear as a civil engineer. It always struck me that we were still trying to preserve waste with a half-life of 1,000 years in concrete that had been around for about 100 years. We are making the problem even worse at the moment by importing waste from Italy. Why are we doing it? I do not know. I do not believe that nuclear should come into it.

It is comforting to know that the European institutions support the intentions of the Bill. I shall not read out a great list of statistics about the problem in Europe, but the Energy and Transport Forum's response to the intelligent energy programme for Europe states that the present implementation procedures, financial and contractual, present an important barrier to the participation of numerous market sectors, including SMEs. Of course, SMEs are at the core of Europe's policy in promoting competitiveness. They also help to encourage new ideas in fields such as this. The report goes on to state that: Simplification of procedures is therefore absolutely necessary". This is the purpose of the noble Lord's Bill.

It would be nice to see the Government supporting SMEs and private individuals rather than listening only to the big business generators and transmission companies, which one often feels may be the case. I believe that microgeneration by renewable means should be a significant contributor to our energy needs. It will give an opportunity for those providing it to understand better the importance of energy conservation and local ownership of the facility.

The right reverend Prelate the Bishop of Chester referred to his experiences in Denmark. From my own experience there, I believe he is absolutely right. I was a member of the European Union Sub-Committee B on energy at the time and we went to Denmark to study renewable energy. We stood under a one megawatt wind turbine and we could hardly hear it. I know that they are bigger now, but noise is not the problem; we have an education problem in this country. I was talking to an A-level student this year and I asked him what he was studying. He said that he was studying energy and wind turbines. I said, "Well, what do you know about them?" and he said, "They are noisy". I said, "Where did you learn this from?". He said, "The text book". Perhaps we should work at getting the text books changed, allow people to stand under modern wind turbines and let them decide for themselves.

I understand that in Denmark many small villages have their own little generators. The community therefore feels that it owns them. Compare that with this country. Again for the same sub-committee, I went to Oxford with Lord Montague of Oxford—who, sadly, is no longer with us—to visit an academic who had built a show house to demonstrate energy conservation. It had photovoltaic cells on the roof, triple glazing and everything else one needed.

But I was interested in the trouble that she had had negotiating with the electricity supply company. Occasionally in the summer she wanted to export electricity back into the grid. The price she paid to buy it was five times the price at which the company would buy it back from her. The sting in the tail was that the company reserved the right for an inspector to visit her at least once a day to check that she was not diddling it or sending back the wrong type of electricity. Each visit was going to be charged at £30 a time. Is not that a real disincentive to sell electricity back to the grid?

As the noble Lord, Lord Redesdale, said, electricity suppliers can purchase if they wish to do so. He then related some of the problems that people have had with this. We have to get this right. Who is going to go through the hassle—unless you are an academic trying to demonstrate a very good point? But even she had serious trouble. It is clear that the generators and distributors do not like the idea of people doing it for themselves. I question whether it is always desirable to rely on bigger and fewer generators and sources of fuel.

I came across an interesting academic paper by someone called Robert Shaw, published in a National Academy of Engineering journal two years ago in summer 2003. I know it is a little out of date but the points he makes are very relevant. He compares the cost of generation at the bus bar, as he calls it, with the cost of distribution. He says that, in some circumstances, Transmission and distribution … costs (including capital, as well as operating costs, such as tree trimming, transformer replacement, and resistance loss)"— we all know these things— can be two to three times the cost of bulk power". That is significant and I am sure that Ofgem takes it into account in all its calculations. But if one adds to it the unreliability that we saw in the United States two years ago, and on the Continent, it is worth thinking about the importance of local generation.

Something that came up at the last meeting of the European Energy and Transport Forum, and which surprised me greatly, was that the European Commission says that it can bring very little influence to bear on transmission between member states, as it is now all private. So if the Commission believes, on a European basis, that Switzerland ought to be supplying Italy with a bit more electricity on occasion, there is nothing it can do apart from a bit of persuasion. We have not sorted out the problem of transmission, but it needs sorting out. The arguments for local generation are important.

