Electricity Market Reform

Business of the House – in the House of Commons at 12:27 pm on 16th December 2010.

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Photo of Christopher Huhne Christopher Huhne Liberal Democrat, Eastleigh 12:27 pm, 16th December 2010

Today, we begin consulting on the reform of the electricity market. This programme sits at the heart of my Department's mission: to deliver secure, affordable and low-carbon energy. The case for reform is clear. We need significant investment in our energy infrastructure. As old coal and nuclear plants shut down, and demand for electricity grows, we must build the next generation of power stations. The electricity that they deliver must be both affordable and sustainable, helping us to meet our emissions reduction targets and keep the lights on.

The current energy market has served us well, but it cannot deliver long-term investment on the scale that we need, nor can it give consumers the best deal. Left untouched, it would lock carbon emissions into the system for decades to come. Investors and boardrooms around the world want to know whether the UK is a good place to do energy business, and today we are setting out our plans to make it one of the best places to do energy business.

The challenges and the opportunities are huge. Put simply, we face growing demand, shrinking supply and ambitious emissions reductions targets: demand for electricity could double by 2050 as we decarbonise the economy; 30% of our electricity must come from renewables by 2020-up from 7% today-to meet our contribution to the European Union's renewable energy target; and in the next 10 years, a quarter of our existing power plants will need to be replaced, as nuclear and coal plants reach the end of their lives.

Without action, we will face a real and growing threat to the security of our supply. The reserve margin of spare generating capacity will fall over the next decade and the risk of interruptions to our energy supplies will rise, so we must build the next generation of power stations, and act to ensure there will be enough reserve capacity to meet our needs. Together with renewables, we will need new gas-fired power stations and new nuclear plant. We must attract more than £100 billion of investment in new power stations and grid connections by 2020-that is double the investment rate of the past decade.

We must rebalance our market framework to attract investment in the right technologies. At the moment, there is a bias towards low-cost, low-risk fossil fuel generation. Renewables, nuclear and carbon capture and storage all have relatively high up-front capital costs, but a more diverse, lower-carbon energy mix is better for our energy security, better for our economy and better for our planet.

Some measures have already delivered investment in new low-carbon generation-the renewables obligation and the EU emissions trading system-but we must go further and faster. To secure reliable, affordable low-carbon electricity, we must change the market structure. We must create the right framework to ramp up power generation and secure our supply and we must deliver cleaner, greener electricity for the 2020s and beyond.

Today, we are proposing new incentives to drive investment while protecting the rules for investments already made. The focus will shift permanently from conventional fossil fuel-fired electricity to low-carbon technologies-renewables, nuclear and cleaner fossil fuels. Our preferred package of reforms is designed to strike a balance between the best possible deal for consumers and giving existing players and new entrants in the energy sector the certainty they need to raise investment.

Reform will be gradual. We want to reassure industry that the rules for existing investments will be protected. By consulting on a process and principles for the transition to new market arrangements we aim to minimise uncertainty. The competitive market will remain at the centre of our energy policy, but the four elements of the reform package announced today will change incentives in the market and ensure both the security and decarbonisation of our power supply system while minimising costs to consumers.

First, there will be greater long-term certainty about the additional cost of running polluting plant, to make lower carbon investment more attractive. Proposals set out in the Treasury consultation to support the carbon price directly tackle the core problem, putting a better price on emissions, increasing the cost of fossil fuel-based generation and strengthening the carbon price for UK electricity generators.

Secondly, greater revenue certainty for low-carbon generation will make clean energy investment more attractive still. Through the proposed contract for difference feed-in tariff, the Government will guarantee greater revenue certainty for low carbon in the form of a top-up payment if the wholesale price of electricity is below the feed-in tariff and a potential clawback for consumers if wholesale prices go above the contracted tariff.

Thirdly, there will be additional payments to encourage the construction of reserve plants or demand reduction measures to ensure the lights stay on. Capacity payments will create an adequate safety cushion of capacity as the amount of intermittent and inflexible low-carbon generation increases.

Fourthly, there will be a back-stop to limit how much carbon any new coal-fired power stations emit. An emissions performance standard will reinforce the existing requirement that no new coal is built without carbon capture and storage.

