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Energy: Renewables (EUC Report)

rose to move, That this House takes note of the report of the European Union Committee on The EU’s Target for Renewable Energy: 20% by 2020 (27th Report, HL Paper 175). The noble Lord said: My Lords, on behalf of the Select Committee, in particular my colleagues on Sub-Committee B, which deals with the internal market, perhaps I may say how pleased we are that there has been such an early opportunity for debate, particularly as the report was published only on 24 October. There are special reasons for welcoming this early debate, which I will touch on a little later. The report was designed not only for your Lordships’ House but for the European Commission, and we very much hope that the Commission and the responsible directorate-general will respond in due course to our comments. Thanks to the encouragement of the chairman of the Select Committee, the noble Lord, Lord Grenfell—I shall touch very briefly on his impending retirement in a moment—we have taken the liberty of having the report’s conclusions and recommendations translated as a courtesy to the European Parliament and to the European Commission. On behalf of the Select Committee, I thank our excellent clerk, James Whittle. I am constantly heartened by the great quality of the clerks who service Select Committees in this House, and I echo the views of all your Lordships in commending the quality not only of our clerks but of the clerk to Sub-Committee B. I also thank Dr Robert Gross, our special adviser from Imperial College, for his expert advice. Our report was a voyage of discovery. We certainly have not completed our understanding of the complicated issues involved in energy conservation, and indeed in meeting such targets as greenhouse gas emissions and in improving the output of renewable energy, but at least we have learnt a great deal from our deliberations. I now pay tribute to the noble Lord, Lord Grenfell, who is at the European Parliament in Strasbourg today and cannot be with us. I also welcome the noble Lord, Lord Roper, to taking on the important role—I am not sure whether it has been publicly announced yet—of leading our deliberations in the future. The encouragement that the noble Lord, Lord Grenfell, has given to all the sub-committees, his wisdom and his calm advice are much appreciated, and we will miss him. Members on all sides of the House appreciate what a difficult job it is to be the Principal Deputy Chairman of Committees and to be responsible in particular for the European Union Select Committee. It is, in many ways, a thankless task and a full-time task. The House is very grateful to the noble Lord, Lord Davies of Oldham, the Treasury Minister, for standing in for the noble Lord, Lord Hunt of Kings Heath—who I know has to be in Brazil today as Minister of State for Energy—and for responding to this brief debate. I welcome the opportunity to have this debate, first, because next month the Council of Ministers in Brussels will be invited to agree the renewable energy targets for the European Union and individual targets for each country. Ministers in this country have assumed a target of 15 per cent of total energy consumption from renewable sources by 2020. That is the issue which our report seeks to address. It is a very narrow issue. It does not deal with greenhouse gas emissions or energy savings; it deals simply with the consequences of this specific target, which our Ministers will consider and, presumably, agree. The Department of Energy and Climate Change has now finished its consultation on renewable energies, and I understand that it will publish its conclusions some time in the spring, so it is apposite to put the views of your Lordships on to the record. I also understand that it is likely that the Economic Affairs Committee will publish early next week its conclusions on some of the financial implications of an increase in sourcing energy from renewables. I hope that our report and its report will not duplicate each other too much. Our report has not dealt with the very important issue of nuclear energy. Nor has it dealt with the 2020 target to reduce greenhouse gas emissions by 20 per cent and by significantly higher percentages in later years; so its scope was limited. One can be a strong proponent of nuclear energy. I speak as someone from the county of Suffolk, which already has Sizewell B and perhaps Sizewell C. Who knows, it may have Sizewell D in due course. I am a strong supporter of nuclear power, but I should point out to your Lordships, as we received evidence on this subject, that even if we were to complete the planning and construction of new nuclear power stations by the end of the next decade, we will largely be replacing what is already there because it will run out of operating capacity. The nuclear issue is extremely important but is not part of our inquiry. It is proposed that 15 per cent of total energy consumption in the UK should come from wind, sun and water, whether hydro or barrage. That is lower than the average for the European Union as a whole because some countries, for reasons of geography or political decision, have made greater strides in this field. So we asked ourselves a simple question: if the target is 15 per cent by 2020—12 years from now—what are the consequences in policy terms that will face the Government and, indeed, face the nation? By total energy consumption we are talking about that from electricity, combined heat and power and transport. On combined heat and power—an extremely important part of our total energy consumption—I pay tribute to the Combined Heat and Power Association for the very sensible and practical representations it has made. It has been very level headed and our committee certainly paid great attention to what it had to say. I remind your Lordships that only 2 per cent of our total energy consumption comes from renewables at the present time and we are facing a target of 15 per cent. That is a massive challenge facing not only the Government but ourselves as consumers. The committee concentrated on where the bulk of that contribution will come from in the next 12 years, and that is from electricity—specifically from wind power through both onshore and offshore wind turbines. However, I shall make one or two qualifications and comments about that concentration. We welcome the Government’s agreement in the recent Energy Bill debates to include a feed-in tariff, particularly for micro generation of energy. We think it is very sensible and can sit comfortably with the renewable obligation certificate regime which encourages the major distributors of electricity to purchase from renewable sources. We did not look in detail at biomass from agricultural crops but we welcome the announcement from Drax, the owner of the largest coal-fired power station in western Europe, which is reported as being willing to invest £2 billion in that new process. We think the target of sourcing 10 per cent of transport energy consumption from biofuel is a real challenge and must be the subject of a further inquiry. As to water power, we have just about run out of hydro capacity in this country. We are excited by the prospect of a barrage on the Severn but we do not believe that it will be complete by 2020, either the larger barrage of 22 kilometres in length, or the slightly shorter barrage closer to the second Severn