HC Deb 13 November 2001 vol 374 cc648-50W
Mr. Hepburn

To ask the Secretary of State for Trade and Industry what plans she has to increase investment in renewable energy. [13209]

Mr. Wilson

The Government have put in place a robust policy to increase investment in the development of renewable energy. The single most important mechanism, the new Renewables Obligation (RO) to be introduced next year and lasting right through until 2027, will drive forward investment in renewables. The RO is expected to create long-term support for renewables, worth over £1 billion per year, by 2010. The introduction of the Obligation will be underpinned by direct Government funding for renewables worth over £260 million between 2001 and 2004. This includes the Government's current sustainable energy research and development programme, worth £55.5 million over the next three years.

Other components to this strategy, which will increase investment in the renewable energy sector, include: exemption of renewables from Climate Change Levy (CCL) payments. This is expected to lead to greater demand for renewable electricity and increased investment; the Non-Fossil Fuel Obligation (NFFO) Orders supported many renewable energy projects through the previous Non-Fossil Fuel Obligation. We have arranged that existing NFFO contracts will be honoured. We have also announced a proposal for a NFFO locational flexibility Order. Locational flexibility will be available for all NFFO 3, 4 and 5 projects that have not been commissioned, other than mixed waste incineration projects. This Order will allow projects not already built, to identify more appropriate locations. so that they can overcome any problems in securing planning permission. These initiatives are expected to bring forward investment in this sector in the near future; the Government have also initiated regional assessments throughout all regions of the UK. The majority of these studies have been completed and have identified each region's capacity to generate electricity from renewable sources. Once all the assessments are completed, it is expected that specific regional targets will be adopted across the UK. These targets are expected to attract investment in the resources available in these regions.

Government policy is bringing about a much more positive approach to supporting renewable energy projects. Taking all these measures together, the Government believe the industry is well placed to attract and retain a significant level of investment.

Mr. Key

To ask the Secretary of State for Trade and Industry what plans she has to increase the target of energy generated from green sources. [10649]

Mr. Wilson

[holding answer 30 October 2001]: The Department of Trade and Industry attaches great importance to green forms of energy and has set ambitious targets. The new Renewables Obligation as well as Scottish R. 0. will create a long-term market for renewables which will be worth over £1 billion per year by 2010. The Obligation will be the main mechanism by which we will meet our renewables targets and will be underpinned by direct Government funding worth over £260 million between 2001 and 2004. This will include an extensive capital grants programme for the early development of offshore wind and energy crops, the initial stage of a major photovoltaics demonstration programme and a boost for research and development.

Our target is that by 2010, just over 10 per cent. of electricity sales by licensed suppliers will come from sources eligible for the Renewables Obligation. As set out in our recent statutory consultation document, we have proposed that the level of Obligation will increase from year to year as follows.

Period Estimated sales by licensed suppliers in GB TWh Total obligation(GB)TWh Total obligation as percentage of sales (GB)Percentage
2002–03 313.6 9.4 3.0
2003–04 316.2 13.5 4.3
2004–05 318.7 15.6 4.9
2005–06 320.6 17.7 5.5
2006–07 321.4 21.5 6.7
2007–08 322.2 25.4 7.9
2008–09 323.0 29.4 9.1
2009–10 323.8 31.5 9.7
2010–11 324.3 33.6 10.4

The Obligation will remain in place until 31 March 2027, although to date we have not made any proposals for increasing the target after 2010. This will, however, be reviewed throughout the lifetime of the Obligation in the light of available information on climate change. The target may increase after this time, and this would be effected through an amendment to the Renewables Obligation Order which we aim to put before the House later this year.

While this is a description of the current position the question of the contribution to be made by renewables is part of the PIU's Remit of Energy Policy. If it appears feasible to achieve even more ambitious targets on renewables, I will closely examine the means of doing so.