Together, those four reforms make good on our commitments in the coalition's programme for government. They will make the UK a prime location for low-carbon energy investment. They will ensure our energy supply is cleaner and more secure. They will protect the consumer-whereas prices will rise in the medium term, the additional impact of the reform packages will be small, and by 2030 consumer bills will be lower than they would have been if we had not reformed the market. They will lay the foundations for the sustainable economy of the future, bringing jobs up and down the supply chain.

The consultation that opens today invites everyone to tell us whether they think the preferred package of reforms is the right one and to provide the evidence to support their views. Final recommendations will be published in a White Paper in late spring 2011, and the reforms will be introduced before the end of this Parliament. We are also reviewing the role of Ofgem and the energy regulatory framework and today we are publishing the Government's response to the call for evidence on the terms of the review.

We have a once-in-a-generation chance to rebuild our electricity market, rebuild investor confidence and rebuild our power stations. Like privatisation before it, this will be a seismic shift, securing investment in cleaner, greener power and delivering secure, affordable and low-carbon energy for decades to come.

Photo of Meg Hillier Meg Hillier Shadow Secretary of State for Energy and Climate Change

I thank the right hon. Gentleman for early sight of his statement and for early notice that it would be made-ahead, even, of Government Back Benchers, for which I am grateful.

Let me be clear at the outset that the Opposition believe that the programme is absolutely necessary to secure energy for the future, and we will support fair and sensible mechanisms for reform. We agree with the Secretary of State that this is a once-in-a-generation opportunity to get it right and we hope that we can work with the Government and that, for their part, they will take on board the Opposition's comments as they consult.

The issues that the Government must tackle are fourfold: security of supply, meeting renewable energy targets, finding the crucial investment for energy infrastructure-some £200 billion-and, as we heard in Question Time, keeping energy prices reasonable. It is crucial that the Government put in place the mechanisms to make new low-carbon investment attractive and they must bridge the looming energy gap without a rush for unabated fossil fuel generation. I am heartened by some of what the Secretary of State has said, but the Government must also provide energy security across a balanced and diverse energy portfolio and they must provide fairness and affordability for consumers.

We face this big challenge together, but we must not allow the consumer to bear the whole burden. The Secretary of State has dangled cheaper prices from 2030 in front of us today-jam tomorrow-but will he provide his modelling so we can be sure that the Government are doing everything they can to ensure that energy prices today are being tackled, too? We cannot allow increased energy costs to be an excuse for increased profit at a cost to our constituents.

The Government must seize this opportunity and act now to give investors the certainty they need and to meet the necessary timescales. Today, the Government have confirmed that the green investment bank is still under review. The Secretary of State has assured us that the Government are committed to low-carbon growth, but the question is: can he do it on time?

This is not the time for delay or dithering. Now is the time for action, and I hope that the Secretary of State will deem 2011 to be the year of decision. He rightly pointed out in his statement that if we do not take prompt action, "The reserve margin of spare generating capacity will fall over the next decade and the risk of interruptions to our energy supplies will rise." Questions remain about whether new nuclear can be built on time and at the pace required and whether carbon capture and storage can be proven on an industrial scale and commercially applied to all fossil fuels on time. We also need to know the details about the funding of projects 2, 3 and 4. We also need to know whether agreements on energy storage with Norway or others will be on time, again, and sufficient in scale.

There are other questions, too. Although I recognise that many of them cannot be given definitive answers, I know that the Secretary of State's officials will have modelled different scenarios. I ask, in the spirit of transparency and open debate, that the Secretary of State share as much as possible of his modelling and risk analysis for plugging the energy gap in the next few years with the House and with the Select Committee on Energy and Climate Change so that we can have a fully informed debate.

The Secretary of State today stresses a UK commitment to 30% of electricity from renewables by 2020. His commitment is clear and we support him. However, has he assessed the mood of the coalition's colleagues in the European Parliament, who often seem to be at sixes and sevens and are certainly not four-square behind his stance. He is, we know, as we heard earlier this week, working closely with European partners. On Monday, he assured the House, with some feeling, that the Government are united on their position in Europe, but what is the true picture?

The statement is on electricity market reform, but given that we enter this winter with the worse gas storage for many years, does the Secretary of State also intend to make proposals on gas infrastructure and storage; and, if so, when?

