Clause 36
Energy Bill
4:30 pm
Charles Hendry (Shadow Minister, Business, Enterprise and Regulatory Reform; Wealden, Conservative)
I beg to move amendment No. 24, in clause 36, page 19, leave out lines 5 to 12.
Thank you, Mrs. Humble, for the helpful explanation that have just given. It has been a while since I served on a Bill Committee and the details sometimes slip away. I thought I had found a way by which we could dive back into issues that we had discussed some time ago and bring them forward again, but that is clearly not the case.
Amendment No. 24 takes us into discussion of the provisions on the renewables obligation, and it may be helpful to give some background. We broadly welcome the clause. It has to be accepted that the renewables obligation certificates are a hideously complicated mechanism. One of my aims when I took on the role of shadow Energy Minister was to end up with a simpler system of financing such aspects of energy that is transparent and simple. ROCs are anything but transparent and simple, but they have delivered significant investment in some sources of renewable energy. However, those investments have been overwhelmingly in onshore wind and methane, because those are the cheapest forms of renewable energy. Only a small amount of investment has gone into offshore wind and virtually none has gone into photovoltaics and wave and tidal technology.
It is right that we should review the ROCs and move towards a banding system. Our goal must be to encourage emerging rather than mature technologies. However, that needs to be viewed against a backdrop of a poor take-up of renewables so far in the United Kingdom. Just 4 per cent. of our electricity production comes from renewables, making us the second worst in the European Union after Malta. We have 40 per cent of Europe’s wind. [Interruption.] My hon. Friend the Member for Billericay thinks that much of that wind is in this room. We have only 2 GW of installed wind capacity, with three times as much stuck in planning, compared with 18 GW of wind power in Germany. We are tied in to ambitious targets for renewables. Some 15 per cent. of all our energy must come from renewables, according to the EU’s targets for this country. We need a dramatic transformation of the process in order to achieve that.
Amendment No. 24 was brought to our attention by Drax Power in relation to its concerns that caps on the volume of non-energy crops will result in less biomass being burnt, which will mean more CO2 being released into the atmosphere. Drax Power is concerned that
“the threat of a cap will lead to the price of non-energy crop co-fired ROCs being discounted and will increase the risk associated with investment in the technology.”
It has advised us further that that will
“hit the public through deterring development in the cheapest form of renewables technology, leaving end customers to pay yet higher electricity prices for more expensive alternatives to enable the Government to achieve its target.”
Drax Power tells us that
“a cap is unnecessary under a banded Renewables Obligation regime, and particularly as there is provision for a review of the bands. The safeguard which allows for an early review of RO bands, should certain circumstances arise, is entirely appropriate.”