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Annual Energy Statement

Business of the House – in the House of Commons at 11:21 am on 6th November 2014.

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Photo of Edward Davey Edward Davey The Secretary of State for Energy and Climate Change 11:21 am, 6th November 2014

Today I am publishing the Government’s annual energy statement and supporting papers alongside the annual update on electricity market reform. This fulfils the commitment set out in the coalition agreement to present an annual statement of energy policy to Parliament. This will be the last annual energy statement in this Parliament before the next general election. It sets out the significant progress the Government have made since 2010.

In 2010 it was not just the country’s finances that needed immediate action. It would be fair to say that back in 2010 the UK faced an energy crisis, too. There was an historic record of underinvestment in energy infrastructure that threatened our energy security. There had been a decade of rises in energy costs, with consumers getting a raw deal from the big six energy suppliers in a market that had too little competition. Even on climate change, there were plenty of legal obligations to cut emissions, but little practical policy to achieve them cost-effectively.

Today’s energy statement shows how we have turned that situation around. Given how fast bills had risen in the previous Parliament and how fuel poverty had increased under the previous Government, helping consumers has been a top priority, starting with those on lowest incomes. Payments to vulnerable people to help with bills have been protected and expanded under this coalition, with the addition of the warm home discount, which will mean a £140 cut in bills for 2 million households most in need. Despite all the pressures on energy bills, this policy and other Government measures have helped to cut the number of households in fuel poverty during this Parliament by more than 100,000 in England alone. I strongly believe, however, that we should be doing more to help people out of fuel poverty, and after this summer’s consultation we are finalising the first new fuel poverty strategy in more than a decade.

We also needed to help every household and that meant reform of the energy markets to promote choice and competition. Ofgem’s retail market reforms now mean energy bills are easier to understand and tariffs are simpler, providing consumers with a greater ability to shop around. Slow switching times were also clearly a barrier to competition, so those times are being slashed in half this year, and Ofgem is consulting on its road map for moving to 24-hour switching, with a decision due by the new year.

Thanks to our deregulation, there are now a dozen new suppliers taking on the big six, to give consumers more choice and competition. In the past, we had switching between the big six, driven by doorstep selling or, too often, mis-selling—switching that favoured the big six. Now we have switching that favours the consumer. Some 3.5 million people switched their electricity supplier over the past 12 months, with 1.2 million moving away from the big six to the smaller suppliers. The independents now boast more than 2 million customers and regularly top the best buy tables. uSwitch has recently talked about a new atmosphere of aggressive pricing, proving that competition is indeed hotting up. Moreover, after years of rising bills, there have been no new price rise announcements from the big six this year, reflecting the increasing competition and the efforts the Government have made to reduce policy costs.

The latest review of prices and bills I am publishing today shows that this year we estimate that policy costs now account for 7% of an average household energy bill. That is down from the 2013 levels of 9% as a result of the package of measures announced in the autumn statement last year. I will place copies of the review in the Libraries of both Houses this morning.

Even those lower costs are, on average, more than offset by the bill savings that our policies deliver through energy efficiency. By 2020, household energy bills are estimated to be on average around £92 lower than they would have been if we had sat on our hands and done nothing. For example, three quarters of a million homes are already benefiting from lower bills, thanks to the Government’s energy efficiency policies such as the energy companies obligation and the green deal. We have also acted to help business with energy costs. Together with my right hon. Friend the Secretary of State for Business, Innovation and Skills, we introduced a number of measures to help limit energy costs for those electricity-intensive industries most at risk from carbon leakage. That will reduce the impact of policies on eligible industries by up to 80% in 2020.

But we can and will do more, with policies ranging from our electricity demand reduction to our leading role in reforming Europe’s carbon market. Most importantly for consumers, however, as a result of the first annual competition assessment that I announced in last year’s annual energy statement, Ofgem has referred the gas and electricity markets to the Competition and Markets Authority. That is the right way to restore trust in our energy markets, and ensure that consumers get the best deals possible.

