Clause 3 - Amendments of the Electricity Act 1989
Sustainable Energy Bill
10:45 am
Mr Brian White (North East Milton Keynes, Labour)
This is one of the key issues on energy policy that faces the Government. The Government have set targets in this area through their climate change programme. Some hon. Members will be only too well aware of the urgent need to give a boost to the CHP industry. There are huge concerns in the industry that the market for CHP has all but stagnated. A strong declaration of Government support is therefore vital to kick-start investment in such highly efficient technology.
I regret that we were unable to reach agreement on removing the renewables obligation. The CHPA estimates that, without it, some £100 million will drift from the CHP sector to other green technologies by 2010, acting as a further break on progress towards real breakthroughs. The debate will continue and I am hopeful that, over time, the Government will be persuaded of the merits of such a measure.
I make the point to the Minister as he learns about his new job that CHP is in crisis at the moment, and much of that results from the new electricity trading arrangements. Not accepting the original clause 3 will not make that problem go away. Many of us will be on the Minister's doorstep and that of the Treasury over the coming months. Scottish Power, Scottish and Southern Energy, Innogy, Powergen, Northern Electric and Meridian Industrial have all withdrawn from the development of their new CHP schemes. New CHP capacity fell by 95 per cent. from 2001 to 2002. I could go on, but given the time, I will not. The Minister will be aware of such statistics.
The Government have agreed that there is a need for action on CHP, and the new clause provided some assurance to the CHP industry. A proper CHP strategy is now five years overdue but the clause will help to convert some of the Minister's statements into future action. It will allow the Secretary of State to set targets for CHP in Government use. It is a useful, if minor, step forward that will help the CHP industry. The Minister has to realise the gravity of the situation facing the CHP industry, and I hope that, when he responds to accept the new clause, he will recognise the severity of the economic situation that the industry faces.