Energy and Climate Change
The Secretary of State was asked—
According to my Department’s latest fuel poverty statistics, less than 5% of fuel-poor households in England have a minimum energy efficiency standard of band C, leaving 2.2 million households below this standard. Bringing these households up to the minimum standard is a challenging ambition, but one we are determined to meet. That is why we have been clear that available support needs to be focused on those most in need. We will be reforming both the renewable heat incentive and the energy company obligation, to make sure that both schemes are sufficiently targeted towards the fuel poor and to tackle the root causes of fuel poverty.
The Government recently spent £50 million of taxpayers’ money assisting a bunch of big businesses such as Sainsbury’s to change their lightbulbs. Meanwhile, they halved home insulation funding in the last Parliament, which was meant to help families out of fuel poverty. I will not ask how many Tories it takes to change a lightbulb, but does that not show whose side they are on?
The hon. Lady is in danger of misunderstanding demand-side reduction. Two pilots have been launched, and both have been effective in reducing the amount of energy used, which is one of our key targets in carbon emissions and energy security. That in no way interferes with our key objective of ensuring that we reduce fuel poverty at all levels.
Would my right hon. Friend be good enough to publish the statistics for Northamptonshire for the number of homes that do not meet that standard? One of the big issues we have in Northamptonshire is the very large number of new houses being built. Can my right hon. Friend confirm that all those new houses are required to meet that minimum standard?
I would be delighted to publish those statistics and will write to my hon. Friend with them. New-build houses are always built to a far higher standard than the existing build. The challenge of fuel poverty is almost eradicated for new builds, so I hope his constituents will be able to welcome affordable, warmer winters in future.
Has the Secretary of State managed to have any discussions with her Welsh Government counterparts about the wonderful Arbed scheme? Arbed in Welsh is to save. The scheme worked with 28 social landlords in its first phase, and worked with more than 5,000 homes on energy efficiency in its second phase. It is funded partly by European structural funds. It is a great example of energy efficiency and a great reason for Wales to stay within the European Union and the United Kingdom.
The Energy Saving Trust has a useful website that directs people to the boiler grant scheme that we operate in Northern Ireland—a package of energy efficiency and heating measures is tailored to each household. Will the Minister consider that Northern Ireland example and consider providing something similar on the mainland UK?
I am aware of the interesting boiler scheme that is being run in Northern Ireland. I welcome such initiatives to address the difficulty of fuel poverty and of reducing heat and carbon emissions. The Mayor of London has launched a similar scheme. We will look carefully at how that works to see whether we can adopt it in the United Kingdom.
My hon. Friend has worked incredibly hard to support local communities in having their say on the siting of wind farms. The Department for Communities and Local Government updated planning guidance alongside its written ministerial statement on 18 June 2015, giving local authorities the final say. Now that the Energy Bill has completed its Committee stage, with my hon. Friend’s support, I can tell him that we are making excellent progress on delivering the Government’s manifesto commitment.
I thank the Minister for that answer. Like me, she will know that the Conservative manifesto contained two pledges on onshore wind: one to remove subsidies and the other to change planning guidance. Given the growing concern about amplitude modulation coming from onshore wind turbines, when will planning guidance on that be given to local authorities?
My hon. Friend has personally done some excellent work researching this serious issue, and my Department has commissioned an independent review that includes many of the issues he has raised. We expect to receive the final report of the review shortly, and the Government will then consider how to take forward their recommendations, including on whether a planning condition might be appropriate.
The Minister must be aware that applications for onshore wind power should be based on merit. Given what has happened over the past five years, is there not a real danger that the barmy army of nimbys on the Benches behind her will ensure, working with their local councils, that no good proposal goes through?
I think the hon. Gentleman is referring to some of my excellent hon. Friends, who are superb constituency MPs. We will have to agree to disagree. I am sure he would agree, however, that the role of an MP is to represent the interests of their constituency as they see them. We have now struck the right balance between the country’s need for superb renewables—it is now a very successful sector—and the need of local communities to have their wishes and their environment taken into account.
Prior to the Energy Act 2013, Scottish Ministers had full control over the renewables obligation. That power was removed on the clear understanding and promise that there would be no policy implications. Why was that promise broken, and will the Minister commit to backing the Scottish National party’s calls for that power to be returned to Holyrood as part of the Energy Bill?
