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Oral Answers to Questions

Volume 520: debated on Thursday 16 December 2010

Energy and Climate Change

The Secretary of State was asked—

Bioenergy

1. What assessment he has made of the potential contribution of bioenergy to the Government’s objectives for energy security and climate change. (30963)

The Government believe that sustainable bioenergy, such as woody biomass, bioliquids and many other bioenergy forms, could contribute up to half the UK’s target of 15% renewable energy by 2020. That would deliver a greenhouse gas saving of 20 million tonnes of carbon dioxide equivalent by 2020. It would also improve the UK’s security of supply, as bioenergy is one of the few renewables that can generate energy on demand.

Convert2Green, a biodiesel producer in my constituency, produces sustainable transport fuels from waste cooking oil. Those fuels currently benefit from a 20p fuel duty differential which is due to be abolished in April 2012, just three months after the renewable transport fuels obligation comes into effect. Will the Secretary of State consider the merits of an extension of the differential until the RTFO has had a chance to prove itself as a suitable support mechanism for the sustainable biodiesel industry?

The Government are keen to secure a more rapid development of all bioenergies, and the use of chip fat or any other cooking oil is certainly one option. I am afraid that the specific measure that my hon. Friend wishes me to warm to falls within the responsibility of the Chancellor of the Exchequer rather than that of my Department, but I am sure that the Chancellor is as mindful as I am of our commitment to becoming the greenest Government ever.

Geothermal Energy

2. What recent representations he has received on Government support for deep geothermal energy production in the UK. (30964)

My Department engages regularly with the deep geothermal sector, and believes that that exciting renewable energy source has considerable unexploited potential. I shall be meeting the key players in the sector in the new year.

I thank the Minister for his helpful response. Deep geothermal power could generate 10% of the United Kingdom’s energy needs. It is a tried and tested technology which provides energy in countries throughout Europe. The last Government did not support that type of power generation, and rejected calls for the introduction of a licensing structure similar to those of other European countries. What are the Government doing to provide support for this important energy sector?

My hon. Friend has fought a vigorous campaign on behalf of this exciting new form of energy. I am delighted to say that, at my direction, officials are actively examining the practical and legal aspects of an exploration licensing scheme covering geothermal heat and power projects, which will be vital to unlocking the true potential of this renewable energy source.

Energy Prices

3. When he last met representatives of (a) Ofgem and (b) energy suppliers to discuss consumer energy prices. (30965)

11. What recent discussions he has had with gas and electricity suppliers on trends in energy supply costs to domestic consumers; and if he will make a statement. (30974)

With permission, Mr Speaker, I shall answer Questions 11 and 12 with Question 3.

Department of Energy and Climate Change Ministers and officials meet both Ofgem representatives and suppliers regularly to discuss market issues. Ofgem monitors the market closely, and reports quarterly on retail prices. Its latest report shows large increases in estimated supplier margins—that is, profits—for the year ahead, which are mainly due to recent price increases. I am disappointed by that development, and I welcome the announcement of Ofgem’s review of the retail market. We are also taking other measures to encourage new market entrants to provide new competition.

I merely point out to the House that the grouping is with Question 11 only. Question 12 has been withdrawn.

We are told that there is a global glut of gas. Will the Secretary of State explain why energy suppliers are increasing consumer prices by two, three and, in some cases, four times the rate of inflation? What are the Government doing to protect the old and vulnerable during what seems likely to be one of the coldest winters on record?

I am grateful to the hon. Gentleman for his question. The first and most important point is that Ofgem, as the regulator, ought to have considerable influence over the margin above the wholesale price, and that is the subject of the inquiry launched by Ofgem. If I remember the figures correctly, that margin has risen from about £65 or £70 on a typical bill to about £90, and that is what triggered Ofgem’s interest in the matter and the review. I have encouraged Ofgem to be firm with all the suppliers as to whether such margins are necessary to bring forward the investment we require in the sector, and we await with interest Ofgem’s review.

The hon. Gentleman also asked about the vulnerable. He may have seen that we have announced support through the warm home discount scheme, which will run both for the next year and the year after—and subsequently, I hope. It will provide discounts for the vulnerable. We are also continuing to make sure that energy efficiency measures are available, such as by extending the carbon emissions reduction target, so we can help the vulnerable get through what I know can be a very difficult period, particularly if there is a hard winter.

May I remind the House of my keenness to get down the Order Paper and accommodate as many Back-Bench Members as possible?

According to the House of Commons Library, between 1996 and 2004 the number of households in fuel poverty fell from 6.5 million to less than 2 million, but now, in the face of massive increases in energy prices, it has nearly doubled again to more than 4 million. Does the Secretary of State agree that energy companies must cut prices now and reflect the reality when wholesale prices go down, and does he also agree that those companies should play a greater part in tackling fuel poverty?

This is a real problem, in part because fuel poverty reduction is an objective for which the Government are not solely in control. Clearly, as energy prices bounce around, people get brought into or leave fuel poverty. As part of the fuel poverty review, I want us to set clearly obtainable objectives to deal with the root causes of fuel poverty. One key issue is that those on the lowest incomes often have enormously variable energy bills—varying, in fact, by a factor of six. If they are in modern social housing they can have low energy bills, but they can have very high bills if they are in private rentals. We must deal with energy efficiency issues.

On energy prices, how will my right hon. Friend ensure that the carbon floor price encourages investors to put money into green energy and does not simply become a mechanism that substantially increases energy bills?

