Energy and Climate Change
The Secretary of State was asked—
Household Energy Bills
19. What steps he is taking to help households with their energy bills. (133338)
Helping people with energy bills is a top priority for us, so we have a range of initiatives including tariff reforms, energy-saving policies and direct help to cut the bills of those on the lowest incomes. From our consultation on proposals to help to get consumers on the cheapest tariffs to the green deal, and from the warm home discount to our promotion of collective switching, this Government will do whatever we can to help people and businesses to combat the effects of rising energy prices.
Has the Secretary of State had a chance to peruse the report just produced by the Committee on Climate Change on the customer price differential between a renewable-rich strategy and a gas-rich strategy? Does he agree that that could represent a sixfold difference in long-term price increases for customers? Does he agree with the committee’s view, and will he be sharing his views with the Chancellor shortly?
The hon. Gentleman got a lot of questions in there. I have looked at the headlines but I cannot say that I have read the full report, although I certainly intend to do so. I agree that it poses some challenges to those who debate energy policy, because it suggests that with a high gas price prediction, we could see energy bills going up by, I think, £600, whereas under a renewables strategy it would be only £100. The Government are adopting a mixed-energy approach, so that we are not dependent on any single energy source and can therefore manage the risks, because we cannot know the future of gas prices or predict how the cost of renewables will go down. I believe that our approach is the best one for the British economy.
The cost of energy is crucial for the nearly 10,000 pensioners in my constituency, and I am worried about the Government’s policy to get people on to the lowest tariff. What would happen if the energy companies simply raised the price of the lowest tariff? How would the Secretary of State address that problem?
We have taken a balanced approach in our tariff reform proposals, on which we are now consulting. We have tried to ensure that those people who are on so-called dead tariffs, or on unnecessarily high tariffs, will automatically be switched down to the lowest tariff, given their preferences. We have also tried to ensure that there will still be competition, in that there will be four classes of core tariff so that the energy companies will be able to compete using those tariffs. The key is to try to help people who do not engage with the energy market to get a good deal, as well as to ensure that competition can deliver for consumers and for businesses.
With respect, I did answer the question. It involves something called competition. On this side of the House, we understand competition and how it supports consumers. I have to say to Opposition Members that an awful lot of people were asking the last Labour Government why they did not sort out the multitude of tariffs that were creating complexity and confusion and getting in the way of competition. Through our simplification, we are helping the most vulnerable people and those who have been on dead tariffs and paying far too much for their energy, but we are also ensuring that competition can deliver for our economy.
23. The Secretary of State will be aware that Scottish and Southern Energy has indicated that pre-payment customers will now be able to enjoy the same rates as other customers. Is he going to persuade the other suppliers to do exactly the same? (133342)
It is great news because it shows how competition can assist in this process. I refer the hon. Lady to Ofgem’s retail market review analysis, which showed that customers on prepayment meters can save an average of £65 and up to £152 by switching to the cheapest deal within that prepayment method. The proposals we are taking forward really will help people on prepayment meters.
My hon. Friend is absolutely right: when it comes to energy bills, saving energy is the best way to save money. The green investment bank is engaging with my Department and the Green Deal Finance Company over the support it will give to the green deal. I cannot make an announcement today. All I can say is that the green investment bank is being helpful on the green deal, as on many other areas, and that it is a victory for this Government that we have introduced the green investment bank.
Energy bills have risen by nearly £300 since this Government came to power. I agree with what hon. Members have just said—that one of the best ways for households to protect against rising prices is to improve the energy efficiency of their properties—yet the launch of the Government’s green deal scheme has been shambolic. I listened to the Secretary of State’s answer and noted that he cannot tell us even whether the green investment bank is going to capitalise the green deal, yet he expects people to sign their green deals in just over a month’s time. The number of homes expected to be insulated next year is set to fall dramatically. The Insulation Industry Forum is warning that low green deal uptake will mean that 16,000 jobs are set to be lost in the sector next year. Will the Secretary of State guarantee that he will not let that happen?
The hon. Lady does not seem to understand the green deal, For a start, it is being launched on 28 January, after the soft work we have seen over the last few months to prepare for it. We believe it will be a huge success. I believe the green deal should have cross-party support, and I hope that the hon. Lady will confirm from the Dispatch Box that the Opposition support it. The green investment bank’s support for the green deal will not be direct; it will come through supporting the financial arrangements of the credit. I thought the hon. Lady would understand that. As for predictions on insulation, I think we should wait. I believe the green deal will support the market and that it will be a real step forward.
