I beg to move,
That this House takes note of European Union document No. 5421/08 and Addenda 1-2, draft Directive on the promotion of the use of energy from renewable resources; notes the Government’s support for the European Commission’s proposal for increasing the renewable energy share of final EU energy consumption to 20 per cent, by 2020 as part of a balanced energy mix; further notes the importance of the Commission’s parallel proposals in the EU package for strengthening of the EU Emissions Trading Scheme, so as to provide the basis for a global carbon market and enable emission reductions to be made in the most cost-effective way; recognises the significant contribution that attainment of the renewable targets can make to the European Union’s efforts to tackle climate change, enhance geo-political security of supply and provide the EU with the opportunity to capitalise on significant business and innovation benefits; further recognises the ambitious nature of the proposed legally binding targets; and urges that the Directive should be revised to provide Member States with sufficient flexibility as to ensure that the overall EU and Member State renewables targets can be achieved in a cost-effective way.
Hon. Members will be aware of the clear context for this debate. We face two major energy policy challenges: tackling climate change by reducing greenhouse gas emissions, and ensuring our nation’s energy security. In response to those challenges, Heads of Government at the 2007 spring European Council agreed ambitious targets to deliver a 20 per cent. reduction in EU greenhouse gas emissions by 2020, increasing to 30 per cent. when there is an international climate agreement. They also agreed to ensure that 20 per cent. of total EU energy will come from renewable energy sources by 2020. The European Council also endorsed measures to support carbon capture and storage and to improve the functioning of the EU emissions trading scheme, which is the centrepiece of the EU’s carbon reduction policy.
The climate and energy package that the Commission published in January seeks to give legislative effect to those goals, and represents a landmark package that underpins our global objective of securing a comprehensive international agreement to tackle climate change. It is an important signal of the EU’s ambitions to shift to a low-carbon economy and to conclude successful climate negotiations at Poznan and Copenhagen. In line with the overall EU renewable energy target, the Commission has proposed individual, binding national targets on renewable energy, including a 10 per cent. minimum binding target for the use of renewables in transport, which is to be achieved by each member state. An overall 15 per cent. renewables target has been proposed for the UK, which compares with our current figure of less than 2 per cent.
Renewable energy is already an integral part of the UK’s energy strategy, and we are taking significant steps to drive up the level of renewable energy used domestically through a comprehensive raft of measures. The renewables obligation has been our primary instrument for incentivising renewable growth and has led to a near tripling of renewable electricity generation since its introduction in 2002. The planned reform of the renewables obligation alone will mean that generation will triple again by 2015. The reforms will provide increased flexibility so that different levels of support can be given to different technologies. That will allow more renewable generation from a wider range of technologies and will set us on a path to meet our more challenging 2020 target. Policies to address key constraints arising from planning and grid controls will also play an important role.
The Minister mentioned the changes in the renewables obligation. I have already raised with him my concerns about experimental schemes such as those in the Moray and Pentland firths. I very much fear that the change in the ROC—renewables obligation certificates—banding will impact seriously on their ability to operate in future. Is he considering that possibility? Does he propose to make any changes to ROCs to address those concerns?
Wave and tidal marine technologies have enormous potential and the hon. Gentleman, as an expert on this matter, knows that they are relatively new technologies. A number of first-class British companies have developed such technology, but there has been relatively little deployment or testing of appliances in the sea for any length of time. We have given considerable backing to the research and development of those technologies, and we have made available a fund to help to finance the deployment of such projects. Meanwhile, our reform of the renewables obligation will give two ROCs, to use the jargon, to marine technologies. I am confident that the UK Government are offering substantial support to that technology.
The point, which was raised during debates on the Energy Bill, is that although there are double-banded ROCs for those technologies, if they have previously received a grant from the UK Government, the EU or the Scottish Government, they have the choice of either repaying that grant or taking the double-banded ROC. The concern is that that will undermine their ability to develop.
Yes, they have a choice, and that must be a commercial decision. The Government are offering a significant amount of support through our research and development grants and the deployment fund, but I am always happy to talk those matters through with the hon. Gentleman, given his interest and expertise.
At the end of last year, we launched a strategic environmental assessment on a plan for up to 25 GW of new offshore wind development rights in UK waters. The plan could increase the potential for offshore wind energy generation by 2020 from 8 GW to 33 GW, which is enough power for 25 million homes—the equivalent of all UK homes. In case anyone who is listening is confused, let me add that I do not suggest that such renewable power would be the only means of providing electricity to our homes, as we need balance in our energy supply system, but that is the equivalent figure. We have also launched a feasibility study into a possible tidal power generation scheme on the River Severn—a project with the potential to provide 5 per cent. of the total UK electricity need.
We have recently introduced the renewable transport fuel obligation, requiring that an increasing proportion of our transport fuel should come from sustainable—that is the operative word—renewable sources. This year, we will overtake Denmark as the country with the highest operating offshore wind capacity in the world, and we are rated No. 1 as an investment location for offshore wind capacity by KPMG.
In relation to transport fuels, the Minister rightly says that the operative word is “sustainable”. How confident is he that rigorous assessment is made to ensure that that sustainability is being delivered?
On my hon. Friend’s point about the UK being a favourable investment location, what is his response to the story in the press at the beginning of last month that outlined that Mr. Sambhi, Centrica’s director of power, thought that there was a great deal of uncertainty about the future of offshore investment in the UK? Is the Minister familiar with that company’s views and what is his response to it?
I have not heard about that. I talk to Centrica executives and chief executives quite frequently, and I have not picked up that criticism. I shall study those comments, although I reject any such criticism because not only are we discussing today our commitment to meet our share of the 2020 target but we are in the process of reforming the renewables obligation through the Energy Bill. Also, as I have just said, an organisation such as KPMG rates us as the No. 1 investment location for offshore wind generation, so I do not accept that judgment from an employee of Centrica.
The Government are fully committed to meeting their fair share of the overall target, but that is not to underestimate its ambitious and challenging nature. Achieving the UK target will require a step change increase in the proportion of our energy generated from renewable energy resources over the next 12 years—almost a tenfold increase. We will therefore consult over the summer on the most cost-effective way of meeting the UK’s share, and will introduce a new renewable energy strategy next spring, after that consultation, that is consistent with our overall energy strategy, based on competitive markets.
I strongly welcome much of what my hon. Friend says. It is clear that we are starting from a low base, as many European countries produce a great deal more renewable energy than we do. The lesson to be learned seems to be that feed-in tariffs have been very successful in many countries. Is my hon. Friend considering the application of such tariffs?
It is accurate to say that we are starting from a low base, but it is worth understanding the reasons for that. The fact that we have been blessed with huge amounts of oil and gas from the North sea and the UK continental shelf is one of the reasons why, historically, we did not invest in renewables. It is also fair to point out that, when we look at some of the nations that already produce a significant percentage of renewable energy, such as Germany, we see that much of that energy comes from hydro resources. As my hon. Friend knows, it is worth studying those comparisons. She also asked about feed-in tariffs. Our renewable energy strategy will be published soon, and we will say something about such tariffs in that.
