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Low-carbon Energy Generation

Volume 599: debated on Thursday 17 September 2015

2. What steps her Department is taking to promote investor confidence in low-carbon energy generation. (901432)

18. What steps her Department is taking to promote investor confidence in low-carbon energy generation. (901452)

I welcome the shadow Secretary of State to her position, and in particular I welcome Otis, who I gather was born only a few months ago. That is fantastic, and I congratulate the hon. Lady on being here so soon afterwards. I wish her every success in her new role.

The Government remain totally committed to our green energy future and to tackling climate change. The success of our renewables programme has exceeded expectations, which means that we are on track to meet our targets comfortably. A key priority for the Government is to keep consumer bills down and limit the cost to hard-working families, while ensuring that the UK remains an attractive location for all forms of low-carbon energy.

The Government are axing support for onshore wind earlier than expected, cutting feed-in tariffs for solar, and ending the exemption for renewables from the climate change levy. If renewables really are the future for our energy supply, what action will the Government take to repair investor confidence?

That is an incredibly important question. More than £42 billion has been invested in renewables, nuclear and CCS since 2010, and 2014 was a record year with more than £8 billion being invested. The Government remain committed to our long-term, low-carbon future in all areas of low-carbon generation. As the hon. Lady will appreciate, we must also consider our other priorities, such as keeping bills down for consumers. The policy reset that we are undertaking is about ensuring that through our success in generating renewables, we do not impact in a devastating way on the bills of hard-working families in this country.

Will the Minister outline when the contract for difference negotiations on the Swansea bay tidal lagoon project are likely to be concluded? My constituents in Neath are eagerly awaiting the job opportunities and apprenticeships that will follow.

The hon. Lady will be aware that the Government are incredibly keen on those new technologies, and we are looking closely at that tidal lagoon and doing our due diligence. The Government would like to support that project, but it must of course offer value for money. It has gone through the first stage of the process and it will take some time, but I assure the hon. Lady that that project, and other firsts for the UK, are on this Government’s agenda.

East Anglia Offshore Wind, which will be developing the UK’s largest offshore wind farm, has the objective of being subsidy-free by 2023. Can the Minister confirm that the Government will set out a clear vision that will enable the industry to plan properly for the future, both to achieve this goal and to maximise the creation of British jobs?

As I am sure my hon. Friend will be aware, the UK is the world’s No. 1 in offshore wind. We are fully committed to the continued growth and development of that sector. As part of the spending review, we need to look at the impact on consumer bills and make sure that we can manage the ongoing development to reach that subsidy-free point while not impacting too much on the bills for hard-working consumers. We will set out our plans later this year.

Does the Minister agree that the progress so far on new renewables sets the scene for even more investment in research and development, and that we need to have a clear pathway for that to happen so that we can encourage more investment, the strengthening of supply chains and the export of these technologies?

Yes, my hon. Friend is right. That is exactly what we want to do. We want to continue to support the growth of the renewables sector. I have already explained that there has been £45 billion of investment since 2010 in this sector and we want to encourage it further. We have to do that in the light of what is affordable for bill payers. At the same time we want to encourage new forms of renewables and keep Britain at the forefront of renewables technologies.

Will the Minister explain how she can possibly think that investor confidence will be enhanced by taking yet another wrecking ball to the British solar industry with the enormous subsidy cuts, alongside ending pre-accreditation? On the latter issue, the Government’s own consultation concedes that her Department has not even bothered to estimate the likely impact on deployment. With tens of thousands of jobs at risk, will she withdraw this now and stop all the waffle about consumer bills? If she were serious about consumer bills, her Government would not be subsidising fossil fuels and nuclear to the extent that they are.

I am afraid the hon. Lady has not done her homework. She should be aware that it is a requirement of EU state aid that we regularly review the subsidies to ensure that we are not overcompensating the sector. That is exactly what we are doing. We are now in a consultation which closes on 23 October. I am sure she will give her response to that. As I keep repeating, we want to ensure that we are not impacting negatively on consumer bills, but at the same time we are supporting this very valuable and growing sector to become subsidy-free within the next few years.

I welcome the Minister’s earlier replies, but she will know that there is a lack of confidence and certainty in the offshore industry, which is vital to the future economy of my constituency. Can she assure me that when she visits north-east Lincolnshire later this month, she will have a positive message for the industry representatives?

I can assure my hon. Friend that I will always have a positive message. I am very much looking forward to my trip to Humber and Lincolnshire. While I am there I will seek to reassure investors and project managers that it is our intention to continue to support and promote the very important renewables technologies in which, particularly in offshore, Britain is world No. 1.

May I add the welcome of the SNP to the hon. Member for Wigan (Lisa Nandy)? We look forward to working together where there are shared interests.

On the renewables obligation for onshore wind, it will come as no surprise to the Minister that the SNP is opposed to that closure. The implementation of the Government’s policy is causing additional and unnecessary difficulties through lack of finance owing to the lack of clarity about grace periods. Will she clarify when her Department will produce the grace period provision clauses to the Energy Bill, and will she consider a flexible approach where there is an element of community ownership involved in a project?

As the hon. Gentleman will know, we are looking very carefully at the consultation responses on the grace periods, and we intend to publish our response as soon as we can. That will be within the next few weeks, as part of the process of the Bill’s passage through the Lords. As he will realise, around 30% of the total support under the RO goes to Scottish projects, and we are delighted that Scotland still forms part of a GB-wide energy sector. That is very important for Scotland and for the whole UK.

It is estimated that 22,000 jobs could be lost as a result of swingeing cuts of up to 87% in the solar industry. Will the Minister confirm that the potential loss of jobs was not taken into account in her decision to cut support for solar power? Can it be right or proper for a formal consultation to ignore such harmful effects on the industry and on the thousands of families whose lives will be affected by these changes, including, as both Ministers have mentioned, their ability to pay their energy bills?

The hon. Lady is completely wrong to say that we have not considered all aspects of the consultation on reducing subsidies. She will appreciate that, because it is a consultation, it is only as a result of that consultation—which, as I say, closes on 23 October—that we will be able to assess the impact properly and then to make a decision. As I have said a number of times, we are fully committed to the ongoing development and progress of this very important sector. All jobs in the sector are of course extremely important and we will be doing everything we can to ensure that it continues to grow.