Finally, will the Secretary of State give certainty to industry and to people who are already paying inflated energy bills that this programme will be enough to encourage energy companies to invest in the UK, to create the jobs that this country needs and, importantly, to protect customers from unaffordable energy bills?

Photo of Christopher Huhne Christopher Huhne Liberal Democrat, Eastleigh

I thank the hon. Lady for her comments and particularly for the helpful way in which she couched them. Of course we will be open to Opposition comments on the details of this matter through the consultation period and further on into the legislation. We shall need £110 billion of investment in electricity infrastructure and a total of £200 billion in energy, and one of the most valuable things we can tell investors is that there is, although I do not want to overstate it, substantial cross-party consensus between the coalition parties and the Opposition. That is very valuable in attracting big foreign investors in particular because it means that in the period over which there can be a payback of investments, which might be 20 years, foreign investors can be assured that there will be real stability of policy. I very much value that consensus and very much want to work with the hon. Lady to make sure it is there.

Let me deal with the hon. Lady's concerns about consumers, which are absolutely appropriate. We have to make sure that business consumers and households in Britain get the best possible deal in supplies of energy-in this case, electricity. A fundamental part of the policy proposal that I hope she will welcome is that by providing investors with the certainty of a feed-in tariff, with a contract for difference, we will attract investment from the big six electricity companies and attract into the market other players-new entrants-to make it more competitive. We will also unlock the pools of capital that various Members have been concerned will not be available without this framework. It is very much part of our thinking that in trying to deal with the underlying problem of a more competitive market we should get more players into the market, because that will ultimately give the best assurance to consumers that we will get the best possible deal.

The hon. Lady asked about the shorter-term view. I made it clear in my statement that this package will deliver lower-cost electricity for consumers than would otherwise be the case on a 2030 view. We will redo the estimates for overall energy policy in the annual energy statement. As far as I can see, on the current basis there is no reason to expect that to change. In the summer, we said that with the overall package of policies we had set out, if one takes into account the energy efficiency packages and the likely reduction in bills as a result, consumers would pay about 1% more in 2020 than would otherwise be the case. That figure involves a fundamental assumption that the oil price will be $80 a barrel at that time, with a corresponding gas price, but oil prices might be substantially higher; obviously, spot oil prices are substantially higher today. The break-even point for consumers is $100 a barrel, and if the price goes north of that the policy framework we are setting out will leave British consumers paying less than if they were reliant, over the relevant period, on the volatility of the world oil and gas markets. That is fundamental. We are dealing with conditions of considerable uncertainty about the future, particularly in the oil and gas markets. We have heard today that the US Attorney-General is taking a case against BP as a result of what happened in the gulf of Mexico. We know that there are rising risks and costs in extracting fossil fuels and we have to take that into account when we set a policy that can protect British consumers from the vagaries that might come.

The green investment bank is going to be a clear part of our thinking in dealing with the enormous investment challenge, and Ministers are reviewing the exact market failures that we are attempting to address with the bank. It is a long-term project and the most important thing, when we talk about decarbonising the UK economy, is not to get up and running for 1 January next year a green investment bank that might be half-baked, but to get it right. This institution has to be with us for the long term, right through to 2050, providing lending to help decarbonise the economy over the long haul, so I would much rather get it right than do it early and get it wrong.

I take on board the hon. Lady's point about the need to deliver. I shall not rub salt in the Opposition's wounds about the 13 years they were in power, but I remind her that we have inherited the position of being 25th out of 27 EU member states on renewable energy. [ Interruption. ] Lyn Brown might chunter about that, but these are the facts. I am not making any comments about them, but am merely saying that we are 25th out of 27 EU countries and we need to improve that position.

Meg Hillier also asked us to make available our modelling basis and I am very happy to do that. Indeed, the models that we used for the 2050 pathways study are already available on the Department's website. Any Member of the House will find that function very user-friendly; it is Professor David Mackay's favourite executive toy. Users can decide they want more renewables, a little less nuclear, a little more nuclear or a little more clean coal, put the change in and find out what the consequences would be. We aim to be extremely open and transparent in our whole process.

On the European Parliament, the reality is that we will determine these matters in this Parliament, not the European Parliament. I note that we have an overwhelming majority, judging by the recent vote on the regulatory justification for nuclear, for the sort of package that we have set out.

