Energy Bill [HL] — Second Reading

Part of the debate – in the House of Lords at 12:42 pm on 22nd July 2015.

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Photo of Viscount Ridley Viscount Ridley Conservative 12:42 pm, 22nd July 2015

My Lords, I declare my energy interests, as listed in the register, mainly in unsubsidised coal, although I also have much smaller indirect interests in wood, wind and grain ethanol.

I shall confine my remarks mainly to the renewables and wind parts of this Bill. I welcome, like others, the Oil and Gas Authority, and strongly welcome the Bill. At last we can see an end to the ruination of many parts of the British landscape, funded by regressive hidden taxation and carried out by crony capitalism. In particular, Northumberland has borne more than its fair share of the onshore wind industry, as we discussed in a debate in this place a few months ago. It is welcome, therefore, to know that this might come to an end.

We have heard a lot from the Benches opposite about the plight of wealthy investors in wind power in the coming months. It is time to hear of the needs of ordinary working people on whom the cost of the renewable energy subsidy burden has disproportionately fallen in recent years. I am proud of the fact that it is a Conservative Government who are standing up for ordinary people to try to halt the runaway cost and overspend that has happened in this industry. I congratulate the Secretary of State, through my noble friend the Minister, on tackling the grandfathering of biomass, as announced this morning, a technology that produces more carbon dioxide than coal. I urge the Secretary of State to push ahead urgently with the early closure of the renewable obligation to under five megawatt solar farms. A five megawatt solar farm needs 25 acres of land, and a policy that distorts the market to switch land from producing food to producing extremely expensive and unreliable energy is a bad policy.

By the way, it is a myth that is being repeated here today that onshore wind is the cheapest renewable. It is not. Hydro is cheaper; biomass is usually cheaper; and, as we have heard, landfill gas is cheaper. So we should not fall into the error of thinking that it is by far the cheapest.

Please note that the measures announced today, and those in this Bill, will not achieve the Government’s stated priority of:

“Reducing energy bills for hard working British families and businesses”,

as the cost of renewable subsidies will still double by 2020. Bills will still go up, not down, and this will be the case even if wholesale gas prices fall. The Secretary of State’s announcement today includes a table that confirms that we are on course to spend £1.5 billion more a year by 2020 than the levy control framework limit—that is, £9.1 billion instead of £7.6 billion. That means a £20 billion overspend cumulatively.

The Renewable Energy Foundation, and John Constable, its director, in particular, have predicted exactly this situation for a number of years, and today’s announcement precisely confirms their predictions. The REF figures, based on the Government’s own planning database, suggest that we have 49 gigawatts of consented capacity for renewables, which would generate roughly 148 terawatt hours of electrical energy, which is 34% over the 110 terawatt hours needed to meet the 2020 target. This is probably an underestimate as it omits small-scale solar photovoltaic, existing unsubsidised hydro and sub-10 kilowatt generation. Then, there is a further 14.7 gigawatts of renewable capacity pending in the planning system. If that was all built, we would have a 67% overshoot of the 2020 target for renewables. So we have to slow down this spend, and we have to grasp the nettle that it has to be slowed down offshore as well as onshore. Almost half the renewable electricity that we will get in 2020 will come from offshore wind. Notwithstanding the hopes of the noble Baroness, Lady Liddell, will the Government confirm that there will not be a huge expansion of contracts for difference for offshore wind in the wake of these announcements?

We have to address the environmental problems created by the mad wind rush we have seen in recent years and the damage caused to landscapes, peat, birds, human health and tourism. I draw my noble friend the Minister’s attention to a 10-minute rule Bill introduced yesterday by David Davis MP, in which he pointed out that many wind companies are not liable for any damage that is proved against them in terms of nuisance because they are now shell companies. That is a relatively new phenomenon. So who carries the cost of decommissioning these wind farms when they need to be decommissioned in the 2020s and 2030s?

I have a series of other questions for the Minister. He said that this measure is intended to give local people the final say. He will know that in the planning system there is, obviously, a right to appeal. Does giving local people the final say over onshore wind farms mean removing that right of appeal or in some way circumscribing it? I would like a little clarity on that, if possible.

There is some strange wording in Clause 60, on which I would like clarification, because it removes the right to renewables obligation certificates in 2016, but not the right to accredit or register for renewables obligation certificates after that. What is going on here? Would this allow speculative developers to still register after 2016 in the hope of a change in policy, a change in government or a fall in the price of wholesale electricity? It would be helpful to have a little clarity.

Finally, my noble friend the Minister said that decarbonisation makes economic sense. However, the figures that he gave me on 24 June, in answer to an Oral Question, confirm that the cost of decarbonisation using offshore wind or solar are £120 a tonne and £110 a tonne respectively under the renewables obligation, and this does not include many of the system costs. Yet these numbers are far higher than the cost of damage that climate change is likely to cause, brought forward to the present, even in the estimates by the noble Lord, Lord Stern, which do not exceed £50 per tonne. So there is a danger here that, in spending huge sums on decarbonisation, we are putting a tourniquet round our neck to stop a nosebleed.