There is much to be said for consistency in macro-renewables. We hear a lot about microgeneration; in terms of macrogeneration, the renewables obligation is, in my judgment, a success story. Every year now, we are seeing momentum towards renewable energy. We would have to think long and hard before changing horses and adopting another mechanism. We could lose a couple of years if we did that, and we are faced with targets that are coming up quite soon—in 2020.
Let me just finish this paragraph.
However, I said during the Committee stage of the Energy Bill—I repeated the point on Report—that, on microgeneration based in our own dwellings and perhaps in community buildings, including schools and community halls, there might well be a case for our doing more. I will not rehearse all the things that we are doing, but I am proud of what we have done. We are the first Government to publish a microgeneration strategy, for example, but there might well be a case for doing more. We will be outlining options in the renewable energy strategy. As I hope hon. Members know, I am very committed to the development of renewables.
I am grateful for the “however”. May I reinforce the point that the renewables obligation has been a success, and that investment requires a sustainable, long-term framework? The renewables obligation and feed-in tariffs can work alongside each other. If there is an area of weakness in which the Government need to do more, it is around microgeneration.
That is an argument that I think I have accepted. Sometimes, the debate about feed-in tariffs needs disaggregating. Some people might argue for feed-in tariffs as an alternative, which would involve the scrapping of the renewables obligation. Many others, however, are essentially interested in how we can further incentivise microgeneration.
The macro story in this directive is that the EU as a whole has to achieve a 20 per cent. goal. If Britain were an average-performing country with an average target, we would be going for 20 per cent., but we are not. We have been asked to achieve only 15 per cent., and we appear to be quibbling about that, as far as I can see. Will the Minister clarify whether we are being asked for only 15 per cent. because we have been so hopeless as a result of starting from so far behind, or is it because we do not have much renewable potential? How does all that sit with his assertion that we are No. 1 in Europe for renewables potential?
As I said, when KPMG was looking at the investment climate, it made a judgment that we were No. 1.
In answer to the question from my hon. Friend the Member for North Ayrshire and Arran (Ms Clark), I was attempting to remind the House of the history of this matter. Looking at the different countries involved, we see that this has a lot to do with their natural resources. I have mentioned hydro, for example. It also has something to do with some countries not having our reserves of oil and gas. As I recall, the hon. Member for Northavon (Steve Webb) is something of an historian, and a fair-minded man. I would urge him to be fair-minded on this. Long before most of us were concerned about climate change, the oil and gas coming from the North sea from the 1970s onwards was surely a reason why, compared with some other European countries, we were not investing in renewables.
I am grateful to my hon. Friend for giving way. In my humble opinion, he is one of the most successful Energy Ministers that we have had. He has a couple of flaws, however: a regrettable affection for nuclear power, and a relaxed indifference to the impact of open-cast coal mining. Will he react to the points made by my hon. Friends the Members for Sherwood (Paddy Tipping) and for North Ayrshire and Arran (Ms Clark) about Germany? I am a member of the Select Committee on Environment, Food and Rural Affairs and, as part of our inquiry into the citizen’s contribution to climate change, we visited that country last year. There is a huge untapped well of potential support from citizens in this country, who need to be given sufficient encouragement. If a substantial feed-in tariff was at the root of what is happening in Germany, surely the Minister could be a little more positive about it here.
My hon. Friend is a great expert in this area, and he will know that the feed-in tariff system has been successful in Germany, but at some expense. At a time when energy affordability is the topic of the moment, along with the impact on our own constituents, I would ask him to look again at the considerable cost of the feed-in tariffs in Germany. I am now advised that they are propelling the German Government towards phasing down some of their financial support for that very expensive technology. Let us also remember that our objective is to bring on microgeneration, rather than to act as a fan club for one particular mechanism as opposed to another. We should all be open-minded about the best way of bringing on microgeneration.
In view of what the Minister has just said about Germany, and of what he said to me in a letter on this very issue in March, in advance of the Energy Bill going through Parliament, and of the EU report’s finding that now,
“as in 2005, well-adapted feed in tariff regimes are generally the most efficient and effective support schemes for promoting renewable electricity”,
will he share with us what work he has done on the competitive electricity market? That was one of the main reasons that he put forward earlier for not opting for feed-in tariffs.
In a letter to me on this subject, the Minister said:
“However, it is not yet clear how feed-in tariffs would work with the UK’s more competitive electricity market”.
In view of what he is now saying about domestic microgeneration, can we now make some progress on that issue? Will he tell me how he has dealt with the competitive electricity market and whether there is now a possibility of making real progress towards feed-in tariffs?
Clearly, the reason that I did not understand the words was that I had written them in a letter to my hon. Friend. Obviously, I did not have time to write a clearer letter, and I apologise to her for that. A lot will come out in the wash when we publish our renewable energy strategy, which will happen quite soon. If, after that, I need to clarify anything for my hon. Friend, I am sure that there will be an opportunity to do so.
I shall now turn, at last, to the proposal itself. Because the cost-effective renewable potential of each member state was not taken into account in the setting of the targets, and because of the target’s significant economic implications, it is imperative that member states are able to deliver their targets in a way that minimises the additional cost to consumers. I touched on this issue earlier when I said that affordability was very much the issue of the moment for many of our constituents.
It is also important that the EU should demonstrate to the wider world that it can achieve ambitious targets in a way that reinforces rather than hinders the competitiveness of our industry. Cost-efficiency is therefore essential to the credibility of the targets. In practice, this means that member states must have sufficient flexibility in meeting their targets, suited to national circumstances. The Government therefore support the principle of renewables trading between member states and derogations for exceptionally large projects that are not complete by 2020. I could be thinking of the odd barrage here or there. We welcome the indicative nature of the interim targets.
Biofuels were raised earlier. Sustainability is, of course—I wish to confirm this—our No. 1 priority. When the 10 per cent. target for use of renewables in transport was agreed at the 2007 spring European Council, at which it was acknowledged that the majority of the target would be met through use of biofuels, it was subject to two key conditions: it must be possible to meet the target sustainably and second-generation biofuels must become commercially available. Those conditions were reaffirmed in the 2008 spring Council conclusions and should be incorporated into the relevant articles of the renewable energy directive. Biofuel sustainability should also be required by the fuel quality directive.
The Government are pressing for robust sustainability criteria to be included in the directive to ensure that the biofuels targets will not have negative impacts on, for example, greenhouse gas emissions. That is hardly the result that we would want. Alongside that, the Secretary of State for Transport commissioned the Gallagher review to assess latest evidence of the indirect effects of biofuels. The review is due to report in June and will inform our position on the EU discussions. We will not agree to a target until we are convinced that adequate safeguards are in place to ensure that it can be met sustainably.
I am grateful to the Minister for giving way. This is obviously a controversial part of the directive because of the damage that could be done by biofuels to the environment and to food production. Is he happy that article 15 would explicitly prevent member states from having stricter sustainability rules than are provided for in the draft directive, which I think he is hinting are inadequate? They seem to me to be highly inadequate. Our existing domestic rules are stricter, so he would be switching strict national controls for laxer European ones by majority vote. That is obviously unsatisfactory. How does he see a way forward on that?
