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Energy Bill

moved Amendment No. 33: 33: Clause 37, page 20, leave out lines 30 to 47 The noble Lord said: The amendment is the first on the rather long Clause 37. We appreciate that the Government’s intention was to consolidate the renewables obligation and to put it into one legislative block. That seems to be an attempt to simplify something of labyrinthine complexity, which, for what it is worth, I suppose must be welcomed. A lot remains unanswered about ROCs. Only 4 per cent of our electricity production comes from renewable energy. The EU directive that places a 15 per cent target on renewable energy reduction will, I fear, not be met by gentle encouragement. We need a revolution. That will only happen if emerging technologies are given much more support. The renewables obligation has certainly encouraged the development of renewable energy, but this has been preponderantly in only a couple of areas; namely, onshore wind and methane. Photovoltaic and tidal technologies, for example, so far do not seem to have benefited very much. Banding the RO is a welcome step to addressing some of these discrepancies. The advantage of a banded RO is that it should incentivise various renewable technologies. Encouraging the growth of emerging technologies will be essential to a low-carbon energy industry. Allowing for different levels of funding should ensure that differing technologies receive the appropriate level of support. The amendment was brought to our attention by Drax Power Limited, which is involved in co-firing biomass as a way of reducing its emissions. The new RO differentiates between energy crop co-firing and non-energy crop co-firing. Yet, with the increase in the price of wheat and the volatility of the markets, it is increasingly difficult to secure a supply of energy crops—crops grown with the express purpose of energy production. Therefore, interest is turned to non-energy crops; in other words, by-products generally of food production, such as corn husks. Current provisions in the Bill maintain a cap on the amount of non-energy co-firing that will be awarded through the RO. It is the only renewable source that will be capped. Drax has advised us that this could have a serious negative effect on the encouragement of renewable co-firing. Indeed, it has been put to us that it could have the opposite effect from that which we would, I am sure, all agree is desirable. No doubt the Government have received similar intimations. Essentially, Drax’s position is that if there is a cap on non-energy co-firing, there is always the chance that that cap could be reached, at which point production might become uneconomic. Because of that constraint, such ROCs inevitably trade at a lower price, which discourages companies such as Drax from being more ambitious with their targets. The Minister in another place maintained that provisions allowed for changes on the bands and further distinctions to be made within any given area of renewables. That is what is now being requested. As is the case with much of this Bill, the amendment concerns big companies, which generally have rather long long-term plans. As I am sure that the Minister will appreciate, leaving a business plan to the ambiguous further distinctions that a Secretary of State might make is risky business. If we are to encourage renewables with vigour, every available opportunity to provide clarity should be seized. The parallel fear is that without greater clarity, the market will be skewed. We appreciate that the banding of the RO is an attempt to address that, but if we are really out to encourage the uptake of the cheapest and cleanest technologies with a market mechanism, we cannot pick winners. That leads me to my final question on the amendment: is the Minister absolutely satisfied that the market mechanism created with the banded RO will not lead to the picking of winners, with all the risks that human intervention brings? I beg to move.