renewable Energy Generation (Hansard, 30 March 1999)

§ Mr. Battle

I have today published a consultation paper "New and Renewable Energy—Prospects for the 21st Century" which reports on the outcome of the Government's review of new and renewable energy policy.

The Renewables Review paper demonstrates that there is tremendous potential for renewables to become a fully competitive part of UK energy supply. Renewables make an important contribution to secure, sustainable and diverse energy supplies in the UK. They are an essential element of a cost-effective climate change programme and will help the Government meet their environmental objectives at the least cost to the customer. Renewables play a vital role in enabling the UK to meet its environmental targets of reducing greenhouse gases by 12.5% by 2012, and the goal of reducing carbon dioxide emissions by 20% by 2010.

The document shows that producing 10% of UK electricity from renewables appears to be feasible. The Government intend working towards a target of renewable energy providing 10% of UK electricity supplies, cost effectively, as soon as possible. I want to achieve this by 2010. However, this should not be seen as an end in itself, but a step forward on the road to making renewables a strong, world-beating industry.

There are already considerable benefits of the renewables industry. The UK industry employs 3,500 people. Through creating. an export drive, and by further developing the industry and the UK market, up to 45,000 jobs could be created.

The Non-Fossil Fuel Obligation (NFFO) has already provided over £600 million of support for renewables. Support for renewables under NFFO will accelerate in the first decade of the next century and could rise to around £150 million a year. NFFO has played a major part in stimulating the industry and bringing down the costs of renewables. As a result of NFFO, an industry of some 700 organisations has been developed. This is why the Government want to see how NFFO can evolve, and to see how it can help the industry to thrive even more.

The review document therefore presents options for possible ways to support renewables while they are reaching market prices. It looks at both the costs and benefits of moving towards a greater use of renewables. In particular, it looks at options for a revised NFFO in the competitive energy markets of the future.

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In addition, the Government have provided an increased budget for DTI's New and Renewable Energy Support Programme. They have allocated £43.5 million over the next three years for R&D to help achieve its aim.

The Government are pressing ahead with reform—electricity liberalisation, for instance, is giving consumers the ability to choose their electricity supplier—including green electricity. Suppliers are now offering green tariffs and the Government hope consumers will take up this opportunity to stimulate growth in renewables.

Solar energy also has real potential in the longer term. This is why the Government have recently asked for industry's involvement in taking forward three major new photovoltaic initiatives. In addition, last year I switched on the first solar panel system for a British school, as part of the Government's Foresight Scolar programme. I believe that such schemes can play a valuable part in the development of the UK renewables industry.

This report identifies key issues and challenges which the Government and industry would need to pursue. Issues examined in the paper include: planning arrangements; opportunities for developing energy crops; and arrangements to ensure that embedded generators—those directly connected to local distribution systems, often the case with renewables producers—receive a fair price for their electricity. It seeks views on the issues raised to enable the Government to frame their future policy.

I look forward to receiving those views, and plan to make a further announcement about the way forward in due course. The Government are committed to encouraging sustainable development, to ensure a better quality of life for all.