That is one element of the proposals we will be bringing forward later in the consultation document. Indeed, we will make a statement on it. The Treasury will consult on the carbon tax element today. It is one of four key instruments that we will suggest should play a part in reforming the electricity market, taken together with our price support measures and our very keen enthusiasm to encourage market entrants. As competition is the best guarantee to consumers, I believe we can ensure that we have the best possible deal for electricity and gas supply in future.

May I congratulate my right hon. Friend on his success in Cancun? As energy and utility companies are not passing on falls in energy wholesale prices to consumers, is it not time we had a review of whether Ofgem has the powers to tackle those companies that seem to care very little about the poor and vulnerable, as the hon. Member for York Central (Hugh Bayley) rightly pointed out?

I am grateful to my hon. Friend for his kind remarks. There was an outstanding team effort at Cancun. The Minister of State, my hon. Friend the Member for Bexhill and Battle (Gregory Barker), who is responsible for climate change, and the rest of the team played a tremendous part in making sure the outcome was much more successful than we might have hoped even as recently as early in that week.

My hon. Friend the Member for The Wrekin (Mark Pritchard) is absolutely right to make the point he made. In my discussions with Ofgem, I have repeatedly raised the fact that we want it to be firm with energy suppliers and ensure our consumers are not being taken for a ride. Both the chairman, Lord Mogg, and the chief executive are very aware of that, and they are completely in line with our objective of making sure the energy suppliers are providing the best possible deal. The review is looking at precisely this issue. Ofgem does have substantial powers over suppliers and, of course, we can also trigger a competition review.

Labour Members are also pleased that Ofgem is looking into energy pricing. The Government seem to be in a funny place. They appear to accept that energy prices will increase and that that is a price the British public will have to pay, to a degree, for a greener future, but we know that prices rise for many reasons, as the Secretary of State acknowledged. Given the Government’s proposals to increase VAT from January, freeze pay, cut funding to public services and oversee huge job losses, increased energy bills will add to hardship. At the same time, the Government are abolishing Consumer Focus, which battles on behalf of consumers. We have heard lots today about the theory, but consumers are facing the challenges now. Even if energy market reform is successful, can the Secretary of State tell the House what plans he has to improve things for consumers now, as we approach a harsh winter and the measures that I mentioned?

The hon. Lady knows that the Ofgem review is a very real review into the margins being charged by suppliers and that Ofgem has considerable powers. If its review finds a real concern about the lack of competition in the sector—I believe that has been a widespread concern—we will move to ensure that behaviour is, in fact, pro-competitive in this area. One of the key objectives of Government policy is to bring more competition into this field, as that is the ultimate guarantee that consumers will get the best possible deal.

Smart Metering

There has been an excellent response to the consultation, with more than 300 replies having been received from a wide range of stakeholders, which have broadly welcomed the key proposals in the prospectus. The Government expect to respond formally to the consultation early in the new year.

The Minister will be aware that smart meters, in themselves, are simply pieces of kit; on their own, they will not change behaviour or reduce energy consumption. What are the Government and the energy companies doing to educate consumers, because that is how we will reduce energy consumption?

The hon. Lady is right that the consumer experience is absolutely at the heart of the success of the smart meter roll-out. We are working very closely with Citizens Advice, Consumer Focus and other groups that represent consumers, including those representing older consumers, because the experience of consumers and making sure that they use smart meters most effectively to their advantage is at the core of what we are trying to achieve.

Crucial to obtaining the benefits of smart meters is ensuring that they are for everyone in this country, no matter where they live—no matter how remote and rural their location—and no matter what the construction of their house, even if it be with walls so thick that most signals will not get through. We need to be mindful that none of the early roll-outs of smart metering lock in a technology that will not be universal. Will the Minister ensure that his response to the consultation gives us a truly universal metering system?

I congratulate my hon. Friend on his tenacity on this issue and the way in which he continually pushes us to make sure that we keep it very much in our mind. We are involving Ofcom directly in our discussions and our approach to developing this area to ensure that exactly those issues are very much in our mind.

But what about smart meters that are being installed now which might be incompatible with the meters that will be installed in future? I thought that the Government were abolishing Consumer Focus, not working with it, as the Minister said in his earlier answer. What will he do to protect consumers now from those future costs?

One of the major operators is installing smart meters as we speak. It is installing many thousands every week, so we have to ensure that the regime we put in place for the longer term takes account of those issues. The operator is, to some extent, doing this at its own risk, because if the meters are not compatible with the longer-term solution they will, in time, have to be removed. The hon. Gentleman is right to say that we need to ensure that in all these areas the consumer interest has to be right, because if we do not get that right, this is the sort of programme that could get stuck in its tracks.

Community Energy Schemes

5. What support his Department is providing for community energy schemes; and if he will make a statement. (30967)

The coalition wants local communities to share the business rates generated from large-scale renewable energy projects and to benefit from financial incentives for smaller renewables. DECC has also recently launched the community energy online website to provide advice and support for both communities and local authorities.

My hon. Friend will be aware of the greening campaign, which started in Petersfield in my East Hampshire constituency and has now spread to 200 towns and villages. What can he do to help such bottom-up community-based organisations as they go about providing facilitation and practical support to local groups that are looking to develop community energy schemes?

The greening campaign in my hon. Friend’s constituency is an excellent initiative. As he knows, community engagement in the energy sector will be vital to our vision of the development of energy in the UK in the coming decades. We are helping communities to access the planning system more effectively through the Localism Bill and giving them more information and advice with the new community energy online website. The finance mechanisms that we are putting in place with feed-in tariffs and the renewable heat incentive will be a great help.