There is increasing concern not just in the UK but across the world and certainly across Europe about sustainability. I had hoped that what I have said would reassure the right hon. Gentleman that our voice in Europe will very much be on the side of sustainability. We are all concerned about the emerging evidence on producing biofuels instead of food crops. We are all aware that the rising price of some staple foods—rice, for example—is causing huge concern among the populations of many countries. I want to reassure him that we are pushing for sustainability. There will still be a significant role for biofuels and it is important that we do not throw the baby out with the bathwater on that issue, but sustainability is the crucial word.
I know that my hon. Friend recognises the distinction between biodiesel from oil seed rape and bioethanol from wheat or whatever, but may I ask him for an undertaking that the Government really will drive hard to insert the objectives that he has been setting out—the principles of sustainability—in the common agricultural policy? That is fundamental to our future direction in Europe and in the UK.
Yes, I can give my right hon. Friend that assurance and I am grateful to him for raising that matter.
The draft directive is being considered by the Energy Council and the European Parliament. The March European Council agreed that the package should be adopted before the European Parliament is dissolved for the 2009 elections to show EU commitment in the next round of international negotiations on a new climate change deal.
I sense that the Minister is drawing to a conclusion and I have been waiting to hear something that he has not said so far. He is right to express scepticism—it is implicit in the motion—about our ability to meet the targets implied by what the EU is asking of us, particularly on electricity generation, but he has said nothing about renewable heat. Is not that one of the really big gains that we could make as a society?
Microgeneration is important and feed-in tariffs are very interesting, but surely renewable heat is the big issue. How does it feed into the directive, if the Minister will excuse the pun, and has he anything to say on that important subject in the forthcoming statement on renewables?
Although I do not think it is relevant to the directive—I will take advice if I have that wrong—I want to reassure the hon. Gentleman, who is Chairman of the Select Committee on Business and Enterprise, that here in the UK we take the issue of heat very seriously. Looking back over more than one decade, if I may put it that way, one could accept that heat has been something of a weak link in energy policy. Despite some history in this country of interest in district heating and combined heat and power, we should acknowledge that.
The Office of Climate Change, which was established only a year or so back, looked at the issue of heat for one of its first projects—not just renewable heat and, for example, heat pumps, but the more general issue of how we can use the heat from power stations, for instance. The renewables side will be a feature of our renewable energy strategy.
In drawing my remarks to a conclusion, which I was about to do before the Chairman of the Select Committee intervened, may I say that we are absolutely committed to our share of the EU target? For different reasons, which most Members of the House—I cannot speak for all—would understand, different member states starting from different bases will have different targets. Our target will be 15 per cent. or thereabouts. It is a tremendous challenge, but one that the Government are committed to meeting.
First, I thank the Minister for arranging for the motion to be debated on the Floor of the House. That is an important contribution. This is a significant issue that many hon. Members will be keen to speak on.
The motion before us is really two motions. It begins with the normal, rather platitudinous statements that we have come to expect of such motions, saying how marvellous they are, but the key part is the last few lines, which contain the words
“urges that the Directive should be revised to provide Member States with sufficient flexibility as to ensure that the overall EU and Member State renewables targets can be achieved in a cost-effective way.”
We have had a couple of sentences from the Minister about flexibility, but not much about cost-effectiveness. I hope he returns to that issue.
There can be no doubt that the directive and the targets that it contains represent a significant challenge. In 1997, the EU set out the target that 12 per cent. of energy should come from renewables by 2010. It looks increasingly unlikely that that target will be met. The Minister is no stranger to the shortcomings of targets. The Government have had their own target that 10 per cent. of our electricity should come from renewables by 2010. Now they are saying that it may be only 8 per cent.
When it was clear that that target would not be met, it morphed into 20 per cent. from renewables by 2020. However, the Government’s latest answer to a parliamentary question suggested that the figure could be as low as 12 per cent. There is clearly an enormous amount of work to be done if we are to have the step change that the directive would require.
The EU targets are not just for electricity; they are for energy overall. That represents a massive challenge. We will be required to bring 10 times more renewable energy on stream in the next 12 years as compared with the past 12. That is just for electricity. It involves nearly seven times as much energy from renewable sources as has been achieved already.
It has been calculated by those outside the House that a 15 per cent. energy requirement for Britain translates to 40 per cent. of our electricity having to come from renewables. How do we get there? That is one of the big challenges that we need to address. Peak usage in the UK is about 62 GW, and 40 per cent. of that coming from renewables would involve producing about 25 GW of renewable electricity by 2020. Most of that would have to come from wind power, because the other technologies simply are not yet in a position to deliver an amount of such magnitude. With a typical load factor of 35 per cent. for wind, we might be looking at 70 GW of installed wind capacity by 2020 to achieve that. That is a massive target, and nothing indicates that we are remotely on course to achieve it.
I recognise the investment that has been made in energy in the past and the huge contribution that it represents, but we are talking of an investment in offshore wind of a similar magnitude to the investment in oil in the North sea over recent decades. Doing for offshore wind what has been done for oil presents a big challenge. I also recognise the massive contributions that British companies are making. I know that the Minister visited the subsea exhibition here earlier today, but I do not know whether he saw, as I did, products being developed by First Subsea, which are making a huge difference to the ease with which massive structures can be attached to the sea bed.
British companies are leading the world, but the challenge is formidable, and we need to know how the Minister thinks it will be met. What contributions does he think will be made by different technologies over the time in question, not in percentage terms but in terms of output? If the technology does not come from wind, where might it come from? Marine technology will make a massive contribution in years to come, but we cannot realistically expect it to do so by 2020. According to reports published this week, the cost of solar energy has fallen significantly, but we shall not be able to make the most of that unless we have financial systems to stimulate the technology and make its use possible.
I was encouraged by the Minister’s observation that there might be a case for doing more about feed-in tariffs, and I hope he will do more when the Energy Bill is debated in Committee in another place. Amendments will be tabled that will enable us to drive forward the agenda, and if no amendment on feed-in tariffs is tabled, both sides of the House will feel that a major opportunity has been missed. We also need to do more about microgeneration: it has huge potential, but without a system of funding through feed-in tariffs nothing will happen.
The Minister mentioned the Severn barrage. It is unlikely that it could be built by 2020. It has the advantage that, unlike most other forms of renewable energy, the power that it generates would be predictable, but it would probably not be much cheaper than wind. It would require a funding system all of its own, and it is not yet evident how that could be arranged. It would also raise huge environmental concerns. Some of those who have been involved in the technology believe that lagoons might be a better solution, and they might indeed be better for the environment, but they would undoubtedly be more expensive than the barrage. A couple of weeks ago, I visited La Rance in Brittany to see the largest working barrage in the world, built by the French 40 years ago. It is an incredibly impressive structure, which shows what could be done here but also highlights some of the challenges involved, including environmental challenges.
The problem is that the Government have signed up to a project without knowing how they will deliver it. Perhaps officials in the Department of Trade and Industry, as it was then, thought that the then Prime Minister, Tony Blair, would go to Brussels and sign up to a commitment for 20 per cent. of our electricity rather than for 20 per cent. of our energy. Their reaction was one of complete horror. Perhaps that poisoned challice was Tony Blair’s parting gift to his successor.