As well as affordable energy, people want to know that power will be there when they flick the switch. Ofgem’s report on energy security in 2010, “Project Discovery”, showed the sheer scale of the problem that we were facing, with a fifth of our existing power stations set to close by the end of the decade. It suggested that the mid-decade period we are now coming to would be particularly challenging as power plants came offline, but as today’s annual energy statement demonstrates, we have acted to turn around that dire situation. In the short-term, our plan ensures that we will comfortably meet supply security standards this winter and next. As National Grid confirmed last week, it has new balancing measures in place that will ensure that the risk of supply disruption remains at very low levels over the next few years, and well within reliability standards.

Looking further ahead at future electricity supply challenges this decade, as part of electricity market reform we are reintroducing a capacity mechanism to the UK. We have delivered all major electricity market reform milestones. The first allocation round for contracts for difference is now open for bids, and the first capacity market auction will take place in December. However, those measures alone will not guarantee the UK’s longer term energy security. For the next decade, we are building a diverse lower carbon energy mix—predominantly home-grown—that ensures that we will not be over-reliant on one source, one fuel, or one import market. With the Energy Act 2013 gaining Royal Assent on 18 December last year, we now have one of the best legal and financial frameworks to support the cost-effective growth of low-carbon electricity anywhere in the world.

Record investments of £45 billion in electricity generation and networks since 2010 have put us on target to meet our future low-carbon power requirements. Indeed, in four years under this coalition, the available evidence suggests that we have surpassed the total electricity investment in the whole of the previous decade under the last Government.

Average annual investment in renewable electricity has more than doubled this Parliament with 2013 being a record year. We now have more installed offshore wind capacity than the rest of the world. Onshore wind—the cheapest of the large-scale renewables—now supplies 5% of our electricity, and the good news is that we have a strong investment pipeline for more onshore wind, worth up to £5.8 billion to 2020. Solar power has had £6.4 billion of investment since 2010, and biomass and bio-energy £6.3 billion. Renewable electricity generation has more than doubled during this Parliament. Indeed, in the first quarter of 2014, 19% of UK electricity was provided by renewable resources. With our continued focus on renewables, from our community energy strategy to our work on tidal and marine power, that is set to rise much further.

It is not only renewables that have seen massive investment. More than £16 billion has been invested in onshore and offshore electricity networks since 2010. Interconnection projects worth £1 billion have been delivered, and projects in the pipeline aim to more than double our interconnector capacity by the 2020s. Those include another link to France with a cable in the channel tunnel, and a link to Norway’s hydropower capacity with what would be the longest subsea cable in the world.

We also have £2.5 billion in gas-fired power plants; more than £3.8 billion in gas transmission and distribution networks; more than £40 billion in the North sea, which is a doubling of private investment on the UK’s continental shelf since 2010; and development capital expenditure higher in 2013 than at any point in the past decade. Last year, the Government agreed key terms for the first new nuclear power station in a generation at Hinkley Point C, and the UK has Europe’s only two commercial-scale carbon capture and storage projects. We have a strong set of low-carbon electricity options. All that investment has been achieved in the face of considerable fiscal restraint, with largely private sector investment rebuilding our energy infrastructure.

Before I leave the subject of energy security, there is one international aspect I should raise with the House that has domestic implications, namely the response by the G7 and the EU to Russian aggression against the Ukraine, and the increasing threats by Russia to use energy supplies as a weapon. It is vital that we co-operate internationally to help our allies, especially in eastern and central Europe and the Baltic, many of which are highly dependent on energy imports from Russia, but it is also vital that we remember how fortunate the UK is to have such diversity in its oil and gas supplies. We should therefore not turn our backs on the shale gas opportunity, for as we decarbonise our economy, we will still need large amounts of oil and gas in the next three decades for heating and transport.

The implementation of the Wood review, which I commissioned last year to maximise economic recovery from the North sea, remains an urgent task. I am therefore delighted today to confirm that Andy Samuel has been appointed as the new chief executive of the Oil and Gas Authority I am establishing.

