10:59 Caroline Nokes (Conservative)

I hope that this debate will feed into the wider discussion about the security of supply and be a useful contribution to the thinking on this issue. Given the three important issues that underpin that thinking—keeping the lights on, the diversity of energy sources and increasing the amount of renewable energy—I am pleased that hon. Members are here to listen to the debate.

The debate title is a testament to Britain’s growth in green technology and our status as a world leader in climate change awareness. However, as I will explain, for too long we have trailed behind countries such as Germany in the production of green energy, and we must take decisive action to secure support across the whole sector.

I pay tribute to the excellent work done by my hon. Friend in this regard. Does she think that we need to expand on the excellent work of companies, such as ACM Environmental plc, which has converted waste into renewable energy in schools in Kent? Waste is converted on-site, rather than outside in other areas, and used to heat water, for example, at those schools.

To date, the main focus of attention on energy from waste appears to have been on large-scale industrial production of waste-sourced energy. Advanced gasification is a key part of securing green energy and decreasing landfill: it is a carbon-lean process involving the efficient, high-temperature conversion of waste to base-load electricity. After the August 2010 announcement that energy from waste can be sold to the national grid, there is now real discussion about how local authorities in particular can secure income sources by selling green energy. For example, Air Products, a leading provider of industrial gases and environmental systems, has been granted permission for a 49 MW advanced gasification plant in Teesside, the building of which will begin next year. That development will create 700 jobs, divert up to 350,000 tonnes of waste from landfill and produce enough predictable, clean power for 50,000 homes. Air Products is precisely the sort of provider of clean energy that we should be encouraging to meet our renewables obligations.

I should like to explore a number of issues facing the development of the renewable energy from waste industry outside the large industrial-scale plants that I have mentioned. I want to show how the current incentives are working and how we could adjust them to accelerate awareness and the development of the industry, particularly harnessing the potential for small-scale production, as well as production on an industrial scale.

I have called this debate because incentivising small-scale production could develop valuable employment opportunities, help small businesses and local communities generate their own green energy, grow UK exports and, most importantly, assist the Government to achieve secure, diverse and green energy.

Anaerobic digestion is the process whereby biowaste from plant and animal material is converted by micro-organisms in the absence of air into biogas, which can in turn be used to generate green electricity and heat. Anaerobic digestion can help reduce fossil fuel consumption and greenhouse gas emissions—two essential goals in our fight against climate change. Almost any biowaste can be processed in that way, including food waste, energy-producing crops and crop residues, slurry and manure. The process can accept waste from our homes, supermarkets, industry and farms, ensuring that significantly less is sent to landfill.

Another major advantage of anaerobic digestion as a renewable energy source is that the material left over at the end of the process—an odour-free digestate, rich in nutrients—can be used effectively as fertiliser. This could, and really should, become the standard fertiliser on the market. However, many domestic and business users do not understand the benefits derived from buying recycled products. A new petrochemical-derived fertiliser can cost a farmer between £200 and £400 per tonne, but the by-product from a micro-anaerobic digestion site is more likely to be of a consistent chemical and nutritional specification. Currently, the anaerobic digestion industry is struggling to sell recycled fertiliser, produced to resource action programme standards, at £5 to £6 per tonne. I would be grateful to the Minister if he expanded on how we can best explain the benefits of, and incentivise the consumption of, recycled fertiliser in farming and domestic gardening.

Many sites in the UK are producing biowaste. According to the Department for Environment, Food and Rural Affairs, the UK produces approximately 7 million tonnes of food waste and about 90 million tonnes of animal slurry and manure per year. With 23.6 million households and 41,000 farms, it is clear that the potential for green energy production is enormous.

All organisations create waste. SeAB is leading the way, through anaerobic digestion, in reducing our dependence on landfill by converting waste into valuable energy. I should welcome the Minister’s visiting and meeting the people who have developed this world-leading technology, so that he can see green energy in production.

By comparison, decentralised sites are arguably simpler to operate, quicker to build and easier to install and manage. Road haulage is largely eliminated and the waste producer benefits directly from using its own waste to generate its own green energy. I would be grateful to the Minister if he commented on how we can incentivise the many small waste producers, such as farmers, food growers, food packers, hotels, hospitals, schools or prisons—the list is almost endless—so that they can benefit from green energy throughout the country. In short, anaerobic digestion reduces the need for landfill, with the exciting possibility of creating sustainable communities with a consistent waste fuel power source.

Other sources of renewable fuel can be found in the waste stream, such as the conversion of used cooking oil into biodiesel, which is entirely sustainable and derived from a waste product. That would involve recycling almost 100 million litres of waste cooking oil each year, while helping the Government to exceed their greenhouse gas emission targets in transport by 8%. However, as highlighted by the recent report on environmental taxes by the Environmental Audit Committee, of which I am a member, the removal this March of the 20p per litre duty differential on such fuel will make it prohibitively expensive and high-blend users will have no choice but to return to fossil fuels. That will have a disastrous impact on the UK biodiesel industry, resulting in the loss of green jobs, as well as discouraging further investment in the development of new technologies in the energy-from-waste sector.

