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Renewable Energy (The Humber)

Volume 523: debated on Wednesday 16 February 2011

It is a pleasure to serve under your chairmanship, Mrs Main.

I would like to begin by thanking the Minister, who has already provided a huge amount of support to the Humber MPs in our campaign to make the Humber a renewable energy centre. He is already aware of much of what I will say today and we are grateful for the support that he has given. There are a couple of issues on which we would like to pin the Minister down, in the best sense of the phrase, as we try to move our campaign forward.

The campaign has support across the Humber and I assure you, Mrs Main, that the absence of other Humber MPs is not due to lack of interest. My neighbour, the hon. Member for Scunthorpe (Nic Dakin), is at a Select Committee hearing outside Westminster today. My hon. Friend the Member for Beverley and Holderness (Mr Stuart) is away on parliamentary business, as is, I believe, the hon. Member for Great Grimsby (Austin Mitchell). However, this is a campaign that enjoys strong support across the banks of the Humber in north Lincolnshire and east Yorkshire. We are concerned primarily with doing what we can, as local MPs, with the support of our local councils and businesses, to ensure that we become a centre for offshore wind, and potentially a centre for wave and tidal power and other renewable energy opportunities, such as bioethanol. With your permission, Mrs Main—I have had contact with the Minister on this—my hon. Friend the Member for Cleethorpes (Martin Vickers) will speak for five minutes of my time.

Thank you, Mrs Main. I will focus most of my comments on wave and tidal technologies and the bioethanol industry.

I think that we all agree, across the House, that we want to ensure that the UK plays its part in the renewable energy sector and that we are not left behind as we have been in the past, particularly with onshore wind. Our campaign on renewable energy, as broad as it is, does not extend quite as far as onshore wind. The Minister is aware of our particular issues with onshore wind locally, but I just place them on the record again. As a country, however, we have missed the boat on manufacturing for onshore wind and we do not want to fall behind with the new technologies.

Why the Humber? Well, apart from the fact that everybody knows it is the best area in the UK in which to invest, has the best people and is potentially represented by some of the best people—I exclude myself from that; I talk of course of my neighbours—in the past 10 years the area has not made the progress it should have done, and as other parts of the country have. We lost private sector jobs in the past 10 years at a time when the economy was growing, and we remain one of the poorest parts of the UK. We have, however, a great deal going for us too: deep sea ports, plenty of land for development, an excellent motorway infrastructure that is not congested in the way that it is in other parts of the country, and a long history of manufacturing and manufacturing skills on which to build. As I mentioned, we also have strong support for this campaign from across the local area, including from some of our key stakeholders, MPs and councillors, but also from local newspapers. The Scunthorpe Telegraph, the Grimsby Telegraph and the Hull Daily Mail have been running their own campaign to support bringing more renewable energy projects to our area.

I congratulate my hon. Friend on securing the debate. On the matter of support, he also has plenty of support from Yorkshire MPs, myself included. Offshore wind is important for my inland constituency, so that we do not have to have onshore wind farms dotted all over the beautiful countryside of the Colne and Holme valleys. It is also important because David Brown Engineering in Lockwood, Huddersfield, has a major contract to make the gears for offshore wind turbines. Hopefully the Humber will also play an important part in cutting our carbon footprint, as part of the array of carbon capture and storage that may go into the North sea, and bring jobs. My hon. Friend has plenty of support not just in the Humber region, but across the whole of Yorkshire and the north of the country. Thank you for this debate.

I thank my hon. Friend for that glowing pledge of support for the Humber, and that demonstrates a point I will go on to talk about. The supply chain for this industry will not be limited to the Humber—it will benefit UK plc. There will be jobs through the development of the renewable sector across the whole of the UK in manufacturing. I know that he will be at the forefront of campaigning for those jobs to go to his constituency of Colne Valley.

What we seek from the Minister is continued support in selling the Humber—I know he has responsibilities for the whole of England—and England, internationally. We would also welcome support from the Government in terms of the pressure they can apply to ensure that once agreements have been made, as they have been with Siemens, there are no glitches in the system. I also seek clarity about the framework in which we are operating. I will turn to that point first, in relation to wave and tidal technologies.

