09:30 Alistair Carmichael (Liberal Democrat)

It is worth reminding ourselves what is at stake. The United Kingdom has the potential to develop about 1 GW of tidal stream energy by 2035 and up to 11.5 GW by 2050. That is equivalent to over three times the generation capacity of Hinkley Point C. The costs of technology have fallen significantly in recent years. Analysis published by the Offshore Renewable Energy Catapult this autumn showed that that tidal stream can become not only a significant part of our future energy mix, but a cost-competitive one. If the sector is supported, by 2035 tidal stream could provide power at £78 per megawatt-hour; compare that to Hinkley Point C at £92.50 per megawatt-hour. By 2042 that figure could be £60 and by 2047 we could be looking at something in the region of £50. That is about £10 per megawatt-hour more than wind and solar today but, importantly, without the challenges of unpredictability.

Marine renewables is an industry that has the potential to support thousands of jobs across the United Kingdom—good-quality manufacturing jobs that bring with them the opportunities to grow an export industry, which would be an obvious route towards a just transition for many of those currently working in oil and gas. The oil and gas industry has been a critical part of the economy of the Northern Isles for the last 40 years, and I believe it will be a critical part of getting to net zero. Indeed, it is difficult to see how we could get there without having an industry on the UK continental shelf. The industry has a number of excellent apprenticeship programmes. When I talk to the young men and women who are undertaking those apprenticeships now, at the start of their career, I am struck by the fact that they tell me they believe that by the end of their working lives they will be working not in oil and gas, but in marine renewables.

If the hon. Member wants to send me his CV, I will keep it on file for when I next have a vacancy for a speech writer. I am at risk of being too consensual, but he knows my views on this and we have to find a way to recognise that in energy security there is no silver bullet. Contributions will be made by all sectors on the journey towards net zero.

The Offshore Renewable Energy Catapult estimates that the UK’s tidal stream industry could support 4,000 jobs by 2030 and 14,500 by 2040. Those high-wage, high-value jobs would be focused on coastal areas. UK tidal stream projects use an average 80% UK content in the world-leading arrays, creating supply chain with high rates of return on public investment. As with offshore wind, the supply chain is widely dispersed across the UK—for example, Leask Marine is a vessel charter, commercial diving and international marine construction service based in Kirkwall, but it operates around the world.

In its briefing for this debate, Nova Innovation called for the speeding up of CfD timescales and consent processing for tidal stream sites. Section 36 consent, which is required to qualify for a CfD, takes at least three years. That is driven by the requirement for two years of bird and mammal surveys and the nine-plus months it takes to receive a consent decision—it is often much longer in practice. In contrast, the EU target is three months for renewable energy project consent. Section 36 is required only for onshore projects greater than 50 MW, but the offshore limit is 1 MW.

Overall, it takes at least six years from conception to the commissioning of a UK tidal energy site. That timeline is similar across the nations of the UK. In contrast, developers in Canada can go from a greenfield site to first power in two to three years. That puts the UK at a competitive disadvantage for project investment and we risk losing our lead in tidal energy. We should also increase the pace and scale of investment in the UK’s electricity grid so it does not remain a constraint on renewable energy development.

EMEC is taking proactive steps to mitigate the lost funding from Interreg, but—let’s be serious—it will not make good all the lost funds. Direct revenue funding of £1.5 million a year for four years to replace the Interreg gap will enable EMEC to preserve the high-quality jobs and the growth sector, supporting levelling up, protecting that internationally accredited and strategically located facility, and providing recognition as a national asset in pursuit of the UK’s aspirations to be a global research and development superpower. It will allow EMEC to enable further growth and diversification in new technology areas, including wave and tidal array testing, green hydrogen integration, maritime and aviation decarbonisation, and floating offshore wind research and innovation, all with the aim of developing the domestic supply chain and the manufacturing capability of UK plc as a whole in the pursuit of economic growth and reaching net zero.