Finally, we have achieved that turnaround in energy security and energy investment while continuing to reduce the UK’s greenhouse gas emissions. I was delighted to announce in February 2014 that the UK had met its first carbon budget, covering the period 2008 to 2012. We are also on track to meet the even more demanding reductions required to meet the second and third carbon budgets. I was particularly pleased, after a cross-Government review, to confirm that our ambitious fourth carbon budget would not be changed.

The Government have delivered on our commitments under the Climate Change Act 2008, but to deliver on climate change more broadly, we also need international action, so in September, I published the Government’s strategy for achieving a legally binding global climate change deal in 2015. With the successful agreement last month on the EU’s 2030 energy and climate change framework, which was based on the UK’s proposed blueprint, Europe is now well placed to lead on the world stage and secure the global deal that is so crucial for future generations.

Despite political differences, energy policy has enjoyed a high degree of cross-party consensus over the past decade or so. I am pleased that that remains the case today on the vast majority of our policies. The Energy Act 2013 enjoyed the same level of cross-party consensus that the Climate Change Act 2008 enjoyed. That is crucial for the long-term investment decisions that energy infrastructure needs.

Of course, differences between the parties remain. There is an anti-competitive approach towards the energy market in parts of the Labour party; an anti-renewables, anti-wind tendency in parts of the Conservative party; and all parties have members with a history of opposition to nuclear power. However, it is imperative that those tendencies are resisted, particularly in the run-up to the general election. Short-term populism is the most dangerous enemy that energy and climate change policy has.

After the hard-won gains for the UK’s energy and climate change policy of these past four years, I urge right hon. and hon. Members on both sides of the House to cleave to the consensus we have achieved. That is the best way to keep energy bills down, to keep the lights on and to keep our pledges to our children to tackle climate change.

Photo of Caroline Flint Caroline Flint Shadow Secretary of State for Energy and Climate Change 11:34 am, 6th November 2014

I thank the Secretary of State for what I hope and expect will be his final annual energy statement. What a curious statement it was. He looked very satisfied with himself, but consumers worried about how they will afford their energy bills this winter are not satisfied with the Government; families living in cold and draughty properties are not satisfied with the Government; and businesses—people who want to invest in this country, create jobs here and put us at the cutting edge of innovation in new forms of clean energy—are not satisfied with the Government either.

Let me start with consumers and the energy market. In his statement, the Secretary of State seemed to suggest that the energy market has never been working better, but will he confirm that, with the exception of a brief spike at the end of last year that followed Labour’s price freeze announcement, switching levels are at their lowest point for almost a decade? If things have improved so dramatically, will he also explain why, according to Ofgem, in the past year the profits of the energy companies have increased, as have the number of complaints about poor customer service? Is that what a functioning competitive market looks like? For the record, will he also confirm that under this Government energy bills have risen twice as fast as inflation, four times faster than wages, and faster than almost any other developed country in the world? That is why, on the Government’s latest figures, fuel poverty is rising, not falling. Is that a record he can be proud of?

One of the reasons households and businesses have been hit so hard by recent energy price rises is that we have such low levels of energy efficiency. Looking back at the annual energy statements delivered in this House in 2010 and 2011, it is very interesting to see what high expectations the Government had for their beloved green deal. Yet today, there was barely a mention. I think we all remember when Gregory Barker said that he would be having sleepless nights unless he achieved 10,000 green deals by the end of 2013. Well, maybe he left the Department to get a decent night’s sleep. So far, despite being billed as the biggest home improvement package since world war two, just 2,500 households and no businesses—not a single one—have had measures installed under the green deal. Does the Secretary of State also regret that, in his panicked response to our energy price freeze announcement last year, he announced sweeping cuts to the energy company obligation that will result in nearly half a million fewer households receiving energy efficiency improvements? Let me tell him that the next Labour Government will not make the same mistakes that he has, as will be clear when we publish our energy efficiency green paper next week.

