Microgeneration

Oral Answers to Questions — Trade and Industry – in the House of Commons at 10:30 am on 1 December 2005.

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Photo of Theresa Villiers Theresa Villiers Shadow Chief Secretary to the Treasury 10:30, 1 December 2005

If he will make a statement on his Department's policy on encouraging the use of microgeneration in UK households.

Photo of Colin Challen Colin Challen Labour, Morley and Rothwell

Whether he expects there to be a surplus or shortfall of funding at the end of the clear skies programme.

Photo of Alan Johnson Alan Johnson Secretary of State for Trade and Industry

The Government already encourage microgeneration in a variety of ways. For example, there is a 5 per cent. VAT level on most microgeneration technologies. We have provided £41 million of support for solar photovoltaic projects through the major PV demonstration programme and support for field trials. There is £12.5 million of support for household and community renewable energy schemes through the clear skies initiative; and £30 million of funding for a new low carbon buildings programme. We have also amended the renewables obligation to make it easier for microgenerators to claim renewables obligations certificates.

My Department is leading the development of a cross-Government strategy for the promotion of microgeneration. This strategy will be published by next April, in accordance with our commitment under the Energy Act 2004.

In relation to clear skies, I expect that all funding will be allocated by the time the programme ends in March 2006, but projects will have a further 12 months to be completed and actually to spend the money.

Photo of Theresa Villiers Theresa Villiers Shadow Chief Secretary to the Treasury

Despite the warm words of the Secretary of State, it is still clear that the take-up of microgeneration is minimal and that the market for it is still very underdeveloped. Will the right hon. Gentleman consider, in assessing the upcoming energy review, how, if the Government decide to go down the nuclear route, they will ensure that the nuclear industry does not effectively crowd out microgeneration and make it more difficult for investment in it? In particular, if the right hon. Gentleman decides to go—

Photo of Alan Johnson Alan Johnson Secretary of State for Trade and Industry

I agree with the hon. Lady's assessment that microgeneration is underdeveloped. Some of the reasons for that will be dealt with in our strategy, which we will publish next April. Much of it is about public awareness, some of it is about problems with planning and some of it is about connection with the grid.

As for the hon. Lady's question about nuclear energy, if the energy review went down that path, I do not think that it would have any impact on the need to develop this particular area of microgeneration. Microgeneration is important in its own right, whatever we do in the rest of the energy mix.

Photo of Colin Challen Colin Challen Labour, Morley and Rothwell

This being the season of good will and festive cheer, as well as reviews, will my right hon. Friend review the amount of money put into the low carbon building initiative, which year on year is quite a bit less than what was put into the programmes that it replaces? If my right hon. Friend is looking for somewhere to get the money, may I suggest that he dips into his Department's nuclear fusion research money, which is considerably more than that being given to the low carbon buildings initiative?

Photo of Alan Johnson Alan Johnson Secretary of State for Trade and Industry

I suppose that as it is 1 December we can officially say that it is the season of good will, but it is not the season of distorting our figures—[Interruption]—as every other season of the year. My hon. Friend is wrong about this. I understand how passionately he feels about the matter, particularly photovoltaics. On average, under the low carbon buildings programme we shall be spending £9.5 million a year compared with £9.2 million average yearly spend since 2000 under the previous project. We have not diluted the amount of money that we are making available, although the use of grants is not the total picture in terms of how we can encourage greater use of microgeneration.

Photo of Elfyn Llwyd Elfyn Llwyd Shadow PC Spokesperson (Home Affairs), Shadow Spokesperson (Business, Innovation and Skills), Shadow Spokesperson (Defence), Shadow Spokesperson (Environment, Food and Rural Affairs), Shadow Spokesperson (Foreign and Commonwealth Affairs), Shadow Spokesperson (Justice)

From the Secretary of State's earlier responses it is obvious that he has recognised the true potential of micro-combined heat and power generation. Has he seen the recent report of the Society of British Gas Industries, which clearly shows that micro-CHP could, by 2015, generate enough power to reduce carbon dioxide emissions by 1.1 million tonnes per annum? Will the right hon. Gentleman take urgent action to ensure that the right regulatory framework is in place to enable that to happen?

Photo of Alan Johnson Alan Johnson Secretary of State for Trade and Industry

I have seen that report, which is an important contribution to our strategy review. That strategy review, to which we made a commitment in the Energy Act 2004, was designed specifically to address these issues. I mentioned planning as a problem earlier. The report is an important contribution to the debate, and it is an area of legitimate concern on both sides of the House. We will try to ensure that planning regulations do not inhibit the growth of combined heat and power.

Photo of Alan Whitehead Alan Whitehead Labour, Southampton, Test

I congratulate my right hon. Friend on his Department's strong support for two private Members' Bills seeking to enhance the use of microgeneration to an enormous extent, one of which was unfortunately blocked by a maverick climate change denier on the Opposition Benches. If that block continues, is it my right hon. Friend's intention to find Government time to complete those Bills and place them on the statute book?

Photo of Alan Johnson Alan Johnson Secretary of State for Trade and Industry

I reaffirm our support for the private Member's Bill tabled by my hon. Friend Mark Lazarowicz. As for how we could get around any blockage, that is a subject for others, such as the usual channels.

I see that my hon. Friend the Member for Edinburgh, North and Leith is present. His Bill contains important principles, and I am sure that it will be supported by Members in all parts of the House. I hope that the person responsible for blocking its passage will remove the blockage; if he does not, we shall have to consider other ways of dealing with it.

Photo of Bernard Jenkin Bernard Jenkin Shadow Minister (Energy and Climate Change), Deputy Chair, Conservative Party

Dr. Whitehead asked a pertinent question. It is in the Government's power to continue to pursue that Bill. Let us see whether they do so, or whether what we are hearing is just rhetoric. I do not support the action of my right hon. Friend Mr. Forth in blocking the Bill.

I agree with my hon. Friend Mrs. Villiers. We have had stop-go policies for the clear skies programme, and the Office of the Deputy Prime Minister has been very obstructive in regard to constructive building regulations for microgeneration and micro-CHP, although we know that those processes have enormous potential for reducing carbon dioxide emissions. Why are the Government being so half-hearted about those programmes and that potential? Does their attitude not underline the fact that their entire energy policy is in a mess—which, of course, is why the Secretary of State has to have a review?

Photo of Alan Johnson Alan Johnson Secretary of State for Trade and Industry

That is nonsense on stilts. On clear skies, we have a go-go policy. There is no gap. There used to be a gap of about four months between money going out and the receiving of, and responses to, bids. In this case there will be a five-month interval—so if there can be said to be a gap, it is a gap of only a month—between the end of the clear skies programme and the start of the new programme.

The hon. Gentleman should give some advice to his right hon. Friend Mr. Forth. We shall be able to proceed with that private Member's Bill if it is not blocked by Conservative Members. I was pleased to hear what the hon. Gentleman said. Why should we delay and lose time? Why should the Government have to rethink the whole programme and go through the usual channels when a quiet word in the right hon. Gentleman's ear might allow us to proceed?