In response to my question in the last DECC questions, the Minister suggested that all was light and joy in the photovoltaic sector and with the feed-in tariffs. Within days, however, he had called the sector in for an urgent meeting. Speculation is rife that he will rush forward a review, and the headlines shout, “Clouds gather over solar park gold rush”. If there is a genuine problem, why does not the Minister stop denying it, stop passing the buck and get on and fix it? After all, that is what he is paid for.

The hon. Gentleman is absolutely right—we inherited a real mess from the last Government with ineffective legislation. Just as with the national debt, it falls to this coalition to clear it up. I took action—I did not dither—and I have called in the industry. We will put a stop to the gold rush that might have developed as a result of Labour’s lousy legislation. We will not allow large speculators in field solar to soak up available funds that are intended for community and household projects.

Carbon Reduction

6. What discussions he has had with representatives of business organisations on the carbon reduction commitment energy efficiency scheme. (30968)

My right hon. Friend and I regularly meet businesses to discuss climate change and energy issues. My officials are also discussing how to simplify the policy landscape with a wide range of CRC and climate change agreement participants. This will inform the proposals the coalition will bring forward next year.

I thank the Minister for his response. On energy efficiency, will he assure me that the Government will include double glazing in their green deal? Will he meet me and Pilkington glass, from St Helens, to discuss the contribution that that company can make to energy conservation and the impact that VAT increases will have on future double glazing sales in the UK?

We want the green deal to be technology inclusive. Any technology or energy efficiency measure that can pass our golden rule of providing the savings needed will be considered very kindly. We want it to be inclusive and for it to drive innovation and technology.

What reassurance can the Minister give us that he will closely consider the Government’s position to ensure that the initiative works for businesses while also driving down emissions?

Absolutely. We had to take a tough decision on the CRC to end revenue recycling, as a direct result of the state of the public finances we inherited. We are talking closely with business and will be having further discussions in the new year to ensure that it remains an efficient measure of driving forward energy efficiency in businesses. We believe that there are billions to be saved in the private sector in that way.

This week, the Secretary of State was quoted as saying that he does not mind being seen as the Tesco of energy policy, with more for less—being greener for less. Tesco, however, is one of the organisations that will be stung by the changes to the CRC that have, in effect, made it a crude stealth tax for the Chancellor rather than an intelligent driver of energy efficiency. How did Ministers surrender their green credentials to the Treasury so easily and what does this stealth tax—described politely as a “bit of a bombshell” by a local government spokesman—mean for the public sector as well as for the private sector?

The hon. Gentleman is in denial about the appalling state of public finances that we inherited from the previous Government. Yes, the coalition is taking action to reduce the deficit—absolutely. That is why we are not the basket case that we would have been had the Labour party remained in Government. The CRC will help to drive energy efficiency. We know that about £1.6 billion is still paid by large companies in the UK as a result of energy inefficiency and we hope that this measure, which will become more effective, will help to drive greater efficiency in UK plc.

Marine Renewables

7. If he will make it his policy to provide long-term revenue support for renewables obligation certificates for marine renewable technology to ensure that developers and manufacturers locate themselves in the UK. (30969)

We are committed to the establishment of a system of feed-in tariffs in electricity as well as to the maintenance of banded renewables obligation certificates. We have already brought forward the scheduled review of the renewable obligation by a year to give investors greater clarity and confidence. As part of the electricity market reforms, we will set out plans for support for marine and other renewables for the longer term.

The Minister will be aware that I represent not only the best constituency but one of the most tidal, with several major rivers including the Ayr, the Ouse, the Trent and parts of the Humber. Does he agree that the Humber area generally has huge potential in terms of marine and tidal energy, and will he commit to supporting the pan-Humber vision of making the Humber a centre for renewable energy?

My hon. Friend raises an issue that applies to many parts of this country. The United Kingdom has some of the highest tidal reaches of anywhere in the world and it is our determination that we should lead in marine technologies rather than follow others. Undoubtedly, the Humber has a significant contribution to make in that respect. Many areas could contribute to that process, which is why we are putting in place a marine energy programme with a view to leading to marine energy parks where those technologies can be taken forward.

Is the Minister aware that about two months ago, the Minister of State, the hon. Member for Bexhill and Battle (Gregory Barker), met company and trade representatives in my constituency to discuss support for the renewable heat initiative, which I know the Secretary of State has also personally supported? We were expecting a statement last month, this month and now, I hope, in January. Will the Minister look into that and bring forward the statement? A lot of new work in Coventry and throughout the private sector depends on it.

I am not quite sure how renewable heat ties into marine and tidal technologies, Mr Speaker, unless it is very hot water indeed. We are working to bring that to a conclusion; we understand the pressure across the House for that clarity and we will provide it in the very near future.

Now that the wave hub plug is in place off the north coast of my constituency—a very exciting project that scales up for the first time wave energy—what will the Minister do to ensure that it is a great success? In Scotland, ROCs provide a far better return for projects. Will he work with me to ensure that this project is a great success and adds to renewable energy?

The project in Cornwall is one of two beacon facilities in the country, the other being in Orkney. That is exactly the approach that we want to take forward for marine energy parks, bringing together the relevant technological, academic and engineering skills that can encourage companies to stay in this country. We have been concerned that some companies have looked overseas to take their technologies forward and we have to put in place the right mechanisms to keep them here in the United Kingdom. Cornwall has a fantastic opportunity in that regard.

