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Renewables Obligation (Amendment) Order 2010

My Lords, the main purpose of this order is to increase the level of subsidy made available for new offshore wind generation. It also extends the system for an extra 10 years, from 2027 to 2037, while limiting the access to the system of individual subsidy recipients to 20 years. So much for the principle that no Government can bind their successors. The Explanatory Memorandum explains that this increase is being proposed following evidence that costs have risen. The subsidy available for offshore wind will rise from 1.5 to 2.5 ROCs per megawatt hour, while the subsidy for onshore wind will remain at one ROC per megawatt hour. Thereby, offshore wind is judged to require twice the level of subsidy as onshore wind. That does not seem to leave with much value, or even meaning, the boast that we frequently hear from Government, and which we heard from the Minister last Thursday: ""We have the best wind resource in Europe, and it makes no sense not to use it".—[Official Report, 11/3/10; col. GC 172.]" This justification for increasing the subsidy also casts doubt on something else the Minister said here on Thursday: ""We think that it is best for us to go down the low-carbon route as quickly as possible, and the cost-effectiveness will become clear over time. I should also say that the more turbines we build, ""the more the cost will reduce. The whole renewable obligations system is based on the expectation that costs will come down, and I am sure that that will happen".—[Official Report, 11/3/10; col. GC 175.]" I do not know what costs the Minister had in mind, but for the moment it is clear that the order is based on the belief that costs have risen, not fallen. On Thursday, the noble Lord confirmed that the Government have in mind 10,000 new turbines, delivering up to 25 gigawatts of electricity by 2020. Asked whether he was confident that this target could be reached, he answered an emphatic yes, in col. GC 173. I believe that more than half this total is expected to come from offshore wind—something in the order of 6,400 additional turbines. Perhaps the noble Lord would confirm that. But how realistic is it to expect that that target could be achieved? The rate is over 600 a year, or perhaps two or three or even five a day during the months when work at sea is possible. Given the competition for, and expense and shortage of, installation vessels to lay them, the target seems to be improbable in the highest degree. In Denmark a rate of two additional turbines a week was never exceeded. The first report of the Committee on Climate Change, which we debated in the House before Christmas, stated that 10 installation vessels were required for targets to be met, only two of which were operating currently in the United Kingdom, and that there was a three-year queue for new orders. We were also told that the new vessels cost between £50 million and £150 million each. Perhaps the Minister could tell us whether the position has improved. In any case, that is the target. It is an enormous target that is, in the Government’s view, worth imposing enormous additional expense on the electricity consumer. Page 22 of DECC’s summary attached to the order, under the third paragraph of the section on distributional impacts, states: ""The very approximate estimate of the consumer cost of both policies together taking account of the overlap"—" which I take to be the sum total of the effects of the order as a whole— ""is around £46 billion total from 2010 to 2030"." As I said on Thursday, that breathtaking sum is likely to push us into the pole position of having the most expensive electricity in Europe—although it will be difficult to beat Denmark, which has a considerable lead in the reckless pursuit of wind power and very expensive electricity as a result—and at the opposite end of the spectrum to France, whose reliance on nuclear power has given it some of the cheapest electricity in Europe. Incidentally, France also has one of the lowest per-capita carbon-emission figures in Europe, unlike Denmark and Germany which have two of the highest. Altogether, that is a recipe for sending our industry overseas. In the Explanatory Memorandum, we are not told in any detail how that figure of £46 billion is arrived at. I assume that it attempts to assess all the subsidy likely to be received in future years, until 2030, but not until 2037, by all offshore wind farms likely to be installed for the Government’s target to be met. Will the Minister confirm that, or state the assumptions behind the calculation? Are the consequent and necessary extensions to the national grid included or are they additional to that figure? If separate from that figure, what do they amount to and how and when will the consumer be asked to pay? The Minister explained that this order also makes provisions regarding the feed-in tariff scheme, which is also due to come in on 1 April, but this order is not responsible for bringing that scheme in. I therefore presume that its costs are not included in the estimates attached to the order. Last Tuesday, when we debated the nuclear national policy statement, the noble Lord, Lord Turnbull, referred to an article in the Guardian by George Monbiot in which that well known patron saint of the green movement came out against the FITs scheme and estimated its costs at some £8.5 billion, once again to be paid by the consumer. I do not know whether the Minister would like to comment on that estimate. I do not think his colleague did so last week. In one of his articles this month on the feed-in tariffs scheme, George Monbiot referred to a study recently produced by Ruhr University. It perhaps played a part in turning him against the scheme. Germany has had a feed-in tariffs system for 10 years or so that applies to large-scale wind power as well as to renewable microgeneration. Germany does not have a ROC system. The study shows that its subsidy regime has resulted in 6 per cent of the country's electricity being produced by wind power at a cumulative cost to the consumer of up to €20 billion, were the scheme to end tomorrow, and in 0.6 per cent of the country’s electricity being provided by solar power at a cumulative cost to the consumer, were the scheme to be cancelled tomorrow, of €53 billion. The study concludes with these words: ""Although Germany's promotion of renewable energy is commonly portrayed in the media as setting a ‘shining example of providing a harvest for the world’ (The Guardian 2007), we would instead regard the country’s experience as a cautionary tale of massively expensive environmental and energy policy that is devoid of economic and environmental benefits"." Just at the moment that Germany discovers all that wasted investment, we proceed to embark down the same path. Like the CCS levy, to be introduced in the Energy Bill, our feed-in tariffs scheme amounts to yet another large charge to be laid on the poor electricity consumer. I suggest that this order is asking the consumer and, through him, the country to pay more than either can bear for a solution that brings no measurable advantage to us or to the world at large. I hope that one day a Government will wake up, see sense and revoke it.