I was very pleased to see that a couple of years ago Ofgem had a seminar on microgeneration with the Institution of Electrical Engineers. The seminar stated that it was very important that there are: simple, low cost metering solutions, fair arrangements in place to recognise the contribution that microgeneration makes to network costs [and] … simple, standardised arrangements for network connection". In conclusion, I would like to see anybody with a reasonably sized garden able to put up a wind generator. People make a fuss about wind generators, compared with electric pylons. At least generators do not have wires between them, whereas pylons do. I think generators generally look much nicer. The whole planning and technical process should be supported so that people can do it themselves more easily, without the need for planning permission. After all, mobile phone masts do not need planning permission, so why should little generators? I hope that my noble friend, on behalf of the Government, will support the principles behind the Bill.

11.52 a.m.

Lord Beaumont of Whitley

My Lords, I support the Bill, as does my party, the Green Party. I congratulate the noble Lord, Lord Redesdale, on introducing it. I shall turn away from climate change, which is what most people talk about, to the point made by noble Lord, Lord Berkeley, about energy security.

An article in the New York Times supplement, published in the Daily Telegraph yesterday, stated about oil: Now that worldwide production is running at full speed, there is no cushion left in the system to absorb a potential blow to producers like Iraq, Venezuela, Iran, Russia or Nigeria". An international expert in energy security was quoted as saying: Saudi Arabia's oil industry is no longer seen as being impenetrable to terrorist attacks; tensions in the Persian Gulf could swell over Iran's nuclear program; Nigerian factions may erupt in violence; and the fighting in Iraq goes on". Energy is not something that we can count on being able to import from abroad. We must be able to produce it ourselves, and we must be able to produce it in a way that does not help climate change.

In its spring conference, which will take place next month, my party will be taking energy policy as the main subject of debate. My party says that the primary solution to this problem is for us to reduce our need for energy radically by energy conservation measures and, in the long run, by reorganising our economy and built environment. But in addition to that, we want to generate, store and distribute energy as close to the point of use as practicable. On that point, I join with what the right reverend Prelate the Bishop of Chester. It is very important that we have small-scale and local energy generation.

Building regulations should be amended from simple insulation values to prescribed energy performance values and should be applied to existing as well as to new buildings. Tenants should have the right to demand that their dwellings be brought into line with prevailing energy performance values at their landlords' expense. We need to have as much small energy and as much local energy as we can. The Bill will help us do that.

We need to do other things as well. We need many more incentives for running vehicles on fuels that produce little or no harmful emissions. We need as much wind energy as possible. The use of small fields of wind energy is to be seriously commended and the Government should be doing much more than they are towards making them possible. The Bill will help by removing a lot of the disincentives to produce energy in that manner and scale. I wish it very well. We will do our best to take part in the debate and to help to improve the Bill as it makes its way through Parliament.

11.57 a.m.

Baroness Miller of Chilthorne Domer

My Lords, we warmly congratulate our noble friend Lord Redesdale on introducing this necessary Bill. It is regrettable that it is necessary to introduce it so soon after the Government put their own Energy Bill through both Houses. That could have incorporated some of these measures, had they chosen to do so.Indeed, some of these measures were amendments that the Government resisted during the passage of that Bill.

My noble friend has taken some of those ideas, developed them further and presented a practical Bill to the House this morning. He is absolutely right in saying that we all need to do our bit as households. The role of the Government should be to facilitate that, but they have not done that to date. They have done little to make it easier for individual households, beyond giving a few grants. If you are clever at using the web, you may discover what is on offer. The grants are not widely publicised, and the forms are quite difficult. However, I should declare an interest as a recent recipient of a grant and should not be too rude about them, but they are not easy to access.

Clause 1 is a key clause when encouraging households to see that it is a good idea to make an investment. After all, we are asking people to make an investment in renewable energy for their future and for the future of the planet. It is perfectly reasonable to expect to receive a return on that investment. The mean-spirited way in which the industry and the Government have dealt with net metering needs urgent review. We need to reward households that invest in various forms of microgeneration.