Carbon Reporting (Private Companies)

8. What recent discussions he has had with the Secretary of State for Environment, Food and Rural Affairs on mandatory carbon reporting for private companies. (30970)

I met my noble Friend the Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs in October to discuss this issue ahead of the coalition’s bringing forward further proposals in the new year.

I thank the Minister for his answer, but legislation is already in place to oblige companies to report their carbon emissions. Will the Government use those powers to fight climate change—yes or no?

We will announce a robust way forward in the new year that will require a clear route map on how companies are required to report their carbon emissions, as they are required to do by the Climate Change Act 2008.

Will my hon. Friend ensure that, through the carbon reporting mechanism, the good work that water companies and others are doing by creating carbon sinks in peat bogs and water storage upstream is more widely known so that we can support it? One example of that is the Pickering pilot project in North Yorkshire, which also brings flood alleviation benefits.

As Chairman of the Environment, Food and Rural Affairs Committee, my hon. Friend is well known as an expert on the matter. She makes some very good points and I shall ensure that they are taken into account when we formulate policy on the way forward.

Warm Front

10. What estimate he has made of the change in the number of homes in receipt of assistance with heating and insulation improvements consequent on the proposed reduction in expenditure on the Warm Front scheme. (30973)

The Warm Front scheme is expected to assist approximately 170,000 households in 2010-11. While we transition to the more ambitious green deal framework, DECC will fund a more targeted Warm Front scheme helping approximately 57,000 households in 2011-12 and a further 50,000 households in 2012-13.

Warm Front has helped more than 2,000 households in my constituency of Hull North, with energy efficiency measures that have reduced fuel bills and started to fight fuel poverty, but many more households still need help from Warm Front. What guarantee can the Minister give me and my constituents that the help, especially now that we have such severe winter weather, will be available over the next couple of years?

Over the next couple of years, we will be transitioning to the green deal. The fact of the matter is that Warm Front per se was not up to the scale of the challenge of renewing and refurbishing our homes in Britain. If we were to rely on Warm Front, at that rate of progress it would take 82 years to refurbish the 14 million homes we need to refurbish. We are going for a much more ambitious scheme—the green deal. It will be a real game changer and we shall introduce measures in legislation in the other place before Christmas.

The last time I questioned the Minister, he said that we really have to attack fuel poverty. National Energy Action recently forecast that fuel poverty is set to rise to 5.5 million households next year, the highest level for 15 years. That is one in five homes, yet yesterday we learned that this year’s money for Warm Front—a key weapon in tackling fuel poverty—has run out. This morning, we have heard about reviews, but with the bitterly cold weather, rising energy bills and the warm homes discount not due to kick in until next year, what are the Government actually doing now to attack fuel poverty?

The hon. Lady raises a very important point, but as I just said to her hon. Friend the Member for Kingston upon Hull North (Diana Johnson), Warm Front—the key weapon under the previous Government—signally failed. Under the previous Government, we saw fuel poverty more than double; it rose from 2.5 million in 2005 to 4.5 million now. Warm Front signally failed; we need to be far more ambitious. The green deal will be the game changer, and it will bring in billions of pounds. As for now, we inherited a Warm Front waiting time for installations of between three and six months. Anyone requiring heating to cope with the cold weather now cannot rely on Warm Front, and I am afraid they never have been able to.

Onshore Wind Farms

The electricity output from a wind farm is a key factor in determining if and where it will be built. The assessment of a planning application includes, among other things, an analysis of visual, landscape and noise impacts. We are constantly looking at ways to ensure that the analysis remains robust and protects the quality of life of people living close to wind turbines. We have already taken action to ensure that the issue of noise is addressed in a standard way across the country.

I thank my hon. Friend for that answer. Can he tell me what assessment he has made of the Danish state energy company’s recent decision to cease building further onshore wind farms, and a similar decision in France in the summer to restrict onshore wind farms, bearing in mind their impact on local communities versus their efficacy? Can he reassure me that in future we will take into account the impact on local communities, and that we will not force them to have wind farms where they do not fit the environment?

My hon. Friend will be aware that the United Kingdom is third from bottom in Europe on the electricity it gets from renewable sources, so the situation here is in no way comparable to that in most other European countries. We are absolutely committed to giving local communities greater say on the issues—that is at the heart of the Localism Bill. We are also determined that the host communities should realise real benefits.

Perhaps a solution to the question the hon. Member for South Northamptonshire (Andrea Leadsom) has just raised is to put the wind farm offshore. Will the Minister join me in congratulating a project in Aberdeen that yesterday secured €40 million of EU funding to build a centre just off the coast of Aberdeen that will develop technologies that can be used to improve the offshore wind sector?

I am delighted to join the hon. Lady in congratulating the company on that development. It is one of the areas of the country where there is the greatest potential, because the skills are already there in the engineering side of the oil and gas sector and the people who work in the area. We hope to see significant gains for the north-east of Scotland from developing those technologies.

Onshore Wind Sources

15. What targets he has set for the provision of energy from onshore wind sources in (a) 2011 and (b) 2020. (30979)

The Government have not set a specific target for onshore wind energy generation. However, our lead scenario as set out in the national renewable energy action plan indicates that onshore wind capacity could be 15 GW by 2020. We are absolutely committed to deploying onshore wind in a way that takes into account the views of local communities and brings benefits to local people.

I thank the Minister for his answer. I know he is very committed to onshore wind energy generation and I welcome his passion. When does he expect major announcements to be made by companies as part of the round 3 onshore wind programme?