Never let it be said that I am not a fair woman. Some things have moved slightly further forward in the past year. On oil and gas, we support the Government’s intention to implement the Wood review and establish a new regulatory body. A greater share of our electricity is coming from renewable sources. However, two thirds of the projects that have come online in this Parliament started under the previous Labour Government. The energy legislation we supported is now finally on the statute book. Progress has been made at Hinkley, too. Thanks to the European Commission, consumers will now get a better deal than the one the Government were able to negotiate. In a similar vein, does the Secretary of State agree that the National Audit Office should publish its analysis on the Hinkley deal before he finally signs the contract? Figures from Bloomberg New Energy Finance published just a few weeks ago show that investment in clean energy this year is substantially down on last year. After well publicised spats and U-turns in Government—first on wind, now on solar—is it any surprise that Ernst and Young has downgraded the UK to seventh in its index of attractiveness for renewable investment?

I understand the Secretary of State has leadership ambitions. Does he agree with me, however, that those ambitions, and the investment climate for low-carbon generation, would be better served if he, like 16 of his Liberal Democrat colleagues, had supported a decarbonisation target for the power sector for 2030, as Labour proposed? The fact that we are missing out on this investment is not just a loss for the jobs and growth it would have supported but for our energy security, which the Secretary of State covered in his statement. As he said, this winter National Grid is taking precautionary measures to maintain the security of our energy supply, which, again, we have supported. However, is not the reason why those measures need to be taken precisely that we have seen so little investment in our energy infrastructure in the past four years? In our last few years in Government, construction on six new gas-fired power stations began, but will the Secretary of State confirm that under this Government just one new gas-fired power station, at Carrington in Manchester, has been commissioned and that even this will not be operational until after the next election?

One area on which there is greater consensus is international climate change. I welcome the progress made with the EU 2030 package last month, which, as the Secretary of State knows, we supported. I also send our best wishes to him and the officials who will be representing us in Lima as we build towards the Paris climate conference next year. In that regard, he has the full support of the Opposition, even if the same cannot be said for all Members on the Government Benches.

I am afraid that that is as far as my good wishes extend, because this time next year I hope that I will be delivering the annual energy statement, as part of a Labour Government who have capped energy prices and begun the work of reforming our energy market, ending the scandal of cold homes and securing the investment that our country badly needs.

Photo of Edward Davey Edward Davey The Secretary of State for Energy and Climate Change

I thank the right hon. Lady for her reply, even if her last bit was slightly delusional, and for her support for things such as the Wood review, the Oil and Gas Authority and the European deal we secured and led on.

On the energy market, the right hon. Lady talked about switching levels. It is true that switching levels were higher under the last Government, but that was because there was an awful lot of doorstep selling and mis-selling. Does Labour plan to encourage doorstep selling to increase switching levels? Unfortunately, it was a very bad strategy. Under the last Government, we saw lots of people switching between the big six—the big six quite liked that approach to switching—but under this Government we have seen record levels of switching from the big six to new suppliers. That is why consumers are getting a better deal. Switching levels in this country are among the highest in Europe, and are higher than in telecoms or the banking industry, so I think we have a very good record here.

The right hon. Lady rightly talked about profits and complaints about energy companies. We are very focused on that, and it was one reason why I was keen to support the independent competition inquiry into the energy market—it is a shame that the Leader of the Opposition did not do the same when he was doing my job. Energy bills rose faster under the last Government than they have under this one. Between 2005 and 2010, they rose 10.3% in cash terms, whereas, under this Government, they have risen by 8% in cash terms. So she and Labour have a very poor record on electricity and gas bills.

The right hon. Lady talked about the green deal, but she did not mention the green deal home improvement fund, which was so successful it unfortunately ran out of money quicker than we expected, or the fact that in response we have announced another £100 million for the fund. She also failed to notice that the number of green deal finance plans being taken out is at long last beginning to rise.

The right hon. Lady’s characterisation of ECO will not be recognised by the hundreds of thousands of people benefiting from this scheme, which has been much more successful than its predecessor. As a result of the green deal and ECO, we are on track to install energy efficiency measures in 1 million homes. She also keeps making this astonishing request that the NAO audit a contract before it is finalised. It sounds like a rather odd approach for an audit. I have told the House before that, of course, I would expect the NAO to look at the contract after the deal has been agreed and that we would co-operate with it.