I thank the Secretary of State for his answer, to which I listened carefully. We have been working on the green deal for over two years now, yet in five weeks’ time the Secretary of State expects consumers to sign a deal when they do not know what the interest rate and the cost of the finance will be, which I think will be crucial to the success of the scheme, which we all want. Rising prices are hitting all consumers, but their effects are felt most by those in fuel poverty. Two years ago, the Minister of State, Department of Energy and Climate Change, the right hon. Member for Bexhill and Battle (Gregory Barker), said at the Dispatch that his Government would really attack fuel poverty, yet uSwitch estimates that the number of those in fuel poverty has risen to 6 million under this Government. Analysis by National Energy Action has shown that even after the measures introduced by this Government, such as the warm home discount, funding for fuel-poor and low-income households will be cut by half from January. Will the Secretary of State now apologise for breaking his promise to the millions of people who will be feeling the cold this winter?
This Government are doing everything they can to tackle fuel poverty. My predecessor, my right hon. Friend the Member for Eastleigh (Chris Huhne), set up the review to look at how we measure fuel poverty, and that concluded that the last Government could not even measure fuel poverty correctly. We are using a whole set of new initiatives, including collective switching, using the power of people coming together. One would have thought that Labour Members would have used that in their 13 years in power. They failed to use the collective principle to try to help people; we are doing that, and we are determined to tackle fuel poverty.
13. What steps he has taken to exploit reserves of shale gas in the UK. (133331)
Shale gas may prove to be a useful addition to the UK’s diverse portfolio of energy sources, and would be particularly valuable in replacing declining North sea supplies, with benefits to energy security as well as to the economy and employment—but its exploitation will be acceptable only if it is safe and the environment is properly protected.
Hydraulic fracturing operations for shale gas were suspended last year, pending consideration of seismic events in Lancashire. Based on the latest evidence and expert advice, and having considered the responses to a public consultation on that advice, I have concluded that, in principle, fracking for shale gas can be allowed to resume— subject to new controls to mitigate the risk of seismicity. I have made full details available to both Houses by means of a comprehensive written statement tabled this morning.
I want to see proper environmental safeguards and generous community benefits for the areas where fracking will take place, but does my right hon. Friend agree that shale gas has the potential not only to lead an industrial renaissance in this country but to play a serious part in dealing with fuel poverty?
I agree that shale gas has an important part to play in our energy mix and in our economy, and I also agree that we must ensure that communities benefit and that there is proper environmental regulation. I have been very impressed by the way in which Members in all parts of the House have contributed to the debate and to the Department’s thinking, but I pay particular tribute to the hon. Member for Fylde (Mark Menzies), who, along with the independent experts, has really influenced our thinking. It is very important for us to take the public with us as we explore the potential for shale gas in the United Kingdom.
Many of my constituents remain concerned about the parallels that they perceive between shale extraction in the United States and what is being planned in the United Kingdom. Will the Secretary of State say a little more about why he thinks that the regulatory environment here will be superior to that of the United States, thereby disproving many of the alarmist stories that are circulating?
Let me also pay tribute to the work that my hon. Friend has done for his constituents, who I know are concerned about shale gas. I can reassure him that the regulations that we already have in the United Kingdom are much stronger than those in many American states where fracking for gas has been taking place for many years. We have the regulations, controls and powers of the Environment Agency, the regulations, controls and powers of the Health and Safety Executive and the regulations, controls and powers of my own Department, so we already have a strong regulatory regime. However, if the exploration suggests that there is potential for commercial development and we move in that direction, we will keep that regime under review, and will tighten and strengthen it if necessary. Today’s announcement is about new controls to ensure that seismicity is not a problem.
I welcome the Secretary of State’s reassurance that environmental and safety concerns will be given a high priority, but some people fear that those whom the press have dubbed the frackheads in the Government are rushing ahead with tax incentives for shale gas exploration without taking the time to look into those concerns first. Can the right hon. Gentleman reassure me that no tax incentives will be introduced until we are 100% sure that it is safe to go ahead with fracking in this country?
I do not think that anyone has described me as a frackhead. My job is to make certain that the environmental and safety controls are there, and I believe that the work that we have done, particularly on the seismicity aspect but also on other aspects, can reassure the public in that regard. I am determined to ensure that the environment is properly protected, and as Members will see if they read my statement, I have also commissioned a study of the potential impact of shale gas exploration on greenhouse gas emissions. I hope that that will reassure people on the environmental side as well.
I welcomed the announcement of the formation of the Office for Unconventional Gas last week, and I thank the Secretary of State and Ministers for all the work that they have done in that respect. However, some of my constituents have subsequently expressed concern about the possibility that the office is not fully independent. What assurances can the Secretary of State give that it will both improve regulations and be robust, transparent and able to respond to any concerns that Fylde residents may express?
I repeat my thanks to the hon. Gentleman. The way in which he has stood up for his constituents provides a model for all Members. I can reassure him that the Office for Unconventional Gas will be a strong office, and that it will be in my Department and accountable to Ministers, so that Members can hold us to account in the House. One of its jobs will be bringing together the various regulatory bodies so that they are properly co-ordinated, and our work as we approach potential commercial development in a few years’ time will include ensuring that we have all the regulatory controls that we need.
