18:00 The Minister for Climate Change and Industry (Claire Perry)

In order to meet our climate targets, we have implemented a number of policies designed to incentivise generation of energy from renewable sources. As we know, the costs of such policies are recovered through obligations and levies on suppliers, who pass those costs to end users, usually in their electricity bills. Such costs can put the most energy intensive industries at a competitive disadvantage. Indeed, as set out in the clean growth strategy, our industrial electricity prices for large consumers in 2016 were the second highest in the EU15, after Italy. That can place some of our most important strategic and productive electricity-intensive manufacturing industries at a competitive disadvantage and increases the risk of businesses relocating due to the costs associated with meeting our climate targets, which no one wants to see.

Energy intensive industries need to play their part in reducing emissions. Eight sectors, including steel, chemicals, glass and cement, are responsible for around two thirds of industrial energy use and two thirds of industry’s greenhouse gas emissions. They have worked effectively with the Government to produce industrial decarbonisation and energy efficiency action plans, which we look forward to bringing forward with the various players in those sectors.

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18:07 Dr Whitehead

The RO arrangement has effectively come to an end for new entrants as of March 2017 and, although the programme will run for a further 10 years, it is effectively a ghost programme. It will continue to carry out the obligations that have been entered into for their 15-year period, but no new ROs will come on stream. Instead, for larger renewable energy concerns there will be contracts for difference.

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18:20 Alan Brown (Kilmarnock and Loudoun) (SNP)

In terms of where energy policy is just now, I fully agree with the motion. I agree with the Minister that exemption rather than compensation is beneficial to the companies in terms of cash flow and managing the process. I share the shadow Minister’s concerns about levies being added in future to consumers’ bills and, in particular, bills for medium-sized businesses. The Minister mentioned the industrial strategy and creating jobs, including higher-paid jobs, which clearly I agree with. She also highlighted the fact that energy intensive industries account for two thirds of greenhouse gas emissions.

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18:22 Claire Perry

The point is about who we get to pay for the investment in the renewables of the future, for which we have pretty much cross-party support; we know that we need to make that transition. The good news is that thanks to the policy frameworks put in place by the coalition and Conservative Governments, we are reaching a point where renewable energy is being delivered subsidy-free. I opened the country’s first subsidy-free solar farm a few months ago, and we purchased offshore wind at £57 per MWh in the latest auction. Renewable companies, having been subsidised to get to this point, do not now require subsidy going forward.

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