I thank the hon. Gentleman for the assiduity with which he advocates the interests of the Humber region and the role it can play in that regard. I was pleased to meet him and some of my hon. Friends and people representing the South Humber gateway last week to enable me to understand the case they are putting forward in that respect. We are delighted that such companies as Siemens, GE and Mitsubishi have committed themselves to major multi-million pound investments in the offshore wind sector, and we understand that some of those announcements are due to be forthcoming early in the new year.

Electricity Supply

16. What assessment he has made of the effects on the electricity grid of the weather of November and December 2010. (30980)

Demand for electricity has been met in full by the normal functioning of the market during this cold period, when electricity demand has been approximately 5% to 10% higher than the seasonal norm. As is usual at this time of year, there have been a few localised disruptions. However, network operators have worked hard to ensure that those consumers affected were restored as soon as possible. We will continue to work with industry to monitor the situation over the rest of the winter.

I thank the Minister for that reassuring answer, but could he outline to the House what steps he and his Department are taking to ensure that there is sufficient capacity and supply in the system to cope with the predicted energy gap?

We are not anticipating an energy gap over this winter in electricity generation. I was at National Grid last week, and we are in daily contact. We are looking at the margins of supply, which remain robust. We are looking at the import capacity for gas. We are looking at the role that all those technologies can play. During these very cold periods, all the energy companies understand the need to keep their plant ready to generate, to ensure that demand can be met by supply.

In order to maintain capacity margin over the longer period, what investigation is the Minister making of electricity storage as an additional way of ensuring that margins are maintained, and that supply that comes on stream at inconvenient hours is captured and restored at convenient hours?

We are looking at a whole range of different technologies. We are looking at the role of battery storage, hydrogen storage and pumped water storage which is already making an important contribution at Electric Mountain in Dinorwig in north Wales. We are also looking at the role that interconnectors can play, using perhaps pumped storage in countries such as Norway, to enhance our energy security. This is a way of ensuring that renewable energy can be used in such a way that it is there when the demand is there, and it will greatly enhance our energy security in the process.

Green Deal

17. What recent estimate he has made of the number of homes in (a) Harlow constituency and (b) England which could receive assistance from the Government's proposed green deal. (30981)

The green deal will create a completely new market mechanism for driving energy efficiency installations in buildings, incorporating an entirely new obligation on energy suppliers. All 22 million homes, and within that all 35,699 homes in my hon. Friend’s constituency of Harlow, could potentially benefit from the green deal.

I thank my right hon. Friend for his reply. More than 850 households in my constituency are thought to be suffering from fuel poverty, and fuel prices are rising now. Will the Minister explain what the Government are doing specifically to warm up Harlow homes this Christmas and in the years ahead?

As my hon. Friend knows, the discount scheme available to people is a voluntary scheme. We are bringing forward the warm home discount bonus for next year, a scheme that will be clearly underpinned by legislation. In the short run, we are putting pressure on Ofgem, as I have previously described in the House, and Ofgem is putting pressure on the suppliers, to ensure that there are not excessive margins in the industry. In the longer term, which is the key if we are to deal with fuel poverty, we have to deal with its root causes. We cannot go on applying sticking-plasters, in the form of discounts or short-term help. The only long-term solution, as we have seen from the failure of the strategy to deal with fuel poverty over the last few years, when it has risen substantially, is to deal with the root causes by improving energy efficiency in the homes of those affected.

In order to inform myself of the effects of the green deal on Harlow, I researched a website this morning, which states:

“The nuclear industry’s key skill over the past half-century has not been generating electricity, but extracting lashings of taxpayers’ money.”

That was on the website of someone called Chris Huhne. Does this person have any connection with the Secretary of State? Has he sold his principles for a Red Box?

The hon. Gentleman should be very aware that the coalition Government are committed to no public subsidy for the nuclear industry for some very good reasons, one of which is in the quotation that he so gracefully supplies to the House.

Domestic Fuel Prices

18. What recent discussions he has had with energy companies on domestic oil pricing.

I declare an interest, as my home is heated by domestic oil. (30983)

I declare an interest, as mine is as well. We are in regular contact with energy companies, including the trade associations that represent those who supply domestic oil. Heating oil is a seasonal product, and its prices vary over the course of the year. I have spoken to the Office of Fair Trading about the price of heating oil, as the enforcement of competition and consumer law is a matter for the OFT, and it assures me that it is keeping a very close eye on the situation and is keen to receive evidence from hon. Members about any market abuse that they experience.

I thank my hon. Friend for that answer. Several constituents have contacted me about the price of oil. Mr Gander, in particular, relies on oil for his heating, but his supply is running low. A month ago the price was 39p a litre; it is now 71p a litre, and as a consequence he has switched off his heating system. Will my hon. Friend take up that issue throughout the Government to ensure that people are not frozen out of their homes this winter?

My hon. Friend raises an extremely important issue, which is about both pricing and the time that it takes to secure deliveries. People calling today who reckon they will be short of oil over the coming weeks are being told that they will not receive a delivery for three or four weeks. We are monitoring that situation day by day and are extremely aware that, if there is further snow ahead of Christmas, it could become very serious indeed. I ask my hon. Friend to provide evidence on those price increases to the OFT, so that it can investigate them.

Low-carbon Energy Products

19. What steps he plans to take to encourage the establishment of community-led low-carbon energy projects. (30984)

Communities are where big society meets big energy, and the coalition intends to drive new community-led, low-carbon energy projects with strong financial incentives and better information and guidance. We have already acted to allow local authorities to sell the energy that they generate.