The hon. Gentleman is aware that the reason we are closing the subsidy for onshore wind a year early is in great part to avoid the additional costs to the bill payer of extra deployment beyond our calculations of what could be expected. This is about trying to keep consumers’ bills down. We have had a number of debates about fuel poverty, and striking that balance is absolutely vital. It is in the interests of the whole of UK that we do not keep burdening bill payers with more costs.
As the hon. Lady will know, we have frequent conversations with Ministers in the devolved Parliaments and we try to ensure that they are included in all the discussions, as they certainly have been with those on onshore wind. As she will know, planning at all levels is being devolved to local planning authorities, and it will then be for the Scottish Parliament to decide exactly what the appropriate planning process should be for onshore wind in Scotland.
Can we have some consistency from the Minister? Why does she support the imposition of fracking on communities against their will? Why can she not extend the same courtesy to those communities that she has extended to those affected by wind farms?
As the hon. Gentleman will be aware, onshore wind has already been deployed to a great extent. As I have just said, it is already at the level of deployment we expected to see by 2020, so it is right that local communities’ views should be taken into account. With hydraulic fracturing, however, absolutely no shale gas extraction is taking place anywhere in the UK at the moment. There are no wells, and there is not even any exploration, yet it is vital to the UK’s energy interests that we explore this home-grown energy, which could be vital for jobs, growth and of course energy security.
Capacity Market Auctions
Security of supply is my No. 1 priority. The capacity market was put in place to ensure sufficient security of electricity supply. It supports existing technically reliable plants to remain in the market and, as coal and other ageing plants retire, it will enable new plants to be financed and built, securing our energy supplies for the future. Following the capacity market auction conducted at the end of last year, I have been considering whether any changes are needed, and I hope to be able to announce my conclusions shortly and to undertake any consultation quickly if we decide that any regulatory changes are needed.
Is the Secretary of State concerned that the latest capacity market option is having the unintended consequence of undermining capacity, as unfavoured power stations are mothballed or closed? Can the Government be certain that they can maintain security of electricity supply while reducing investment in the solar industry?
I do not share the hon. Lady’s views. The whole purpose of the capacity market is to guarantee security three or four years out and that is exactly what we are delivering. As I said earlier, however, having had two capacity auctions so far, we will be reviewing how we can improve so that the third delivers even more certain security going forward.
I am pleased to hear that the Secretary of State is willing to look again at the way the capacity market works to encourage cleaner forms of energy rather than a reliance on fuels such as diesel, which, sadly, was a large beneficiary of the latest round. Will she give us a timescale for when the new proposals will come forward?
I thank my hon. Friend for that question, which gives me the opportunity to point out that diesel was in fact 1.5% of the capacity market—a very small amount. However, it is absolutely essential to make sure that we have no risk at all to security, which is why diesel was included at that stage. I cannot give him an exact timeline, but I can say we are working on it intently at the moment and will be coming forward with proposals shortly.
Will the right hon. Lady look to make changes to the capacity market, so that battery energy storage can compete and provide an alternative to thermal generation? Will she also look at final consumption levies that are affecting battery storage, because battery storage is not, of course, final consumption? It is just storage.
I thank the hon. Gentleman for his question and share his enthusiasm for storage. We are at the moment working with Ofgem to address how we can best encourage it within a secure regulatory environment. I cannot at this point say whether it will be within the capacity market, but that is certainly one of the considerations we will be looking at.
It is with sadness that I stand here without Harry Harpham in his familiar place. He was my Parliamentary Private Secretary and a much-loved and valued member of the shadow Energy team. Owing to his background, Harry never let us forget that energy is about people. Last month, he told the Yorkshire Post that he would be the last deep coalminer elected to this place. Our promise to Harry is to ensure that the voice of working people remains at the heart of the energy debate. I will miss him enormously. We will never, ever forget him.
The capacity market was supposed to bring forward new investment in gas power stations and ensure that we have enough back-up power stations in case of a power crunch. We know that it has failed on the first count. Now, one of the companies contracted to provide back-up capacity, SSE, has pulled the Fiddlers Ferry power station out of the scheme, throwing the Government’s entire policy into doubt. Will the Secretary of State give the House a guarantee that no other power stations will pull out?