Photo of Paul Flynn Paul Flynn Labour, Newport West

On a point of order, Madam Deputy Speaker. Is it appropriate, given what the Speaker has said about short statements, that the Secretary of State's answer to a single question has been longer than the original statement?

Photo of Dawn Primarolo Dawn Primarolo Second Deputy Chairman of Ways and Means

Strictly speaking, that is not a point of order, but while I am on my feet let me say what I was going to say when the Secretary of State sat down. I am sure that the House is very grateful for his long and full answer, but I sincerely hope that we will revert to short questions and short answers so that everyone can get in.

Photo of Christopher Huhne Christopher Huhne Liberal Democrat, Eastleigh

Thank you, Madam Deputy Speaker. Gas storage is dealt with in the current Bill. On that point I shall end.

Photo of Dan Byles Dan Byles Conservative, North Warwickshire

Does the Secretary of State agree that when the new measures are in place, we will require long-term regulatory stability if we are to encourage an attractive investment environment in order to decarbonise our energy market and keep the lights on at an affordable price?

Photo of Christopher Huhne Christopher Huhne Liberal Democrat, Eastleigh

I absolutely agree that we require long-term regulatory stability. That is one reason why we have been at pains to say that we will not change the terms on which investors relied when they made past investments. We want them to believe that when we put this framework in place they will be able to rely on a similar assurance of stability.

Photo of Alan Whitehead Alan Whitehead Labour, Southampton, Test

I strongly welcome the content of the statement on the future construction of energy markets and how they will underpin the move towards a low-carbon energy economy. The Secretary of State has said that there is currently a bias towards low-cost, low-risk fossil fuel generation, but it is more than a bias. The present build and planning permissions suggest that there is more gas in the pipeline than would cover the gap for reserve generation over the next period. The third of the four pillars he has mentioned involves capacity payments: how does he intend to fund those payments, and will he be able to direct them to ensure that reserve capacity is not overwhelmingly gas, as appears to be the case currently?

Photo of Christopher Huhne Christopher Huhne Liberal Democrat, Eastleigh

Clearly we want to have low carbon sources of supply, but I have made it clear that we are intending one of the three remaining demonstration projects on carbon capture and storage to be a gas project. Given the development of unconventional gas, there is a possibility that gas will provide a much more sustainable long-term source of supply than people had thought until recently. In those circumstances-carbon capture and storage applied to gas-gas may have a very important role in the long term, not just in the short term. Otherwise, I entirely agree. Capacity payments will be made on the basis of encouraging peaking plant, to deal with the ad break in "Coronation Street" when we all turn on our kettles, and to offset the intermittency problems that occasionally arise-the nightmare of the four or five cold still days in February when the wind turbines are not going and we need back-up capacity. The capacity payments will inevitably be made by consumers from their payments, but they will provide us with the assurance of supply that we have been proud to have in this country for a long time.

Photo of Duncan Hames Duncan Hames Liberal Democrat, Chippenham

There is, unfortunately, something of an uncertainty paradox, in that measures that seek to create some certainty in the market necessitate of themselves a period of uncertainty. That being the case, will the Secretary of State tell us how long energy investors will have certainty once his reforms have been implemented?

Photo of Christopher Huhne Christopher Huhne Liberal Democrat, Eastleigh

I am grateful to my hon. Friend for that question. When he reads the documentation we have tabled, he will see that we are at great pains to ensure that investors have the very clear message-not least because of recent experience in some other member states of the European Union-that the incentives that have been in place will be grandfathered. They can continue to rely on that. We shall minimise the amount of uncertainty, which is important not only to honour our past obligations but also if we want investors to believe in our future obligations. We have to be prepared to stand behind what we have said in the past, and we intend that to be the case. We will minimise the amount of uncertainty in joining up the two regimes, but we are of the view that we have to reform the electricity market to bring forward the low carbon and secure supplies that we need.

Photo of David Hamilton David Hamilton Opposition Assistant Whip (Commons)

I hope the Minister can find a way of sitting down now and again.

In terms of nuclear energy, we are talking about a subsidy by another name, and that is a major change in policy. I have real concerns-as will a number of other MPs when they come back in the new year-about supporting nuclear energy in the long term, when we have always argued that it should not be subsidised. What is in this for coal? Coal has played a major part in this country's economic security, so what part will it play in carbon capture in the future? What projects will be going ahead and when?

