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Energy: Renewables (Economic Affairs Committee Report)

My Lords, I, too, thank the noble Lord, Lord Vallance, and members of the Select Committee on Economic Affairs for its report, The Economics of Renewable Energy. The Clerk and Professor Richard Green too should be congratulated on producing such an accessible report on a subject that is still shrouded in mystery for most people. I would commend it to anyone who wants a better understanding of the renewable energy choices we face, particularly as it is written in plain English and was encouraged no doubt by the long number of years that the noble Lord, Lord Vallance, spent in business. His speech was a pleasure to listen to. We on these Benches agree with the committee’s main recommendations to the Government to give a firm lead in low-carbon alternatives to renewable power generation, to emphasise and promote the opportunities for renewables, and to consider how to promote more focused research into new effective and economical ways to reduce carbon emissions. We agree to encourage research into energy storage with a view to mitigating the disadvantage of intermittency in the types of renewable generation likely to prevail in the United Kingdom. We also agree with reviewing the UK’s research effort and I agree most strongly with the noble Lord, Lord Layard, on this point. Overall, my party is more supportive of renewables than this report is, but we are also alive to the risks that are highlighted within it. We recently launched our low-carbon economy green paper, which sets out how we propose to rebuild the British economy on the back of the new high-tech green industries, intelligent energy generation and transport, and energy efficiency in our homes, schools and businesses. This also is a very good read. It is written in plain English and I commend it to your Lordships as an exciting read for the future, although my noble friend Lord Lawson, my distinguished friend, may be uncertain of that for himself. A lot of interesting questions have been posed from all sides of the House in the wake of this splendid report. My knowledgeable noble friend Lord Jenkin seems to come up with new ideas every time he talks about energy and climate change, which is quite amazing, and I have to say that even the noble Lord, Lord Teverson, has given me some interesting thoughts for which I thank him. I look forward to the Minister’s answers to the many questions that have been put to him, and obviously he will write if he cannot answer. However, I should like to add my voice to just a few points. According to BERR, the cost of meeting the new renewable energy target is estimated at £100 billion. If the current downturn only lasts until 2010, we will have a 10-year period in which to increase renewables from 5 per cent to 35 per cent, so my question is this: will the financing be found by the Government in the current climate? Unlike some sources of electricity generation such as wind, which have intermittency issues, there is no such problem with renewable heat. The report recommends that the Government should place at least as much emphasis on encouraging the use and development of renewable heat as on renewable electricity generation, so again I would be interested in the steps the Government’s department is taking to expand the renewable heat sector. The technical challenges and costs of back-up generation on a scale large enough to balance an electricity system with a high proportion of intermittent renewable generation are, as we have heard, very high. The committee has recommended that the Government should ensure that further work is carried out to clarify the costs and encourage the development of technical solutions to deal with intermittency. What research is currently being undertaken to look at these problems? The committee also hoped that the work of the Energy Technologies Institute will yield technological advances and lower costs. We join with the noble Lord, Lord Layard, in all of this. What is the Minister’s response to the suggestion that the Government should consider offering a substantial annual prize for the best contribution to renewable energy development? It seems such a fine idea. The committee was not persuaded that advances in renewables technology would be made in time to assist with the UK’s generating requirements up to 2020. How is the Minister’s department going to respond to the recommendation that the Government, as a matter of urgency, should encourage more research, development and demonstration in energy storage technologies? As the noble Lord, Lord Vallance, said, the committee’s prime objective in this report was to look at the Government’s wish to reduce carbon emissions, not whether or how far it would be necessary to do so. In this respect, the report has done its job. The Government set out their policy objectives in their 2006 Energy White Paper, which BERR states are to, "““put ourselves on a path to cutting CO2 emissions by some 60% by about 2050””." That has since been superseded by their commitment to an 80 per cent reduction target by 2050 in the Climate Change Act 2008. The Government have also set out their policy to maintain the reliability of energy suppliers, to promote competitive markets in the UK and beyond, thus helping to raise the rate of sustainable economic growth and improve our productivity. Finally, they seek to ensure that every home is adequately and affordably heated. These are fine targets, but I have to say that they set a high hurdle for the next Government to clear. We welcome the report.