09:30 Mr Mike Weir (Angus) (SNP)

This is not purely projection. As part of electricity market reform, the Department of Energy and Climate Change established a final investment decision enabling process—a bit of a mouthful, but never mind—which enabled a number of projects to move forward with investment decisions, having been awarded early contracts for difference. This enabled five offshore projects totalling nearly 3.2 GW of capacity to come forward. On the back of this, there was a significant boost to the offshore supply chain when Siemens, the dominant supplier of offshore turbines in Europe, confirmed that it would proceed with a major manufacturing facility in Hull for its new offshore turbines. This was a clear demonstration of the direct link between visibility of deployment at scale and securing wider investment in the supply chain, and it demonstrates that this is not just a Scottish issue; it applies also to the north of England.

Although I support the hon. Gentleman’s message on this subject, a number of businesses and others in my constituency are concerned about the cost of green energy, and believe that it is not properly regulated. Does he agree that we need proper regulation to make it more efficient, and so that more companies can use it?

Clearly, there is a balance to be struck between the interests of the bill payer and the interests of creating renewable energy. We all have to take that into account. My point is that as well as being clean, renewable energy also produces investment in industrial development and creates jobs. I agree that there is a balance to be struck. We must always bear in mind the impact on the bill payer of all these projects, and we must always seek value for money. The point that strikes that balance will vary over time.

Two developments off the shores of my constituency have a combined total of 1,234 MW and both are bidding in the first round of contracts for difference. The Government are currently considering that first round of CfDs, which are due to be allocated, I understand, around the end of March. Therein lies part of the difficulty. New projects have to bid for contracts for difference through a competitive auction process, and offshore wind projects will compete not only with each other for the budget, but against other renewable energy projects. Offshore wind has been grouped with wave, tidal, biomass, combined heat and power and Scottish island wind. There is a total budget for all these technologies of £235 million, which is split between £155 million for 2016-17 and £80 million from 2017-18.

I raised that issue with the Secretary of State at the last Department of Energy and Climate Change questions. I said:

We are in danger of having a debate within a debate. I will return to the points I was making on offshore wind, although nuclear power does come into this to some extent. If we are serious about the long-term development of offshore wind, we need clear targets and commitments for developers and we need to ensure that we give certainty to support supply chain investment and development. That would undoubtedly also involve providing the necessary conditions for competition, innovation and cost reduction, all of which are supposed to be the Government’s aims. Instead, there are mixed messages on energy policy and continuing uncertainty. Strike prices are set only to 2018-19 and the levy control framework is set only to 2020. There is no real commitment to a decarbonisation target. RenewableUK described the 2020 deadline as being like a cliff edge, because of the uncertainty on what comes after.

“The research has identified five actions the next government should take to realise the industrial and decarbonisation potential of offshore wind:

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10:20 Dr Eilidh Whiteford (Banff and Buchan) (SNP)

Today’s debate takes place in the context of energy market reform. We should always remember that that is not only about keeping the lights on, bringing consumer prices under control and repairing a broken system, but about climate change and the need to reduce our greenhouse gas emissions and to mitigate, or adapt to, the effects of climate change that are already manifest.

I read recently that 2014 was the hottest year on record. We do not always notice that in Banff and Buchan, which is pretty cold, but we undoubtedly see the impact of a slightly warmer, slightly wetter climate and the effect of changing sea temperatures on our marine environment, with coastal erosion and increased landslips. And who could fail to notice the problems associated with increased flooding right across the UK? If we abdicate our responsibility to reduce emissions or pretend we can ignore climate change indefinitely—or at least for another decade or two—we are burying our heads in the sand. Environmental campaigners are fond of pointing out that the climate does not negotiate, and they are not wrong.

That is primarily why we need cleaner energy. However, we are also in the fortunate position of being able to take economic advantage of the opportunities renewable energy presents. Being in the vanguard of new technologies has the potentia1 to strengthen our manufacturing, our exports and our research base.

The hon. Lady’s argument is surely an argument in favour of investing in adaptations to ensure that the impact of climate change is not felt so severely—for example, on the coast. If we have coastal defences, we can defend ourselves better against the consequences of climate change.

In that light, I am deeply disappointed that no decarbonisation target has been set for 2030. That is a real missed opportunity, and it undermines confidence in the Government’s commitment to the offshore renewables sector. The Government initially seemed much more ambitious about the development of offshore wind, and that raised a lot of expectations, leading to considerable investment from industry. Companies were actively encouraged to make bids for offshore developments, and they have invested hundreds of millions of pounds in bringing projects to consent.

I well recall how the Government made the same short-sighted mistakes in the 1980s, when early, first-generation renewable energy technologies being developed in Scottish universities were starved of funding. That simply meant that the research moved to Europe and beyond and that other countries created the manufacturing jobs that could and should have benefited our economy.

Renewable energy is an important part of our energy mix, but we need to think long term if we are to realise its full potential. The cost of new technologies is likely to reduce over time. Contract for difference helps to encourage that investment, but we will achieve the added benefits only if we remain in the vanguard. The point has been made already, but it is worth saying again that a native renewables industry is critical to our long-term energy security.

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10:29 Albert Owen (Ynys Môn) (Lab)

As a member of the Select Committee on Energy and Climate Change and the Committee that considered the Energy Act 2013 I supported electricity market reform. Any party in government over the relevant period would have needed to make progress on that. I agree with my right hon. Friend the Member for Delyn (Mr Hanson) that we need continuity and consensus when we talk about energy and long-term planning. We had that when the Government first came to power; and we had a sensible Energy Minister—I welcome the Minister to his place—but he was replaced by someone who was less pro-wind. He said in the Chamber that he supported it, but outside said he did not, following the line of many of the popular newspapers of the day. That is no way to make Government policy, and I think that the uncertainty has affected the future of development.