Before I answer that question, I join the hon. Lady in sharing our condolences from the Conservative Benches on the sad loss of Harry, her friend and able Labour Member of Parliament.
On the capacity market, I reassure the hon. Lady that we are looking at it again to ensure that it delivers the mix of sources. As far as losing old power stations is concerned, she is as aware as I am that these are very old power stations and that it is not surprising that some of them are closing. In our plans for capacity and in our discussions to ensure security, we always plan for a certain amount of closures. We do not feel it is a threat to security of supply, but we take nothing for granted and will never be complacent. We will always make sure we have a secure supply.
I thank the Secretary of State for that answer. Unfortunately, it is not the answer to the question I asked her. No new gas stations have come on stream since the Prime Minister took office. The final investment decision on Hinkley has been delayed yet again. Analysts said recently that renewables investment is about to fall off a cliff. I ask the Secretary of State again: can she confirm that no other power stations will pull out of this scheme?
I simply do not recognise the picture the hon. Lady portrays. It is, of course, a bit rich for Labour to point that out when it has absolutely no record of planning for the future. We are the Government who are delivering the first nuclear power station. We are the Government who are taking the difficult choices for the next 10 to 15 years. I remind the hon. Lady that the Carrington closed cycle is going to start this year.
Energy storage was identified in 2012 as one of the eight great technologies where the UK can lead the world, and I can tell the hon. Gentleman that I am a very keen supporter. More than £80 million of public sector support has been committed to UK energy storage research and development since 2012. We now are looking at what more we can do to improve the incentives for electricity storage in particular. We will be publishing a call for evidence soon. I do hope he will put his thoughts into that call for evidence.
I thank the Minister for her answer, but may I be a bit more specific? As a spin-off from developing battery-driven cars, domestic battery storage is now becoming practicable and commercially viable, and indeed in America it is now taking off. What are the Government specifically doing to promote the adoption of domestic battery storage in homes?
As I say, we will shortly issue a call for evidence on energy storage at grid level—at battery generation level—to try to ensure that we give as much scope and capacity to energy storage in the system. At domestic level, people are starting to look at those systems and, as part of the improvement of house-building performance, builders are required to look at other opportunities such as battery storage, solar panels and the like. There will be more work on that, but, as the hon. Gentleman will appreciate, it is still at a fairly early stage as things stand.
The energy storage industry sees 2016 as a breakthrough year, with many emerging technologies coming into the mainstream. Will the Minister concede that current subsidy cuts to renewables are lacking the foresight needed if we are to promote a genuinely green future in this truly innovative industry?
I certainly would not. Since 2010, £52 billion has been invested in renewables. The pipeline is still enormous. There are lots of new projects that will be coming to the fore over the next five to 10 years. It is simply not true to say that support for renewables is in any sense dropping off a cliff. The advantage of energy storage will be to deal with the intermittency of renewables, so it should be a win-win for the UK.
Our priorities are to decarbonise at the lowest price while always ensuring our energy security. That is why we have taken steps to end new subsidies for onshore wind. It was interesting, after my right hon. Friend’s announcement, to hear companies almost immediately seeking a subsidy-free contract for difference, which suggests that our analysis that this industry can stand on its own two feet was correct. We are calling it a market-stabilising CfD and we are listening carefully to industry on how it can be delivered.
The early closure of the renewables obligation has severely damaged investor confidence in onshore wind, which is a vital part of the fragile economy of my Argyll and Bute constituency. The Government desperately need to restore that confidence quickly. The Minister could make a start today by announcing a date for the introduction of subsidy-free CfD. Why will she not get on and do exactly that?
As I said to the hon. Gentleman, we are looking at it. It is not something that we would introduce just on the back of a fag packet; it requires careful consultation and consideration. He will appreciate, alongside all the other priorities, that a subsidy-free CfD is not cost-free or risk-free to the bill consumer, and we are absolutely determined to ensure that we keep the costs down for consumers in his constituency as well as right across the UK.
Does my hon. Friend recognise, when she comes to introduce a subsidy-free contract for difference, that it will be subsidy free only if the price reflects the value of the electricity, and the value of the electricity depends on the time that it is produced, where it is produced and how reliably it is produced? Therefore, variable renewable electricity is worth much less than regular supplies from ordinary power stations.