Clause 2 deals with microgeneration and local authority targets. I declare an interest as a Somerset county councillor. I am pleased to tell the House that the council has recently won a Green Apple award for its renewable energy strategy. Somerset County Council has been recognised for practising some of what it preaches by putting photovoltaics on its county hall. It has also gone much further and encouraged communities, through small grant schemes and a lot of help and advice, to develop a range of energies from biomass to a very innovative partnership with Wessex Grain and the Ford Motor Company. Grain will be converted to fuel and made available to the car fleets of participating bodies. Interested bodies include the police force, county hall and various other partners. In addition, there is combined heat and power in various community buildings throughout the county.

My noble friend is right: even given the will that exists at Somerset County Council, we could do more with individual households. I hesitate, as my noble friend Lady Maddock said, to set stringent targets; local authorities have had enough of the Government setting targets and never providing funding. In thinking about target setting, the Minister might like to consider that the funding currently goes to the Carbon Trust and the Energy Saving Trust. Perhaps if targets were set for local authorities, they might receive directly some of that funding to help them meet those targets.

Clause 3 deals with planning for renewables. My noble friend Lord Redesdale is absolutely right: one of the main difficulties is that the picture is unclear. As he said, different planning authorities take a different approach. It is a disincentive when households are not clear about whether they need planning permission. Applying for planning permission is time-consuming, difficult and bears a cost, so removing such a need would be a big help. Perhaps the Minister could say whether, in their current review of permitted development orders and general development orders, the Office of the Deputy Prime Minister is considering anything along the lines suggested in the Bill.

I was delighted to hear the general welcome for the Bill from the House and pleased that the noble Lord, Lord Hunt of Chesterton, reminded us of its importance in the context of global warming. Along with other speakers, he mentioned the necessity of the reliability of many small sources. At a time when, as the noble Lord, Lord Beaumont of Whitley, reminded us, energy security is important, having many small diverse sources is a lesson that the Government should take to heart.

The right reverend Prelate the Bishop of Chester reminded us that we cannot afford to be profligate with our resources. Anything we can do to be less profligate is to be welcomed. The spirit in the country is that people would like help to be less profligate, but it is so difficult at the moment that they find it impossible.

My noble friend Lady Maddock has done as much as anybody, and probably a great deal more than anybody in either House, to promote renewable energy and energy-saving measures. I listened to her speech with great interest. Her point about federalism was made in conjunction with the example of Scotland given earlier. The people of Scotland have made much greater progress than we have.

The noble Lord, Lord Berkeley, reminded us of the issues surrounding long-distance electricity transmission. That is one of the most important points for the Government to consider in the context of the Bill. If we can have microgeneration on a domestic scale, all the wastage of money and electricity that is part of long-distance transmission would be overcome. That point is particularly important.

I share the noble Lord's view that nuclear energy is not the answer. We have heard many questions from the Conservative Benches about the efficacy of renewable energy, particularly wind power, over the past few months. Many on the Conservative Benches are heavily promoting nuclear energy as the answer. But as I have said on previous occasions, it is not the answer, particularly while we have so many outstanding questions about what to do with the waste we have as well as the waste that the noble Lord, Lord Berkeley, reminded us is being imported from other countries, notably Italy, which has had permission to export its waste. The Italians, quite rightly, recognise that there is no answer at the moment to the safe storage or disposal of such waste, and have managed to offload it on to the UK.

Finally, I was interested to hear from the noble Lord, Lord Beaumont of Whitley, that the Green Party's spring conference is in February this year. That is indeed an indication of climate change, with spring coming ever earlier. I am grateful to him for the Green Party's support for the Bill.

I look forward with great interest to finding out whether the Government will support my noble friend's Bill. I very much hope that they will.

12.7 p.m.

Baroness Miller of Hendon

My Lords, this is a very short Bill which has four main components, most of which deal with encouraging microgeneration, either by removing barriers or by adding incentives. The noble Lord, Lord Redesdale, in promoting the Bill, has explained those methods very clearly.

There have been some very interesting speeches in the debate. I shall not add anything other than to say that the noble Baroness, Lady Miller of Chilthorne Domer, has commented on what everyone has said, so there is no purpose in my doing so again.

The noble Baroness said that she had heard many Conservatives heavily promoting nuclear energy. I am not sure that that is correct; like the Government, we say that the nuclear energy option should be kept open. But that is a subject for another day.

