Feed-in Tariffs (Closure, etc.) Order 2018 - Motion to Regret

Part of the debate – in the House of Lords at 7:00 pm on 4th March 2019.

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Photo of Lord Grantchester Lord Grantchester Opposition Whip (Lords), Shadow Spokesperson (Energy and Climate Change), Shadow Minister (Environment, Food and Rural Affairs), Shadow Spokesperson (Business, Energy and Industrial Strategy) 7:00 pm, 4th March 2019

I thank the noble Baroness, Lady Jones of Moulsecoomb, for bringing the attention of the House to this negative SI. I have always found the designation of instruments as affirmative or negative rather arcane, and either can be the case following substantial changes in government policy. I thank your Lordships’ Secondary Legislation Scrutiny Committee for recommending that the order be brought to the public interest; otherwise, it would have become operable without comment or scrutiny under the negative procedure. It certainly follows the Conservative Government’s pattern of behaviour to cut, curtail, restrain and restrict sensible, positive climate change policies.

In 2015 the new Conservative Government announced that they were going to scrap green taxes and levies in general, and in particular that the tariff for the generation of renewable energy to new entrants under the FIT scheme would end in March 2019. With so many policy swings, the result is that the UK is no longer on course to meet the fourth and fifth carbon budgets recommended by the Committee on Climate Change; wind and solar deployment have been severely curtailed, resulting in a severe recession in the industry; and policy reversals have shattered investor confidence. Many important projects, such as CCS, have also been cancelled and scrapped. All this is at a time when the Intergovernmental Panel on Climate Change has come forward with updated warnings about global temperatures by 2050.

The order takes advantage of the timed scrapping of the tariff for the generation of renewable energy under the FiT scheme and adds to it by scrapping the export tariff on surplus small-scale generated electricity to the grid, so that both coincide. The Government knew there would be serious concerns about this decision because they consulted on it, with the result that a massive 91% of responses opposed the plans, but they carried on anyway. That such a large proportion of representations against the change were ignored raises the question of why industry and the public should bother engaging with the Government. What can the Minister say to convince the public that it is worth their while to engage in consultations in future? Will their expertise be listened to?

As the Motion points out, future entrants to small-scale generation will have to provide surplus electricity to the grid for free. Respondents to the consultation are correct that this change of policy is incompatible with the Government’s climate change targets and responsibilities. It can have only a destabilising effect on the renewables sector and jobs. It denies a route to market for small-scale generators that encourages everyone to do their bit to alleviate climate change. Of course, as technology develops the costs of low-carbon generation decline and over time there will be less of a need for support, but it must also be pointed out that this is consumer support, not government support. Of course costs on households must be kept to a minimum, but what are these costs? The impact assessment points to an estimated cost saving from scrapping this scheme of £45 million a year from 2021—a whole £1 per year to the average household. Is that material for this disruption?

Yet the Government admit that there is still a need for a scheme to encourage small-scale generation. It is indeed still necessary. The Minister for Energy and Clean Growth, Claire Perry, recently said that,

“nobody should be providing energy to the grid for free”.—[Official Report, Commons, 8/1/19; col. 159.]

The Government agree that new entrants will still be needed but they have no replacement. They are consulting on their new scheme—the smart exports guarantee, or SEG—in recognition that the small-scale low-carbon generation electricity market is not yet fully developed and support is still required. It is still a fledgling market and a scheme is still needed but the Government admit that they have not got it ready, so why scrap the existing scheme prematurely? The scheme could continue with less disruption, still with value for money, while the consultation was completed and a new scheme drawn up. How long do the Government expect to take between the end of this consultation and having a smart exports guarantee scheme ready?

The order includes an element of levelisation—charges on suppliers for costs—and the Government would wish to build on suppliers providing remuneration to small-scale low-carbon generators under their new SEG scheme. However, the Solar Trade Association is lobbying for a minimum floor price set at a fair market rate. What guarantee can the Minister give that small-scale generators will not be left in a vulnerable position under these government plans and will be provided with a fair and competitive price? Why not gain experience of this levelisation scheme, continue with the current policies to prevent a clear gap opening up in the market and withdraw the order? Why rush to close the FiT scheme?

The consultation has been damaging to the reputation of the Minister’s department. Yes, cost-control measures need to be developed to be effective and proportionate from an administrative perspective, but the scheme has not run its course. The simple question to the Government is: why do you want to do this now?

The noble Lord, Lord Teverson, reminded the House of the Smart Meters Act, which highlighted the Government’s turmoil on that matter. We offered the Government more time to get it right. He will remember that the Government foolishly rejected that offer. The turmoil continues.