My right hon. Friend points out exactly correctly that there are limitations to intermittent renewables technologies, and that there are costs associated with ensuring energy security when we become over-reliant on renewables. That is an absolute case in point. On the subsidy-free CfD, he is also right that we must take into account all the various costs. We are looking at the matter very closely. I am not making any promises here, but, alongside other subsidies and other CfDs, we are looking carefully at the proposition.
May I follow the previous comments by suggesting that we introduce subsidy-free CfDs as quickly as possible? The most important thing that was needed in relation to onshore wind was to make sure that local communities did not have it imposed on them. The Government have rightly done that. What can the Minister do to ensure that where communities do want it, we get as much onshore wind as we can at the lowest possible price?
I completely agree. The important thing was to give local communities the final say. I agree also that where local communities want more onshore wind, that should be supported. Nevertheless, as I said, even what we are calling a market-stabilising CfD would not be without risk or cost to the consumer, and our priority is to keep bills down for all energy consumers.
The solar industry is an amazing UK success story, with 99% of all solar panel installations taking place since 2010. We are determined to keep supporting this great industry, but we are also mindful of the need to keep costs down for consumers, so with our feed-in tariff review we have tried to find the right balance between the needs of the bill payer and those of industry. We project that the revised FIT scheme could support up to 220,000 brand new solar installations between now and 2019.
A reduction in the solar feed-in tariff was probably inevitable given the falling commodity prices, but many of us want to see a thriving solar industry in the UK. Although it is early days, what assessment has been made of the impact of the 63.5% reduction on jobs and prosperity in the UK solar industry?
I know that my hon. Friend has big constituency interests in the success of this industry. I can reassure him that our tariff reset was built on a huge data set submitted by industry and, in terms of domestic rates of return, nearly 5% will still be offered for well-sited projects. After our announcement, the Solar Trade Association said:
“The new tariff levels are challenging, but solar power will still remain a great investment for forward-thinking home owners”.
14. The Scottish Government have led the way, setting ambitious building standards for every new build home, the Glasgow Commonwealth village being a prime example. Does the Minister agree that our goal should be for every suitable home to be equipped with solar PV? (903603)
I agree with the hon. Gentleman up to a point. What is essential for the UK right now is that new homes get built. That is our absolute priority; people are in desperate need of more homes being built. I can assure him that since April 2014 builders have had to consider the use of renewables in all their designs, and I am pleased that during the previous Parliament the energy standard for new buildings was improved by 30%.
Coal-fired Power Stations
As the Prime Minister made clear yesterday, the UK owes a great debt to the coal industry for all it has done to keep the lights on and keep our economy moving. Both I and officials in my Department regularly discuss a range of energy and climate change issues with our international counterparts, and it is clear from these conversations that the UK remains respected internationally for our ability to reduce emissions while at the same time growing our economy.
The Secretary of State will be aware that the day after the UK announced the closure programme, Germany commissioned a brand-new lignite building unabated coal power station as yet another addition to its coal fleet. In Belgium, Holland and Spain, coal use increased in 2014. Much of that electricity will be imported to this country through interconnectors, yet in my constituency the closure of Fiddlers Ferry was announced last week. Many of the workers there ask me how these various factors can be part of a coherent European energy policy. What should I tell them?
I start by expressing my sympathies for all those workers in my hon. Friend’s constituency who have been impacted by the recent announcement of the closure of Fiddlers Ferry, as well as of Ferrybridge. On different countries in the EU making different choices about how to deliver their renewables targets, it is up to them to address how they reduce their emissions. Germany, for instance, is also having an enormous amount of solar. It has 52 GW of solar at an eye-watering cost of €10.5 billion.
On coal—I think that was the subject of the hon. Gentleman’s question—we will be consulting and looking at the different methods we might or might not need. Those may be regulatory, or they may be legislative, but we have an open mind about how we achieve these things. That consultation will begin shortly.
12. My right hon. Friend will know about the recent announcement of the closure of Rugeley power station, which is half in my constituency and half in that of my hon. Friend the Member for Cannock Chase (Amanda Milling). The station was sited there in the first place because of a coalmine, which, like many others throughout western Europe, is long gone. However, the closure may mean that up to 150 people are made redundant, although ENGIE says it will try to redeploy them elsewhere. Will my right hon. Friend commit to speak to the Secretary of State for Work and Pensions about actively playing a role in making sure that those people can be re-employed somewhere else? (903600)
I thank my hon. Friend for that question, and we have, of course, spoken already this week about this matter. I have also spoken to his neighbour, whose constituency covers half the Rugeley power plant area. I will, of course, actively engage with my hon. Friend and his colleague to make sure that we do what we can for the people who have lost their jobs.