There is a slight problem with the Bill. I think that it will involve some heavy costs, which have not been mentioned. Although the noble Baroness, Lady Maddock, said that the infrastructure is already in place, my understanding was that this would all go on to the grid, so those costs would have to be taken into account. However, that would not make me oppose the Bill—indeed, we are certainly not opposing it.

Lord Hunt of Chesterton

My Lords, I am sure that the noble Baroness will remember that Woking went off the grid. These things can be done off the grid.

Baroness Miller of Hendon

My Lords, my understanding was that the Bill supported another way, but the noble Lord, Lord Hunt of Chesterton, may very well be right. The noble Baroness who comes from Woking had already left the Chamber before I was able to check that with her, but never mind.

I feel that probably, at best, the Bill will not be able to do much more than scratch the surface. However, on the basis that every little helps, we certainly wish it well.

12.10 p.m.

Lord Triesman

My Lords, like many noble Lords, I really welcome the opportunity to debate the vital issues that have been raised by this Bill. I thank the noble Lord, Lord Redesdale, for giving us this opportunity and all the other noble Lords who have taken part in the debate, not as a matter of ritual but because their comments have added to fundamental discussions. I have taken note of some of the good examples of local authorities that have been introduced as adding weight to the clauses—in Merton and Woking. I am sorry to hear about what is being written in train lavatories about Woking. I do not know Woking at all, but I am sure that it is entirely unjustified.

I welcome the support of the GLA for the energy goals that the Government have announced. London is obviously in a position to make a significant contribution to reducing carbon emissions. We will read with interest the detailed strategy which was published last year but still needs a good deal of study. In relation to microgeneration, officials in the DTI have already had constructive meetings with the GLA to discuss its strategy and I will be brought up to date on them. Having said all that, I will explain why the Government will not be supporting the Bill.

The Government have long considered micro-generation an important strand of the long-term energy policy. Indeed, the energy White Paper provided a vision of the energy system in 2020, suggesting that there will be much more microgeneration and that it will generate excess capacity, which can be sold back into the network. It is not fair to say, as the noble Baroness, Lady Miller of Chilthorne Domer, suggested, that the Government have not done a great deal. I can illustrate in the next few moments that we have really done rather a lot. However, I do not want be churlish. I congratulate her on that grant and look forward to hearing how it has been deployed.

As I said, microgeneration is an important strand and it is worth putting that into the context of the Government's commitments to renewable forms of energy: providing 20 per cent of the UK's electricity needs by 2020. That aspiration will drive a significant increase in investment in renewable technologies. Energy provision is indispensable to a thriving modern economy and essential to our society. We need to reflect that the world of energy supply and the diversity of sources is changing, as many noble Lords have emphasised. In the past, we relied on the United Kingdom's domestic fossil fuels with all the problems of carbon emission that they then caused. Our aspiration in the changed circumstances is to meet our energy demands in an environmentally sustainable way and to ensure, so far as we can, that we control the extent to which we are required to import energy from abroad—a point to which I shall return later when I comment on what some noble Lords have said about that.

We have four key aims. The first is that we aim to cut the UK's carbon emissions by some 60 per cent by about 2050. We share the understanding of noble Lords—the right reverend Prelate the Bishop of Chester made the point about global warming and I wholly agree with what he had to say—that global warming is a problem of massive significance; the Prime Minister has said so repeatedly.

Secondly, we aim to maintain security of supply and we are committed to the reliability of energy supplies. Thirdly, we aim to promote competitive markets, including those beyond the United Kingdom, to exchange and enhance sustainable economic growth and to improve our own productivity. Fourthly, we aim to ensure that every home is adequately, affordably and, with proper insulation, efficiently heated. Fuel poverty should be a sad historic memory in every United Kingdom household by 2016–18. Together those aims speak clearly about the Government's green aspirations.

However, aspirations must be translated into action. The renewables obligation introduced in April 2002, backed by direct government investment of £500 million sets a direction of travel and puts in place the milestones over the years. The investment has embraced major capital grants for emerging technologies and some of those technologies, like all emerging technologies, are not yet fully known. What they will be capable of achieving is not altogether proven. That is still to come, as always happens with emerging technologies. New resources for energy research and development are also in the funding stream that I described.

