Clause 10 - Renewable heat obligation

Climate Change and Sustainable Energy Bill – in a Public Bill Committee at 5:00 pm on 25 January 2006.

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Question proposed, That the clause stand part of the Bill.

Photo of Joe Benton Joe Benton Labour, Bootle

With this it will be convenient to discuss the following: Government new clause 3—Renewable heat—

(1) It shall be the duty of the Secretary of State to take such steps as he considers appropriate to promote the use of heat produced from renewable sources.(2)For the purposes of subsection (1), heat produced by any plant is produced from renewable sources to the extent that the plant is fuelled by renewable sources.

(3)The steps which the Secretary of State may take for the purposes of subsection (1) include, in particular, steps for the purpose of promoting—

(a)the installation of plant which is or may be fuelled by renewable sources,

(b)the adaptation of plant so as to enable it to be fuelled by renewable sources, or

(c)the production of heat by plant which is fuelled partly by renewable sources and partly by other sources.

(4)In this section—

“fossil fuel” means coal, substances produced directly or indirectly from coal, lignite, natural gas, crude liquid petroleum, or petroleum products (and “natural gas” and “petroleum products” have the same meanings as in the Energy Act 1976 (c.76));

“plant” includes any equipment, apparatus or appliance;

“renewable sources” means sources of energy other than fossil fuel or nuclear fuel.’.

And the following amendments thereto: (a), at end of subsection (1) insert—

‘(1A)Before taking any such steps the Secretary of State shall satisfy himself as to—

(a)the most cost effective; and

(b)the most practicable, method or methods of promoting heat from renewable sources.

(1B)The Secretary of State shall publish in whatever form he sees fit his conclusions reached pursuant to subsection (1A).’.

(b), at end of subsection (3)(c) insert—

‘(3A)The Secretary of State shall lay before Parliament an annual report on—

(a)steps that he has taken to promote renewable heat and any steps that at the time of the report he proposes to take; and

(b)the effect of any steps taken by him and an assessment of any steps specified in the report that he proposes to take.’.

Government amendment No. 14

Photo of Malcolm Wicks Malcolm Wicks Minister for energy, Department of Trade and Industry

Although it is important to promote renewable heat, it is also important to find an effective way of doing so, particularly in terms of carbon savings and costs to the consumer. The heat market is vastly different from the electricity market—for example, in the number of suppliers and the scale of installations. We do not consider that an obligation in relation to heat similar to the renewables obligation is necessarily the most effective measure to support renewable heat generation.

The biomass taskforce and the Scottish renewables forum recently suggested that the complexity of such an obligation led them to believe that other measures were more appropriate to bring forward renewable heat at this time. The Government agree, and therefore do not support the proposal for a renewable heat obligation in clause 10. Although a renewable heat obligation is not the correct approach, we remain committed to promoting renewable heat. We already support renewable heat projects through the bioenergy capital grant scheme, the clear skies initiative and the community energy programme. Support for renewable heat will continue in the low carbon buildings programme, to which I referred earlier.

The Government are considering their overall approach to renewable heat in the context of our response to the biomass taskforce. We are carrying out further analysis on all the taskforce’s recommendations. That analysis will take account of the recent study by Future Energy Solutions, which carefully considered renewable heat, combined heat and power and the carbon savings likely to be associated with each, and the Carbon Trust report on biomass.

Bioenergy is the largest potential contributor of renewable heat, and the Government are committed to responding fully to the taskforce report by the end of April. That will include responding to its recommendation for a capital grant towards bioenergy heat and combined heat and power projects, and the recommendation on longer-term support measures. The Carbon Trust is currently scoping a project to accelerate the development of biomass in the United Kingdom, focusing on heat. The European Commission is likely this year to bring forward measures to support biomass under its biomass action plan. Measures to support renewable heat are being considered also in the context of the climate change review and the new energy review.

As the hon. Member for Edinburgh, North and Leith indicated, amendment (a) to new clause 3 would require the Secretary of State to publish his considerations on the cost-effectiveness and the practicality of methods of promoting renewable heat. The Secretary of State would of course have regard to those issues in putting forward options to promote renewable heat. However, there are significant difficulties in defining them in the Bill. For example, how does the amendment define cost-effectiveness? For whom would the measure be most cost-effective—the Exchequer or the consumer? What is the relationship between the potentially conflicting requirements of practicality and cost-effectiveness?

Given the difficulties attached to the implementation of amendment (a), the Government do not support it. We are content to consider reporting on the Secretary of State’s duty to promote renewable heat as proposed in amendment (b) to new clause 3, but we do not feel that the reporting requirement should be expressed in the Bill in that way. We would  prefer to report on the duty to promote renewable heat in the context of our reporting under the Sustainable Energy Act 2003. That would be more appropriate, given the need for a consistent approach on all our reporting responsibilities on other aspects of energy policy. We will consider the reporting requirements further, and we aim to table a new clause for the next sitting.

In case anyone has not followed all that I have said, let me say that I oppose clause 10 standing part, but support new clause 3. I support amending the title of the Bill, as proposed in Government amendment No. 14, to reflect the content of new clause 3. I would resist amendment (a) to the new clause, but I will consider amendment (b).

Photo of Mark Lazarowicz Mark Lazarowicz Labour, Edinburgh North and Leith 5:15, 25 January 2006

The potential for renewable heat is widely recognised, but the UK as a whole has yet to take full advantage of it. That was the reason behind clause 10.

I am aware that there is still a considerable lobby among those who favour renewable heat in support of a specific obligation. I understand what the Minister said, however, about the need to develop the best way of taking renewable heat forward. I am influenced by the fact that even some in the renewables industry are not necessarily convinced that a renewable heat obligation is the right way forward, so I accept the changes that the Government propose.

I ask the Committee to support new clause 3. Although it was tabled by my hon. Friend the Minister, I was involved in discussions with the Department about its contents. I understand the reasons for the Government’s opposition to amendment (a) to new clause 3. It would help if the Minister could give more detail either today or in writing about how he would satisfy himself as to the most effective and practicable way of taking forward renewable heat. As for amendment (b) to new clause 3, I shall be happy in due course to accept a revised provision, as outlined by the Minister.

Question put and negatived.

Clause 10 disagreed to.

Further consideration adjourned—[Joan Ruddock.]

Adjourned accordingly at seventeen minutes past Five o’clock till Thursday 9 February at Two o’clock.