Is the Minister aware that you cannot be too sure what happens once you start drilling a long way through strata? In my area, after a pit had closed a whole village had to be removed and rebuilt on the other side of the road because of the escape of methane and other gases. I have heard that a company is drilling within a mile of that area now. It may not be anything to do with this fracking business, but I hope that the Minister will tell people to keep their noses out, because otherwise there might be another explosion in the area.
The whole House listens to the hon. Gentleman closely on these issues because he is an expert on drilling and all aspects of the coal industry. I do not know the case to which he refers, but if he wishes to write to me, I am sure my officials can look into it. He makes an important contribution to this debate, because he highlights the fact that this country has had to tackle methane emissions in the coal and the oil and gas industries, so we have a lot of knowledge, experience and expertise to draw on to make sure we can control emissions from shale gas.
I can see how excited Members on the Government Benches are about the potential for shale gas, but I wonder whether they will be equally excited if drilling starts in Wiltshire, Lincolnshire or other parts of the country. As the Secretary of State knows, we have always said fracking should go ahead only if it is safe and environmentally sound. We set out six conditions, and we will be looking to see if they are met in the Government’s written statement today.
On prices, last week the Chancellor said he did not want the British public to miss out if gas prices tumbled as a result of discoveries of shale gas, but does the Secretary of State agree with the former Energy Minister, the hon. Member for Wealden (Charles Hendry), as well as most experts, that
“betting the farm on shale brings serious risks of future price rises”?
First, I thank the right hon. Lady for saying she will look at our statement carefully. I know that her colleague, the hon. Member for Rutherglen and Hamilton West (Tom Greatrex), wrote to my hon. Friend the Member for Wealden when he was a Minister to set out the Opposition’s conditions. I believe that when the Opposition study the written ministerial statement—we gave a copy to the right hon. Lady before this Question Time, but she should have a chance to examine it—they will see that we have met all the conditions.
The right hon. Lady’s main question was on prices. I agree with my hon. Friend the Member for Wealden that we should not bet the farm on shale gas. I am absolutely clear that the most responsible and sensible way forward for energy policy is to have a diverse set of resources and sources for our energy. Some of the press and commentariat have got very excited about the possibility of gas prices falling, but the independent analysis and the International Energy Agency findings do not necessarily support that.
I welcome my right hon. Friend’s statement that there will be some further environmental studies, because is it not the case that at present we simply do not know the environmental impact of shale gas exploration in relation to methane seepage and methane getting out into the atmosphere? Until we can be certain of the impact, we must proceed with a great deal of caution.
I agree with my hon. Friend that we should proceed with caution, and we are doing so. The evidence so far suggests that the carbon footprint of shale gas exploration is only slightly higher than that for conventional gas, but I am determined that we in this country examine it seriously, which is why I have commissioned a study.
Carbon Capture and Storage
It is a pleasure to answer a question from my hon. Friend the Member for Sherwood, the Robin Hood of his age. Carbon capture and storage has the potential to play a crucial role in our future low-carbon energy mix, allowing us to benefit from the flexibility of fossil fuels without associated emissions. As set out in the annual energy statement, the Government are committed to working with industry to create a cost-competitive CCS industry in the UK, and to make that happen we have introduced one of the best support packages in the world.
What a privilege it is to receive an answer from the Minister who has won the award of Minister of the year! Does he agree that CCS gives us the opportunity to make use of coal, which offers us 200 years-worth of supply, flexibility within the market and the ability to produce our energy very cheaply? Will he come and have a look at the coal industry in Sherwood?
When I think of Nottinghamshire I think of my hon. Friend, and when I think of my hon. Friend I think of Nottinghamshire—how proud each must be of the other. He is right to say that carbon capture and storage can play a role in delivering clean coal, and three of the four projects we are supporting in our £1 billion competition are coal projects. I know that he visited Thoresby colliery in his constituency just a few weeks ago, and he will understand that CCS is crucial to our ambitions to deliver energy security in a way that reduces emissions.
The Government have not met the deadline for the first stage of European Union funding for CCS, yet the gas strategy looks to the construction of about 30 new gas-fired power stations. Will the Minister tell me how many of those are likely to have CCS fitted from the outset?
The hon. Gentleman says that we did not benefit from European funding in the first stage. In anticipation of this scrutiny, I spoke to the European Commissioner for Climate Action just yesterday evening, making it very clear that we hope for—indeed, we expect—European support for the work we are doing. It was a very positive call. I assure the hon. Gentleman that we will work with Europe to ensure that both what we do and what is done across Europe supports the development of world-beating CCS.
In his discussions with the EU Commissioner yesterday, did the Minister have the chance to raise the case of Germany? It burns about 25% more carbon per head than the UK, yet has just decided to go ahead with 23 unabated coal power stations, which will increase that differential still further.
