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Renewables Obligation

Volume 599: debated on Thursday 17 September 2015

1. What assessment she has made of the relative net financial benefit to the public purse of early closure of the renewables obligation using different cost methodologies. (901431)

May I start by welcoming the hon. Member for Wigan (Lisa Nandy) to her Front-Bench role?

We estimate that closing the renewables obligation early to large and small-scale solar PV projects will reduce costs to the levy control framework by between £180 million and £280 million per year. The estimated saving of closing the RO early to new onshore wind is up to £270 million per year. The details of those cost estimates are published in impact assessments that are available on DECC’s webpage.

Does the Secretary of State agree that publishing impact assessments two months after decisions have been taken is unacceptable practice? Does she acknowledge that, using the alternative methodology in the impact assessment, the net present value of deciding to close the RO early turned out to be minus £100 million? That means that we are £100 million worse off as a result of her taking that decision, instead of allowing the RO to continue. If she had had the impact assessment to hand when she took the decision, might she have made a different decision after all?

What the hon. Gentleman fails to address in his question and does not seem to absorb from the steps that we have taken to address the costs is that at the centre of everything this Government do is the impact on consumer bills. We had a commitment to limit the levy control framework to £7.6 billion by 2020. When it became apparent that we were way in excess of that, but were still meeting our renewables targets, it was right to limit the amount of money we were spending. That is why we took action quickly to do so.

I congratulate my right hon. Friend on the action she has taken, particularly in relation to the wasteful onshore wind turbines that are blighting many areas of the countryside. In June, when she made her original announcement, she suggested that some of the RO money might be diverted to other forms of alternative power generation. Is she in a position to say what those alternatives may be?

The key reason for reining back on onshore wind was its very success. The Government are absolutely committed to supporting renewable sources of energy, and onshore wind has been very successful. On the use of funds that may have been saved, I come back to the point that the Government are committed to staying within the levy control framework budget as far as is possible. That is the key reason we are taking steps to limit spending. Any further spending commitments, as my hon. Friend will be aware, are up to my right hon. Friend the Chancellor of the Exchequer.

I thank the Secretary of State for her kind words. It is a pleasure to speak from the Dispatch Box today and a privilege to follow in the footsteps of my right hon. Friend the Member for Don Valley (Caroline Flint), who has been a fearless advocate for consumers and the environment in recent years.

My right hon. Friend will be as dismayed as I am that this week it was announced that, for the first time, the UK is no longer one of the top 10 countries in the world for investing in clean energy technologies. The Government have ruled out new onshore wind farms, slashed solar support and left onshore wind farm companies with an uncertain future. The only new nuclear plant that seemed to be proceeding is delayed and in doubt, gas investors do not have the assurances that they need to invest, carbon capture and storage has stalled, and other clean generators have been hit with new taxes. What exactly is the Government’s plan to cut carbon pollution and keep our lights on?

I, too, am sorry that the right hon. Member for Don Valley (Caroline Flint) is no longer on the Front Bench. She and I used to have regular, robust exchanges, and she had a realistic approach to energy security, describing nationalisation proposals as “turning the clock back”. How much I agree with her.

The hon. Member for Wigan mentioned investor confidence, but perhaps I may ask her to look within her own team as there are real concerns about the Opposition’s approach to nuclear power—who knows their position ahead? The Government are committed to a mix of energy supply and to ensuring that nuclear power, which she mentioned, is part of that mix. It is so disappointing that under the previous Labour Government there was no planning or looking ahead—

Order. The Secretary of State can leave me to adjudicate on these matters. Her answers must be about the policy of the Government. That is the premise from which we start and with which we proceed.

I was going to thank the right hon. Lady for that answer, but I do not think I will.

Investors looking at the UK are scratching their heads. On the one hand the Government say that they are trying to reduce the cost of energy for working families, but on the other hand they say that they want to go for shale gas and CCS, which are unproven markets. We have

“new nuclear build and offshore wind which are substantially more expensive than renewables such as onshore wind and solar PV. Investors don’t know what the government is trying to achieve.”

Those are not my words; those are the words of Ernst and Young’s energy analyst in a report that was published this week. When will the Government return with a plan to keep our lights on, cut pollution, and get energy bills under control?

The hon. Lady is entirely wrong. This Government have a clear plan, and in a way she summed it up in her conclusion. We are committed to ensuring that energy security is at the forefront, to carbon reductions, and above all—a feature that never appears except on the Conservative Benches—to keeping consumer bills down.