Given that the timetable for the closure of coalmines is linked to the construction and bringing online of new nuclear power, and given that the board of EDF—a cash-strapped company that is dripping with debt—has this month yet again postponed giving a green light to the construction of Hinkley C, will the Minister commit to meeting EDF’s board and reporting back urgently to the House as to what the project’s status actually is?
I would dispute with the hon. Gentleman the direct connection he has made. The closure of coal will be part of a consultation, but it is influenced by many different things, including the age of the fleet, the wholesale price that is being delivered and other matters. On his question about EDF, may I reassure him that I have regular conversations with the board and the chief executive? I am confident that we will have good news soon.
The Secretary of State, in her energy reset speech, said that taking “coal off the system” by 2025 will
“only proceed if we’re confident that the shift to new gas can be achieved within these timescales.”
Bearing in mind that no new large gas-fired power station has commenced building in the past six years, and that the last two capacity auctions have underwritten the building of only one power station, which will probably not be built, what plans does she have to procure the building of new gas-fired power stations to ensure that her pledge is actually met?
The hon. Gentleman is absolutely right: the plan is to move from coal to gas so that we can reduce our emissions and have secure investment going forward. I am delighted to say that the Carrington closed cycle gas turbine will commission next year, and we have 12 additional CCGTs commissioned. I have also stated that we will have the capacity market adapted to make sure that we can deliver gas. It is going to be an essential part of the low-carbon mix, and it is this Government who are making the plans and securing energy sources for the future.
The Government do not intend to introduce national electricity distribution pricing as this would weaken each network company’s local accountability to its customers and risk an overall increase in network costs across Great Britain. We are currently consulting, however, on the level of protection provided to consumers in the north of Scotland, which amounts to an average of £41 per household this year.
I thank the Minister for that answer, but may I point out what she said just before Christmas:
“It is not right that people face higher electricity costs just because of where they live”?
I agree with her. Why does she not now take action to introduce fairness into the electricity market? Why are people in the highlands and islands paying 2p per kWh more than people elsewhere? Why are people in my constituency being discriminated against? Do the right thing and create a national market.
As I have said to the hon. Gentleman —we have had this discussion a number of times—I sympathise with his point, but he needs to appreciate that a national charge would mean lower charges in some areas and increases in others. Specifically in Scotland, 1.8 million households would face higher bills while 700,000 would see reductions. This is a very serious problem; he cannot just wave a magic wand and have us change it.
Our new domestic supplier obligation will provide support to over 200,000 homes per year from 2017 for a period of five years by improving energy efficiency, tackling fuel poverty, and continuing to deliver on our commitment to insulate 1 million more homes during this Parliament.
My hon. Friend is absolutely right to raise this. We will engage with the industry in order to reform these grants—the renewable heat incentive and ECO, the energy company obligation. The Sustainable Energy Association is one of the stakeholders we will work with to make sure that our reformed system delivers even better value for the people who are really in need.
We know there is a link between cold homes and excess winter deaths. Last winter, 43,000 people died completely unnecessarily as a result of the cold. What work is the Secretary of State doing with colleagues at the Department of Health to reduce excess winter deaths, specifically by ensuring that households meet minimum energy efficiency standards?
The hon. Gentleman is absolutely right to point this out. Any excess winter deaths are too many, and we work very hard across Departments to make sure that we do what we can to help people who are in the poorest homes. We do work with the Department of Health, but also with the Department for Communities and Local Government. There is more we can do through regulation to address cold homes and some of the energy efficiency measures that I would like to put in place in existing homes.
Yesterday the Park Homes Owners Justice Campaign was here launching its new PARK-LINE helpline and talking to Age Concern about its warm homes campaign. It then delivered a petition to the Secretary of State. Can she confirm that she has it and will give it active and proper consideration?