We need to know rather more about the cost. In the explanatory memorandum, the Minister says that his initial estimate of the direct cost to the United Kingdom of the 15 per cent. target is at least £5 billion a year, plus indirect costs in higher energy prices. What does he mean by “direct cost”? Does he mean the cost of what he has described as the enormous investment in renewable technology and its infrastructure? Can he confirm that although it may include the cost of connecting renewable electricity facilities to the national grid, according to a study by Pöyry Energy Consulting, which his Department commissioned, it does not include the cost of the investment in infrastructure required to meet the target more generally?
Does the direct cost include the so-called resource cost—the extra cost to the economy of using more expensive sources of energy than could otherwise be used? Can the Minister confirm that the study by Pöyry Energy Consulting suggests that the resource cost will be at least €5.1 billion a year up to 2020, or, in current prices, about £4 billion? Pöyry also says that if an effective market does not develop for the trading of renewable energy and the United Kingdom has to provide for all its own renewable energy needs, that resource cost will rise to €6.7 billion, or £5.3 billion, a year. It says that the lifetime cost to the United Kingdom of meeting the target could be as high as €93 billion. Those are huge figures. In his motion, the Minister talks of cost-effective ways of delivering his proposals. What has he in mind?
At a time when consumers are profoundly worried about rising costs, what will be the cost to them? How will the Minister carry people with him? At present, if people were asked whether their priority was secure energy, green energy or cheaper energy, they would probably say that they wanted the cheapest possible energy. The age of cheap energy has gone, but in terms of what will be relatively achievable in the future, cost is clearly a particularly important aspect. Has the Minister had discussions with the CBI, the Institute of Directors and other business groups about the impact of these costs on the economic competitiveness of the United Kingdom? We all agree that this is the direction in which we should move, but surely we should do so with our eyes open and be aware of the costs involved.
We have all seen what happened to the predictions of the DTI and the Department for Business, Enterprise and Regulatory Reform about energy prices. There is a massive difference between those predictions and where the prices have ended up. Certainly for the foreseeable future, by which I mean the year ahead, it is hard to see how energy prices could do other than rise. It is likely that in the first quarter of next year gas prices will be 50 per cent. higher than they are now. The forward market in energy across the board is very high. We also know that for every 1 per cent. of economic growth, energy demand goes up by 1.5 per cent. Given that the Chinese and Indian economies are still growing at a rate of at least 4, 5 or 6 per cent., the energy supply will be very tight, and will continue to be expensive for the foreseeable future.
As the Minister will know, the directive is covered by article 175(1) of the treaty establishing the European Community. Can he confirm that such measures are covered by qualified majority voting, meaning that the British Government would have no veto over the proposals? Would it not be more appropriate for the directive to be covered by article 175(2), which relates to environmental laws that significantly affect
“a Member State's choice between different energy sources and the general structure of its energy supply”,
and under which there would be no QMV? The Government would then be able to use its veto.
My hon. Friend is making a powerful point. He has already cited the unrealism of the targets, and the huge potential cost to our constituents. Does he think it wise for us to accept or negotiate a directive under majority voting that would render it beyond the democratic control of the House, and therefore our constituents, after the next election? Will he press very hard for a good answer to the question that he has just raised? There was an alternative—namely to found the measure on a different legal base subject to unanimity. Is that the policy that he would advocate?
I think there is a very strong case for unanimity to apply. That returns us to what the Minister said about biofuels. He said that unless the directive was adapted to take account of the Government’s concerns about biofuels, they would reject it. However, under QMV, they would not be able to reject it There is a strong case for something of such fundamental long-term importance to be endorsed by all member states individually.
It is still far from clear what will count towards the renewable energy target. The Minister said that there should be trading, about which Baroness Vadera has spoken elsewhere. It is interesting to note that that is Government policy. Does the Minister envisage a limit to how much can be traded, or will he argue that no limit should be imposed on the grounds that a limit would restrict fair and free trade?
The Minister said that the major projects that would not be completed by 2020 should be included, citing the Severn barrage. How far advanced would projects have to be in order to be included? What if a project were due to be completed in 2022 or 2025? What cut-off date has he in mind?
There are certainly people who have a vested interest in the types of technology that would be used and who say that the targets are achievable, but even they would say that the targets are very challenging. All the independent experts are saying that “very challenging” is an optimistic phrase. I find it difficult to see how we get from where we are today to where we need to be by 2020 when I look at the huge investment that will be required.
Baroness Vadera has also suggested that nuclear power and coal-fired power stations equipped with carbon sequestration and storage should be included. What is the Government’s position? Do they now consider both nuclear and carbon capture and storage to be renewable technologies—a difficult assumption to come to—or are they negotiating to have the definition of the directive broadened to be “low carbon” rather than “renewable”? I could see why other countries such as France or Poland would wish to encourage that, but we need to see what the Minister has in mind to try to take this forward.
The directive talks about the additional financial support that will be required for renewables and the Minister refers to this in the explanatory memorandum. Has he been able to establish what level of support will be required, how it would be delivered and whether he is completely satisfied that it can be given under EU rules on state aid? The directive would also require member states to give electricity from renewable sources priority access to the national grid. There is great merit in that idea if we want renewables to come forward, but can he confirm that he has made the nuclear companies aware of this? New build nuclear would require massive investment in the national grid, in part because the volume of electricity it will be generating would be so much greater than from existing power stations. Has he spoken to the nuclear industry to make it aware that its national grid needs would come behind those of renewable electricity facilities? What are the implications of that for a new fleet of nuclear power stations?
I accept that there is a need to look at the way in which the national grid operates. It does not make sense at the moment, where people are connected directly in the order in which they have applied. For example, a wind farm that does not have planning consent and will not get it for years will be connected before one that already has planning consent. That does not make sense. I believe strongly that there is a role in the debate for nuclear, but if we end up with a system in which investment in nuclear is put at risk because of that priority, that will need to be addressed. I do not think it is as straightforward as one or the other.
Does the hon. Gentleman note that article 14 of the draft directive states that member states should give priority connection to renewables? Does he support that part of the directive, disregarding its consequences, or is his support conditional and rather lukewarm?
My support is conditional. If we ended up with new investment in nuclear being put at risk by that one clause, that would give me profound concern. We have to look at the matter and I would be interested in the views of the nuclear industry. The future energy provision for this country is so finely balanced that to start putting in place artificial barriers would be counter-productive.
The Minister spoke at length about biofuels and the requirement that all member states get 10 per cent. of their transport energy from biofuels by 2020. I have referred to the fact that it would be better if this were done under a system of unanimity rather than by qualified majority voting. Clearly, attitudes to biofuels have been changing; perhaps we were overly positive a year ago and are now overly pessimistic, as we do not take sufficient account of the potential of second generation biofuels and cellulosic biofuels, allowing crops to be used for food and the remainder for fuel.
The directive rightly puts down many restrictions, but we need to know with clarity where the lines in the sand will be with regard to biofuels being included. This debate is bound to continue, especially in the light of the publication of a report by the scientific committee of the European Environment Agency which estimated that the amount of land required to meet the directive's 10 per cent. target is greater than the total volume of land available that could be used for bioenergy production without harming the environment of the EU. The scientific committee has gone further and called for the suspension of that 10 per cent. biofuels target. In the light of these concerns, does the Minister agree that there is a case for dealing with biofuels separately from this directive, so we can do so from a position of greater understanding about the full impact of their development?