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09:50 Richard Graham (Gloucester) (Con)

I pay tribute—unusually, perhaps, in such a debate—to the Department. BEIS has played a huge role in recognising the value of tides and waves, and the cause of marine energy, to renewable energy made in the UK: it contributes to the energy baseload, domestic energy security, community sustainability—that is an aspect that should not be overlooked—and the creation of green jobs around the northern, western and southern coasts of our island. The work of the Department includes both officials, who have worked hard on the detail, and the commitment of Ministers. The right hon. Member for Orkney and Shetland may have referred to this, but that was epitomised by the visit of the previous energy Minister but two, my right hon. Friend the Member for Berwick-upon-Tweed (Anne-Marie Trevelyan), to EMEC in summer 2021, and by the commitment of the Secretary of State at the time—the former Chancellor, my right hon. Friend the Member for Spelthorne (Kwasi Kwarteng)—who was absolutely committed to the business of recognising that support for marine energy would be one of the best long-term investments that this country could make. Of course, the truth is that, in adding a separate pot in allocation round 4, the Department effectively moved from philosophical understanding of the issue to practical assistance in a way that had never been done before and, for those not yet convinced about marine energy, not a penny of taxpayer funds is due until the energy is generated.

So far, so good—but what next? Without repeating too much of what the right hon. Member for Orkney and Shetland said, I will highlight four quick things. First, we must keep going; we need a continued pipeline of opportunities to stimulate manufacturing scale and innovation research. The work done on FastBlade by Babcock and the University of Edinburgh partnership at Rosyth, which I saw in the summer, is a model of its kind; it will help to both improve the technology and reduce costs. Secondly, we must reduce the hidden cost of process—that has been referred to in terms of some of the detail around marine licences and the section 36 consent. We can probably all agree that the process, as it is, is both opaque and slow, and could be made much less opaque and much faster. I propose the production of a combined paper on its details from the Marine Energy Council—the chair of which is well known to the Department—which the all-party parliamentary group on marine energy will give to the Minister by the end of January for discussion, consideration and, I hope, implementation as quickly as possible. The Minister has been a great supporter of green energy, work on climate change and the environment in general. I hope that, as soon as possible after he has seen the paper, he will happily come and discuss its implications and what might be done with the all-party group.

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09:58 Jim Shannon (DUP)

The hon. Lady asks me to speak highly of Strangford Lough, and that will be done without question. I thank her for her intervention. The main issue is more than energy; it is the balance of life and the potential to provide safe, renewable energy. I speak to my mother regularly and she has always said that there are few absolutes in this world. One, pertinent for this time of year, is that “Jesus loves you, regardless of what you have done.” The other is that the sun will rise and set. Clearly, a very wise woman, for which I am so thankful.

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10:07 Liz Saville Roberts (Plaid Cymru)

On CfDs, I ask for clarity on whether—as with the fourth allocation round—tidal stream energy will continue to have ring-fenced funding into the fifth round. Having funding set aside specifically to support tidal stream is key to getting projects in the water and bringing costs down over time. There are pre-consented demonstration zones in Wales, such as Morlais in Ynys Môn, that are dependent on securing funding through the scheme to deploy. Finally, will the Minister clarify whether any consideration is being given to adjusting the CfD scheme so that it can support renewable energy hubs that contain multiple technologies by assessing together projects that are linked? Again, that would be very significant for many parts of Wales.

Of course, for Wales to realise our marine renewables potential, our grid infrastructure desperately needs to be brought into the 21st century. A recent report of the Welsh Affairs Committee on grid capacity in Wales warned that our renewable energy potential is threatened by UK Government inaction on improving grid connectivity. The inadequacy of the grid in Wales is a barrier to the decarbonisation of heat and transport across Wales, let alone to the future potential that we should be realising. It is well known that Wales exports more energy than it actually uses. I am very comfortable with that—I think Wales should be exporting into England and, in future, into Ireland—but we need to have the means to do that, and the grid structure does not permit that. It is not sufficient for our needs, let alone for the future.