The Energy Act 2004 provides a framework for renewable energy sources to succeed. I mention a few of them because as I said, microgeneration is one strand and it is important to recognise the other strands in this fabric. In the marine sphere, the Government recognise the potential of wave and tidal sources. My right honourable friend Patricia Hewitt announced on 2 August last year £50 million for a marine renewables development fund, which will accelerate commercial development, and promote and underpin sustainable manufacturing for marine energy technologies.

In respect of wind, we have an industry growing in economic efficiency. There has been an improvement of 80 per cent in efficiency in the past two years. We retain our commitment to a renewables contribution of 10 per cent to the UK's needs by 2010. Wind farms will obviously make the key contribution.

I now turn to the issues in this particular strand of renewables. The Government are committed to a development of photovoltaic means and the first phase of the major photovoltaic demonstration programme worth £31 million runs from 2002–08. In addition, a research and development programme of £2.5 million per annum is in place. I was very grateful to hear from the noble Baroness, Lady Miller of Chilthorne Domer, about the Somerset example in trying to take up and make use of some of those initiatives. Some £66 million in capital grants is pledged to crop and biomass development and the DTI and the New Opportunities Fund have announced a further £4.2 million for the installation of biomass boilers in 11 areas of the United Kingdom. Biofuels are supported by a 20 pence in a litre fuel duty reduction. We are committed to achieving at least 10 megawatts of combined heat and power by 2010.

So alongside the green aspirations, we can claim that there are real green programmes. Some 8,000 jobs are already in existence in the industries that I have mentioned and we believe that that figure will rise to about 35,000 new jobs in the United Kingdom over 15 years in the renewables industry. It is hard to describe that as a mean-spirited programme.

The right reverend Prelate the Bishop of Chester also mentioned other initiatives that should be seen alongside those developments. The recycling industry is a very important element and I applaud the fact that he mentioned it. Its excellent work is exemplified, for example, by the work of organisations such as the Waste and Resources Action Programme and by London Remade and we are pressing rapidly, as technologies allow, into green policy in those areas as well. I personally feel great enthusiasm for this subject.

Plainly, the key objective of all of this is climate change. The right reverend Prelate the Bishop of Chester, my noble friend Lord Berkeley, and the noble Lord, Lord Beaumont of Whitley, all mentioned climate change as did the noble Lord, Lord Hunt of Chesterton and the noble Baroness, Lady Maddock—indeed, a duty to look after the earth", was the phrase that she used; and I completely agree. Many of the noble Lords I mentioned also talked about security of supply. That must also be one of the guiding principles, although that issue has come up quite frequently and over a long period.

People have quite often pointed to the areas in which there are oil fields or natural gas resources and have anticipated calamity in all of them. Yet, certainly with regard to natural gas, whatever the political changes in many of the countries involved the fact is that the supply has been secure and uninterrupted in a period of, I believe—and I hope that my memory is correct— some 35 years. We are also trying to increase the number of jobs by stimulating new industries. A good deal of discussion goes on with New Zealand. Alongside the Prime Minister, Helen Clark, the Prime Minister of New Zealand, is very enthusiastic about all those developments.

Microgeneration has to be a significant strand in those developments. By 2020, it should be capable of generating excess capacity that should be sold back into the network. To achieve that long-term vision, we have been giving significant support to microgeneration technologies. We have funded PV installations to the tune of £25 million through the major PV demonstration programme. We have provided a further £10 million to fund large-scale and domestic field trials of PV technologies. With another £10 million we set up the Clear Skies initiative to support community and household renewable energy sources. Last summer, my honourable friend Mike O'Brien announced in another place an extra £6 million of funding for the major PV demonstration programme and an additional £2.5 million for the Clear Skies initiative. That brings the total support for the programmes that we are discussing in the context of today's debate to £53.5 million.

However, effective support is not only about providing money for grants. We have also been working closely with Ofgem and other key stakeholders to address various technical issues relating to metering and grid connection. Last year, we amended the renewables obligation order to make it easier for small generators to claim renewable obligation certificates—ROCs. Generators producing under 50 kilowatts can now claim ROCs on the basis of annual output rather than monthly output. The forthcoming review of the renewables obligation will consider yet further steps to simplify the process for microgenerators to claim ROCs. I believe that that will help, and I know that the noble Lord, Lord Redesdale, has argued for precisely that kind of approach.