Can the Minister tell us about the inclusion of biomass? At 350 MW, the Port Talbot renewable energy plant will be one of the largest in Europe. Although it is not renewable on a day-to-day basis, because the wood that it burns releases carbon, it produces renewable energy over the lifetime of the project, as the trees planted to replace those cut down for burning will absorb the carbon dioxide that the plant produces. Would such plants count towards our EU 2020 targets?
A lot of questions need to be answered. We are at times critical of the Government’s decision to hold another consultation because they simply do not know which way to turn. But there is a strong case for further consultation on this exercise and it is crucial that industry and other interest groups take part in the programme. I hope that the Minister will make sure that there is a real understanding of the urgency. He talked about a renewable energy strategy being produced next spring. To many of us that is leaving it rather late. We need to push the programme as far forward as quickly as we can. What we do not have is time on our side. Every month of delay makes these targets even more challenging to reach. I hope that the Minister will be able to give us reassurance on these points of concern.
I thank the Minister, if he was involved in the decision to debate this subject on the Floor of the House. I certainly thank the hon. Member for Wealden (Charles Hendry) for what was clearly a speech based on having read the directive and the report of the European Scrutiny Committee report of 27 February 2008. The Committee was so concerned about the issues contained in the directive and the dilemmas facing the Government that we thought it should be debated here.
There has been some diversion from the task before us, which is to look at the draft directive. The Minister has got it right in the motion, which states that the draft directive
“should be revised to provide Member States with sufficient flexibility as to ensure the overall EU and Member State renewables targets can be achieved in a cost-effective way.”
Little has been said about the cost. The Minister’s assessment to our Committee was that we would need an investment of £5 billion per annum between now and 2020 to reach the target of 15 per cent. The reality, as the hon. Member for Wealden said, was that we have fallen far short of our previous aspirations; they were aspirations and have not really been targets. The problem with the directive is that it gives the power to the Commission not just to set a target for 2020, but to review it every two years and to take action against states that do not reach their two-year targets.
Every country is expected to deliver a flowchart as well as a commitment to mandatory targets by 2020. The flowchart will be assessed every two years and the Commission can then use its powers. If it goes through by QMV, those powers can be punitive. The Commission can use the European Court of Justice to force countries to do what the Commission has decided they should do. Flexibility is desperately needed in relation to the directive because I do not believe that it is necessarily well founded.
Having viewed the EU for the past 10 years as a member of the Scrutiny Committee and as Chairman for the last couple of years, it is clear to me that Euro-fudges are driven by political alliances, often in the major states within Europe. It is clear that the alliance between the SPD and, it hopes, the Greens to get back into power in Germany has affected all energy policy in the past four or five years. The Green agenda—an anti-nuclear and pro-renewable agenda— is not necessarily based on what it should be based on: a carbon count. It should not be based on the form of generation, which should be sustainable and help security of supply, but on the basis of the carbon count of that type of energy. Yes, renewables might be shown to be a low-carbon form, but they are a very expensive low-carbon form and we have yet to deal with the major problems associated with it.
My hon. Friend the Minister referred to microgeneration. The point has been made that if grid access is challenged for a major base-load because of the problems associated with trying to get lots of microgeneration or small generation from wind farms, is that the right choice to make for the country and in sustainability terms? I believe that there was a motion before the European Parliament recently through which it rejected the biofuels proposal because of its effect on the sustainability of food production. I heard that a representative of the Commission’s directorate-general said that there will be enough spare land when the common agricultural policy is properly reformed to allow Europe to generate as much biofuel as is required to meet its targets. I do not know whether that is likely to be more than a wish on its part.
On why we are at such a low base, we should consider paragraph 1.9 of our 15th report. On targets—this is the UK’s own assessment—it said that we are
“at less than 2 per cent…and only expected to rise to 5 per cent. by 2020.”
This directive is asking for a massive increase in commitment to renewables, and it is not one that the UK can sustain, for a number of reasons that I have outlined. We are all dealing with one of those reasons at the moment: our constituents are fed up to the back teeth with the increase in fuel prices. Using biofuels will add to the cost of car fuel and to domestic fuel prices. We and the Government must take that into account—every Government in Europe has to take that into account, given the new range of costs of commodities such as oil and gas.
There is much to fight for in the directive, much that is good in it. However, on the question of unanimity versus qualified majority voting, raised by the hon. Gentleman, if I recall correctly, the Government’s opinion was that article 175(2) should be used in respect of renewable fuels, so unanimity would be required. That has been resisted by the Commission. The Government’s first task is to go back and argue the case. Our report points out that, following the 2007 spring European Council that approved the general outline of the White Paper and introduced the draft directive,
“the Commission made a political commitment to all Member States that it would attempt to agree the national targets by unanimity.”
The first thing that the Government must do is to ensure that these targets are agreed by unanimity. That means every country on that rather odd table appended to our report, which demands that we increase from 1.5 to 15 per cent., but which also demands that a country such as Sweden, which has a very good record, increases from 39.8 to 49 per cent. It might be more difficult for Sweden to achieve that than for us to achieve an increase from 1.5 to 15 per cent. It is as if the figures have been worked out on the back of the proverbial fag packet—on the basis of some rule of thumb made by a Commission directorate-general official. Unanimity is required first, and with unanimity comes the ability of our Government properly to negotiate and to get the flexibility that they are calling for in the motion, which I will support.
Like other hon. Members, I welcome the profile given to this important subject by it being debated on the Floor of the House. The frustration, of course, is that we get 90 minutes, whereas if we were debating it upstairs in Committee, we would get another hour on top. Given the detailed nature of many of the issues that we want to raise, it is frustrating that so few of us will be able to contribute in any detail.
It is important to say a word or two about the context. The point of the directive is presumably to reduce our greenhouse gas emissions from energy, heat and transport, yet we are debating this issue on a day when the Office for National Statistics has published greenhouse gas emission statistics for the country showing that in the past eight years, our emissions have barely changed. On hearing the Minister talk about all the triumphs of British policy—on hearing how we are No. 1 at this and that and how we will hit these very bold targets—one would not realise that in the past eight years, we have made no progress at all in reducing our emissions. It is indicative of the lack of drive and determination that we have seen to date that we are starting now from where we are.
It is extraordinary for the Minister to say that the reason we are worst in Europe on renewables except for Malta and Luxembourg is that we have had all this oil, and so we were just going to use it and not bother too much about renewables. The former Prime Minister, Tony Blair, who signed last year’s agreement on these renewables targets, is the same Prime Minister who 10 years earlier signed the Kyoto treaty. The Government were only a few months into power when they signed up to the Kyoto targets, yet 10 years later, we are still virtually bottom in Europe on renewables. Is the fact that we had oil somehow an excuse for our lamentable failure? That is what the Minister seemed to be implying—that we were not under any pressure because we had some alternatives, so we did not bother much with renewables. That is a shocking thing for a Minister for Energy to say.
I have to say that I do not hold this Minister personally responsible. He was not the one trying to solve the energy crisis—he was solving the pensions crisis at the time. We absolve him of having failed to solve the energy crisis because he was dealing with other big problems that have now been resolved.