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10:13 Wera Hobhouse (Liberal Democrat)

It is a pleasure to serve under your chairmanship, Mr Hollobone. Thank you for allowing me to be absent briefly from the debate. I was at an extraordinary meeting of the net zero all-party parliamentary group—I was needed to make sure that it was quorate.

Just to set the scene again, climate change is devastating the world. The abnormally hot and cold temperatures across the world contribute to as many as 5 million deaths a year. Limiting global warming to 1.5°C instead of 2°C could result in around 420 million fewer people being exposed to extreme heatwaves, yet too many politicians are still treating our vital climate net zero targets like a bus—if we miss one, we can catch another one. There will be no next time if we miss our net zero targets. Our reliance on fossil fuels is not only terrible for the planet, but bad for our energy security. Our constituents would not be paying the price for Putin’s war if the UK had moved towards renewables faster, harder and earlier.

The UK must rapidly diversify its energy through multiple forms of clean energy sources. Hydropower is a proven green technology. It can provide flexible storage to support the growth of wind and solar at scale. Hydropower is affordable and reliable, and can be ramped up at short notice when needed. Well-developed plans for tidal range projects on the west coast could mobilise and deliver at least 10 GW of net zero energy, with a construction time of five to seven years. The UK also has the potential to develop up to 11.5 GW of tidal stream by 2050, supporting over 14,000 jobs. I agree with everything that has been said today. We should support everything, including what the hon. Member for Gloucester (Richard Graham) said about tidal stream and lagoon energy.

The technologies are all there, but they could be developed much faster and more effectively if they did not always have to compete with fossil fuels or nuclear. The Minister knows that I am not a great supporter of nuclear, simply because it is a very expensive technology. If the nuclear industry had the same requirements for competitiveness as the renewables industry, it would not be able to compete in the same way. The renewable energy sector has to compete in a very competitive environment, which is good for our consumers—I get that—but let us apply the same rules to all energy sources, not just the renewable energy sector.

Committing to a target of 1 GW of marine energy by 2035 would send a powerful signal to investors that the UK is the best place to invest in tidal power. I continue to worry that the Government rely too much on fossil fuels. We are getting stuck in the transition. We are never getting out of it, and we will never end up in a net zero world. From 2016 to 2020, the Government provided £13.6 billion in support to the UK’s oil and gas industry. The Chancellor’s recent autumn statement confirmed that oil and gas giants will be allowed to continue offsetting taxes, while ordinary taxpayers foot the bill. Britain gives out the largest tax breaks in Europe to the oil and gas industry. Whose side are the Government on?

When I met the British Hydropower Association recently, it warned that weak grid capacity in some rural areas meant that not even one electric vehicle charging point could be installed. I agree that grid infrastructure is now the biggest issue holding back renewable energy developments in the UK. It must be prioritised. Where is the long-awaited reform of Ofgem’s remit?

I absolutely agree, and I thank the hon. Gentleman for making that exact point. How can we make sure that renewable energy technologies get the same support that the Government are giving to other forms of energy? I like to think that we all agree on the need to accelerate and turbocharge our renewable energy sector. My criticism of the Government—and the Minister is aware of this—is that we are not prioritising getting away from fossil fuel energy as soon as possible. That is my point, and it needs to be made again and again. I make that point at every opportunity to ensure that the Government understand the urgency that the climate emergency requires.

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10:20 Alan Brown (Kilmarnock and Loudoun) (SNP)

As the right hon. Gentleman said, the crucial things about tidal stream development are the jobs and manufacturing it creates in the UK, the export opportunities it provides, and that it forms part of the just transition for the oil and gas sector.

I agree with the right hon. Gentleman, and that is why further support is needed. In many ways, though, that also shows the pace of deployment to deliver these projects in the next few years. Looking at the Government’s overall renewable energy targets, it is really important that they back many sectors, particularly tidal stream.

I congratulate the right hon. Member for Dwyfor Meirionnydd (Liz Saville Roberts) on her contribution. She rightly highlighted that these technologies encourage redevelopment and regeneration. Energy Island is a fantastic development that will move from fossil fuels to renewable energy. I support the call for an innovation report for CfDs and the call for the ability to group multiple technologies together, because that would facilitate the development of green hydrogen as well.