I would never be so impertinent as to raise the policy of another sovereign state in such a call. However, my hon. Friend is right to say that the future of coal is clean coal. That is the way forward and it is why we are running our £1 billion competition. May I draw the House’s attention to the conclusion of the UK CCS cost reduction task force, whose members I met yesterday afternoon? It has said clearly that coal power stations equipped with CCS have
“clear potential to be cost competitive with other forms of low-carbon”
In his evidence to the Liaison Committee earlier this week, the Prime Minister talked about the importance of CCS in relation to gas and coal generation, saying:
“Here are some funds. Let us have demonstrator projects and all the rest of it.”
The “all the rest of it” is the European Commission saying in correspondence to me that the UK did not secure up to €600 million of match funding because the Treasury would not confirm co-funding. It is also the Cabinet Office project assessment review—it is previously unpublished but I have obtained a copy—stating that “only” £200 million is “available”. How does the Minister expect there ever to be progress in developing commercial CCS if the Government’s financial commitment falls so far short of the Prime Minister’s warm words?
I can tell the hon. Gentleman, although I am in a sense disappointed to do so, because he will not have been privy to the information I gave the House until I provided it a few moments ago, that that was not the reason given by the European Commissioner—[Interruption.] The Commissioner did not say that to me in our telephone conversation. Indeed, the hon. Gentleman will know that in that first round no CCS project received support—there was some thought that a French project might, but in the end it did not. The second round will begin next spring and will be completed next year. I have made it very clear that we will work as a Government, with Europe, to ensure that our projects have the very best chance of receiving that additional funding.
The coalition Government are absolutely committed to achieving substantial cuts in carbon from our electricity sector by 2030; that is entirely consistent with the targets set out in the Climate Change Act 2008. We have also announced that we will take a power to set a legally binding decarbonisation target for the electricity sector specifically as a Government amendment to the Energy Bill.
I am grateful to hear that, and I very much hope that the target we set will be the right one to ensure that we meet our commitments to cut emissions by 2050, because it is very clear that we need a target. Will the Minister say what he believes that will be?
But is the Minister just delaying the decision until after the general election? Is he now accepting the advice of the Committee on Climate Change that the Government’s dash for gas perpetuates the stop-start approach to investment in low-carbon technologies? We need certainty for investment.
The hon. Lady, my former Environmental Audit Committee colleague, is absolutely right to say that we need certainty for investment. The CBI has said that the Energy Bill
“sends a strong signal to investors”.
Energy UK says:
“This energy bill is a big and positive step forward.”
The right time to decide on a decarbonisation target for 2030 will be when we set the fifth carbon budget, which must be set by June 2016. It is at that point, when we can take it in the context of the whole economy and the economic effort to meet our decarbonisation targets, that we will decide whether we need to set an additional target.
It is interesting that the Conservative part of the coalition is answering this question, rather than the Liberal Democrat part. Will the Minister not admit that the chief executive of WWF UK had a very good point when he said recently that the lack of a 2030 decarbonisation strategy in the Bill will undermine the certainty of long-term investment in renewable energy supply chains and that that is a clear failure of leadership by the Prime Minister?
I am afraid that I could not disagree more. If we look at the people who will be putting billions of pounds into decarbonisation, and if we consider what the industry is now saying, we can see that there is genuine transparency, longevity and certainty as a result of the Energy Bill. I understand the concerns of WWF, but now we have published the Bill the need for additional legislation to give certainty falls away. As I said, we will consider the need for a decarbonisation target as part of setting the fifth carbon budget for 2028 to 2032, which will happen in 2016.
I agree that certainty is needed for investors, and I hear that from the Cambridge cleantech cluster and others. I very much welcome the proposed power for the Secretary of State to set a target, but would the Minister support the Secretary of State in setting such a target?
I can assure my hon. Friend that there is a unanimous view among DECC Ministers. We think there is significant merit in a target, but the right time to decide whether we should set one and what it should be will be when we set the fifth carbon budget, which has to be done by June 2016. I reiterate that investor certainty, which was not there before we published the Bill, is now there in spades. I think we can all move forward and look to a future full of investment in a very exciting sector.
My UK energy app tells me that of the electricity generated in this country and lighting us, nearly 80% comes from burning hydrocarbons, 16% from nuclear power and, despite all those windmills onshore and offshore, a derisory 1.3% from wind power. Is it credible to suggest that over the next 18 years we will have replaced all that hydrocarbon and our ageing power stations with windmills, or will we just have black-outs?
My right hon. Friend points out that we inherited an appalling level of renewables deployment. We are now changing that very quickly, but he is quite wrong to think that we are seeking to place the entire UK capacity with renewables alone. Nuclear will play a strong role and there will be a big role for gas in the future. As my right hon. Friend the Secretary of State said, what we need is a diverse, clean energy mix and that includes a range of technologies. Perhaps my right hon. Friend will be slightly less afraid of the future than he seems to be at the moment.