The right hon. Lady made some rather odd points about renewables investment. If the investment was all down to the last Government, why was last year a record year for investment and why do we have such a healthy pipeline set to more than double investment in renewable electricity? Bloomberg New Energy Finance, which she quoted, marked the UK down as fourth in the world in 2013 for clean energy transactions, with more than $21 billion of transactions. I think she was referring to the 2014 figures, which she says are coming out soon, but I am afraid she needs to check her facts, because there is a bit of a difference between raw data and model data. I am happy to explain that later, however, because it is an important debating point.

I was glad to have the right hon. Lady’s support for the 2013 deal—it was significant, as was the confirmation that we would keep to the fourth carbon budget, meaning that the Government have met their climate change objectives. She talked again about the power sector decarbonisation target and I have made it clear that the Liberal Democrats will pursue that. I also made it clear why I put in the Energy Act 2013 the power for the next Government to implement such a target.

The right hon. Lady also talked about gas stations. I can confirm that fewer gas stations have been constructed during this Parliament than were previously expected. That has been the case, by the way, across the whole of Europe, because of the changes in the relative prices of coal and gas, which have affected all European countries. That is one of the reasons why we were right to put in place a carbon price floor and reform the EU emissions trading scheme, so that we can get the incentives to move from coal to gas, as part of our climate change strategy.

But overall, I think I detected some consensus from the right hon. Lady.

Photo of David Mowat David Mowat Conservative, Warrington South

In the event that the positions are swapped for next year’s energy statement, I hope the Secretary of State agrees that it would be a shame if we went back to being 25th out of the 27 countries in the EU for renewables, as we were in 2010. However, my substantive question is about coal. Across the world we are seeing a renaissance in coal—I believe that last year coal increased by eight times more than renewables in absolute numbers. As the Secretary of State goes on trying to secure a worldwide agreement, does he really believe that we can make progress on this?

Photo of Edward Davey Edward Davey The Secretary of State for Energy and Climate Change

My hon. Friend is right to focus on the last Government’s poor record on renewables. On coal, global investment in clean energy was outpacing global investment in fossil fuels last year and has been for the last few years, but he is right to warn about coal, because global coal prices have fallen, which has meant that some people are investing. That is one of the reasons why it is important that we have a price on carbon. We have policies such as contracts for difference, which give investors in low carbon security for the future.

Photo of Yvonne Fovargue Yvonne Fovargue Shadow Minister (Education)

Pre-payment meters are still causing problems for many of the most vulnerable customers. The problems include long delays in recalibrating the older meters when prices rise or fall, which leads to arrears or overpayments. The best deals are still not available for pre-payment customers and many do not know that they can switch suppliers for a much better deal. What steps is the Minister taking to ensure that these customers are fully informed and treated more fairly by the energy companies?

Photo of Edward Davey Edward Davey The Secretary of State for Energy and Climate Change

The hon. Lady had a distinguished career working for Citizens Advice, which has been a real champion on this point. Its latest campaign on pre-payment meters is something we are looking at seriously, and we are grateful to Citizens Advice for its evidence and research. Longer term, the introduction of smart meters will be important, because they will reduce the higher differential costs that pre-payment meter users face, which is one of the reasons I called on the obligated suppliers to move further and faster to roll out smart meters for pre-payment meter users. That is part of the solution, but no doubt we need to look at other issues as well.

Photo of Robert Smith Robert Smith Liberal Democrat, West Aberdeenshire and Kincardine

The deal in the EU on climate change shows the benefit of engagement and co-operation. How optimistic is the Secretary of State that that can be taken forward to Paris? In particular, does he draw any optimism from the fact that the Chinese are expanding renewables, experimenting with carbon capture and storage and also introducing pilot emissions trading schemes?

Photo of Edward Davey Edward Davey The Secretary of State for Energy and Climate Change

I am grateful to my hon. Friend for his question. Engaging in Europe over a period of time, building relationships and building trust, is critical if we are going to argue for British interests. The green growth group, which this Government set up in Europe to bring Ministers together, was critical in securing that deal. The green growth group will continue to help the European Union to lead at this level in the climate change talks ahead of us.