Photo of Christopher Huhne Christopher Huhne Liberal Democrat, Eastleigh

There are two parts to the hon. Gentleman's question. The first was whether the proposals are a subsidy for nuclear. I could not be clearer: this is a subsidy for low-carbon sources of energy generation. There is no subsidy specifically to nuclear. That is fundamental. [ Interruption. ] No; this is about low carbon. Our vision in the long term is that we should be able to rely on the market as much as possible to determine which sources of energy are the best for the British consumer. We want companies to make proposals, and-on the second part of the hon. Gentleman's question-I very much hope that they will be on clean coal. We have an enormous amount of coal in this country that I want us to be able to use, but we cannot use it unless we can decarbonise it. We cannot use it and meet our carbon emissions targets unless we make a success of carbon capture and storage, which is exactly why I was so pleased that, despite a very tough spending round, we managed to secure £1 billion to make sure we have the first commercial-scale coal carbon capture and storage plant in the world. I hope genuinely that it will unlock a whole new future for coal as a source of low carbon electricity generation.

Hon. Members:

Come on.

Photo of Neil Carmichael Neil Carmichael Conservative, Stroud

I was just surprised to be asked.

I very much welcome the reforms, which are an excellent start. The Secretary of State talks about a gradual process. Will he give us some idea of when the four elements will be up and running?

Photo of Christopher Huhne Christopher Huhne Liberal Democrat, Eastleigh

We would aim to get the White Paper out in the spring and legislation landed in this place before the end of the Session, although realistically it would probably have to be a carry-over. I hope very much that we shall have legislation in place, and therefore the market system in place, in 2012.

Photo of Malcolm Wicks Malcolm Wicks Labour, Croydon North

I welcome the broad thrust of the statement. Does the Secretary of State agree that notwithstanding the beneficial effects of energy efficiency measures on prices, there are three reasons why prices are likely to rise in the medium term? The first is the new investment we require. The second is the climate change measures, which are vital, and the third is the dramatic global demand for energy over the next 30 years, which could go up by 30% or 40%. The only weakness in the statement that I can see is the social policy dimension. It is an irony that we have global warming, yet there are cold homes in Britain. Do we not require a step change in our thinking about social policies of different kinds to protect the most vulnerable during our winters?

Photo of Christopher Huhne Christopher Huhne Liberal Democrat, Eastleigh

I am grateful to the right hon. Gentleman for his question. He is one of the most informed people in the House on these matters, and he is absolutely right about the long-term drivers for energy markets. The social policy dimension is absolutely crucial for the Government, which is why the green deal puts such an important stress on dealing with the root cause of the problems of fuel poverty. Every winter we have debates in this place about the problems of fuel poverty, yet we have not made enough progress in really tackling the underlying issue, which is the energy inefficiency of the homes of so many people at the bottom of the income distribution. As I said in oral questions, the bills of those who are lucky enough to live in social housing with the decent homes standard could be only a sixth of the bills of owner occupiers or people in private rentals. We have to deal with that.

In the short term, we are committed, for example, to winter fuel payments, cold weather payments and to the continuation of the voluntary discount scheme for bills, and we shall underpin that with our own Warm Homes discount scheme from the next financial year. We are very aware of the issue and very concerned about it. We intend to make real progress in tackling the underlying causes, not merely providing sticking plasters for the symptoms.

Several hon. Members:

rose -

Photo of Dawn Primarolo Dawn Primarolo Second Deputy Chairman of Ways and Means

Order. I ask again for short questions and short answers. Given that oral questions preceded the statement, I think we can assume that Members remember what was said.

Photo of Martin Horwood Martin Horwood Liberal Democrat, Cheltenham

Given the fresh security concerns about nuclear power, its notorious inflexibility and intermittency and the toxic legacy it will leave future generations for 1,000 years, should my right hon. Friend not explore a levy on nuclear to balance any hidden-even if unspecific-windfall subsidy, especially to existing nuclear power stations, which may come about through the reforms he has described?

Photo of Christopher Huhne Christopher Huhne Liberal Democrat, Eastleigh

My hon. Friend knows very well that our policy is no subsidy to nuclear. We are not intending to impose additional levies on nuclear, but the no subsidy policy certainly encompasses the idea that if there are uncertainties they have to be met in the payments made, for example, on waste and decommissioning.