In terms of R and D, the UK is at the forefront of these technologies and there are huge opportunities, not only because we are an island, but because of the skills we have. There are massive opportunities along the Humber, which is served by several other tidal rivers including the river Aire, which I live next to, the Ouse, the Trent, and what we call the Dutch river, but which is the Don to everybody else. It is estimated that marine power has the potential to bring approximately 10,000 jobs to the UK by 2020.

There is a project on the Humber at the moment, the Pulse Tidal project, which is one of those great British entrepreneurial technologies. It started in someone’s garage. After 10 years of working in someone’s garage, that has now developed into a machine that is operating on the Humber, just off Immingham dock. It was funded 50% by the Government and 50% by private funds, and has been operating successfully since 2009. It cost £2 million to build, but the beauty of the project is that it used Corus steel and is maintained by another local company, Humber Work Boats. The next step of the development is a commercial scale machine, rated at 1.2 MW, which will be installed by 2013. There the good news tails off a little. It is likely that the commercial scale machine will go to Scotland, because the renewable obligation certificate scheme is more generous there. In fact, Bob Smith the CEO of Pulse Tidal, tells me:

“The single biggest funding issue for us today is the market pull—at present there is nothing to incentivise investors to support a tidal power project in favour of a wind power project—they both receive 2 ROCs. Given that tidal is early in its development, comparable to wind about 15yr ago, it is more expensive than wind, and higher risk. Hence no investor would put money into tidal projects. With 5 ROCs in place for tidal, there is sufficient incentive to bring investors to the sector.”

I know that there is a review of that scheme, but will it consider the current disparity between England and Scotland? The scheme is currently in favour of Scotland and we are at a disadvantage, so will the review recognise that?

I hope the Minister will consider the need for extra support for these emerging technologies, so that we remain at the forefront. We have had all that R and D. We have successful projects up and running, but we risk losing them overseas and missing out, just as we did with onshore wind technology.

What are the Department’s plans for the longer-term capital support for this sector? The marine development fund is being phased out. Will that be replaced and what will be put in its place? There is a need for capital and revenue support to ensure that we do not miss out. I am sure that we will get that, because I know the Government are certainly committed, but we seek a clear commitment from the Government on the future of wave and tide.

On losing industries overseas, does my hon. Friend agree that, given our heritage of petrochemical skills and a highly efficient agricultural base, it makes sense to have a bioethanol base here in the UK?

I will be coming on to talk about that exact point. As with the wave and tidal technologies, where we have the skills base and the R and D, the same applies to bioethanol. I seek those commitments in relation to wave and tidal. My hon. Friend’s intervention moves me beautifully on to bioethanol.

The question, of course, is why bioethanol and why the Humber? My hon. Friend made the comments that I would have made about the petrochemical skills heritage in this country, so I shall not repeat them. We also have mandated targets for biofuels, so whatever people’s individual views about biofuels are, the reality is that if we do not produce them locally in the UK, and specifically in the Humber, they will be produced elsewhere, and the jobs will be elsewhere.

As with wind—and, potentially, wave and tide, if we are not careful—the UK has been lagging behind. In 2008, France had 15 operational plants, Germany had nine and the UK had one large and one small plant. There is huge potential: as with wave and tidal technologies, the predictions for the industry are impressive. It could be worth as much as £3.25 billion to the UK by 2020, and could employ some 14,500 people. There is huge potential, in the Humber in particular, for the reasons that I have outlined in respect of infrastructure.

Two plants are coming to the Humber: Vireol will be running an industrial-scale wheat-based production plant in Grimsby from 2013, which should produce about 44 million gallons of bioethanol a year. I am told that that is the equivalent—my science was never very good—

I congratulate my hon. Friend on securing this important debate. I add my support to his campaign for the Humber, especially as I am a big supporter of wave and tidal. He makes a key point about bioethanol: it will be a huge economic driver for our region if we get it right. However, I add a note of caution, and would like to know what he thinks about it. Commodity prices are growing rapidly at present—

Order. Interventions should be brief. The hon. Member for Brigg and Goole wants to hear the Minister’s response.

It is an important point, and I will come to it. It is one of the criticisms—a misunderstanding, in my view—of what is actually happening. I shall first finish with the plants that are coming to the Humber. The effects of Vireol’s production of bioethanol will be the equivalent of taking 60,000 cars off the road, and Vivergo will produce at a plant in Saltend.