The Minister says that the reason the Government cannot set a decarbonisation target is that the fifth carbon budget, which covers 2030, will not be set until 2016, but the third and the fourth carbon budgets, which run till 2027, have already been set. If that is the only objection, why does the Minister not use the power in the Energy Bill, end the uncertainty and set an interim decarbonisation target for 2020 or 2025?
I know that the right hon. Lady and the Opposition love a target and would love more targets, but everyone is agreed that what we want is certainty, not targets. We want a simple architecture. Overall, there are too many targets. What we need is real clarity to be certain that we deliver against those key targets. As I said, we are open-minded about the issue of a decarbonisation target, but we want to assess it at the right time.
If that is the best answer that the Minister can provide, it is no wonder that the DECC team loses out time and again when faced with arguments from the Treasury. Not only have the Government failed to set a decarbonisation target, but we have seen the blocking of the appointment of David Kennedy as permanent secretary, and now they are proposing a gas strategy that would blow a hole through our climate targets. Before the last election, the right hon. Gentleman told Members that the Conservatives
“attach the highest importance to the full implementation of the Climate Change Committee’s recommendations”––[Official Report, Climate Change Public Bill Committee, 24 June 2008; c. 60]—
and that the Conservative party in government would implement the advice in full. Will he confirm today that if the Government opt for 37 GW of new gas, as their strategy proposes, for the first time ever Ministers would have to reject advice from the Committee on Climate Change and rewrite the fourth carbon budget?
The right hon. Lady clearly does not understand the difference between sensitivity modelling, which shows a whole range of potential outcomes, and a Government plan going forward. She should look at our central forecast. I can assure her that we take the advice of the Committee on Climate Change extremely seriously, but we are delighted that as a result of the publication of the Energy Bill, we now have the certainty that was not there a couple of weeks ago, and industry is speaking up in a chorus of approval of the steps that this coalition Government are taking. We will deliver a transformation in the UK energy sector and the market will deliver the billions and billions of pounds of investment to make it happen.
International Climate Change Agreement
The best strategy to avoid dangerous climate change must be agreeing a new global deal in 2015. However, while pressing for this, we are also working hard with other countries to encourage low carbon growth through effective bilateral partnerships. I pay tribute to my hon. Friend and to GLOBE International for the important work that they are doing in this area too.
Following the outcomes at Doha, it is clear that we need to reconsider how we use our political capital to get a successful deal in 2015. Does the Minister agree with GLOBE’s analysis that much greater focus should be given to supporting action at national level to put in place climate legislation and regulation in order to create the political conditions for that agreement?
My hon. Friend is right. If we are to see progress that allows us to clinch that global deal in 2015, we need much more momentum and we need to build momentum at national level as well. The UK has led by example but we are also now engaged with countries such as South Korea, China and Mexico, and other countries with which GLOBE is familiar, to see how we can work together in partnership to drive real progress on the ground, as well as with the private sector.
I am delighted to say that making sure that our international climate fund benefits the UK low carbon sector is a key aim of our policy. That is why I took a trade mission—the largest ever green trade mission—to east Africa in October, and I will be going in the new year to the middle east, taking more of our renewables companies, to make sure that where we are supporting developing countries, UK industry gets the benefit of that, and in the long term, probably more than the total spend.
Energy Infrastructure Investment
My Department and the Treasury regularly discuss how to incentivise investment in new energy infrastructure. That is why we were able to reach agreement, paving the way for the introduction of the Energy Bill and the Chancellor’s autumn statement. These enable us to meet our legally binding carbon reduction and renewable energy obligations and ensure the investment required to bring affordable power to our nation.
Given the recent announcement on consumer price rises, how will the Minister ensure that decisions over the next six months on investments in new nuclear generation capacity, before the Energy Bill is even on the statute book, will be made at the lowest possible cost to consumers?
The arrangements in the Energy Bill allow for precisely the eventuality that the hon. Lady describes: they allow final investment decisions to be made in concert with contracts for difference. She will know that we are in ongoing discussions about the Hinkley Point development. I cannot say too much about its commerciality, but she should know that we intend to proceed with that with alacrity and diligence. I am confident that new nuclear can play its part in an energy mix that is fit for the future.
Centrica recently pulled out of investment in a new energy plant at Scawby Brook, and the Siemens and Able UK renewables investment on the Humber, although hopeful, are still uncertain. How will the Government ensure that areas such as the Humber do not miss out on opportunities for investment and jobs because of ongoing uncertainty?