My hon. Friend is right to point to the action that China is taking. Indeed, I am more optimistic about a good climate deal in Paris 2015 than I have ever been, not just because of the EU deal but because of the actions being taken by President Obama in the United States and by the Chinese Administration and, indeed, the leadership that I believe Prime Minister Narendra Modi is showing in India.

Photo of Gordon Marsden Gordon Marsden Shadow Minister (Transport)

This winter many of my constituents in Blackpool will face poorly insulated homes and high bills because wholesale reductions in cost have not been passed on to consumers. Why did the Secretary of State not include any measures to bring that about in the Energy Act 2013, and what can he tell us about stopping the green deal becoming a snail race?

Photo of Edward Davey Edward Davey The Secretary of State for Energy and Climate Change

I am afraid the green deal has in fact been hotting up—the hon. Gentleman obviously missed that. I can also tell him that, thanks to extra competition and choice and faster and easier switching, if energy companies are not passing on falls in wholesale costs to his constituents, his constituents now have the ability to move to companies that are. I urge him to look at the new fixed-price tariffs—and to show them to his constituents—which are enabling people to save money on their energy bills this winter.

Photo of John Baron John Baron Conservative, Basildon and Billericay

Given that the myriad tariffs and deals in many respects led to gross mis-selling on the doorstep, will the right hon. Gentleman never tire of reminding the electorate that one of this Government’s biggest achievements has been to oblige energy companies to be much more transparent about whether they are offering the best possible deal to their customers? Such transparency has helped many customers.

Photo of Edward Davey Edward Davey The Secretary of State for Energy and Climate Change

May I pay tribute to my hon. Friend, who has done an awful lot in this regard? The Government have listened to many of his arguments, as I believe has the independent regulator, Ofgem. There has been a reduction in the number of tariffs—frankly, they led to obfuscation and got in the way of competition, on which the previous Government failed to take any action—and bills have become simpler, which all helps to promote competition. The fact that energy companies now have to tell their customers whether they have a tariff that could save them money is another step forward.

Photo of Gareth Thomas Gareth Thomas Shadow Minister (Foreign and Commonwealth Affairs), Party Chair, Co-operative Party

Energy co-operatives such as Baywind Energy in the Lake district or Brixton Energy Solar in south London make a small but important contribution to meeting our energy needs and to reducing CO2 emissions. Given that a number of other countries have a far larger energy co-op sector, what further steps will the Secretary of State take to encourage the growth of energy co-ops in the UK?

Photo of Edward Davey Edward Davey The Secretary of State for Energy and Climate Change

I strongly agree with the hon. Gentleman. We have very much been going down this path. I urge him to read Britain’s first ever community energy strategy, which I published in January. Later, I am going to meet community energy groups, co-operatives and others that are working with the renewables industry on something called the shared ownership taskforce, which is launching its report today. With that we are ensuring that there is an option for communities to buy in to renewable projects in their area, thus extending the options for new types of energy co-operatives.

Photo of David Morris David Morris Conservative, Morecambe and Lunesdale

Candu Energy is in talks with the Nuclear Decommissioning Authority to commission its new nuclear technology. If the talks are successful, it has indicated that it is interested in building a new nuclear power station at Heysham. Will my right hon. Friend use any means at his disposal to facilitate a new build for fission low-carbon energy at that site and secure jobs in my constituency for generations to come?

Photo of Edward Davey Edward Davey The Secretary of State for Energy and Climate Change

I am grateful to the hon. Gentleman for his information, but he will know that I cannot comment ahead of the negotiations or discussions that Candu is having with various stakeholders in the industry. At the moment, we are working at Heysham to ensure that EDF gets the reactors back on line.

Photo of Michael Weir Michael Weir Shadow SNP Spokesperson (Business), Shadow SNP Spokesperson (Energy and Climate Change)

The Secretary of State talked about the amount of offshore wind that has already been installed. Despite the vast amount that has been put into nuclear energy, it seems to me that relatively little is going to offshore wind in the first CfD allocation round. In fact, I understand that it may be sufficient only for one major project, despite the fact that three are proposed off the coast of my constituency alone. Does he think that that is a sufficient incentive to the offshore wind industry to meet his offshore wind industry strategy?