My hon. Friend knows that we have not only in the Humber region but across North Yorkshire—on his patch—some of the most productive agricultural land in the country, so there is huge potential locally to benefit from bioethanol production. The concern he raises is one that many people raise, which is that we are taking land that could be used to produce food to feed our cars instead. However, the process that will be used at the Vireol plant will produce as a by-product a high-quality animal feed, and there is a difference between biodiesel and bioethanol.

The global annual production of the big four oil seeds that are used for biodiesel is about 120 million tonnes. To meet our 2020 target, 24 million tonnes would have to be used for biodiesel. For bioethanol, it is 1.7 billion tonnes of the big three grains, of which only 60 million are needed to produce bioethanol. There is a prediction that the UK could increase its production volumes up to about 20 million tonnes. That could be done while ensuring food security, and, as I said, the wheat-based process that will be coming to the Humber produces a high-quality animal feed by-product, so it is a win-win situation. We already export wheat for animal feed or bioethanol production overseas.

I have two quick questions for the Minister on bioethanol—I am conscious of the time. What in particular will he do to continue to support this important sector, which has the potential to bring many jobs to our region? And when, specifically, will the Government renew the 2020 targets, which are for 10% of our fuel production, so that the bioethanol industry can continue to secure investment?

I have cut down as best I can. With that, and with your permission, Mrs Main, I would like to hand over to my hon. Friend the Member for Cleethorpes.

I congratulate my hon. Friend the Member for Brigg and Goole (Andrew Percy) on securing this timely debate. It has come at a time when north Lincolnshire, in particular, stands ready to take full advantage of the opportunities for jobs and growth. Many local companies, some of which were previously involved in similar activities such as supporting our offshore oil rigs, are well positioned to take full advantage of the development of offshore turbines. New training opportunities are being developed by local colleges, training providers and businesses, and there is massive public support following a particularly successful focus on the industry, which my hon. Friend mentioned, by local newspapers the Grimsby Telegraph and the Scunthorpe Telegraph.

My hon. Friend has articulated successfully the role that tidal and biofuels—

Sitting suspended for a Division in the House.

On resuming—

I was praising the Grimsby Telegraph and the Scunthorpe Telegraph, which is always a wise thing to do, especially as their reporter is present.

My hon. Friend the Member for Brigg and Goole has articulated the future impact of tidal, wave and biofuel energy, but I want to highlight the region’s potential for placing the Humber at the centre of the offshore wind sector, not only in the UK, but in Europe and globally.

The area is ideally located. The Immingham and Grimsby dock complex is the largest in the UK, measured by tonnage. Since the decline of the fishing industry, Grimsby dock has been seeking a new role, and offshore wind could be the vital opportunity. Only a few miles away, Scunthorpe has steel production, and everything possible must be done to ensure that the various contracts filter down to small businesses, many of which have been struggling in recent months.

The region has several examples of where short-term investment could result in long-term growth and regeneration. For example, the regional growth fund is currently reviewing proposals, made in association with North East Lincolnshire council, to modernise, improve and update port infrastructure, which would provide for the construction of tailor-made facilities for the offshore wind sector. Such improvements, requiring investment of £1.8 million, would lead to real improvements within a planned 12-month time frame and to several potentially major contracts being finalised, possibly resulting in the creation of hundreds of long-term, sustainable jobs. Such contracts would directly affect investment and job creation, arising from the emphasis and support given to the Humber region.

One of the most exciting developments is proposed by Able UK on a 300 hectares site close to East Halton and North Killingholme. It could make northern Lincolnshire the capital of the offshore wind industry and provide the potential for thousands of jobs over the next decade or so. Many of those jobs will come fairly soon with construction projects, and when linked to this country’s commitments to increase dramatically our environmentally friendly energy supplies, green technology has the potential to create many new opportunities.

The production of renewable electricity in the UK has been growing by 11% per year since 2000, and the offshore renewables industry has been gearing up for growth. The Crown Estate has announced the successful bidders for each of the nine round 3 offshore wind zones within UK waters, and that will occupy the industry for at least the next 10 years. It has been brought to my attention that there may be some delay to round 3, but I hope the Minister will allay those concerns in his reply. Opportunities for growth opened up to the area with the supply chain for the Humber gateway site—the Able UK development—and also with the massive round 3 Hornsea site that is within 12 miles of Hull. When finished, it could generate up to 14% of the UK’s total energy needs.