Photo of Barry Gardiner Barry Gardiner Labour, Brent North

Capacity payments have resolved one problem the Secretary of State had, which was the falling-off of power in 2017-18, but they may have given him another problem, which is that there will now be another dash for gas. Many companies were holding off, with planning permissions in the pipeline or already approved, but they will now proceed with that investment. Can he be sure that the surge in investment for gas will not detract from investment for other renewables? In addition, will he make good an omission in his statement-that the emission performance standards will not apply simply to coal, but will also apply to gas?

Photo of Christopher Huhne Christopher Huhne Liberal Democrat, Eastleigh

On the first point, we are consulting on the capacity payments scheme, and obviously the details will need to be worked through, but I believe that it is potentially more radical than the hon. Gentleman may be suggesting. One of the things that can be paid for under the capacity payment scheme is demand-side measures to encourage companies to get consumers to sign up for temporary interruptions in their supply, so they can turn off their fridges and so forth. That is a way of making sure that we need less peaking capacity, which will be very important. That so-called negawatt concept would also be encouraged by capacity payments. I do not believe that a consequence would be a dash for gas.

On the emissions performance standard, we have made it absolutely clear from the beginning-the coalition agreement and beyond-that this is about stopping unabated coal, as the dirtiest of the technologies. We want coal to have a future with carbon capture and storage; we want to see gas plant, if it is built, built with the readiness to apply carbon capture and storage. In the long run there may be a role for gas with carbon capture and storage, but I do not believe that it will have the consequences that the hon. Gentleman suggests.

Photo of Stewart Hosie Stewart Hosie SNP Chief Whip, SNP Deputy Leader, Shadow SNP Spokesperson (Treasury)

The statement was very clear: there will be new incentives, including for nuclear. That is a subsidy by any other name, and directly contradicts what the Secretary of State said on the "Today" programme in May; it contradicts what he said in his departmental debate in July, when he said that the coalition would allow new nuclear but with no public subsidy; and it contradicts what he said to his own party conference in September. So let me ask him: who does he think will feel most betrayed by this U-turn-he, his party, the coalition or the taxpayer who will undoubtedly have to pick up the tab for the folly of the new generation of nuclear power?

Photo of Christopher Huhne Christopher Huhne Liberal Democrat, Eastleigh

I could not be clearer than to say that there is no subsidy here which attaches to nuclear power. The subsidy attaches to low-carbon generation, and whatever the Member's view, the reality is that nuclear power is a low-carbon energy source and the subsidy applies to low-carbon generation. Over time I want to see the technologies as they are at the moment compete, so that we can find which are the most effective at providing our consumers with low-cost electricity from low-carbon sources-and the framework will allow us to do that.

Photo of Ian Swales Ian Swales Liberal Democrat, Redcar

How can the Secretary of State ensure that those who want to invest the much-needed billions right now do not get delayed by the consultation period and the navel-gazing that might follow today's statement? For example, if someone has half a billion pounds for a biomass power station today, can they spend it?

Photo of Christopher Huhne Christopher Huhne Liberal Democrat, Eastleigh

My hon. Friend and I have had discussions on the specifics of biomass power stations, and I hope that some of the announcements that the Department has made, for example about bringing forward the review of the incentives for that type of plant, will help. We have also been able to issue some letters of comfort to different investors to try to ensure that they do not have problems with financing projects. I want to minimise the uncertainty that inevitably exists in changing from one regime to another, and make these investments happen as quickly as possible.

Photo of Tom Watson Tom Watson Labour, West Bromwich East

The Secretary of State mentioned volatile oil markets. These reforms will impact on the domestic oil sector in the UK. Can he tell me what he thinks the impact will be, and in doing so, can he tell me what measures he is taking in the next 72 hours to deal with the Christmas oil crisis?

Photo of Christopher Huhne Christopher Huhne Liberal Democrat, Eastleigh

I take it that when the hon. Gentleman says "the domestic oil sector," he means the offshore oil and gas sector in its entirety. The prices for that sector are clearly set in a global market, so what we do, although it will be very significant in the electricity sector within the UK, will have a marginal impact on the overall global demand for oil and gas, and therefore on the prospects for our own domestic offshore oil and gas sector.