I did receive the petition yesterday. We have already taken steps to help people in park homes by ensuring that they are eligible for the warm home discount of £140 and can apply for ECO where appropriate. However, I am always looking for opportunities to be more helpful and to give more support for people in need, so I will look carefully at the petition.
The Data Communications Company is an integral part of the roll-out of the Government’s smart meter programme, but it is now nine months behind schedule, and the delay is narrowing the window for the installation of SMETS 2 meters, with the risk that any additional cost might be borne by consumers. At the very minimum, can we have an updated impact assessment to reflect these delays and ensure that we are getting value for money for customers?
I can assure the hon. Gentleman that we are making good progress on smart meters. My colleagues and I have regular meetings with the energy companies about progress, and some of them are even ahead of schedule. However, we will continue to monitor the situation and continue to ensure that customers get the best value from smart meters, because this is an incredibly important infrastructure project that will help to reduce bills.
Shale gas could become a very valuable new industry, and it is in the strong interests of the UK to explore its potential. However, we are determined to protect our most valuable spaces and have consulted on banning surface-level drilling in the most precious areas. We have also regulated to set the minimum depth of hydraulic fracturing under sensitive areas.
Last month, I held a second successful fact-finding fracking meeting at Helsby high school, ably assisted by the Environment Agency, Public Health England, and the Health and Safety Executive. Over 400 constituents from Frodsham and Helsby left better informed. What steps is the Minister taking to encourage regulatory bodies to engage further in such public meetings?
I am impressed by my hon. Friend’s managing three F-words in one parliamentary question. It is vital for local communities to have access to the facts about fracking and our stringent regulations, and I congratulate him on organising those important events. We are working with the regulators to make sure that they have every opportunity and encouragement from the Department to engage with the public. The Environment Agency, the Health and Safety Executive, the Oil and Gas Authority and Public Health England regularly attend public meetings such as the one he mentioned, and they will continue to do so.
An application was made to start drilling at a little place called Calow in the Bolsover area. Most of the villagers were against the application, and it was turned down by the local planning committee. It then went to the Government inspector, because Cuadrilla wanted to appeal, and the Government inspector turned it down. Now I am told that it is possible that the Government are quite capable of overruling the decision of their own inspector and allowing fracking. Is that correct?
The hon. Gentleman is a real challenge to, but a role model for, the House in the work that he does. I genuinely congratulate him and wish him a very happy birthday. In terms of the appeal, he has set out exactly what is supposed to happen. Local communities have their say and feed into the process. Developers can appeal, of course—it is right that they should be able to—and the inspector can turn it down. There is an appeal process. I am not sure about the specifics of the case he mentions, but the point is that democracy is done, and is seen to be done. That is very important.
Climate Change: Adaptation Costs
I am clear that the only way to address climate change effectively is through global action, building on the global agreement that the UK was instrumental in achieving in Paris in December. All countries need to act if we are to bring down emissions and minimise adaptation costs in the future. I want the UK to continue to set an example by addressing the 1.2% of global emissions that we are responsible for, while at the same time continuing to grow our economy.
The Government’s advisers have warned them that if global temperature rises are not limited, there will be a big increase in flooding in the UK. The effects of flooding were felt acutely in the Lancaster district during Storm Desmond, when our substation was flooded and we lost the electricity supply for three days, affecting tens of thousands of homes and businesses. Will the Secretary of State commit to upgrading our adaptation plans, including our flood defence budgets, especially those for defending our electricity supplies?
I am aware of the impact of flooding in the hon. Lady’s constituency, and I remember her speaking during the debate that we had on the subject with the Department for Environment, Food and Rural Affairs. The best way to address dangerous climate change and its potential impact on extreme weather events is to get a global deal, which is why we have been so focused on trying to do so. I reassure her that I will work closely with my colleagues in DEFRA to ensure that we have a national adaptation programme in place.
One thing that we have to do in the UK to meet our obligations under that international deal is to reduce further our emissions from buildings. When people buy a more efficient car, they pay less tax than they would on a less efficient model. Should not the same apply to the taxation of buildings?
I agree with the hon. Gentleman that addressing buildings is an incredibly important part of trying to meet the renewable energy targets that we have set for 2020 through the EU. I am working closely with the Department for Communities and Local Government to see what action we can take to address that, but buildings are an important part of the mix.