The hon. Gentleman has provoked me. He is absolutely right: together with friends, we tackled the pension issue—with a little bit of scrutiny from him from time to time. However, the serious point is that I was going for a broader historical sweep, saying that in the 1970s—I was not talking about the past 10 years—we suddenly discovered this huge resource of oil and gas in our own backyard in the North sea, whereas other countries had to look at alternatives because they did not have that resource.
I am slightly baffled by this. The argument for why, in 2005, on these figures, we were the worst in Europe seems to be that in the 1970s we found lots of oil. We signed up to climate change obligations in 1997, at the start of this Government’s term of office, and for the best part of 10 years on we were bottom of the league. Even if we achieve the goals in this directive, we will still be 18th in Europe. Even if we achieve the targets that everyone is saying are bold and very demanding, we will “surge” to 18th in Europe. Is that not an indication of the paucity of the Government’s achievements so far?
On the one hand, we are trying to cut our carbon emissions through the renewable strategy in the directive; on the other, we are seeing airport expansion and new coal-fired power plants. There is a lack of connectedness in this whole policy, which, again, is segmented into different Departments, none of which has overarching responsibility for the environment. The root cause of the failure of the Government’s climate change policy is that no one in the Government with a very big stick is in charge of it. Whenever I do talks on climate change and the environment, I always ask audiences to name the Environment Secretary, and virtually none of them can. I mean no disrespect to the Environment Secretary; rather, that is indicative of the status of the environment within the Government. All the big decisions on the environment—be they on energy, airports, transport, housing insulation, green taxes—are all taken by somebody else. That is the biggest problem.
On the 15 per cent. target for the UK, the Minister said that we would do our fair share, but of course, we are not. We are doing below our fair share because we failed so much in the past and we start from so far behind. The hon. Member for Linlithgow and East Falkirk (Michael Connarty) suggested that these numbers are made up on the back of a fag packet. The directive indicates that one of the bases for the numbers we have signed up to is where we started from, which is a position of great weakness due to the failure of Government policy to date. One of the reasons our percentage is so low is that we have such a long way to go. It was extraordinary to hear the Minister say in his introduction that Britain is rated No. 1 by KPMG for offshore wind potential. That implies that we should have a really big target, because we have fantastic renewable potential. Actually, we have a below-average target because even with tremendous offshore wind and tidal power potential, we still cannot credibly get to more than 15 per cent., given how we have done. So the 15 per cent. figure—the fact that we cannot do any better than this—should be a source of national embarrassment, and even that looks pretty difficult to attain.
One issue is not clear to me. The Minister talked about 15 per cent. and then said, “or thereabouts”. In responding to the debate, perhaps he can clarify whether the British Government are going to attempt to water down that target. The motion refers to “flexibility” on achieving that, and in the evidence that he has given on this directive, he talked about flexibility on the trajectory. He will know the directive contains a trajectory—an indicative trajectory—in annex 1B, which suggests that a quarter of the progress must be made by 2011-12 and that 65 per cent. of the progress must be made by 2017-18. I find that alarming, because it means that two years short of the deadline we will need to have made only two thirds of the progress. I hope that the Minister will correct me if my understanding is wrong.
I understand the point that there is a lag in these things and that they take time to come on stream, but that is an incredibly end-loaded approach. I think that the Minister’s position is that he wants even more end-loading. Let us reflect on what the hon. Member for Linlithgow and East Falkirk just said. He seemed to say that we do not want penalties for really slow progress in the early years, because we will have this great surge in the end. My worry is that the British Government will say, “Tomorrow, tomorrow, tomorrow”, but tomorrow may never come. Unlike the hon. Member for Linlithgow and East Falkirk, I think that the threat of imposing serious penalties on the British Government so that we can make steady progress as we go is a very good thing. It is entirely welcome because we know what the British Government would do without someone taking a big stick to them.
The Department for Business, Enterprise and Regulatory Reform has responded to the directive, producing a written ministerial statement on 23 January. It was totally delusional. It is baffling to realise which country is being referred to when the Department describes the situation. I have not got time to go through it all in depth, but paragraph 13 states that we
“are aggressively implementing our micro-generation strategy.”
Which microgeneration strategy are the Government aggressively implementing? I have not noticed it. They are opposing the only microgeneration strategy in town—feed-in tariffs—for now, because they are going to consult on it in the summer. They will probably eventually give in on that. Where is the aggressive prosecution of the strategy?
The whole document is full of delusion about the position that we have reached. Paragraph 14 states that
“we will need to do even more.”
It then discusses heat, a crucial subject about which we have had a brief discussion. There was nothing on renewable heat in the Energy Bill. Why? Guess what? It was because we will need to do even more. We will need to incentivise renewable heat, which is why we are told that
“we will shortly be issuing a call for evidence”.
When are the Government going to get on with it? A legislative opportunity is going through the House at the moment that would allow any necessary legislative steps to be taken on renewable heat, yet there is to be a call for papers and perhaps a conference. Perhaps I could attend that, to listen and debate. Perhaps there could be a further consultation draft.
I shall tell the hon. Gentleman where he can help me. When I receive representations from Liberal Democrat MPs and Liberal councils trying to block the development of renewable projects, as frequently happens, will he come with me to those meetings to urge his colleagues to walk the walk, rather than just talk the talk?
I would be interested to receive specific examples. I was talking about the topic of renewable heat, and I am not aware of any Liberal Democrat council in the country that is—[Interruption.] The Minister has swapped to wind farms; I am talking about heat and his answer is wind farms. Will he deal with the specific point I am making about the failure to address renewable heat? We are also failing on renewable transport, and the renewable energy policy is already years behind schedule—that is a pretty poor combination.
We could do with answers on a couple of other specific issues. I would be interested to learn what projections the Minister has made of the contribution of renewables and the contribution of Scotland to his overall totals. To what extent does his Department examine particular sites, areas or nations in the United Kingdom? To what extent will the Government in Scotland’s attitude to, for example, onshore wind, be a barrier to the Government achieving the targets in this directive? Has he examined that matter?
We have heard about priority grid access, which is mentioned in the directive.
I hope that the hon. Gentleman will forgive me if I do not. He has intervened on a number of occasions, and I want to give him a chance to speak.
The issue of priority grid access came up during our debates in the Energy Public Bill Committee but nothing happened, as far as I can tell. The directive refers to it, implying that there would be priority grid access, but it is not clear to me whether or not there is, or what the Government’s position is.
My hon. Friend the Member for West Aberdeenshire and Kincardine (Sir Robert Smith) referred to the renewable transport fuel obligation, and the Minister said something rather strange. He said that we must not have a target unless we are sure about sustainability. I thought we already had a target and that it had come in a couple of months ago. I thought that we now had a 5 per cent. obligation on biofuels, yet in only a couple of months’ time the Government’s review will assess the sustainability issue. Are we obliging transport operators to use a percentage of renewable fuels without having robust certification in place now? In other words, are we doing damage now by introducing an obligation when we are not yet satisfied that we have reliable certification? That is my understanding of where we are at, and that concerns me a great deal.