A 50 per cent uplift for innovative technologies, such as micro-CHP, is included in the second phase of the energy efficiency commitment, which runs between 2005 and 2008. As I am sure all noble Lords will remember, the Government signalled their overall support for microgeneration through the incorporation of a specific clause in the Energy Act 2004. Based on an amendment tabled by the noble Lord, Lord Ezra, the clause commits us to producing a strategy for the promotion of microgeneration in Great Britain. Work has been progressing on the strategy but it is too early to be legislating on specific measures. To be effective the strategy must be based on suitable evidence and analysis. Rushing measures into legislation before the preparatory work has been completed would be harmful to the overall strategy.

I must break off for a moment to correct the record. Apparently, I said—and I am sure that the officials are right—that the Government have a 10 megawatt target for CHP; in fact, it is a 10gigawatt target, which is considerably bigger. I am glad to be among the first Ministers to have dramatically understated the case.

I turn to the specifics of the Bill. Clause 1 gives the Secretary of State the power to establish a scheme enabling the sale of electricity by domestic microgenerators. If such a scheme were established, under Clause 1 electricity suppliers would automatically be required to purchase electricity from microgenerating customers at the market rate. Microgenerators already sell their electricity, and legislation is not required to achieve that. To go a step further and to require suppliers to buy the electricity at the market price risks distorting the electricity supply market and would be incompatible with the liberalised arrangements of the British electricity market.

The framework underpinning our competitive energy markets was established to provide market-based solutions to our energy needs, governed by an independent regulator. That: provides certainty and gives confidence that those who we need to invest will do so, and will deliver our energy supply as a consequence. Intervention of the kind envisaged in Clause 1 is likely, we believe—though not by any intention—to deliver the opposite. Clearly, microgenerators will be concerned that they can sell any excess electricity generated. I can assure the noble Lord, Lord Redesdale, that we are looking carefully at that matter as part of the work on the strategy for the future. It is important that, within the framework of competitive energy markets, there are no barriers to entry for microgenerators.

Clause 2 obliges the Secretary of State to require local authorities to set targets for microgeneration. Like other noble Lords, I have heard the example of Merton and other places. Last year, Merton introduced a policy expecting all new non-residential developments over a certain size to reduce predicted carbon emissions by 10 per cent through the use of onsite renewable energy sources. It did this without any requirement from the Secretary of State to set such targets. The Government made it clear in planning policy statement 22 in August 2004 that local authorities could include such policies in their local development documents. I understand that a number of local authorities have similar policies in place, or are planning to introduce them in future. So it would appear that local authorities are taking the lead in that area without the need for added intervention.

It is not clear whether anything like a majority of local authorities would welcome government legislation. Indeed, we believe that they would not. That point was made by noble Lords. Therefore, the problem does not seem to mean that there is a need for further statute, but I take the point made by the noble Baroness, Lady Maddock, on the potential for other incentives. Without trying to elaborate on that, I would welcome the opportunity of a discussion with her about what she believes might be an interesting approach.

We shall continue to monitor progress in this area and will make a proper assessment of the effectiveness of the updated planning policy before making a judgment as to whether further legislation is needed. In the mean time, I can only applaud the authorities that have taken innovative steps to promote embedded generation, and would encourage others to look at implementing similar policies.

Clause 3 requires the Secretary of State to make an order classifying small renewable energy developments as permitted developments under the Town and Country Planning (General Permitted Development) Order 1995. The Office of the Deputy Prime Minister is currently undertaking a review of that order. Although the noble Baroness, Lady Miller of Chilthorne Domer, asked me to anticipate Mr Prescott's announcement, I have no intention of doing so at this stage.

However, no one would find it particularly useful if we took a casual attitude to planning at any stage of significant developments. Like the windmills of old, people may come to love them; but, at the moment, I notice that people keep tilting at the windmills of new. They do not seem to treat them with the same affection, although I hope that that will not be true of the windmill that the noble Lord, Lord Redesdale, may potentially establish in north London.