I urge the Minister to give a cast-iron guarantee that northern Lincolnshire and the Humber will receive Government support equal to that for other areas. Private enterprise stands ready to invest, but it cannot do it alone. We welcome the opportunities offered by port development grants, but the earlier we receive confirmation that the A160 into Immingham docks will be upgraded, the better. I appreciate that that is not within the Minister’s brief, but it is yet another opportunity for me to mention the issue.

There is also the seemingly never-ending debate about Humber bridge tolls. The Treasury review into the tolls is a major step forward, and we look forward to its conclusion later this year. If the labour market is to function freely in the renewables industry—and other industries—and allow local workers to take all opportunities available, we must consign the debate on tolls to history.

Potential investors and current stakeholders remain concerned about long-term financial commitments and the speed at which planning applications are implemented. In a report on the potential of the UK’s renewables sector, the offshore valuation group stated the requirement for new financing structures that complement the fundamental features of renewable energy infrastructure and are able to support the scale and speed of industrial growth. That is necessary to secure the UK as a centre for the global renewables industry.

So far, the Government have done a lot, which is greatly appreciated by local councils and other representatives from the industry. Nevertheless, we cannot do it alone. There is the possibility to create a great number of job opportunities in an area that has been in recession for too many years, and I urge the Minister to do everything in his power to help the area.

It is a privilege to serve under your chairmanship, Mrs Main, particularly on a subject that I know is dear to your heart. I congratulate my hon. Friend the Member for Brigg and Goole (Andrew Percy) on securing this debate and on returning to a theme that he has become accomplished in discussing in this House. He and my hon. Friend the Member for Cleethorpes (Martin Vickers) make a powerful duo, and they are eloquent and dedicated advocates for the interests of their constituencies. They have worked hard to create a broad coalition on both sides of the House and of the Humber, and to bring together the interests of the local authority, the business community and the political representation in the Greater Humber area. That will ensure that we take maximum advantage of the benefits that undoubtedly exist. Contributions from other hon. Friends concerning how such opportunities can benefit their constituencies have also been encouraging, and we have heard from my hon. Friend the Member for Colne Valley (Jason McCartney), and about the interest in bioethanol from my hon. Friends the Members for Hove (Mike Weatherley) and for York Outer (Julian Sturdy).

This is a timely debate because we are looking at the potential for a huge regeneration in parts of the country that have been badly affected by economic decline over many years. One of the most exciting aspects of the renewable sector is the potential that it brings for economic prosperity in areas that have suffered badly. We must put this debate in the national context. The Government are committed to a major roll-out of renewables, because we believe that it will help to secure our long-term energy interests, help tackle climate change and meet our renewable energy targets for 2020 and beyond. It will also deliver many green jobs across the United Kingdom, revitalising our manufacturing sector.

The 15% target for renewable energy by 2020 is challenging, but we are sure it is achievable. We are on track for the first interim target of 4% renewable energy by 2011-12, and we have 25 GW in the renewable electricity pipeline. We should look at the resources around us—we have heard about how such resources play out for the Humber. Around these islands we have 40% of Europe’s wind and some of the highest tidal reaches in the world. We are already global leaders in the offshore wind sector, with 1.3 GW of installed capacity.

This debate takes place against the background of the Government’s commitment to localism, and we expect communities that accept renewable energy developments to receive distinct and specific benefits. We have mentioned the localisation of business rates, and we are looking at other ways in which communities can benefit from hosting facilities on behalf of the wider national interest.

My hon. Friend the Member for Cleethorpes discussed offshore wind. The Carbon Trust has estimated that the offshore wind sector could create 70,000 jobs by 2020. Last week, I was delighted to announce the grant of consent for the Humber gateway offshore wind farm, which will generate enough clean electricity for 150,000 homes. We put in place the offshore wind developers forum specifically to identify barriers. We are determined to drive that process forward as fast as possible, identify potential barriers to investment and do what we can to ensure that they are dealt with and do not become insuperable. We still need an acceleration in deployment and technical advances to realise the potential of offshore wind.