It would have been a great joy to have gone through the entire ministerial written statement pointing out the absurdities and the complacency, yet it would also have been a great sadness, because these are important issues. We want these goals to be achieved, because we think that they are a legitimate priority for this Government. That is why we will support this directive tonight, but we urge the Government not, as is hinted at in the motion, to try to water it down in the negotiations. We urge them not to try to have opt-outs, get-outs and British exemptions. Would it not be great if, for once, Britain was leading the way, rather than having to plead for special terms because we have failed so much in the past?
I strongly welcome the fact that we are getting the opportunity to debate this draft directive on the Floor of the House because, as has already been made clear, achieving the targets will have substantial implications for many areas of policy. I welcome our focusing clearly on the document before us, which highlights the fact that previous attempts to meet renewables targets have not been very successful. In 1997, a directive setting a non-mandatory target of 12 per cent. by 2010 was not successful, and, as has been said by many hon. Gentlemen, it will be very difficult for us to meet the targets being set by the European Union.
Although it will be very difficult to meet, it is very important that we sign up to a mandatory target on renewables of 15 per cent. As has been said, we are starting at a very low base. There are many reasons for that, but part of the cause is that we have not taken earlier challenges as seriously as we should have done. We need to accelerate our approach in many areas of policy if we are to meet the targets being set by the directive.
The debate on these issues often focuses strongly on electricity, which is, of course, an extremely important factor. However, it is only one of the areas that we need to examine, and it is clear that if we are to meet the directive’s targets, the renewables sector will have to be substantially developed. I welcome what the Government have done on renewables obligation certificates—ROCs—particularly the provisions of the Energy Bill. They introduce enhanced ROCs in relation to other forms of renewable energy.
We need to go further than that and we need to examine what has worked elsewhere in Europe, so I urge the Government to re-examine the issue of feed-in tariffs, particularly in relation to micro-generation. However, I am not of the view that we should move away from ROCs, because they have been exceptionally successful in encouraging the private sector to invest in research and development and in the expansion of renewables that we so desperately need.
The table provided to us from the European Scrutiny’s 15th report of Session 2007-08 highlights the situation in which we find ourselves; the UK is starting from a very low base. Only 1.3 per cent of our share of energy came from renewable sources in 2005, which compared with Sweden’s 39.8 per cent., Portugal’s 20.5 per cent., Finland’s 28.5 per cent., and the Czech Republic’s 6.1 per cent. We are very low down the table. I believe that only Luxembourg with 0.9 per cent. and Malta, a small island without a history on renewables, came below the UK.
We need to see significant changes in policy if we are to achieve the kind of development that we need. Like many hon. Members here tonight, I have a constituency interest, in that a range of planning applications is pending, including for wind farms, which provide part of the solution, but only a very small part. We need to look at all the other forms of renewable energy that are available, and ensure that we enable speedy research and get the financial resources to put into development. We do not know for sure which forms of renewable energy we will rely on in the future, so we have to put a financial regime in place that encourages development of all the various forms.
We also need to recognise that we are not talking only about electricity generation. To meet our carbon targets, we need to ensure that we are more effective in our use of the electricity that we produce. That goes beyond this directive, but will be essential in ensuring that we meet our targets. Transport will also have a major role to play, but that is an issue for another day.
What is important in this debate is not our discussion today about the exact method used to meet these targets, but whether we should have the targets at all. If we sign up to the directive and the potentially legally mandatory targets, action could be taken against us if we do not meet them. I support the Government’s courageous position, in Europe and domestically, on the Climate Change Bill, which contains mandatory targets for carbon reduction. This directive fits well with our domestic policy, and for that reason I strongly support the Government’s position on the directive.
I was interested in the animated discussion with the Minister about oil reserves. History is being rewritten, but if Scotland had been given its oil all those years ago, the Minister would have been saved a lot of angst.
The hon. Member for Northavon (Steve Webb) made a comment about the Scottish Government’s record on wind power, although he would not take an intervention on it. The present Scottish Government have granted proportionally more wind farms in their first year than the Government of which the hon. Gentleman’s party was a member.
There is much that is good about the document and I am generally supportive of it. I was especially interested in what it says about transmission charges— an old hobby-horse of mine that I am sure the Minister will be pleased to hear about again—as they relate to renewable energy in Scotland. I will not go through all that in great detail again as the Minister has listened to the arguments on many occasions about how renewable generation in Scotland is handicapped by the transmission charge regime introduced by Ofgem.
Article 14 of the document says that renewable sources should be given access to the system and that the rules should be
“objective, transparent and non-discriminatory…taking particular account of all the costs and benefits associated with the connection”.
I hope that the Minister will explain how that will fit in with the present Ofgem regime, which is clearly discriminatory against renewable producers—or indeed any producers in a remote area. The document may mean that the UK Government have to look again at the transmission regime to ensure that it is non-discriminatory.
I agree with the Minister that we should not throw the baby out with the bath water when it comes to biofuels, but the document is not clear about the position of imported biofuels. At the moment, much of the biofuel used in the European Union is imported, mainly from the US, which—given that it has not signed up to previous agreements, such as Kyoto—is unlikely to sign up to any agreement on biofuels soon, pending a possible change in the Administration. Massive grants are given to farmers in the American mid-west for the production of biofuels, and their withdrawal could lead to a farming crisis there.
Will the targets for biofuels in the document be purely for the production of biofuels within the EU, or will moves be made against the importation of biofuels from outside that are not deemed to be sustainable? How would that fit in with World Trade Organisation rules, because that is a potential problem?
In an intervention, I raised the issue of renewables obligation certificates. I apologise to the Minister because I said that only tide and wave would be affected, but deep-water offshore wind will also be affected. I have written to the Minister about this before. He is right to say that grants are given to experimental schemes, but the difficulty is that the new system for ROCs will not allow such schemes to be developed and then to receive the double-banded ROCs for the future generation of electricity. Under the Energy Bill, the companies will have to choose between repaying the grant that they have already received or taking the double ROCs. The problem is that the companies need the grant money to get the projects up and running, but to generate the electricity they will also need the new ROC system.
The difficulty is that companies may get the grant money but then be unable to generate electricity. If they take the double-banded ROCs, they will have to pay back the grant money that got them up and running in the first place. That is a serious problem of great concern to developers, especially of the Beatrice scheme in the Moray firth and wave and tidal power schemes in the Pentland firth. The hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) has also contacted the Minister about the latter schemes, and the issue may be debated in the other place when the Energy Bill is debated there.
I urge the Minister to consider these representations. As other hon. Members have pointed out, these targets are very strict and will be difficult to meet. We should all recognise that, but unless we get the system right we have no chance of meeting them. The hon. Member for North Ayrshire and Arran (Ms Clark) is right to say that wind power is only one part of the picture. We all recognise that, and we must have a suite of different renewables if we are to have any chance of meeting the targets.
The one Post-it note that I want to mention in this contribution, which will necessarily be very short, is attached to the memorandum of explanation from the Department for Environment, Food and Rural Affairs and its reference to the fact that the EU has decided that if there is an international agreement on climate change, the target for reducing carbon emissions will rise from 20 per cent. by 2020 to 30 per cent. by 2020. I hope that that agreement will be signed in Copenhagen next year, which suggests that the targets for renewable energy’s contribution to reducing our CO2 emissions may have to be revised in little more than 18 months’ time if they are to make a contribution to the increased target.
