Renewable Technologies (Tariffs)

Energy and Climate Change – in the House of Commons at 10:30 am on 16th September 2010.

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Photo of Dominic Raab Dominic Raab Conservative, Esher and Walton 10:30 am, 16th September 2010

What plans he has for the future of existing tariffs and subsidies in relation to renewable technologies and other sources of clean energy.

Photo of Christopher Huhne Christopher Huhne Liberal Democrat, Eastleigh

We are committed to achieving our 2020 renewable energy target, which is a European Union legislative goal. The coalition programme for government commits us to the establishment of a full feed-in-tariff, with the aim of securing a significant increase in investment in renewables while maintaining a banded renewables obligation and not changing the ground rules for existing investments. We are also strongly committed to action on renewable heat.

Photo of Dominic Raab Dominic Raab Conservative, Esher and Walton

The last Government's impact assessment on feed-in tariffs showed that domestic solar power is nine times as expensive as industrial turbines and hydro plants in producing clean energy. That means that poorer families must pay billions in their energy bills to subsidise those who can afford solar panels. How will the Secretary of State eliminate such distortions in the market for clean energy, so that we can sustain public confidence and so that our environmental policy makes wider economic sense?

Photo of Christopher Huhne Christopher Huhne Liberal Democrat, Eastleigh

Renewables are currently more expensive than fossil fuels, and, as the hon. Gentleman points out, there is a wide variation in the costs of different sources of energy. One of the things the Department must deal with is the enormous uncertainty about the development of costs in future. For example, the cost of onshore wind generation has fallen, and according to calculations that we obtained recently from our Mott MacDonald study, it is competitive with the cost of nuclear generation. As for photovoltaics-a subject that concerns the hon. Gentleman-it is true that ours is not a very sunny country and that Arizona produces about twice the yield that can be obtained anywhere in the United Kingdom, but the costs are falling by roughly 6% a year. We have to make a judgment about the uncertainties in the long run.

R

It will be instructive to have an authoritative view from industry on this vexed and politicised area.
One will be forthcoming September 7, 1830 Savoy Place:
'The IET Presidents Address 2010: Keeping the lights on - an inconvenient truth'

Submitted by Richard Tebboth

Photo of Albert Owen Albert Owen Labour, Ynys Môn

Tidal energy has great potential to contribute to the meeting of our renewable obligations. A fine example is the proposed development off sunny Anglesey, my constituency, which I invite the right hon. Gentleman to visit. The industry has difficulties in securing the investment. Will the Secretary of State ensure that there is a proper level playing field of subsidies, so that young technologies such as tidal energy can develop here in the United Kingdom?

Photo of Christopher Huhne Christopher Huhne Liberal Democrat, Eastleigh

I am grateful to the hon. Gentleman for highlighting that issue. It is important for the Department to make a judgment about increased support for promising technologies at a very early stage when commercial funding is not available. The essential framework that we are applying is that as the technology becomes older, more mature and market-tested, the subsidy should be gradually removed until it can wash its own face in the marketplace.

Photo of Eric Ollerenshaw Eric Ollerenshaw Conservative, Lancaster and Fleetwood

In the context of tidal energy, is recent press speculation about the Severn tidal barrage correct? Might it be time to consider smaller tidal barrage schemes such as the one on the River Wyre in my constituency, which has been on the table for 20 years?

Photo of Christopher Huhne Christopher Huhne Liberal Democrat, Eastleigh

I believe that there will be an important role for tidal energy in our future energy provision. It is too early for us to make a statement about the Severn barrage, but we will do so when we have given full consideration to the findings of the study.

Photo of Ed Miliband Ed Miliband Shadow Secretary of State for Energy and Climate Change

I think that the Secretary of State and I agree about the importance of renewable technology and clean energy to Britain's economic future, but does he recognise the rising concern about the possibility that, on the crucial issue of subsidies to make that economic future happen, the Government are going backwards? May I ask him in particular about the £60 million that the last Government pledged to improve port facilities? That £60 million is crucial to some of the investments announced by Siemens, GE and others. Can he confirm that it will go ahead?

Photo of Christopher Huhne Christopher Huhne Liberal Democrat, Eastleigh

The right hon. Gentleman knows that all the Government's spending decisions are subject to the comprehensive spending review. It would not be comprehensive if they were not. Decisions will be announced on 20 October, but I can assure him that we consider it extremely important, given the enormous growth in offshore wind generation, that there is a supply chain capable of supplying that tremendously important and exciting market opportunity, and that it is based in this country. We will do what we can to ensure that that happens, given the limits to affordability.

Photo of Ed Miliband Ed Miliband Shadow Secretary of State for Energy and Climate Change

Of course there are limits to affordability, but the last Chancellor made this a priority: he said that the £60 million investment would go ahead.

As the Secretary of State did not give me a very satisfactory answer to that question, let me test him with another. We announced four demonstration projects for clean coal technology. That should not be a worry for the Treasury, because it is funded directly by a levy passed by the House of Commons, but there have been reports this week that the projects may not go ahead. Can he scotch that speculation, and confirm that all four of them will go ahead?

Photo of Christopher Huhne Christopher Huhne Liberal Democrat, Eastleigh

I am glad that the right hon. Gentleman mentioned the last Chancellor because, of course, one of the legacies we are having to deal with in government is the fact that the last Government, of which the right hon. Gentleman was a member, identified £44 billion of expenditure cuts without a single expenditure cut specified in that total. The reality is that we have had to clear up the legacy of his Government. The reality is exactly as the former Chief Secretary to the Treasury, Mr Byrne, said: there is no money left. We are therefore having to make some extremely tough choices, but on carbon capture and storage I can assure Edward Miliband that the coalition agreement between the two Government parties says very clearly that there will be four CCS projects. That is an extremely important part of our low-carbon future and, of course, it is crucial in ensuring that we have a competitive advantage in these areas, because the UK has a lead in CCS technology, as we have seen from our university researchers.

Photo of Ed Miliband Ed Miliband Shadow Secretary of State for Energy and Climate Change

I am not quite sure whether that answer was a yes or a no. The Government's short-sightedness in cutting investments that are necessary for our economic future is a fundamental issue affecting the future of the country, and the Secretary of State and the coalition parties have to realise that there can be no credible plan for deficit reduction in this country if we do not have a credible plan for growth and jobs. When will he start fighting for the investments that are necessary in offshore wind, in clean-coal technology and in Sheffield Forgemasters, where there was the absolutely terrible decision to cut back- [Interruption.] Coalition Members groan, but there is no credible plan for deficit reduction and no credible plan for growth and jobs.

Photo of Christopher Huhne Christopher Huhne Liberal Democrat, Eastleigh

The passion of the right hon. Gentleman's oratory reminds me that I ought to wish him luck in the forthcoming Labour leadership campaign. The reality is that we are struggling: we are struggling with the fiscal legacy that his Government left us and we are having to take some very tough decisions. It is fundamental to our national interest that we are not next in line among the countries affected by the sovereign debt crisis. I know that the right hon. Gentleman has in the past pooh-poohed that as the Greek defence, but the reality is that on the weekend after the general election in our country every single finance Minister in the European Union, including-