The Parliamentary Under-Secretary of State for Energy and Climate Change (Mr. David Kidney)

My noble Friend the Minister for Energy and Climate Change today made the following statement.

“No we don’t agree with the proposal to retain the cap on co-firing. We would like to see the cap removed going forward. The cap potentially disadvantages independent co-firing generators if vertically integrated suppliers self-supply a considerable proportion of their demand for co-firing ROCs. This would mean that the market for independent generators may be smaller than that implied by the cap. We also are concerned that the cap constrains the contribution to our renewable energy targets from a relatively low-cost renewable technology. This might be the case if independent generators constrain output below the level at which they perceive there is a risk that a supplier with demand for ROCs could negotiate ROC price discounts. We also think the concerns about the potential volatility of co-firing volumes could have on ROC prices are overstated. This is because of the reduction in the number of ROC given to co-firing (down to 0.5 ROC/MWh) and the headroom will effectively set the size of the obligation from 2010-11”.

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