In the last 72 hours we have been trying to ensure that drivers can work longer-that they can get heating oil to homes that need it. The Energy Minister has been in constant discussions, looking at any way in which we can ensure that those who need heating oil and are currently short of that oil get it. That is essential. In those discussions, my hon. Friend has been informed about suppliers attempting to ensure that people do not have too much, so that there is enough to go round for everyone.

Photo of Alun Cairns Alun Cairns Conservative, Vale of Glamorgan

The Secretary of State's statement includes some ambitious targets for renewables by 2020. What consideration has he given to planning matters in view of the coalition Government's policy intention to devolve planning to a more local level, and what reassurance can he offer many people who might be concerned that large-scale wind farms could be foisted upon them?

Photo of Christopher Huhne Christopher Huhne Liberal Democrat, Eastleigh

I am grateful to my hon. Friend for his question because Ministers and senior officials were discussing that subject with representatives of the industry only this week. We had an interesting and useful round-table discussion about exactly that. I do not believe that top-down solutions are the right solutions, and therefore the planning framework that gives local communities real control over what happens in their area is absolutely crucial. At the same time, one message that we heard loud and clear from the industry is that where the industry has brought in local communities, often as co-investors, and where there is a clear benefit for the local community from renewable energy projects, including onshore wind, those projects go ahead. I think that is the right way forward.

Photo of Caroline Lucas Caroline Lucas Green, Brighton, Pavilion

I welcome part of the statement, although certainly not the part on nuclear, and I suspect that the devil will lie in the detail of the rest. For example, can the Secretary of State confirm what level of emission performance standards he intends to introduce, and whether both coalition partners remain committed to their pre-election position that any standard will be set at the equivalent of the emissions of a modern gas plant-in other words, 300 to 400 grams of CO2 per kWh?

Photo of Christopher Huhne Christopher Huhne Liberal Democrat, Eastleigh

We are consulting on two levels, as the hon. Lady will see in the documentation: 450 and 600 grams. There is inevitably a certain margin of error, but she will see that those are the two points in consultation.

Photo of Adrian Bailey Adrian Bailey Chair, Business, Innovation and Skills Committee

Can I take up the theme of a previous questioner? The history of renewable projects has been bedevilled by planning delays and objections. There is enormous concern in the business community that the new Localism Bill will only reinforce those processes. What representations is the Minister making to his colleagues in the Department for Communities and Local Government to overcome this, in order that we have joined-up government and give necessary reassurance to the business community?

Photo of Christopher Huhne Christopher Huhne Liberal Democrat, Eastleigh

The hon. Gentleman is right. Some issues can be tackled at national level; one planning issue on onshore wind surrounds aviation impacts and radar, and we should obviously lead that at national level. But I refer him to the answer that I gave previously: local people should be able to determine local planning and, therefore, local impact. If they are on board, and if they are brought into the proposals, renewable projects go ahead. That is our experience throughout the UK, and that will be the right way forward in getting planning approval for renewable projects.

Photo of Paul Flynn Paul Flynn Labour, Newport West

On what day in May was the right hon. Gentleman bewitched by the Pied Piper of nuclear power into learning to love a nuclear stealth tax? He and his party used to know that nuclear has never delivered on time or on budget, and that the only new nuclear power station in the world is already three years late and £4 billion over budget. Is it not irrational optimism for him to believe that it will be different here?

Photo of Christopher Huhne Christopher Huhne Liberal Democrat, Eastleigh

The hon. Gentleman is a careful student of the economics of nuclear power and is well aware of the track record. When he looks at the consultation document, he will see that we are providing greater revenue certainty for all low-carbon sources of energy. We provide no subsidy to construction for any particular sort of energy, and no subsidy to any particular type of energy on the basis of that energy's characteristics. That means, for example, that if someone comes forward wanting to build a new nuclear power station, all the risks of construction-all the risks of delivering on time and to budget-fall on the investor, not the UK Government. If, on that basis, investors come forward, and they assure me that they will, I believe we will have new nuclear power stations, but if there is any delay in construction, that cost will fall to the investor, not to the UK Government.

Photo of Paul Flynn Paul Flynn Labour, Newport West

On a point of order, Madam Deputy Speaker. In view of the unsatisfactory nature of that reply, can I give notice that I wish to raise this issue on the Adjournment of the House?