Speaking to representatives of the excellent Settle hydro scheme in my constituency, I was struck by the amount of red tape that they have had to deal with to get the project off the ground, and the legal action that they have had to deal with from environmental groups. Will my hon. Friend make it as easy as possible for community energy projects to get off the ground in the coming 12 months?

The Settle micro-hydro scheme is exactly the sort of scheme that we want to see more of and encourage, but my hon. Friend is absolutely right: we need to make it easier for communities to take the initiative. That is why we are making it easier to get through the planning system and providing more financial incentives; and we have also launched a website to give people the information they need.

Nuclear Power Stations

20. What recent progress he has made on facilitating new nuclear power stations without public subsidies. (30985)

The Government are committed to removing any unnecessary obstacles to investment in new nuclear, and we have made good progress. We are consulting on the revised draft energy national policy statements, including the nuclear NPS; I made a decision recently, on regulatory justification in respect of the AP1000 and EPR reactors, which was subsequently approved by both Houses, with an enormous majority in this House; we laid the Nuclear Decommissioning and Waste Handling (Designated Technical Matters) Order 2010, which was subsequently approved by both Houses and published last week; there have been consultations on funded decommissioning programme guidance, and an updated waste transfer pricing methodology for the disposal of higher activity wastes; and regulators are on track to complete their assessment of the reactors going through the generic design assessment process.

I am grateful for that answer. Given some of the comments from investors, can the Secretary of State confirm whether there is an appetite in the City to invest in new nuclear and whether we have the domestic skills to decommission our Magnox plants and build a new generation of new nuclear? Will he also confirm whether the planning regime is fit for purpose, so that we can ensure we meet our target of 16 GW of nuclear generating capacity?

From my contacts around the City, I believe that there certainly is an appetite to invest not just in new nuclear plant, but right across the range of low-carbon technologies. I hope that we will be able to describe that in greater detail in the statement later. On planning and other issues that could present obstacles, we are considering how to clear the way right across all the technologies we will need in a low-carbon future to ensure that that happens.

Achieving 16 GW of supply from nuclear, as the Secretary of State has demanded, would require one new reactor coming on stream every nine months from about 2018 onwards. The industry told the Select Committee on Energy and Climate Change the other day that that simply would not happen because there was neither the investment capacity in the City to deliver it nor, indeed, the skills available to build what is required. How will he ensure the continuity of supply that he seeks?

The hon. Gentleman knows that the market has always been composed of different views. He is citing one particular institution’s view, but that is not the common view of other investors in the City. The funds will be forthcoming and we will describe the incentives that we are putting in place for the low-carbon future that we want in the statement later today.

Green Deal

21. What plans he has to meet representatives of the heating industry to discuss the proposed green deal for energy efficiency. (30986)

I have recently met heating industry representatives and have invited the heating and hot water taskforce and the Heating and Hotwater Industry Council to be represented on the green deal stakeholder forums that I have established. I want the whole industry to be actively engaged with us on the green deal.

I am grateful to the Minister for his response. I was interested to hear his response to the question from the hon. Member for St Helens North (Mr Watts) on the consideration of glazing in the green deal. Will the Minister confirm that he will consider the replacement of old and inefficient heating systems in the green deal?

There will certainly be scope for heating systems to be included in the green deal. We want the green deal to be as technology-inclusive as possible, and we want to drive innovation. Any energy efficiency measure that costs less to install than it pays back over a specified period will be eligible. That includes heating measures.

Heating Bills (Newcastle upon Tyne Central)

22. If he will assess the effect of recent winter weather on the heating bills of the elderly and others in the Newcastle upon Tyne Central constituency. (30987)

Local area energy data are produced on an annual basis covering all homes in a local area. As such, it is not possible to assess short-term changes in energy consumption by specific household types. However, the latest information suggests that eligible households in the Newcastle upon Tyne Central constituency have received between one and three cold weather payments so far this winter.

This week, Eaga—the green energy company that is headquartered in Newcastle—placed 1,400 people on notice of redundancy as a direct result of the 70% cuts to the Warm Front programme that the Government have implemented. Considering 18% of Newcastle constituents live in fuel poverty, will Newcastle not suffer twice over as a result of the Government’s approach to fuel poverty?

I am very sorry to hear about the redundancies at Eaga. That is very regrettable. Eaga still has to fulfil about 70,000 jobs this winter, between now and the end of the financial year. However, we need to get more investment into the energy efficiency sector in the long term, which means opening it up to the private sector and getting in billions not hundreds of millions. The green deal is the way forward to achieve that.

Topical Questions

Since the last departmental questions, we have helped to secure an agreement at the United Nations climate change conference in Cancun. We have published the Energy Bill, which includes measures to boost investment in low-carbon electricity generation, to improve energy security, and to give companies better access to upstream oil and gas. The Bill also sets out the infrastructure of how the green deal energy efficiency programme will work, with particular reference to those in fuel poverty.

Given that Labour Members blame us for everything, including the weather, may I ask my right hon. Friend, in his capacity as climate change Minister, if he can do anything to ensure that we have a white Christmas in Harlow?

There are limits to my powers. I think that the most popular legislation that this House could ever bring forward would be a short Bill requiring it to rain only between the hours of 2 o’clock and 4 o’clock in the morning. Sadly, the technological capability to deliver quite such meteorological results is not yet with us.

Order. There is huge interest, as colleagues can see, and I want to try to accommodate it, but we must have brief questions and brief answers.