Photo of Edward Davey Edward Davey The Secretary of State for Energy and Climate Change

It is quite difficult to argue that this Government have not put huge amounts behind the offshore wind industry. We have more offshore wind installed and under construction than the rest of the world put together. We are on track to meet 10 GW by the end of this decade, which is a huge amount. If, when thinking about the allocation of CfDs from the levy control framework—that is what lies behind the hon. Gentleman’s question—we had allocated all of it in the first round, there would have been less to allocate in future. One of the things the industry has said is that it wants a much smoother deployment of offshore wind. By the way, that will also enable us to get the benefit of cost reductions, which is vital for consumers.

Photo of Alan Beith Alan Beith Chair, Justice Committee, Chair, Liaison Committee (Commons), Chair, National Policy Statements Sub-Committee

Thank you for your kind comment, Mr Speaker.

My right hon. Friend has given welcome support in the European state aid negotiations for the Lynemouth power station’s conversion to biomass. May I stress that it is now becoming urgent to get a favourable decision, because the permission to continue to burn coal expires in June next year? May I ask for the Secretary of State’s continued help?

Photo of Edward Davey Edward Davey The Secretary of State for Energy and Climate Change

Let me first mention that my first job in politics was working for my right hon. Friend Sir Alan Beith[Interruption.] I hear a comment from a sedentary position that it was downhill all the way from there, which may be right, but it was a great privilege to work for my right hon. Friend, whom I consider to be one of the greatest parliamentarians of our time.

On my right hon. Friend’s constituency project, my officials are very much engaged with the Commission. It is a new Commission, which has contributed to a little delay, but we are trying to push forward as rapidly as possible for exactly the reasons my right hon. Friend outlined.

Photo of Kerry McCarthy Kerry McCarthy Shadow Minister (Foreign and Commonwealth Affairs)

Last week, I had the pleasure of meeting Ovo Energy—an alternative supplier to the big six—which employs 550 people in Bristol. It tells me that it will pass on falls in wholesale energy prices to customers, so why can the big six not do the same?

Photo of Edward Davey Edward Davey The Secretary of State for Energy and Climate Change

The hon. Lady is absolutely right. I think Ovo Energy has given a real boost to competition in the retail energy market—something that we have welcomed and, indeed, championed. I would say to the hon. Lady’s constituents and to those of every right hon. and hon. Member that companies such as Ovo Energy are offering good deals, although it is not the only company to do so. I urge people to look to those alternatives if their energy supplier is not reducing its tariff in line with falls in wholesale prices.

Photo of Ian Liddell-Grainger Ian Liddell-Grainger Conservative, Bridgwater and West Somerset

I am delighted to hear about Hinkley C, although you would expect me to say that, Mr Deputy Speaker. It is important to recognise that we have all worked hard across the House with the Department’s officials, EDF Energy and Sedgemoor, not only to explain to Europe and the Irish why this is important but to take on Germany and Austria, which were very keen on making sure this did not happen. This shows that we understand the importance of energy security and that we can build a large-scale infrastructure project on time in the way necessary to keep the lights on in this country. Will the Secretary of State praise EDF and everybody else who has participated in this humungous project to get it to where it is today so speedily?

Photo of Edward Davey Edward Davey The Secretary of State for Energy and Climate Change

First of all, I would like to praise my hon. Friend, who has shown great leadership. He is right that it has been a collective effort, and it is also right to say that we have greater consensus across the House on these issues. This sends out a strong signal to the European Commission and to other European countries. This is fantastic news for energy security in the 2020s, and fantastic news for our climate change objectives.

Photo of Nicholas Dakin Nicholas Dakin Opposition Whip (Commons)

The mitigation of the impact of the Government’s unilateral carbon floor tax has been too little, too late. In the light of that, will the Secretary of State and the Government look to bring forward support for energy-intensive industries in relation to the renewables obligation from 2016 to 2015?

