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Energy Bill

moved Amendment No. 60: 60: After Clause 90, insert the following new Clause— ““Renewable heat incentives (1) The Secretary of State may make regulations— (a) establishing a scheme to facilitate and encourage renewable generation of heat, and (b) about the administration and financing of the scheme. (2) Regulations under this section may, in particular— (a) make provision for the Secretary of State or the Authority to make payments, or to require designated fossil fuel suppliers to make payments, in specified circumstances, to— (i) the owner of plant used or intended to be used for the renewable generation of heat, whether or not the owner is also operating or intending to operate the plant; (ii) a producer of biogas or biomethane; (iii) a producer of biofuel for generating heat; (b) make provision about the calculation of such payments; (c) make provision about the circumstances in which such payments may be recovered; (d) require designated fossil fuel suppliers to provide specified information to the Secretary of State or the Authority; (e) require the payment of a levy by designated fossil fuel suppliers to the Secretary of State or the Authority; (f) make provision about the calculation of the levy; (g) make provision for payments to fossil fuel suppliers in specified circumstances; (h) make provision about the enforcement of obligations imposed by or by virtue of the regulations (which may include a power for the Secretary of State or the Authority to impose financial penalties); (i) confer functions on the Secretary of State or the Authority, or both. (3) In this section— ““Authority”” means the Gas and Electricity Markets Authority; ““biofuel”” means liquid or gaseous fuel which is produced wholly from biomass; ““biogas”” means gas produced by the anaerobic conversion of organic matter; ““biomass”” means material, other than fossil fuel, which is, or is derived directly or indirectly from, plant matter, animal matter, fungi or algae; ““biomethane”” means biogas which is suitable for conveyance through pipes to premises in accordance with a licence under section 7 of the Gas Act 1986 (c. 44) (gas transporter licences); ““designated fossil fuel suppliers”” means— (a) if the regulations so provide, a specified class of fossil fuel suppliers, and (b) in any other case, all fossil fuel suppliers; ““fossil fuel”” means— (a) coal; (b) lignite; (c) natural gas (within the meaning of the Energy Act 1976 (c. 76)); (d) crude liquid petroleum; (e) petroleum products (within the meaning of that Act); (f) any substance produced directly or indirectly from a substance mentioned in paragraphs (a) to (e); ““fossil fuel supplier”” means a person who supplies fossil fuel to consumers for the purpose of generating heat; ““owner””, in relation to any plant which is the subject of a hire purchase agreement, a conditional sale agreement or any agreement of a similar nature, means the person in possession of the plant under that agreement; ““plant”” includes any equipment, apparatus or appliance; ““renewable generation of heat”” means the generation of heat by means of a source of energy or technology mentioned in subsection (4). (4) The sources of energy and technologies are— (a) biomass; (b) biofuels; (c) fuel cells; (d) water (including waves and tides); (e) solar power; (f) geothermal sources; (g) heat from air, water or the ground; (h) combined heat and power systems (but only if the system’s source of energy is a renewable source within the meaning given by section 32M of the Electricity Act 1989 (c. 29)). (5) Regulations may— (a) modify the list of sources of energy and technologies in subsection (4); (b) modify the definition of ““biogas”” or ““biomass”” in subsection (3). (6) Regulations may make provision, for the purposes of subsection (2)(a)(iii) and the definition of ““fossil fuel supplier””, specifying that particular activities do or do not constitute generating heat. (7) Before making regulations under this section which extend to Scotland, the Secretary of State must— (a) if the regulations contain any provision which would be within the legislative competence of the Scottish Parliament if it were contained in an Act of that Parliament, obtain the consent of the Scottish Ministers; (b) in any other case, consult the Scottish Ministers.”” The noble Lord said: My Lords, this is the final group. On Report, we promised to bring an amendment to incentivise renewable heat. This is it. We know that the current renewable heat sector is very small, and we accept that financial support is necessary. The powers in this clause allow the Secretary of State to establish a financial support mechanism for renewable heat: the renewable heat incentive. Noble Lords will know that this was a possible option in the Government’s consultation on the renewable energy strategy. The noble Lord, Lord Reay, is not here to take me to task for anticipating the outcome of the consultation by tabling this amendment, but, as with the FIT scheme, this is a strong response to the debate in both Houses. Under this initiative, owners of plant for the generation of renewable heat will be entitled to receive financial support. This could entail a set rate for each unit of renewable heat energy that they produce. Renewable heat opportunities will exist at all levels from large-scale industrial sites down to households; all scales will be eligible for support. In some cases—for example, producers of biogas and biomethane—the RHI power is structured to reward the production of those renewable fuels rather than the generation of renewable heat itself. To achieve the deployment of the large amounts of renewable heat required by 2020, it is expected that a contribution from a range of different renewable heat technologies will be needed. As the different technologies will require varying rates of support to attract investment, it is expected that the level of support provided by the RHI will be specific to a group of technologies. We intend to introduce a banded system similar to that brought forward in the context of the renewables obligation. Payments under the heat incentive will be funded by a levy on designated suppliers of fossil fuel for heat; and powers to require the payment of such a levy are included in the amendment. The levy will be placed on certain fossil fuel suppliers designated in secondary legislation which are supplying fossil fuel for the purpose of generating heat. The scheme will be administered by Ofgem. Necessarily, there is a great deal of flexibility in my amendment. Even more than in the FIT scheme, an awful lot of work is required in this area. Inevitably, we need flexibility, but I think that this meets the requirements of noble Lords and the other place and I commend it to the House. I beg to move. [Amendments Nos. 61 and 62, as amendments to Amendment No. 60, not moved.]