The Energy Bill brings a framework of certainty that will allow investors to be confident about the Government’s direction of travel. I am obliged to say that, frankly, those decisions could have been made five, 10 or perhaps 15 years earlier, given that we knew that our energy infrastructure was ageing and that we would have to rejuvenate it by means of legislation. The hon. Gentleman is right to make the case for the Humber. I have met one of his near neighbours to discuss that, and I will be happy to meet him and delighted to meet representatives of his community to discuss what we can do to assist his cause that we are not already doing.
Cumbria has the fastest flowing water in England, a strong, well developed and world-class hydro-technology industry and strong public support for hydro-technology schemes, so will the Minister strongly consider energy infrastructure schemes for hydro-technology in Cumbria?
The hon. Gentleman is right that hydro-technology can also play a part. The critical point is that the energy infrastructure investment that has been discussed in the House this morning is central to our macro-economic plans. We are speaking not merely of tens of thousands of jobs, but of hundreds of thousands of jobs and new skills in his area and others. Given that I have offered to meet the hon. Member for Scunthorpe (Nic Dakin), I think that I should meet the hon. Gentleman, too, to discuss the specifics of his area.
What can the Minister do to ensure that adequate investment finance is available to marine energy and its attendant infrastructure? Is he aware that it is now more than eight years since a marine current turbine was trialled off the north Devon coast, which more than twice exceeded expectations for energy production but has not come to market because of a lack of finance? If he cannot make new finance available, can he rebalance existing finance away from 30-year-old wind technology and towards the new technologies that could drive forward the process of decarbonisation?
I do not want to take the opportunity to put the wind up anyone, so I will concentrate on the first part of the hon. Gentleman’s question. He is right that we need to look at all kinds of technologies to achieve the mix that we have described. He will be familiar with our work on green energy parks and will know that six of the eight major wave and tidal energy projects around the world are in this country. I know that the Environment Agency certainly believes that, because it told me so last night. We are investing in that significantly, but I will look at it again because it is absolutely right that we are at the cutting edge of technological change when that can contribute to the energy mix I have described.
The coalition is supporting geothermal heat through the renewable heat incentive. Our September consultation proposed a higher tariff unique to geothermal. The coalition is also supporting geothermal power through the renewables obligation. We announced in July that geothermal would be paid at a rate of two renewables obligation certificates. Deep geothermal heat and power projects have also been supported by specific grant awards under the Department’s deep geothermal challenge fund and through the Government’s regional growth fund.
I am grateful to the Minister for his answer. This is an exciting opportunity for Cornwall, and the hon. Member for Truro and Falmouth (Sarah Newton) has convened meetings in this place to discuss it, which the Minister was gracious enough to attend. Given the potential for jobs in Cornwall, the potential to make a base-load contribution to energy, and the now-legendary willingness of the Minister of State, the hon. Member for South Holland and The Deepings (Mr Hayes) to meet, will the Minister agree to meet a delegation from Cornwall to discuss the potential of geothermal?
I pay tribute to my hon. Friend’s diligence in pursuing this issue, and to my hon. Friend the Member for Truro and Falmouth (Sarah Newton), because their efforts have really helped to promote this industry in their region. We are very keen to see progress in Cornwall, which we estimate has the best geology for deep geothermal power generation in the UK. I will be delighted to meet them both to see how we can advance this agenda.
We liaise closely with the Environment Agency on this issue, and it confirms that volumes of water used in shale gas exploration are not exceptional compared with other industrial activities that routinely take place across the United Kingdom. Any operator who wishes to abstract water as an alternative to using public supplies will need a licence. Additional water abstraction will be authorised only where it is sustainable and no risks are posed to the rights of existing abstraction licence holders.
Shale gas exploration is at a very early stage in the UK, and its possible scale is as yet unknown. We have legally binding carbon budgets, and that should reassure the hon. Lady. In addition, I hope that she will be reassured to know that I have announced today that I am commissioning a study of the possible impacts of shale gas development on greenhouse gas emissions.
On the first part of my question, when one recognises the fact that 4 million gallons of water are needed for every single frack, the Minister’s answer about the water supply is very complacent. On the second part, on carbon emissions, why do the official scenarios published last week alongside his gas generation plan set out an option for carbon intensity that is four times higher than the maximum level compatible with meeting our carbon budgets?
We have legally binding commitments under the Climate Change Act 2008, and our carbon budgets have been set out for people to look at. When we announce strategies it is not unusual for there to be a whole set of analyses, including sensitivity analysis. Yes, one analysis showed higher carbon intensities, but there was also an analysis that showed lower carbon intensities, and I think that people have missed that.
Many of my constituents just to the west of the Singleton Well shale gas site draw their water from their own sink holes in the Bleasdale area and Bowland forest. Will the Minister’s Department monitor the exploration process throughout Lancashire, because if there is going to be a problem with the water supply, it will be in that part of my constituency?