UK manufacturing activity will be key to realising the economic potential offered by offshore wind across the whole supply chain, and I am confident that the offshore wind sector will grow substantially in the coming years. We are determined to avoid mistakes that we have seen in the past, where although our waters contain some of the largest offshore wind farms in the world, the jobs and contracts go to mainland Europe or the far east. In taking forward the next stage of offshore wind development, we must ensure that those jobs come to the United Kingdom.

We are the world’s leading market, and any company that is keen to invest in the offshore wind manufacturing chain should be looking at Britain. The contribution made by Siemens, and its determination to build in the UK, and the interest we are seeing from Gamesa, GE, Mitsubishi and other companies shows the extent to which Britain will be a global leader in this technology.

We are looking at making larger turbines than have been developed before. They need to be more reliable than those used for onshore wind, and to have deep foundations and undersea cabling. That means that they will be harder to transport than some of the turbines used for onshore wind, and there is a strong case for that manufacturing to be done locally to market.

I support the work that has been done on both sides of the Humber and, indeed, in other parts of the country to showcase the benefits of this technology for potential investors. It is also interesting to see the work that well-established local companies are doing to give themselves a new direction. For example, Cosalt, which was originally known as the Great Grimsby Coal, Salt and Tanning Company when it was founded back in 1873, now provides engineering, safety and inspection services to the wind energy sector. That typifies the economic development thinking in the area. There is no doubt that such activity should provide a major boost to the British economy, and there is every reason for us to hope that the ports along the Humber will be able to develop from that.

Of course, this issue is not just about wind power. One of the most exciting aspects is how the renewables sector brings together in specific locations a raft of different technologies and the contributions that they can make. Biomass is part of that. In 2009, biomass electricity provided 87% of total renewable generation in the Yorkshire and the Humber region. There is no doubt about the significance of the contribution that it can make.

My hon. Friends spoke about the importance of bioethanol and the leadership that Britain ought to be looking to establish in this sector. Bioethanol offers one of the few options in the short term for tackling greenhouse gas emissions and for meeting our renewable energy targets in the transport sector. We are considering the opportunities that can be provided through eligibility to benefit from the renewable transport fuel obligation and the renewables obligation. As my hon. Friend the Member for Brigg and Goole set out in opening the debate, we are looking at the renewables obligation, and this issue can be part of that process, although as he will understand, it is my colleagues in the Department for Transport who lead on those issues.

We are also committed to harnessing the benefits that a successful marine renewables sector can bring to the UK generally and, within that, to the Humber area. The schemes to which my hon. Friend referred show some of the thinking that is going on. This is a fast-moving sector. As he has said, the struggle is in getting things to a commercial scale. What we have seen in looking at the schemes that were in place already—the marine development fund and particularly the deployment fund—is that the bar was set too high to be relevant to the stage that the industry is currently at.

We have examined how we take the technology further and faster. Its development is an explicit written element in the coalition agreement, which is at the core of what we are trying to do in the Department of Energy and Climate Change. The benefits go well beyond providing us with secure, clean electricity, because there is an opportunity to build a new manufacturing sector in the UK, which will create new jobs and grow economic opportunities both at home and globally.

That will happen only if we ensure that we capitalise on the hard work that the sector is doing already and ensure that the right foundation is in place on which to build success. We have established a marine energy programme, and we now want to ensure that small, dynamic companies have every reason to stay in Britain by putting in place a network of marine energy parks around the UK. That will enable us to take forward the technology and ensure that those emerging companies want to develop in the UK, rather than, as we have seen too often in the past, taking their technologies elsewhere in the world.

We have brought forward the banding review for renewables obligation certificates by a full year, so that we can provide much greater certainty to investors. The difference between different parts of Britain—the difference between ROCs support in England and in Scotland—will feature in that, although of course the level at which support is set in Scotland is a matter for the Scottish Government and the same applies in Northern Ireland.

We can offer a real opportunity to take forward these technologies in this country. Our objective must be to remove barriers, to encourage investment and to ensure that we identify where the challenges are, so that the potential throughout this country can be achieved. This has been a short but important debate. The Humber has a very important contribution to make to the renewable energy future of this country, and I again pay tribute to the Members of Parliament who are representing the area for the determination and assiduity that they have brought to its cause.