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Renewables Obligation (Amendment) Order 2010

I apologise to my noble friend for misunderstanding him. I am assured that DECC is working rapidly to resolve the situation with biomass grandfathering and is reviewing its policy on the matter. It has formed two working groups consisting of investors and industry representatives who have been recommended by the trade associations to help to inform the review. We plan to announce the way forward later in March. My noble friend Lord Woolmer asked about integrated suppliers. Drax has suggested that licensed suppliers in company groups with generation arms may choose to buy from generation in their own groups and companies, but that argument is not yet proven because companies in groups are independent and must act in the best interests of their shareholders, so it may not work out like that. The noble Lord, Lord Stoddart, raised the question of biomass and energy crops. Grants are available to farmers in England to help establish energy crops, and from January 2010 they increased to 50 per cent of establishment costs. Grants are available to farmers and businesses to develop biomass supply chains. We are funding a £1.5 million, three-year research project to examine the feasibility of short-rotation forestry delivering greater volumes of biomass from the same land area as covered by current energy crops. Capital grants have been made available to help with the installation of small-scale heat boilers, community heating networks, combined heat and power plants and large-scale, dedicated biomass electricity generating plants. The noble Lord, Lord Teverson, asked what happens to micro-generators in the existing system. As I said in my opening speech, we take the view that FITs will be a more appropriate scheme than renewables obligation as far as concerns micro-generators. As of 1 April, micro-generators in technologies that will be supported through FITs will no longer be eligible for support through the RO scheme. Any micro-generators in these technologies already in the RO will transfer to FITs, and any new micro-generators that have commissioned since we published our proposals on 15 July 2009 will be able to join FITs from its start. The only micro-generators that will be unable to access either the RO or FITs will be those that have already been operating without any form of financial support. Allowing these generators access to FITs would not only increase the cost of the scheme, but would also not encourage additional generation, which is the primary objective of the policy. This simply does not represent value for money and we cannot justify the additional cost to consumers that the support would bring. The noble Lord also asked about jobs. We have the offshore and service skills, and the potential to develop a lead in this sector. As I said earlier, we are now the leaders in offshore wind. There is the potential here for up to 70,000 jobs by 2020. The Carbon Trust estimates that up to two-thirds of the domestic value chain could be supplied by the UK, as well as providing significant export potential. These are high-value jobs in manufacturing, research and development, engineering, installation, O and M and services. We intend to ensure that developers and manufacturers, working with the Crown Estate, will create these jobs in the UK. The noble Baroness, Lady Wilcox, raised the question of opening the RO to stations outside the UK. We are aware that concerns have been raised about spending United Kingdom consumers’ money on foreign investment, where the benefits stay overseas. I hope that I have summarised her point exactly. She and we are right to focus on value for money for United Kingdom consumers. However, we must also be open to the opportunities that the renewable energy directive presents, as there could be benefits to such projects. Analysis suggests that using joint projects—for example, electricity generated outside the UK—to meet a proportion of our target could offer cost savings, with a correspondingly reduced impact on United Kingdom consumer bills. This is something that we are looking into further as we take forward the work in this area. We set out in the RES that one principle according to which we will be open to projects under the flexibility mechanism will be if they offer genuine cost savings to the UK. But the responses that we received to those proposals in the RO consultation last summer raised a number of concerns that need to be addressed before any changes can be made. We need to take account of discussions at the European level on how trading would work, as well as the wider context of the issues such as grid interconnection and the route through to 2050, before any final decisions are taken, so we shall be consulting further on the matter. The noble Baroness also raised the question of marine energies. Again, she is right not to underestimate this potential. Indeed, the reason that I am speaking to the Committee today rather than my noble friend Lord Hunt of Kings Heath is that he has been visiting Strangford Loch in Northern Ireland, where Marine Current Turbines Ltd has in operation a working tidal stream technology, to announce the publication of the marine action plan. The plan considers the full range of challenges and opportunities facing the industry, and will ensure that we retain our position as the world leader in this industry. We have committed over the past decade some £160 million on a range of measures to support the wave and tidal industries, which accelerate the development and deployment of wave and tidal energy in the UK. Six of the most promising wave and tidal energy technologies, including Pelamis to which the noble Baroness referred, and Marine Current Turbines, have been chosen to receive a share of £22 million of the Government’s marine proving fund with the aim of securing large-scale deployment of marine energy technology by 2020. I am conscious that I have not answered all the points that have been made in the debate. I apologise for that, but, as I said at the beginning, I hope that I will be able to do so in writing.