Clause 4 would create an obligation similar to the current renewables obligation, but with reference to energy rather than electricity. I understand what the noble Lord is trying to create in what he refers to as a "renewable heat obligation". Such an obligation would be much more complex than the current electricity obligation. The heat market involves a wider range of fuels and types of suppliers than the electricity market, and there is not a suitable regulator that could replicate the role played by Ofgem in terms of administering that obligation.

It is also not clear what level of carbon savings would be achieved through the obligation. Enforcement costs are likely to be very high and perhaps out of proportion to the benefit of any heat that would be achieved through renewable sources resulting from this measure. The noble Baroness, Lady Maddock, made the point that time and attention would have to be given to the detail and that that would in itself require probably quite large resources and at pretty high cost. The DTI has commissioned a study of the market of heat generated from renewable sources and the heat produced by combined heat and power plants. I think that we should wait for that before trying a legislative fix.

Clause 7 extends the Bill to cover devolved administrations. That would be problematic in Northern Ireland as responsibility for energy policy has been transferred to the Northern Ireland Assembly. I shall not go into the detail of the arrangements that have been devolved to Scotland.

Baroness Maddock

My Lords, I am very grateful to the Minister for giving way. I cannot accept that we cannot devolve these matters to Northern Ireland. When the Home Energy Conservation Act came through, we managed to do so through the Northern Ireland Housing Executive. It is possible and we have done it with many other Bills.

Lord Triesman

My Lords, I do not want to add to what I have said about the state of devolution. The responsibilities, in my view, plainly lie with the devolved authorities.

In conclusion, I should simply like to say that I am not unsympathetic and the Government are not unsympathetic to what the Bill seeks to achieve. The real question is whether the approach is rhetorical or practical. We obviously need a practical response—the point which the noble Baroness, Lady Miller of Hendon, made. I think that that is absolutely right. We need realistic thinking and realistic action.

I was intrigued by what my noble friend Lord Berkeley said about a number of matters including whether the wrong type of electricity might get into the grid. That added to my thinking on the wrong kind of leaves and the wrong kind of snow. I had thought that there were only two sorts of electricity—DC and AC—but it may very well be that my physics is behind the times.

We shall continue to work hard with key stakeholders to develop an effective strategy that will make a significant contribution to the growth in the number of microgeneration institutions. Our principles on this are the same; the practicalities are the problems. However, with those words, I hope that I have indicated that we have a great deal of sympathy and will ourselves continue to press this important strand.

12.22 p.m.

Lord Redesdale

My Lords, I thank all noble Lords who have spoken in this debate, most of whom have been entirely positive and expected the Bill to be passed. Of course my heart sank like a stone when the Minister said that he was not 100 per cent behind all the measures and did not see them moving forward with great speed. Perhaps I may pick up some of the points on which he said that he saw problems with the Bill.

The Bill has not been easy to draft. We attempted to draft it in a way that provided as much flexibility as possible. In Clause 1, on metering, we added the term "market rate" to raise this very problem. The Minister mentioned the comment by the noble Lord, Lord Berkeley, about the wrong sort of electricity. The real problem with microgeneration is the voltage at which electricity would be fed into the grid. That could cause problems. However, it seems very unfair that at present one buys electricity at between 5p and 8p per kilowatt while those who are seen as providers receive only 2p to 3p per kilowatt for selling it back to the grid. That is obviously due to the skew in the market towards the very large producers. I have a massive briefing on how many megawatts, gigawatts or kilowatts one has to produce over a half-hour period to be described as an electricity provider and on the rate that one would receive. Seeing the time, however, I do not think that I should go into it at great depth at the moment.

Secondly, the Minister said that local authorities may well not appreciate further statutory instruments and burdens being placed on their shoulders. I happily take on board that point. The Minister also mentioned Merton and Woking, which are the two greatest examples. However, he said that we will have to look at how other authorities address the issue. How will the environment benefit from our spending a couple of years looking at hundreds of other local authorities that are doing absolutely nothing on the issue? The Minister indicates that that is not the case, but in many cases it is not a real issue.

