What steps her Department is taking to develop electricity generation using wave and tidal power.
The Department is taking a number of important steps to develop electricity generation from wave and tidal power. We have supported the development of the world's first commercial wave power station on Islay, and we recently announced that we will provide further support to Wavegen—the company involved—for its most recent project. Earlier this year, the wave programme was extended to cover tidal-stream technology.
The Minister is no doubt aware that the Select Committee on Science and Technology concluded last year that the United Kingdom should establish a marine energy test centre. He is no doubt also aware that since then, research commissioned by the Scottish Executive and Highlands and Islands Enterprise has concluded that the best site for that centre would be in Stromness, Orkney. What discussions has he had with the Scottish Executive and Highlands and Islands Enterprise to move that project forward to the next stage? Is he prepared to commit any funding from his Department towards establishing the centre?
The announcement to which I referred about further support for Wavegen is relevant to the testing station on Orkney, because I understand that Wavegen will develop the technology for an offshore wave-power machine, which will be tested there. There is close liaison between those responsible for our UK-wide policy and those responsible for what is happening in Scotland. We work very closely with the Scottish Executive on all energy issues, especially renewables, and the funding will come from the DTI where appropriate, and from the Scottish Executive or Highlands and Islands Enterprise where that is appropriate.
The Minister will share the concern of Members who read the report in the recent Parliamentary Office of Science and Technology bulletin that changes to reduce the price of electricity have resulted in a decline in the amount of energy produced from renewable sources in recent months. Will he be particularly vigilant to ensure that in attempting to reduce energy costs, we do not score an own goal?
My hon. Friend's point is extremely well taken and succinctly expressed. There is a problem, but the new electricity trading arrangements are working well in their own terms. NETA has led to a significant 20 per cent. reduction in the wholesale price of electricity, but there is no doubt that NETA, among other factors, has had an impact on renewables, especially wave power and combined heat and power. That is why I have announced a consultation exercise on NETA's implications for renewables and CHP in its first few months of operation, but the rhetoric must match the reality, and I will be very interested to know about NETA's effect. NETA has many benefits, but we must also pursue and give substance to our targets on renewables and CHP.
May I make it clear to the Minister that the Opposition strongly support efforts to encourage the development of renewable energy sources, such as wave and tidal power? We welcome the measures that he mentioned, and those to which the Secretary of State referred earlier, but may I press the Minister on the issue that has just been raised? The support that he described is almost worthless when set against NETA's effect on the industry. As he said, NETA has been very successful in driving down electricity prices, but it is also driving renewable energy producers out of business. Does he accept that if the Government are to meet their renewable energy targets—rather than waiting for the outcome of a review or the consultation exercise to which he referred—action is needed straight away?
I am delighted to hear that the Tories now support our policies on renewable energy, because the reality is that they never did anything about it. If they had done so, Britain might have kept its lead in wind power in particular and we, instead of Denmark, might have a £4 billion manufacturing industry today. I am determined that we will not lose our technological lead in wave and tidal power, CHP and other industries that can contribute enormously not only to our energy policies but to our manufacturing policies. That is our objective, and it is why I am so determined that we shall not be diverted from those targets. We will study NETA's effect. Ofgem is an independent regulator. Its priority is to reduce the price of electricity, which is also a popular and successful policy, but we have our targets for renewables and CHP, and we must consider the reality of what is happening in the first few months of NETA's working.
Is it not the case that the European Union has now set a target of 20 per cent. for renewables, by contrast with the 10 per cent. by 2010 that we have set? Is it not now time for us to look beyond 2010, and to set higher targets for renewables in the years ahead? In the current context of international terrorist threat, will my hon. Friend tell the House whether he personally would feel safer living next to a wind farm or a nuclear power station?
I would feel extremely safe living beside either, and no one should suggest otherwise at this or any other time. On the wider point, I should like even more ambitious targets for renewables to be set, and those involved in the energy review are studying that issue among others, but I am not interested in setting targets that cannot be achieved, so if we set a higher target for renewables, which I would strongly welcome and support, we must do so on the basis of hard evidence showing that we can deliver. That is precisely what the energy review will set out.