Photo of Dawn Primarolo Dawn Primarolo Second Deputy Chairman of Ways and Means

The hon. Gentleman knows full well that that is not a point of order, but he has got his point on the record at least.

Photo of Thomas Docherty Thomas Docherty Labour, Dunfermline and West Fife

First, can I welcome the Secretary of State restating his long-held, principled and consistent commitment to nuclear power? On carbon capture and storage, specifically, can he guarantee my constituents, who eagerly await the Energy Minister's visit in the new year, that there will be no delay at all in the decision, which we expect early in the new year, on the first carbon capture and storage project for Longannet?

Photo of Christopher Huhne Christopher Huhne Liberal Democrat, Eastleigh

I believe that my hon. Friend the Energy Minister is making good progress on that. We have made good progress at an official level as well, and there is no reason to anticipate any delay. I very much hope that at the end of our Department's collective term of office, we will go down as being a happening Department that makes things happen. That is what we intend to do with CCS.

Photo of Russell Brown Russell Brown Shadow Minister (Defence)

The Secretary of State has mentioned the significant investment that will be required. Does he recognise that the wave and tidal sector seems somewhat unloved in the UK, because it sees its opportunity overseas? What does he feel he should do about that, and what will he do to ensure that that opportunity goes to people in this country who are prepared to invest?

Photo of Christopher Huhne Christopher Huhne Liberal Democrat, Eastleigh

I do not know how the hon. Gentleman got the impression that wave and tidal are unloved. They are certainly not unloved by me, and I want to ensure that we recognise the potential of those technologies, and that they are brought forward commercially as soon as possible. I know, for example, that the tidal stream pilot project on Strangford lough has made good progress, and there are real opportunities, because, although tidal stream power is intermittent, it has one advantage over offshore wind of being predictably intermittent. So, I very much hope that those technologies come on-stream. We have a marine energy programme designed to make that happen, and I assure the hon. Gentleman that this ministerial team wants that to succeed.

Photo of Kevin Brennan Kevin Brennan Shadow Minister (Education)

There will be no shortage of either wind or gas while the Secretary of State is in post, that is for sure. On the oil issue, which we discussed earlier, and the long-term impact of his reforms on the domestic oil market, my hon. Friend Mr Watson mentioned an immediate crisis. We have 72 hours of inclement weather ahead of us, which means that oil supplies will be even more disrupted. What steps will the right hon. Gentleman take immediately to call together oil suppliers to ensure that he sets out clearly the rationing that he thinks appropriate, something to which the Energy Minister previously referred?

Photo of Christopher Huhne Christopher Huhne Liberal Democrat, Eastleigh

We are already in very close contact with the suppliers, and we anticipate that deliveries will be adequate to ensure that there are supplies wherever they are needed before Christmas.

Photo of Robert Buckland Robert Buckland Conservative, South Swindon

Manufacturers in and around my constituency and elsewhere are doing what they can on a small scale to reduce electricity consumption by taking energy efficiency measures, but what plans do the Government have to encourage that on a large scale as a way of dealing with increased demand in the years ahead?

Photo of Christopher Huhne Christopher Huhne Liberal Democrat, Eastleigh

I refer my hon. Friend to our extensive answers on the green deal scheme in Energy and Climate Change oral questions earlier. It will be an ambitious, comprehensive and enormous scheme to ensure that we completely refit our housing stock.

Photo of Sheila Gilmore Sheila Gilmore Labour, Edinburgh East

The Secretary of State will be well aware that the housing with the poorest insulation is in the private rented sector. Will he put pressure on his fellow Ministers in that field to reconsider their decision not to go ahead with landlord registration or other measures, such as using the buying power of housing benefit to force landlords to insulate homes for those vulnerable tenants?

Photo of Christopher Huhne Christopher Huhne Liberal Democrat, Eastleigh

I think the hon. Lady will welcome our provisions in the Energy Bill, which is being debated in the other place and will come to us in the new year, because they ensure that, if the private rented sector does not take up the green deal adequately over the period to 2015, first, a tenant will be able to request a green deal installation and not be unreasonably refused, and secondly, there will be regulatory powers to improve the energy efficiency of the private rented sector for F and G-rated homes.