Surely one of the most important things that the Secretary of State can do to limit climate change is publicly to state how she will meet the shortfall in our legally binding renewable targets for 2020. She knows that beyond 2017, her Department projects a 25% shortfall across the heating, electricity and transport sectors. The Eurostat data released yesterday show the UK to be missing its target by the widest margin of any European country. What assessment has she made of the potential fines the UK may face as a result of that failure?
I do not share the hon. Gentleman’s catastrophic view of the progress that we have made. We already have nearly 25% of our electricity coming from renewables, and we believe that we may well exceed our target of 30% by 2020. In terms of the overall renewable target, I hope he will welcome, as I do, the fact that we have already exceeded our interim target, which was 5.4%; we are now at 6.3%. However, we are aware that we need to make more progress, and we have set out clearly what we will do during this Parliament to address the shortfall.
13. What steps her Department is taking to ensure the long-term future of the offshore wind industry. (903602)
My hon. Friend will be aware that I announced last November that, in addition to the 10 GW I expect to be installed by 2020, the UK could support up to 10 GW of new offshore wind in the 2020s, subject to costs coming down. The next contract for difference round will take place by the end of this year, and I will set out further information in due course so that potential bidders can start planning their bids.
I thank my right hon. Friend for that answer. Offshore wind is an important part of renewable energy policy but so, for that matter, is marine energy. What progress have the Government made on the marine energy park to be situated down in the south-west?
I am aware of the good work that my hon. Friend has done this year and the progress he has made, and that Plymouth’s world-leading expertise is at the heart of the south-west marine energy park. Last year, I was delighted to host, with him, a conference in Plymouth to take forward marine energy planning. I can reassure him that we will continue to work with him to ensure that Plymouth stands at the front of any marine energy park.
The development of Hornsea Project One by DONG Energy will be funded by UK taxpayers and UK energy bill payers. How will the Government use their new procurement guidelines to ensure that UK content, such as UK steel, is used in that development?
As the hon. Gentlemen may be aware, average domestic gas prices fell by £37 during 2015. Six major suppliers have announced a further cut in their tariffs; two more have announced that this morning. It is a good start, but the Government expect all suppliers to pass on reductions in the costs of supplying energy to consumers. I have met all the major energy suppliers in recent months to make that point clear.
Will the Secretary of State join me in celebrating the work of our local councils in assisting people to save energy? Oldham Council’s collective buying scheme has attracted 8,700 households to sign up to it, each of which will save about £170. In Nottingham, the first local authority energy company, which employs 30 staff, is hoping to sign up 10,000 households.
I will join the hon. Gentleman in congratulating his council on doing that. Some individual councils are doing exceptionally good work on group switching and are trying to help their constituents. I visited Nottingham last year to see the good work that has been done there. I hope that more councils will follow that lead.
Like the hon. Gentleman, I am impatient to receive the comments of the Competition and Markets Authority. It was predominately to address the difficulties with switching and the difficulties that some consumers find in engaging with the energy market that the Prime Minister referred the energy market, via Ofgem, to the authority. I certainly hope that it comes forward with such suggestions.
Just over a year ago, the Government announced an investigation into whether families should pay less for their energy because of the fall in the wholesale price of gas. The Chancellor told The Telegraph:
“Falling oil and gas prices should bring cheaper household bills”.
A spokesman added that the Government were conducting a series of studies of utility companies to examine whether action was needed. The investigation was backed by the Prime Minister, the then Energy and Climate Change Secretary and the former Chief Secretary to the Treasury. It was reported that Ministers would be watching the energy companies “like a hawk”. What happened to that study, and what action was taken?
I can reassure the hon. Lady that we continue to watch the energy companies like a hawk. I am pleased that we continue to see reductions, with two more being announced just this morning, and I hope she will join me in welcoming them. The great news for consumers is that they are not faced with the price freeze that I cannot forget Labour promised last year. If that had happened, none of these reductions would have taken place.
Solar Energy: VAT
A recent European Court of Justice ruling found that the reduced rate of VAT on certain “energy saving materials” was in breach of EU law. As a result, Her Majesty’s Revenue and Customs recently consulted on changes to the rate of VAT and is considering the responses. If the rate of VAT does change, we will consider the options for how to maintain a suitable rate of return for investors under the feed-in tariff.