I am grateful for the hon. Gentleman’s question. The Environment Agency will carry out the monitoring, but because we have increased the co-ordination of regulatory bodies, my Department will be aware of it. I hope that I assured him in my answer to the hon. Member for Brighton, Pavilion (Caroline Lucas) that the terms of any additional licences would have to ensure that the abstraction was sustainable and would not put at risk the rights of existing licence holders.
The capacity market is intended to ensure that we have adequate reliable capacity on the electricity system. It will be open to all reliable providers of capacity, including large centralised generation and other forms such as demand-side response, storage, and combined heat and power. We are putting in place tailored arrangements accordingly.
Does the Minister not share my worry and concern that, in the context of the Energy Bill and every other measure, it does not matter that we have been told this morning that we have unanimity across the two Government parties, because there is no unanimity with the Chancellor? What he said in his autumn statement and what he said this week means that it is all about gas, gas, gas. I am in favour of shale; indeed, today’s Question Time has been destroyed by not having a proper announcement on and scrutiny of shale. The fact is that we now have a Government determined to go for gas with no balance in the energy economy at all.
As the hon. Gentleman knows, the intermittence of renewables and the relative inflexibility of other forms of generation mean that gas is necessary to provide flexibility. However, he is absolutely right that if we are going to make an argument for a mixed economy, because that provides the best chance of sustainability, we cannot put all our eggs in one basket. The Energy Bill, together with the levy control framework —which, as he also knows, provides £7.6 billion for renewables, carbon capture and storage, and nuclear—enables us to achieve just that mix.
Since our last Question Time, we have published Britain’s first comprehensive energy efficiency strategy and a consultation on electricity demand reduction; we have announced a landmark agreement across the coalition Government on energy policy, including a tripling of support for low-carbon generation by 2020; and I have attended the UN climate change talks in Doha, where we were able to make steady progress on the Durban platform towards a legally binding global deal on greenhouse gas emissions in 2015. We have also introduced the Energy Bill, which will have its Second Reading next week. It will reform the electricity market, provide long-term certainty to investors and ensure that British households and businesses enjoy affordable, secure and clean electricity supplies.
Despite all those measures, in Stoke-on-Trent North alone fuel poverty is among the highest in the country at 25%—10,120 households out of a total of 40,000—and Warm Front has been cut. Given the delay to the green deal—the computer software could not be sorted out—and given that we still do not know about the loans from the green investment bank, what emergency measures will the Secretary of State take to help insulate homes and get in place energy efficiency in places such as Stoke-on-Trent North?
The hon. Lady is wrong to say that the green deal is delayed. It is not delayed—it is on track. She also missed out a whole range of policies that the Government are taking, such as the energy company obligation, which includes affordable warmth, which will be targeted on fuel poverty. It is a very important measure and I think that people should focus on it. We are not complacent. We know that fuel poverty is a real concern, and that is one of the reasons why we have had so many initiatives, whether they be the reform of tariffs or collective switching. We are delighted that 115 applications have been received by our “Cheaper Energy Together” competition. That shows commitment across the country to help on fuel poverty, which is central to that competition.
Thank you, Mr Speaker. As a Liberal Democrat, I am pleased with the progress that the Department is making on decarbonising Britain, but, bearing in mind that 50% of carbon emissions come from buildings, will the Secretary of State tell the House what discussions he is having with the Secretary of State for Communities and Local Government about making sure that zero-carbon homes are on track for delivery in 2016?
I am grateful to my right hon. Friend for his question. I know that he did an awful lot of work on this issue himself. The Under-Secretary of State for Communities and Local Government, my right hon. Friend the Member for Bath (Mr Foster), is working on it and, when we discuss it as a Government, we will make our views clear. Zero-carbon homes are very important.
T2. The Secretary of State will have seen that the big six have laid the blame for the recent price rises on the wholesale prices and Government policies. Given that there is alleged corruption in the pricing of gas and that we have got to the stage where the energy companies do not think that it is their job to worry about whether they put their prices up or not, will the Secretary of State get Ofgem to start to pay its way and look at what is happening to prices and profits in the gas industry? (133344)
I am grateful for the hon. Gentleman’s support for Ofgem’s role, which is not a view shared by his Front-Bench team. Ofgem and the Financial Services Authority are undertaking investigations to make sure that, if there has been manipulation of the gas markets, it is tackled in the strongest possible way. We will have to await the results of their investigations.
T4. Emissions from international aviation and shipping are not currently included in the UK carbon budgets. The Committee on Climate Change recommends that they should be included, and that has been accepted by the shipping industry and aviation representatives. A decision has to be made by the end of the year. Will the Secretary of State confirm that they will be included? They are emissions, so they should be counted. (133347)
I thank my hon. Friend for that question. He is right that we need to take this issue seriously. We intend to lay a parliamentary report announcing our decision before the end of the year, as is required by the Climate Change Act 2008. In making that decision, we are considering carefully the advice provided by the Committee on Climate Change. We are taking careful note of developments in the international policy framework for aviation, in particular in relation to the EU emissions trading scheme and discussions with the International Civil Aviation Organisation. It is important to clarify that the Government have set the first four carbon budgets, which take account of international aviation and emissions.