If that is the case, I hope that my hon. Friend the Minister will put a Post-it note in his red box to ask his civil servants to start thinking about plan B. They have clearly not paid as serious attention as one might hope to plan A, and we have heard that under the current plans we will struggle to get to a 5 per cent. renewable energy contribution by 2020. Going to 15 per cent. will be even tougher. I do not think that the way to approach that is to say that we will introduce more flexible mechanisms, seek renewable trading certificates and so on. We need to start investing seriously in our economy, as the Germans and Danes have done. There are problems in the delivery of wind turbines because Siemens in Germany and Vestas in Denmark simply cannot keep up with demand. Why do we not have our own wind turbine industry on a massive scale, employing hundreds of thousands of people, as is the case in Germany with the renewables industry?
We can do it if we want to. I disagree with my hon. Friend the Member for Linlithgow and East Falkirk (Michael Connarty), who said that we should not have punitive measures. We need those punitive measures to drive along the aspirations that we have not seriously tried to fulfil in the past.
I shall be exceptionally brief, and I thank the Minister for his indulgence. I have three quick points. First, will he clarify whether these will be binding national targets, as the Commission makes it clear that they will be? What will be the sanctions if they are breached, or if we fail to meet them? Can we predict what action the European Court of Justice is likely to take if we fail to meet those targets?
Secondly, may I press the Minister again on renewable heat? Paragraph 20 of the preamble talks about exempting those in households from
“guarantees of origin for heating or cooling”.
In my view, the big gains available to the UK in terms of renewable energy come from renewable domestic heat. They cannot be measured for target purposes, which calls the targets into question, but the big gains in climate change and energy security and supply will come from such things as solar thermal power for water heating.
Thirdly, in his explanatory memorandum, on page 355 of the documents, the Minister stated:
“Achieving the level of ambition implied by the proposed UK target of 15 per cent. will require significant increases in the levels of electricity derived from renewable energy sources by 2020.”
When he last came before the Select Committee that I chair, he gave some interesting figures for what he thinks the increases in electricity generation will be. Will he confirm that 35 or 40 per cent. will be required? I repeat the question that I put earlier to my hon. Friend the Member for Wealden (Charles Hendry): is this target achievable? Are we signing up to something that we know, in our heart of hearts, we cannot reach?
Yes, it is an achievable target. As my hon. Friend the Member for North Ayrshire and Arran (Ms Clark) said, we are setting ourselves interim targets for climate change and carbon reductions through the Climate Change Bill. I thought that that was a very neat answer to the Liberal Democrat spokesman, the hon. Member for Northavon (Steve Webb), who rather implied that we were not setting ourselves interim targets. After all, the overall focus has to be on carbon reduction, and renewables are an important means to that end.
May I clarify a point, as I may have misled the House—
No. I may have misled the House when I started talking about combined heat and power. Let me confirm that the target is for renewable energy, including heat, electricity and transport. I did not mean to be rude to the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith), but I am conscious that I have only about five minutes left. I ask him to forgive me.
There are too many pessimists in the House on these matters. Let me give hon. Members some figures to show where we are with onshore and offshore wind provision. We now have about 2.5 GW of wind power in operation, 1.3 GW being built, 5.3 GW consented and 9.69 GW in planning. Those are quite formidable figures and I do not think it helps anyone to talk down this emerging British industry. The hon. Member for Wealden (Charles Hendry) quoted a figure of 70 GW of wind power. We will consult on that and look at estimates, but the advice that I have received is that that figure is likely to be a significant overestimate.
We have discussed European comparisons, as we do on these occasions. Some hon. Members should look carefully at this. Renewable energy accounted for 8.4 per cent. of all EU energy in 2005, which was an increase of just 1.5 per cent. of the share 10 years earlier. That suggests that we are not in a situation where some countries are moving ahead at a rapid speed during the 10-year period that the hon. Member for Northavon focused on. The increase was just 1.5 per cent. That suggests to me that the challenge is for all member states. When we look across the piece at the huge concentrations of renewable energy, we find that they are often in places where there are hydro resources. Hon. Members need just to look at the figures and they will see that that is true. Others include biomass resources, including the use of wood stoves. There is a challenge for the whole industry.
I was asked about costs. The renewable energy strategy will say more, but our initial research suggests that the cost to the UK of meeting a 15 per cent. target could be about £5 billion a year by 2020. We have to be mindful of the costs at a time when energy costs are high. They will fluctuate, but the days of low-cost energy are over. We therefore need to be mindful of a cost-effective way of meeting our targets.
I quite understand the points that have been raised about the transmission access review. It is important to developers to get a suitable connection when they are ready. I do not think that they are so interested in getting a preference. Indeed, in terms of balancing the grid as we go forward with more renewables, we simply could not give all preference to renewables. We need to look at the issues about balance very carefully.
I was asked whether article 15 would not permit us to have stricter sustainability standards than prescribed in the directive. We will press for the directive to include sustainability standards that cover the same range of issues as our renewable transport fuel obligation. Subject to the directive’s being amended to include an acceptable set of sustainability criteria, we support the proposal that there should be the same criteria throughout the EU, as that will help to promote an efficient internal market for biofuels.
May I clarify that we have never said that CCS is a renewable? Of course it is not. However, at an early stage we tried to argue to the Commission that if the European Union is serious about 12 CCS projects across Europe, we need to have some ideas about where they will come from. We in the UK are moving forward with a major demonstration project, but we are worried about the incentives to bring other CCS projects forward and we will continue to press that point.
We think that trading schemes will play a part, but we and other member states agree that that should not be at the expense of national support systems for renewables. We need to have regard, as I have emphasised, to cost-effectiveness, and trading could play a part in all this.
We have had a useful and quite detailed debate in the time available. I will not have been able to pick up on all the points that have been raised. I am prepared to write to hon. Members—
We think that this will probably be settled by qualified majority voting. I think that that is the reality of what is likely to happen. This is a challenge for the whole of Europe, however, and we must work with Europe on it. I want to emphasise that the UK Government are committed to our share of 15 per cent. or thereabouts, and we will do our utmost to hit that target. I am confident that we will.
Question put and agreed to.
That this House takes note of European Union document No. 5421/08 and Addenda 1-2, draft Directive on the promotion of the use of energy from renewable resources; notes the Government’s support for the European Commission’s proposal for increasing the renewable energy share of final EU energy consumption to 20 per cent. by 2020 as part of a balanced energy mix; further notes the importance of the Commission’s parallel proposals in the EU package for strengthening of the EU Emissions Trading Scheme, so as to provide the basis for a global carbon market and enable emission reductions to be made in the most cost-effective way; recognises the significant contribution that attainment of the renewable targets can make to the European Union’s efforts to tackle climate change, enhance geo-political security of supply and provide the EU with the opportunity to capitalise on significant business and innovation benefits; further recognises the ambitious nature of the proposed legally binding targets; and urges that the Directive should be revised to provide Member States with sufficient flexibility as to ensure that the overall EU and Member State renewables targets can be achieved in a cost-effective way.