The city of Newcastle has declared itself carbon neutral and is now trying very hard to achieve that end. However, for many reasons, a vast number of local authorities do not see this as a priority and are not working hard towards it—despite the fact that, as the noble Lord, Lord Hunt of Chesterton, said, not only could they achieve a 70 per cent reduction in carbon; they could also make millions of pounds of savings over a number of years in the amount they spend on energy.

The Minister raised the issue of planning, which is an issue. My small wind turbine is being built in Northumberland, not north London. I look forward to the day that I am allowed to stick up a large mast and wind turbine in my very small back garden. I used the example because I am in the middle of the planning process at the moment, and I very much hope that permission will come through. Objections are being raised because many people see wind turbines with a capacity of 1 gigawatt to 3 gigawatts rather than of 6.2 kilowatt. I have, therefore, had objections saying that it will cause television interference. That is plainly not the case as something so small would have no effect at all. But people raise such issues. Planning authorities need to be given as much guidance as possible to ensure that they do not stop the development of small renewables on the basis of erroneous information.

Many noble Lords have raised some of the issues behind the Bill. The right reverend Prelate raised the issue of a changing culture, which is one of the fundamental issues. As has often been said, far more energy could be saved if people actually switched off light bulbs. If everyone in the Chamber made the switch today to energy-saving light bulbs at home—they are incredibly cheap;£1.98 buys you one at Tesco—there would be a significant saving. However, that will not always be the case.

The noble Baroness, Lady Miller of Hendon, said that this legislation is only scratching at the surface and will have no real effect. The noble Baroness, Lady Maddock, raised the issue of combined heat and power. I strongly believe that in future it will probably be mandatory to install combined heat and power boilers, just as it is now mandatory to install condensing gas boilers. The cost differential is coming down as we speak.

It seems very unfortunate that the only CHP boilers that we can buy in this country at the moment are from Whisper Tech. As those have to be shipped over from New Zealand, it obviously has carbon implications in transportation and boiler miles. However, there is a real possibility that such companies would build in this country if there were a large market. With an average of 2 million boilers being changed in this country each year, we have a massive market. If each boiler produced 1 kilowatt per hour, hundreds of thousands and perhaps millions of tonnes of carbon could be saved.

If every house in a new development was fitted with solar thermal, or every house that could be fitted was fitted, it would save millions of tonnes of carbon dioxide and have a significant impact on meeting the Kyoto targets. Solar thermal is a form of renewable technology that takes the heat of the sun and drops it into the hot water tank.

Many other noble Lords raised other points, but I am conscious that the Minister answered many of them. I would put forward just this final thought. I understand that the Minister is moving forward and that a great many schemes are being undertaken by the DTI and Defra, many of which are innovative. However, we should not be under any misapprehension. The figures seem large, in the millions of pounds, but the problem that we are facing with global warming, as has been shown by the changing climate, could cost us tens of millions to billions of pounds. Therefore, we have to act quickly.

One of the real issues at the moment is that there is a perception that renewables are spreading everywhere, but that is not the reality. It is interesting that everyone talks about wind turbines in their backyard, but most people have never seen them. Last year a small by-election occurred in Hartlepool, which we came very close to winning. Enormous wind turbines can be seen along the Hartlepool skyline, which I think are very beautiful. At the time of the by-election I asked people in Hartlepool whether they were bothered by the wind turbines. The wind turbines overshadow the town but not one person that I asked cared about that. Hartlepool, of course, also has a nuclear power station on its doorstep. It appears that the perception of people complaining about wind turbines is very different from the reality of the view of wind turbines held by tens of thousands of people who live in Hartlepool. We need to act quickly on the matter for this industry to take off.

I wish to share with the noble Lord a simple calculation devised by someone who has tried to introduce renewable technology; that is, regulation over local government bureaucracy times the cost of renewables equals inertia. One of the major problems with regard to renewables is that people do not install them as it takes so much time and effort to do so. I very much hope that the Government's work on the subject will result in our discussing this subject on many occasions, even if by some small margin the Bill should fail to complete its passage through both Houses of Parliament, which I very much hope will not be the case. I hope that we shall return to this issue and that, like my noble friend Lady Miller and I, many more noble Lords will install renewables in their homes. I ask that the House give the Bill a Second Reading.

On Question, Bill read a second time, and committed to a Committee of the Whole House.