Energy Generation (Hansard, 31 January 2002)

§ Mr. Wilson

The Cabinet Office's Performance and Innovation Unit have recently undertaken a strategic review of the UK's energy policy including the longer-term role for renewable energy. The Government's work on developing environmentally friendly energy generation has continued throughout this period with several new initiatives being implemented to ensure the development of renewable sources of energy and cleaner coal technology.

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Subject to parliamentary approval, we shall shortly be implementing the Renewables Obligation. In addition, renewables generated electricity has been exempted from the climate change levy and existing Non Fossil Fuel Obligation (NFFO) contracts have been protected. These measures will create a long-term market incentive for renewables worth over £1 billion per year by 2010.

We are underpinning the obligation with direct Government funding for renewables worth over £260 million between 2001 and 2004 and within this, we are setting up an extensive capital grants programme for offshore wind and energy crops projects, initiating a major photovoltaics demonstration programme, and boosting research and development.

We recently implemented an order to allow locational flexibility for NFFO 3, 4 and 5 projects that have not yet been commissioned. This will allow more appropriate locations to be found in order to overcome problems in securing planning permission.

We have initiated studies of each UK region's capacity to generate electricity from renewable sources. Once all these assessments are completed, it is expected that specific regional targets for renewable energy will be adopted across the UK.

The Government are also exploring the scope for upgrading the electricity distribution system to enable the UK's huge renewable energy resources to be exploited to the full. For example, we have commissioned an initial study of the feasibility of an underwater cable to connect parts of the Western seaboard of the UK directly to the National Grid.

In the Cleaner Coal technologies arena, the Government are already investing £12 million over the three-year period 2000–01 to 2002–03 on research and development. We will also be publishing in the very near future the findings of the review of the case for Government support for Clean Coal Technology power plant.