Of course, it is the reliability and predictability of this green energy that is so important. As we have heard, it is also cost-efficient, particularly if given the right Government backing. The 40 MW allocation in AR4 will be delivered at £178 per MWh, which is already 15% below the administrative strike price and represents a 40% reduction in the levelised cost of energy since 2016. As we have heard, it could go as low as £78 per MWh by 2035 and below £50 per MWh by 2050. However, such cost reductions are possible only with continued Government backing.

We ask that a renewables investment allowance be created. When we are trying to embrace a renewables revolution, it makes no sense to have an oil and gas investment allowance, which offsets the massive profits that oil and gas behemoths are making, but not to have an investment allowance that encourages them to invest in renewable energy, to divest and to pursue that long-term just transition to net zero.

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10:32 Kerry McCarthy (Labour)

We know we need a diverse mix of energy sources if we are to get to net zero. It is always frustrating when clean energy sceptics say, “What happens when the sun doesn’t shine or the wind doesn’t blow?” and conveniently ignore the fact that our tides, as the hon. Member for Kilmarnock and Loudoun (Alan Brown) said, are a predictable source of energy and something we should be harnessing. We could also use hydroelectric reservoirs, which I do not think anyone has talked about, which release stored water and therefore generate energy at short notice.

In Merseyside yesterday, metro Mayor Steve Rotheram signed a deal with the South Korean state-owned water company, which owns and operates the world’s largest tidal range scheme, to develop the Mersey tidal power project, which could generate enough energy to power 1 million homes. It will create thousands of jobs and help the region get to net zero by 2040.

We also need action across the board to simplify and streamline the planning system, not in the way proposed by the previous, short-lived Administration, who were all about scrapping vital environmental protections and riding roughshod over the wishes of local communities, but by ensuring we do not place unnecessary burdens on renewable energy developers that delay or even derail new projects.

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10:43 Graham Stuart (Conservative)

The British energy security strategy affirms that the Government will aggressively explore renewable technologies, including the potential of tidal power to contribute to a net zero-compliant future. Members will have been delighted that the Government established a ringfenced budget of £20 million for tidal stream developments in pot 2 of the fourth contracts for difference allocation round—AR 4—which has been referred to.

The CfD scheme is our flagship mechanism for supporting the cost-effective delivery of renewable energy. That support will ensure that the nation’s tidal stream innovators get the opportunity they need to bring their cost of energy down and learn the valuable and exportable —a point made by a number of hon. Members—lessons that come with being the first in the world to deploy a cutting-edge technology at scale.

The Government have delivered for the burgeoning tidal stream industry. It is now time for the developers to push on, to make good on their promises and their potential and to demonstrate the value for money and scalability that we need from our renewable energy technologies as we transition to an efficient and net zero-ready power sector.

We hope that other technologies can follow offshore wind in its remarkable reduction in price over just two auctions—from 2015 to 2019 it went from £120 per megawatt-hour to £39.50—but we cannot assume that just because it happened with offshore wind, it will happen with everything. We want to create genuine competitive tension between the technologies because we want not only to take an accelerated path to net zero but to do so in a way that, in the end, brings the UK the lowest and most competitive electricity costs as a base part of our energy system. That will put us in a position to be able to keep energy affordable for families but also make us industrially competitive. There is so much to play for. We have got to get the balance right, and CfDs have done a great job so far.

There are two BEIS overseas funding streams that EMEC may be able to apply for in partnership with developers: the first is the £1 billion net zero innovation portfolio that provides support for research and development, and the second is the energy entrepreneurs fund, which provides small grants to developers of innovative energy technologies. In May this year, BEIS awarded a £5 million grant to a hydrogen technology developer based at EMEC. Two of the CfD AR4 projects are, of course, also based at EMEC, and will be paying lease fees to EMEC from 2026. There are a number of things there, but as I have said, I am happy to meet and discuss it.

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