Given the list that the Secretary of State just read out, one would think that he sees himself as Action Man, but we heard this week that he describes himself as Tesco Man. Last time I questioned the Government about green investment, the Minister of State, Department of Energy and Climate Change, the hon. Member for Bexhill and Battle (Gregory Barker), reassured the House that plans for the green investment bank would be unveiled in the spring. Yesterday, I read that the Secretary of State has lost out to the Treasury and that this much-vaunted green investment bank is to be a fund with nowhere near enough resources to generate the £200 billion necessary for investment in green technologies. The question is whether the country has lost out. Given the impact on British business, job creation and the climate, a properly functioning bank cannot wait, and this confusion is very unhelpful to British business. Will he tell the House what is happening?

I am grateful to the hon. Lady for her question. I can assure her that this matter is still under review by Ministers on the time scale that we were anticipating. Much as I like and respect The Guardian, having worked for it for 10 years, I have to say that its report gave only a partial view of what I said. I said, among other things, that ducks quack and banks borrow and lend. The Chancellor of the Exchequer was the person who put forward the idea of the green investment bank when he was in opposition, and he knows very well what a bank is. I am absolutely convinced, therefore, that we will have an institution that does exactly what it says on the tin.

We still do not have certainty. We hear that the matter is “under review” but we believed that it was a Government commitment. I am proud to be the first Labour/Co-op shadow Secretary of State for climate change, and the Secretary of State has described himself as very happy to be the Tesco of the energy industry. Yet without the green investment bank, whichever model we choose, we will not see the benefits that we want to see. The Minister of State, the hon. Member for Bexhill and Battle, spoke earlier of the importance of community energy and smaller suppliers; we want energy to benefit all. We want to see this bank up and running, and the Secretary of State will have support from the Opposition if it gets going. Will he consider joining me, as the advocate of co-operative climate change, in working for the benefit of all, with the green dividend and green investment shared fairly through an up-and-running bank?

I agree that we have to look very carefully at the sources of finance for green investment. There are undoubted obstacles in the way of some of the technologies that are furthest away from the market, in particular, and that makes the very important case for the green investment bank. That—not the concept—is what is under review at the moment. The commitment to a green investment bank is clearly in the Government’s coalition agreement, and it was an idea of the Chancellor of the Exchequer. Some of the reports suggesting that the Chancellor would want to murder his own baby seem a little far-fetched.

T7. Following on from that question, will the green investment bank include the proceeds of asset sales, as the Chancellor announced recently? Given the importance of green investment to the Tees valley, will the Secretary of State consider putting the administrative centre of the bank in the Tees valley? (30995)

I am grateful to my hon. Friend for his question about the siting of the bank, but that is a little premature given where we are at the moment. I am afraid that quite a long list of hon. Friends and others are advocating the benefits of that to their constituencies.

Capital endowment of £1 billion for a green investment bank was allocated in the comprehensive spending review in 2013-14. I have made it clear that we are continuing to look for asset sales. In our Department, we are looking for asset sales from URENCO, for example, but there are other asset sales across Government that could also be used. We will attempt to use that process to ensure that the institution has the proper endowment of capital necessary for its task.

T2. The green deal is based on loans, which many of my constituents cannot afford, and it places the responsibility for tackling fuel poverty in the hands of the energy companies that have created a national rise in fuel bills of 139% since 2003. Will the Secretary of State explain how the green deal will help the poorest and most vulnerable in my constituency? (30989)

I am happy to answer the hon. Lady, because her question is based on a misunderstanding of the green deal. There is no requirement for anybody to take out personal finance to fund the green deal. The whole point is that finance will be provided for the householder. The company that provides the finance will recoup its return from the householder’s savings on their energy bills. In addition, we will reshape the carbon emissions reduction target and community energy saving programme obligations on energy suppliers into an eco-obligation, one of the key objectives of which will be to provide additional support to those in fuel poverty. Such people will therefore be able to go ahead with the green deal, even if the anticipated savings on their bills are not adequate to pay for the installation.

The coalition agreement anticipated that we might extend green deal finance to microgeneration. We are working on the assumption that green deal finance will be available for insulation measures, because we have secured outstanding incentives for microgeneration through the feed-in tariffs, as was confirmed in the comprehensive spending review. Green deal providers will offer microgeneration proposals precisely because the incentives are so good.

T3. Like the hon. Member for Suffolk Coastal (Dr Coffey), who is no longer in her place, many of my constituents who live in rural areas rely on heating oil, the price of which has more than doubled in the past two months. Companies are now refusing to deliver less than 1,000 litres, which is having a massive impact on families and on schools, colleges and hospitals. What will the Minister do now to deal with that exploitation? (30990)

I would be very grateful if the hon. Lady could give me more details, because we have also heard that some companies are asking people to take lower amounts so that the delivery lorries can get to more homes and more people before Christmas. That is obviously the sensible approach. I would be very concerned if companies were artificially raising the amounts that they expected people to buy at this time.

As we speak, severe weather is sweeping through the north of the country and heading south. Referring back to the Secretary of State’s remarks about Ofgem, will he stress in all his dealings with that body that for those living in the coldest parts of the country, such as the highlands of Scotland, a fair set of tariffs must be applied that are relevant to their circumstances? There is a real feeling of social injustice, which I believe is entirely justified.