Hitachi is developing a nuclear power station in my constituency, which I fully support. I do not think that there is an either/or decision to be made over nuclear or renewables; I think we should have both. I have seen what skills have been developed over generations, and I want them to be transferable between different types of energy production. That is why I have been promoting Anglesey as an energy island—so that we can have a focus of attention and a centre of excellence, with links to universities, schools and technical colleges, to get the right skills base for the future, and high quality jobs. The hon. Member for Waveney (Peter Aldous) mentioned the accents to be heard when he travels around the world; and Welsh accents can be heard in energy development in Canada and elsewhere. I want to hear those accents back home, in a forward-looking industry where young people have opportunities to develop. Offshore wind, like oil and gas, has provided great opportunities for people in the United Kingdom, and we should keep those sectors in our country. That is why I support nuclear as well as wind and renewable energy.

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10:37 Julie Elliott (Sunderland Central) (Lab)

This will come as no surprise to those taking part in the debate—we talk about such things a lot, and I too was on the Committee that considered the Energy Act 2013 and have gone over the arguments at length many times—but I am pleased to have the opportunity, at this early stage in the new year, to reaffirm Labour’s commitment to cutting our carbon emissions by encouraging investment in clean energy through the system of contracts for difference. I want to make a few comments on some of the speeches. As my right hon. Friend the Member for Delyn (Mr Hanson) said, there is a broad consensus—barring the views of the hon. Member for Christchurch (Mr Chope), who has a slightly different view from ours. I, like some other right hon. and hon. Members, am committed both to renewables and to nuclear, which will both have an important part to play in the energy mix. We need both of them to reach our carbon emissions targets and negate the problems arising from climate change.

Scotland currently benefits from a system in which resources from across the UK are pooled. Scotland hosts 8.3% of the UK population and around 9% of the energy bill consumer base from which we fund clean energy projects via the levy control framework. In 2012-13, Scotland received nearly a third of all renewable obligation certificates supporting renewable energy. Furthermore, Scotland will receive a significant proportion of the support given through feed-in tariffs, which in 2014-15 is projected to reach £817 million.

Although Labour—and most parties, as the hon. Member for Angus said in his contribution—supported the Energy Bill as it progressed through Parliament, there were significant areas in which we were convinced that it needed to go further. I do not intend to précis our “Powering Britain” Green Paper, as I am quite confident that most people here have read it cover to cover. However, what was missing from the Energy Bill, in addition to reform of the wholesale or retail markets through which energy is traded, were policies to encourage further investment in clean energy. Labour is committed to setting a 2030 power sector decarbonisation target, which is supported by organisations as varied as the Committee on Climate Change, energy developers such as Siemens and Dong Energy and companies such as Asda, Sky and PepsiCo as a crucial tool to provide certainty and clarity to drive investment.

Given this Government’s refusal to set a 2030 power sector decarbonisation target or allow the green investment bank to borrow, it is unsurprising that investment in renewable energy has fallen. Furthermore, according to the Environmental Audit Committee, investment in clean energy is running at half the level necessary if we are to meet our carbon emission reductions. It is also worth pointing out that the majority of renewable energy projects that have come online since May 2010 started under the last Labour Government.

This Government’s mixed messages and active hostility to onshore wind and solar PV, the cheapest large-scale clean energy technologies, have acted as significant blows to investment in all clean energy technologies. In the last few months, the UK slipped to seventh place on Ernst and Young’s attractiveness index for investment in renewable energy, and Ernst and Young labelled the Government’s

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10:46 Mr Ben Wallace (Wyre and Preston North) (Con)

What I am hearing in this debate is similar to what I heard in my previous work in aerospace. That industry had long lead times and required certainty, and that is also true of the renewable energy industry. There is a constant play-off between new investment in new technologies and mature and maturing technology elsewhere. The hon. Member for Edinburgh North and Leith (Mark Lazarowicz) made the point clearly that often there is a tension between maturer technologies and those seeking a fair audience, such as wave, solar or tidal energy. In my previous life before entering the House, in early 2003, I was part of a process of trying to get funding for tidal energy off Britain’s shores, and I remember being crowded out of the debate.

Low-carbon electricity projects will compete at auction for the contracts, which will deliver new capacity much more cheaply than the previous arrangements. Recent studies have shown that compared with the renewables obligation scheme, the current scheme produced a difference of £19 per MW when it came to the pricing of this energy. That is important to recognise. It is estimated that the reforms to the electricity markets will mean that average annual household electricity bill will be around £41 lower over the period from 2014 to 2030 than if we decarbonised without making these changes.

My right hon. Friends the Secretary of State for Energy and Climate Change and the Minister of State and I are aware that some offshore wind projects may end up disappointed at the end of the CfD allocation process and may need to wait for future rounds. It is not possible yet to say for certain which technologies will bid lowest and therefore win the auctions. However, if for example, offshore wind won the whole of the £235 million in the less established pot, that could lead to around 700 MW to 800 MW, depending on the clearing price, which answers the question from the hon. Member for Sunderland Central (Julie Elliott) about the assessment of how much it could do. I should point out that we are making a substantial amount of budget available in this autumn’s allocation of contracts, and we increased the budget for both pots over the summer.

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