Photo of Edward Davey Edward Davey The Secretary of State for Energy and Climate Change

This Government have done more than any other to assist in these areas. I spoke to a group of manufacturers earlier this week at the Engineering Employers Federation, and I found there was real recognition that we had done a huge amount domestically and on the European front, with the 2030 deal and getting much more of a level playing field across Europe. The hon. Gentleman asks me to announce a new policy from the Dispatch Box, but I am certainly not going to do that. I can tell him that we keep this issue under close review and that I work very closely with my right hon. Friend the Secretary of State for Business, Innovation and Skills on this matter.

Photo of Duncan Hames Duncan Hames Liberal Democrat, Chippenham

I congratulate my right hon. Friend on the record levels of electricity generated from renewable sources, but those sources could be more diverse, which would benefit us all. What role does he see over the next 10 years for the construction of tidal lagoons to contribute to our renewable electricity generation?

Photo of Edward Davey Edward Davey The Secretary of State for Energy and Climate Change

My hon. Friend is absolutely right that it is important to look at all forms of renewables to see whether they can provide a cost-effective addition to our low carbon strategy. Tidal power and especially tidal lagoon power look increasingly attractive. It is clearly up to private investors and companies to come forward with their proposals, and I very much hope they will.

Photo of Mark Lazarowicz Mark Lazarowicz Labour, Edinburgh North and Leith

There has indeed been a lot of progress made at the European level in the recent negotiations, but there were disappointments as well, one of which was the failure to have any binding targets at any level on energy efficiency. What is the Government’s approach to that issue, and if they agree that there should be more energy efficiency measures at the European level, what steps are they taking to bring them about?

Photo of Edward Davey Edward Davey The Secretary of State for Energy and Climate Change

The Government were comfortable with a non-binding target, which is the type of target that was agreed by the last Government in the 2020 deal, but, like the last Government, we were concerned about having a binding target. We believe that our existing energy efficiency policies will be able to meet a non-binding target at the European Union level of 27%, because they are very ambitious. We also believe that should there be a review of that energy efficiency target— which there will be, according to the European Council conclusions—we shall need to look again at energy efficiency as one of the lowest-cost ways of going green as we develop our policies for the fourth and fifth carbon budgets.

Photo of Philip Hollobone Philip Hollobone Conservative, Kettering

The Secretary of State has said that interconnector capacity should double by the 2020s. Would he be kind enough to give us more details? For instance, what is the size of the present interconnector with France and to what extent is it currently used? What is the capacity of the new channel tunnel cable and the new cable connecting us with Norway, and are there any plans for interconnectors with both Northern Ireland and the Republic of Ireland?

Photo of Edward Davey Edward Davey The Secretary of State for Energy and Climate Change

My hon. Friend has asked very detailed questions. Let me refer him to two recent publications. At the end of last year I published a policy statement on interconnectors, because I think this is a critical issue that has been long overlooked, and Ofgem has published proposals for a new regulatory regime to facilitate investment in interconnectors. However, we will gather the information for which my hon. Friend asked specifically, and I will send it to him in writing.

Photo of Thomas Docherty Thomas Docherty Shadow Deputy Leader of the House of Commons

Thank you, Mr Deputy Speaker.

The Secretary of State will obviously be aware that ScottishPower, which owns Longannet power station in my constituency, has decided not to bid for the 2018 market at this stage. When I met representatives of ScottishPower last week, they expressed concern about German-owned RWE’s legal challenge to Project TransmiT. When does the Secretary of State expect that legal dispute to be resolved?

Photo of Edward Davey Edward Davey The Secretary of State for Energy and Climate Change

I cannot, because I am not sure of the timetable, but it is interesting that the hon. Gentleman should raise the issue. When I spoke to representatives of ScottishPower about Longannet, I asked specifically what issues there were, so that we could ensure that Longannet was on the bars for security-of-supply reasons, because we had expected ScottishPower to bid for the capacity market initially. However, its representatives reassured me that it would keep the plant open, and they did not raise the issue that the hon. Gentleman has raised with me. I will ask my officials to look into it.