T5. May I take the Secretary of State back to his statements today about investment? He has said before that there was plenty of confidence in industry and that investment would occur as a result of the Energy Bill. That is not the case for the 1,500 leading companies in the UK that have signed an advertisement demanding that the Government set the 2030 decarbonisation target because it is the only way to give confidence to the markets. (133349)
The welcome that industry gave to the publication of the Energy Bill was extremely heartening. The British Chambers of Commerce, the CBI, the Engineering Employers Federation and the Federation of Small Businesses, which represent thousands of businesses, welcomed the Energy Bill. The fact that we are taking powers in the Bill to set a decarbonisation target shows real leadership and many companies have welcomed that.
T6. Will the Government do what they can to support the billing stakeholder group’s key recommendation, which has been adopted by Ofgem in its present consultation, that would oblige energy companies to be much more transparent in their bills? That chimes with the Prime Minister’s statement, but we know that the energy companies do not like it. (133350)
I thank my hon. Friend for his dogged determination in pursuit of this issue. I assure him that, although we cannot yet declare victory, we have victory within our grasp. Thanks to the leadership of the Prime Minister and our determination to legislate, we are moving towards bills that not only offer greater transparency and clarity, but instil greater competition. I think that our final model will be based on the modelling that my hon. Friend has shared with us.
Will the Secretary of State explain why he proposes in the Energy Bill to include contracts for difference that are raised from levies in the levy control mechanism, but to exclude capacity payments that are raised by levies from the same mechanism?
T7. The views of the Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for South Holland and The Deepings (Mr Hayes), on onshore wind farms have been greeted with great acclaim in various parts of the country. What action is he taking to ensure that local communities that do not want such wind farms do not have them foisted upon them? (133352)
My hon. Friend is generous. I do have the wind beneath my wings. He will know that we issued a call for evidence. That has been completed and we are considering the outcome. He and the whole House, including the ministerial team, recognise that community buy-in and ownership, and communities shaping the developments in their area should lie at the heart of all that we do. We must not impose what people do not want on them.
Do the Secretary of State and the Minister of State, Department of Energy and Climate Change, the hon. Member for South Holland and The Deepings (Mr Hayes), agree with the recent report by Greenpeace and WWF, which states that investment in wind energy could create an additional 70,000 jobs, help us to meet our carbon reduction targets, and boost the economy by £20 billion a year by 2030?
My right hon. Friend the Minister of State has spoken about his support for geothermal energy in the United Kingdom. Will he drive forward the Department’s work with Iceland to develop that country’s vast geothermal potential? Does he agree that an interconnector is not just technically feasible but has the potential to bring vast amounts of low-carbon electricity, thereby helping our security of supply and avoiding price shocks?
My hon. Friend and former ministerial colleague left a huge record of achievement in the Department of Energy and Climate Change, including that of fostering greater links and a coherent strategy with Iceland. I assure him that the Government will build on his legacy to take that project forward.
Last week I met representatives from Bristol port to hear their concerns that the Severn barrage might be back on the political agenda, and the possible impact of that on their business. Will the Secretary of State tell me to what extent that issue, in particular the proposal from Wales, is being actively discussed in the Department? Is it on the political agenda again?
As the hon. Lady will know, a study was done on that early in the coalition Government. It was decided that although the Government would not take the matter forward, if a private consortium wanted to put forward proposals, we would study them. At the moment we have not seen proposals that we could back with any financial regime, whether renewables obligation certificates, contracts for difference or anything similar. I know that people are looking at the issue, but as yet the Government have not taken a decision to support any particular project.
In light of today’s announcement, does the Secretary of State agree that fracking is not appropriate for the Mendip hills? The water that feeds the aptly named city of Wells and the villages that surround it in my constituency takes 900 to 1,000 years to reach the spas of Bath. Will the Secretary of State ensure that communities are consulted fully about this issue?
I can certainly reassure my hon. Friend that communities will be fully consulted. We have made it clear that the regulatory regime is strong, and it will be strengthened if need be. We have put in the co-ordination that will give her constituents the reassurances that they need.
What are the Government doing for those who are off-grid and use liquefied petroleum gas or oil-fired heating and have much higher bills than those on-grid? Those in rural areas suffer from poor support and funding for many public services, and they need extra help from the Government recognising their plight at this time.
I recently met representatives of the downstream industry to discuss that issue and we are indeed looking at competition, accessibility and price for those kinds of customers. I do not want anyone to be cold because they cannot afford the oil or heat they need, and the Government will take action to ensure that people are not cold or needy this winter.