I am grateful to my right hon. Friend for that question. As he knows, Ofgem is reviewing competitiveness in the market and the scale of the margins. In addition, a discount scheme is in place for those in fuel poverty, and we will underpin that. The Government are committed to preserving winter fuel payments, and to ensuring that cold weather payment schemes continue. Whatever the weather brings for us over the next few weeks, I hope that we will be in a position to help those who are most hard-pressed. I return to the fundamental point, which is that we have this problem every winter, again and again, and it is time that we dealt with its root causes through energy efficiency measures for those in rural poverty, rather than attempting constantly to put sticking-plasters on it.

T4. Today the Secretary of State told the House that energy bills in private rented housing can be as much as six times higher than in modern social housing. Why do the Government not use the Energy Bill to require all private landlords to comply with minimum energy efficiency standards, and not just when a tenant requests it? (30992)

The Bill will allow us to move forward on F and G-rated homes, for example, if there is not a sufficient improvement in the private rental sector. There is clear provision for us to regulate to deal with the problem.

Referring again to Ofgem, in the past month crude oil prices have risen by 17% but consumers are paying 70% more. Is it not time that the Government took on the oil companies to ensure that my constituents get a fair deal on oil prices? Many of them have no choice but to have oil.

There are two aspects to the matter. Clearly it is seasonal, with demand going up at this time of year, which inevitably pushes prices up, as with turkeys, Christmas trees and so on. However, there is a fundamental problem in the oil market, because people are not getting deliveries when they need them, even when they order well ahead. We are therefore asking colleagues to give evidence to the Office of Fair Trading so that it can see whether there is evidence of collusion or inappropriate practices.

T5. Recent satellite photographic evidence shows that thousands of homes in my constituency are still not properly insulated and are pouring heat into the atmosphere. Given that the Government’s plan A for the economy is clearly already failing, would it not be sensible to have a national crash programme of home insulation as part of the Cabinet Secretary’s plan B? (30993)

The hon. Gentleman may have read recently about the crash programme to do exactly that in Australia. It resulted in large numbers of builders who were not properly trained putting nails through wires in people’s lofts and setting fire to houses. People died, and it was all over the front pages of the Australian tabloids. The result was that energy efficiency got the most appalling name. I intend that the green deal programme will avoid all those pitfalls and deal with the problem genuinely and thoroughly.

Will the Secretary of State join me in welcoming the news of National Grid’s announcement yesterday that it will consult residents in the levels and moors in Somerset, Suffolk’s Stour valley and other parts of the country on undergrounding electricity power cables rather than using pylons? Will he congratulate residents on their peaceful and persistent campaign, which will ensure that residents in rural areas benefit from the technology that is taken for granted in urban areas, where undergrounding is standard practice?

I do indeed congratulate National Grid on undertaking a public consultation on whether the cost of undergrounding is acceptable to the public. I also welcome the research being carried out by the Institution of Engineering and Technology, because people in areas affected by new pylons need to be absolutely convinced of the relative pricing of overgrounding and undergrounding.

T6. My constituents have faced an incredibly difficult winter, and they want to know what action the Government will take now, not in the future, to make energy companies bring down their prices. (30994)

The action that Ofgem is taking is now, not in the future. It is reviewing the matter and making it very clear to the energy companies that margins that are not justified by the economics will incur its wrath, the use of its powers and potentially a competition inquiry. I merely refer to my earlier answer about all the action that the Government are undertaking to try to ensure that people are protected in these difficult times through cold weather payments, winter fuel payments and the voluntary discount scheme. We want to ensure that the people are who most adversely affected are protected.

Palm oil plantations are now seen as a new cash crop in various parts of the world, but they cause mass deforestation and a huge loss of wildlife habitats. What can the Secretary of State do to ensure that we have a global deal on palm oil plantation that is sustainable for wildlife and the world’s natural resources?

One of the real steps forward at Cancun was progress on rainforests and forestry in general. Within the package of measures that was agreed was clear text making it absolutely crystal clear that preserving biodiversity and preventing perverse consequences of supporting palm oil plantations would be a key part of rainforest protection and funding.

On energy security, will Ministers examine critically the supply obligation that we place on companies, given that the tendency to buy short term rather than long term, and sometimes on the spot market, means that there can be no absolute guarantee that the supply will be in place in critical and extreme times for the world?

That is an element of the Energy Bill. We will increase the supplier obligation to ensure that suppliers can meet demand at times of greatest demand. I have also spoken with other Governments—Qatar this week and Norway more recently—about how to secure more long-term contracts to provide greater security of supply and greater price predictability.

I am very concerned about what I have heard in the Chamber this morning. Hon. Members have said that there is a shortage in the supply of oil, that their constituents are going cold, and that schools and hospitals are losing out. We obviously have an oil supply crisis. The Minister of State, the hon. Member for Wealden (Charles Hendry), says that he wants suppliers to ration their oil, but will the Secretary of State take personal command of this situation, call in the oil supply companies and sort this out?

I have complete confidence in the Minister of State, my hon. Friend the Member for Wealden (Charles Hendry), who has responsibility for energy. He has been absolutely hands on in dealing with that matter and has kept me informed. I believe that the measures he is taking are absolutely appropriate, but we are watching the situation day by day to ensure that the heating oil supplies are there.

In the light of the role that the World Bank could play in establishing and managing the new green climate fund, which was set up following the Cancun agreements, will the Secretary of State comment on the current level of fossil fuel lending undertaken by the World Bank group, and will he support a major shift to lending for renewables instead?

The Government have repeatedly said, and I entirely agree, that the lending practices of the World Bank and other institutions must reflect the overwhelming need that we have as a globe to move towards a low-carbon economy. It is certainly dispiriting to find that that need was not reflected in some of the loans that were approved recently by the World Bank.