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Energy Bill

I share many of the concerns about this amendment raised by previous speakers. The amendment is timely in that, almost at the beginning of our consideration of this Bill, we are dealing with the interface between the competitive economics of different kinds of energy at the same time as the environmental worries that we have about some of these forms of generation. Certainly, conventional wisdom has come to the point where we look at coal as being dirty and old-fashioned, but probably still very attractive in so far as it is very flexible. One thing that we must never forget about coal-fired capacity in this country is that if everything else fails, a coal-fired power station can be got going in several hours. Hydro would be even better. I once had the opportunity to press the button in a small hydro complex in the Highlands. Within eight minutes, we could see signs of activity and generation. For practical purposes, it is essential to have large plant, preferably going at baseload. But we are conscious that, if we were to do that, it would make our CO2 emissions even more embarrassing than they are now. In seeking to fine-tune the ROCs mechanism, the Government should try to make distinctions, but there could be a number of unintended consequences. It is often the case that when a particular form of generation is promoted, people do not realise that there can be a cost. Certainly the former DTI did not understand the consequences of sponsoring and supporting through ROCs a series of wood-burning power stations. The impact was that a large part of the UK timber harvest was taken out using the subsidy, while the timber processing industry, a very important part of a number of local economies, was denied any timber. No one had thought about it. My worry is that in the quite understandable desire to make us less dependent on coal while ensuring at the same time that a bit of support remains for coal-fired stations, we may penalise the largest single generating capability in the country, which is Drax. It provides something like 7 per cent of the electricity generating capability in the UK. There are around six sets of 660 megawatts of generation, but not all of them operate at the same time, so it could be that a capped system takes account of the fact that coal-firing will not take place all the time. When it does, it is only in the limited percentage of the capacity in operation at any one time. But the fact is that Drax is a substantial freestanding power station—I use that word in the sense that it is not vertically integrated into the power networks. It is ironic that when privatisation and deregulation started up, there was a clear assumption that no individual company would own more than 15 per cent of the country’s generating capability. Today that percentage has been exceeded and set aside so far as I can see, but we still have one of the last independent generators of substantial character. As has already been said, because of its size and ability to purchase, Drax is an extremely efficient and well-equipped power station which has been well maintained over the years. But the ability of a station such as this to compete with the vertically integrated companies, which have other economies available to them in respect of their operations, means that it will always be at a comparative disadvantage at certain times. I should like to know why the Government are introducing the cap in this way. If Drax is scaremongering—some of us have been at this game long enough to know that effective lobbying will always contain an element of that, and as has been said in the past of paranoia, there is an element of persecution anyway—at this point I am willing to give the company the benefit of the doubt. There could well be a grain of truth here. I think it is incumbent on the Government to make it clear that if the cap is going to be imposed in the way suggested, there will be scope for further refinement of the cap, or the recognition that it would be both foolish and unwise to penalise the largest independent single-site generator in the country. It would disadvantage the station at a time when we recognise that coal will continue to make a contribution, and that this is as close as you can get to clean coal until many of the blue skies hopes that we discussed last week can be turned into reality. If the Government will not accept the amendment—I realise that I am not pushing it that hard—we would like assurances that if it is not accepted, while the door might be closed it has not been locked and bolted so far as any future review or reconsideration are concerned. It might only be a couple of winters before Ofgem is required to look at this again. We have to remember the glacial speed at which Ofgem usually moves when we are considering reviews of anything. It bends over backwards to consult everybody. So we are not going to be satisfied with a promise of a review in five years’ time in the knowledge that it may be seven years before it comes into play. This can be the renewable contribution to and an amelioration of what we all agree is an unacceptably dirty form of power generation at the present moment, but one that is going to be sadly necessary for a long time—and perhaps even more necessary if the much-vaunted generating gap comes along. This is a very important and useful amendment to get clarity on the Government’s objectives. I am not particularly concerned about some of the unrealistic targets that the EU has set, because at the end of the day very few countries will be able to meet these targets and it was in some respects a rush of blood that resulted in the Commission proposals being accepted in the first place. But that is not for this debate. I would be interested to hear the Ministers’ response to the points that I have raised and which some of my other colleagues have raised, too.