crossing. It will be a subject of great consultation, discussion and, I am sure, argument, but because it did not fall, in our judgment, within the time period we were looking at, we do not comment in detail on it. The final qualification to our concentration on electricity and wind power is that we believe very strongly that the Government should encourage research into other technologies. We do not want wind power to crowd out other sources of renewable energy, and there are many. I mention only one—geothermal—which I am sure in the years and decades to come will be playing an important role. Before coming on to the contribution that wind power can make, our report states that it is obvious that if we reduce our total energy consumption through energy efficiency measures, the mountain we have to climb is reduced. Therefore we hope that the Government, in the spring of next year at the latest, will come forward with recommendations about improving the rate of energy efficiency and, therefore, a reduction in the total amount of energy we consume. If the Government’s decision is that it is to be 20 per cent, that clearly reduces the target of 15 per cent for renewables by perhaps up to a fifth. We should like a policy statement from the Government as soon as possible on that front. We accept that pursuing a target of 15 per cent for renewables will involve increased cost to the consumer. The Government have to be frank about this and the power generators have to explain the consequences. The charges for those who are emitting carbon under the carbon permit scheme—I understand that in the first round it raised about £50 million—are paid by the power generators and therefore paid by the consumers. The renewables obligation certificate, which is a scheme for encouraging the use of renewable sources of energy, is also paid for by the consumer. We have got to understand that, estimate what it is likely to cost and ensure that we protect the most vulnerable energy users in our society. I turn now to the issue of wind power. The noble Lord, Lord Broers, spoke a few days ago in your Lordships’ House and I understand his point in questioning the wisdom of pursuing offshore and onshore wind because of the problems of intermittency—that is, that when the wind does not blow you do not get any energy—and the energy producers having to plan for a certain base load coming from conventional coal and gas-fired power stations and nuclear. I shall deal with the intermittency point in a few moments. The noble Lord, Lord Oxburgh, and my noble friend Lord Dixon-Smith gave evidence. I pay tribute to my noble friend’s experience and wisdom on this subject and look forward to his comments in due course. The noble Lord, Lord Oxburgh, while being cautious about how much reliance should be placed on wind power because of the problems of intermittency, nevertheless welcomed further development of the technology. We are all aware of the objections from householders, conservationists and many other bodies about the construction onshore of wind turbines that disfigure the countryside, particularly in large, open rural spaces. My noble friend Lord Vinson has written to me reminding me of the problems of construction in Northumberland, and I am well aware of it in my own county of Suffolk. Our report states, however, that one of the consequences for the Government is that if onshore wind turbines are going to make a contribution, then one may have to go back to the Planning Bill, after it becomes an Act, and reduce the threshold size for the responsibility passing to the Infrastructure Planning Commission to perhaps 20 megawatt output. Otherwise, even with onshore wind farms, it will take longer and longer to obtain planning permission, for reasons we all understand. The committee believes that the real challenge and opportunity lie offshore. As regards planning, I commend what the Crown Estate have done in the third round, which is underway at the moment, of inviting bids for planning permission, essentially, offshore. It has gone about that in a positive way and I am looking forward to the outcome. It will certainly be much bigger than the second round. The committee is attracted to the technology of laying under the sea a grid cable, essentially—perhaps around the whole of the United Kingdom—so that wind farms can be constructed not only in the North Sea but in the western approaches off the Northern Isles. If all the power generated could be transmitted using direct current and then converted to alternating current in due course—I understand that there is Swedish technology to create that—that would deal with the intermittency problem because the wind has to be blowing somewhere around the British Isles at any one time. As to the grid, we welcome what Ofgem is doing in looking carefully at how it can encourage the grid to invest ahead of connection from not only renewable sources but conventional sources, and also making sure that the queuing system is a proper queue of those who have finance and planning rather than simply on the basis of those who have applied in the past. We think Ofgem is moving in the right direction. Finally, I am sure that my noble friend Lord James of Blackheath, whose experience dates back to the oil and gas industry 20 or 30 years ago, will have comments to make on the supply chain—the creation of the supply mechanism for new turbines, barges and drilling systems. However, I make the point that the Swedes, the Germans, the French and the Danes have already responded to the opportunities offshore in the United Kingdom and we should welcome their manufacturing companies into this country. Can offshore wind be a significant contributor by 2020? I believe so, and our committee believes there is a chance that there could be such a contribution so long as planning consents come on time, one hopes, by 2013; that turbines are ordered—there is certainly capacity around the world; and that we have the lifting barges to lift the turbines and place them into the seabed. Some industrialists are forecasting 25 gigawatts of capacity coming out of round 3 by 2020, and if you add what happened in round 2—6 gigawatts are likely to be in production by 2020—that is a large contribution to our target. I end by referring to the challenge. It is not only an organisational challenge for the Government but a challenge for us as consumers. In the Second World War Lord Beaverbrook was charged by the then Prime Minister, Winston Churchill, with increasing aircraft production, and he took substantial executive powers to get the programme delivered. We believe that something like that has to happen; there are too many government agencies involved, and some form of renewables commission should be in place in order to deliver the objectives that the Government may accept. Those, like my noble friend Lord James and myself, who were involved in the development of the oil and gas industry in the North Sea in the 1970s remember that industry responded quickly. Incentives were given, there was clear planning guidance and great success was achieved in a relatively short period of time. I look forward to the contributions of those who know a great deal more about this subject than I do. I beg to move. Moved, That that this House takes note of the report of the European Union Committee on The EU’s Target for Renewable Energy: 20% by 2020 (27th Report, HL Paper 175).—(Lord Freeman.)