I strongly urge the Minister to continue to speak to his colleagues in the Treasury, because I fear that, without continued support, we will jeopardise the significant steps that have already been taken. The energy-from-waste sector is full of innovative and in many cases ingenious ideas. I am conscious that we need a wide variety of energy generation methods to meet demand. No one form of green energy provides the whole answer, and we need a range of solutions, both large and small.

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11:14 The Minister of State, Department of Energy and Climate Change (Charles Hendry)

As my hon. Friend outlined, renewable energy has a vital role in our low-carbon future. By the end of the decade we must cut our carbon emissions by 35% on 1990 levels, and by the end of the next decade they must have halved. We also have the EU renewable energy target, which means that we must generate 15% of our energy from renewables by 2020. In order to meet that target, about 30% of our electricity and 12% of our heat will need to come from renewable sources. That is not only about meeting targets, because it is also the right thing to do, and we need to reduce our dependency on imported fossil fuels. Home-grown renewable energy can enhance our energy security and give us a greater degree of energy independence, helping to shield us from global fossil fuel price fluctuation, which seems to be in only one direction at the moment, as we see high prices for oil and gas. She also touched on the immense economic potential in renewable energy, and the sector could provide opportunities for up to 500,000 jobs.

In the Department of Energy and Climate Change, we have been working with the renewables sector to understand more effectively how much renewable energy can be deployed by 2020, and to identify the current constraints that must be addressed.

I thank the Minister for investing DECC money into an anaerobic digestion facility at the Centre for Process Innovation in my constituency. He is referring a lot to renewable energy, but does the way in which waste is treated under all our policies throughout the various Departments satisfy the renewable energy criteria and meet the simplicity requirements mentioned by my hon. Friend the Member for Romsey and Southampton North (Caroline Nokes)?

We have identified eight technologies that we believe will bring us closest to delivering those 2020 targets cost-effectively and sustainably. They are onshore and offshore wind, marine energy, biomass heat and electricity, ground source and air source heat pumps, and renewable transport. Biomass heat and power includes energy from waste technologies, such as anaerobic digestion, waste combustion and the new, advanced technologies of gasification and pyrolysis. We believe that those eight technologies collectively are capable of delivering more than 90% of the renewable energy we need for 2020.

Last year, we published the UK renewable energy road map, which shows where we are now on those eight technologies, how deployment may develop up to 2020, and the actions that will need to be taken now to overcome the barriers to deployment. Although our evidence shows that we can meet our target of 15% renewables by 2020, we are clear that we need a rapid increase in deployment. At the end of 2010, renewable energy accounted for 3.3% of UK energy consumption, so there is a significant way to go.

The Minister talks about eight key technologies and delivering them affordably. I entirely agree with that, but will the road map be flexible enough to change if technologies advance with time? If one technology becomes more prevalent in delivering the green energy that we need, will changes be made to cover that ?

Despite the undoubted benefits of renewable energy, it must be cost-effective and affordable compared with low carbon alternatives. I acknowledge the valid point that my hon. Friend the Member for Romsey and Southampton North made in her introduction that the renewables industry and investors need stability to plan ahead. Uncertainty is often the greatest enemy of investment. I also appreciate that recent changes, particularly to the support for solar photovoltaic installations under the feed-in tariffs scheme, may have temporarily affected industry and investor confidence, although we are now seeing strong growth again in the number of PV installations. We are committed to delivering our goals in a way that minimises the impact on consumers’ bills.

I have mentioned the eight existing technologies that we have focused on in the UK’s renewable energy road map. Anaerobic digestion has, without doubt, an important role to play in both biomass heat and electricity generation. The United Kingdom produces about 100 million tonnes of food waste, manure, slurry and sewage sludge that is suitable for treatment by anaerobic digestion. When the coalition was formed in 2010, we stated our commitment to developing energy from waste through anaerobic digestion. I assure my hon. Friend the Member for Romsey and Southampton North and other hon. Members who have spoken that we remain absolutely committed to delivering on that commitment.

Last June, the Department for Environment, Food and Rural Affairs and the Department of Energy and Climate Change jointly published the anaerobic digestion strategy and action plan. It sets out our vision for anaerobic digestion, with an estimate of potential that could reach between 3 and 5 TW hours of electricity by 2020. Currently, there are only 172 MW of installed anaerobic digestion capacity in the UK, processing more than 5 million tonnes of material, and generating more than 1 TW hours per year. More is coming through the system. Just last week, Tamar Energy announced plans to develop 40 AD plants in the UK, with an installed capacity of 100 MW. In addition, we know of more than 100 plants that have received planning permission, and a further 80 that are going through the process.

I share my hon. Friend’s enthusiasm for smaller, more local plants. That is backed up by the study by consultants for the renewables obligation banding review that suggested that anaerobic digestion potential lies in stations with less than 5 MW of capacity. That ties in with our commitment to localism, which was raised during the debate, and is why, as part of the rural economy growth review, the Government have announced that they will promote the development of community-scale renewable energy projects in England through the establishment of a £15 million rural community renewable energy fund.

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