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Energy Bill

I hear what my noble friend has said for the second time. I do not disavow the argument, but merely suggest that one has to look at this not just industry by industry, but process by process in terms of the effect that government procurement may have with regard to exports. However, I shall write to him if I have anything constructive to contribute to the important point he has made. Perhaps I may return to the amendment. The other issue it leaves open is the question of what size insulation would benefit from the feed-in tariff. That is a critical factor when we consider the question of investor confidence. Any move now that suggests replacing the renewables obligation with a feed-in tariff for large-scale renewable generation would occasion great uncertainty and would be likely to result in unrecoverable delays to new renewable projects coming on stream. We would have to draw a line on the definition of microgeneration in order to establish exactly how large ““micro”” actually is, lest we interfere with other aspects of government policy, which we expect to work well in reaching our targets. We have been told by business again and again that what it wants from the Government is a clear commitment that decisions taken will be implemented as quickly as possible, and through this commitment, investors can rely on a stable and consistent policy framework. We have made a commitment and that is why we would have great difficulty in accepting any significant departure from the renewable obligation strategy that we are pursuing. We have been given a clear steer by business that financial support for large-scale generation is not the main barrier to delivering more renewable energy. Its main concerns are related to the planning process and grid access. The Committee will appreciate how much work the Government are doing both in the Planning Bill and in the Transmission Access Review in order to deal with those problems. The proposed new clause seeks to compel designated energy suppliers to offer a regulated tariff. Even if this were to turn out to be the right approach, although the Government have some reservations, making it work in practice in the context of the UK electricity market would be a complex challenge. Perhaps I may illustrate the difference once again. Germany is held up as a model in this regard, but in that country the network operators, who can be obliged to pay, have geographical monopolies. It is easy to identify who should pay. In the United Kingdom’s market, we have no fixed geographical location for suppliers. If a householder wants a feed-in tariff, which supplier are they meant to approach? Would we need to give suppliers an incentive to make it easy for householders to receive the tariff? Could we effectively prevent suppliers discriminating against microgenerators through some form of additional regulation? If so, how? Or would it be better to place the obligation on someone other than suppliers? I pose those questions merely to indicate that the relationship between microgeneration and electricity supply is not an easy one, particularly against a background where the Government have a strategy to protect the broader issues. If even the greatest advocates of microgeneration look at the German illustration, they would recognise just how limited the contribution could be. One German Member of Parliament said that in 2007 consumers paid €1.4 billion for electricity from solar energy in Germany. However, solar photovoltaic contributes only 3 per cent—I repeat, 3 per cent—of all renewable energy. There is no reason why in introducing microgeneration we necessarily would fall into the German position and how they have paid for it. But it shows the danger of the cost-benefit analysis that the Committee needs to take seriously. He also said that one must not justify these high jobs because of the 35,000 jobs in the solar industry, which is an important consideration. It means a subsidy of around €153,000 per job. That is even higher than the German subsidy for coalmining, which is also notoriously high. I am merely emphasising to the Committee that this amendment raises some very serious and major issues for the Government. Serious and difficult technical questions need answering. To rush into legislation, which this amendment would require us to do, with a provision that must be implemented within a year, is obviously fraught with problems. In particular, having done more detailed analysis, the proposed amendment does not provide the full scope of provision that we would need to develop a working mechanism that addresses the concerns I have mentioned. I am not implying that we will take more than a year to reach our conclusions, but if we conclude that something is required then the legal basis on which we could implement a financial mechanism that works needs to be considered in a proper fashion. The development of a coherent renewables energy strategy with due consultation, surely, is the right way to do this. At this stage, my plea is to ask the Committee to let us look at all the options as part of the renewable energy strategy, which we will be obliged to deliver next year. Give us time to consider what needs to be done, and allow us to bring forward proposals against a background where, otherwise, all these reservations and difficulties that we have about this proposal would be pushed to one side and the Government would be obliged to act, as the amendment suggests, in one year.