May I, along with the Minister, wish my hon. Friend the Member for Bolsover (Mr Skinner) a happy birthday? I am so pleased that he is still winning. He is fantastic.
Following on from the question from the hon. Member for Cheltenham (Alex Chalk), the proposed hike in VAT would raise the typical cost of a 4 kW residential solar PV system by nearly £1,000, even though industry experts advise us to retain the lower tax rate for solar under the recent ECJ judgment. The Government are keeping the lower rate for heat pumps, biomass boilers and combined heat and power units. The same should surely apply to solar PV thermal; otherwise we will have the perverse situation in which electricity generated from fossil fuels is taxed at 5% VAT, while homeowners have to pay 20% VAT for their own renewable energy. Can the Minister not persuade the Chancellor to reverse this tax hike and, if she cannot, will she make commensurate increases?
I want to be clear with the hon. Lady that this is not the Chancellor’s choice. As I have made very clear, this is an EU Court ruling; it is not our choice. In the event that we have to impose an increase in VAT, we will look at the returns to investors under the feed-in tariff.
Since the last Question Time, there has been a dramatic fall in the oil price. The Government are clear that the broad shoulders of the UK are 100% behind our oil and gas industry, the hard-working people it employs and the families it supports. The Government have set up the Oil and Gas Authority to drive collaboration and productivity in the industry. We recently set out an action plan to back the export of our world-class skills in oil and gas, and to diversify the economy of the north-east of Scotland, including through investment in exploration, innovation and skills.
Will the Secretary of State outline what progress is being made to secure vital infrastructure investment in the energy sector? Are not thinking for the long term and investing in infrastructure the best way to get secure, low-cost electricity for my constituents in Wealden? Before I forget, I wish the hon. Member for Bolsover (Mr Skinner) a happy birthday.
My hon. Friend is absolutely right. We are tackling the legacy of under-investment, the failure to deliver the next generation of energy projects and the energy security black hole that were left by the last Labour Government. We are getting on with the job of building a system of energy infrastructure fit for the 21st century. We have made substantial progress in securing infrastructure investment. The UK has enjoyed record levels in the deployment of renewables over recent years and it maintains a healthy energy investment pipeline, as is shown in our national infrastructure plan.
Last week, a Bloomberg report showed that the UK is the biggest beneficiary of European Investment Bank funding for clean energy projects and we are the third largest recipient of the new European fund for strategic investments, which is being spent mostly on energy. Some 70,000 jobs are expected to be created as a result. Does the Secretary of State agree that that is further evidence that Britain should stay in the European Union?
My hon. Friend puts his finger on a sensitive and tricky issue about delivering the best for consumers, which is what the Government want to achieve, while also encouraging competition. I ask him to wait for the Competition and Markets Authority report, which I hope will address the issue, and then I believe we will make some progress.
At Prime Minister’s questions on 27 January, the Prime Minister said about oil and gas:
“I am determined that we build a bridge to the future for all those involved”—[Official Report, 27 January 2016; Vol. 605, c. 260.]
Following his visit to Aberdeen, it is clear that that bridge will be built on the cheap. Industry needs meaningful support in the forthcoming Budget, so can we have less talk about the broad shoulders of the UK, and will the Secretary of State put her back into delivering the change we need?
The hon. Gentleman is being a little churlish about the significant investment that the broad shoulders of the United Kingdom are putting into the north-east, particularly to ensure that jobs and skills are secured. I am working across Departments, and chairing a ministerial group, to ensure that those skills are preserved, and I will be working with the Department for Business, Innovation and Skills to ensure that we have a taskforce to take that forward. I hope he will also welcome the £250 million put into Aberdeen for its city deal, but there is a lot of progress to be made and a lot more to take forward.
T6. Will the Secretary of State consider how the current system model, including the National Infrastructure Commission, National Grid and Ofgem, could be reformed to make it a more flexible and independent part of an energy infrastructure that is fit for the 21st century? (903614)
My hon. Friend has a great deal of experience in this sector, and he will be aware, as I am, that National Grid as system operator has played a pivotal role in keeping the energy market working. As our system changes, we must ensure that it is as productive, secure and cost-effective as possible. There is a strong case for greater independence for the system operator, to allow it to make the necessary changes, and we will work alongside the National Infrastructure Commission to consider how best to reform the current model.
T2. As Valentine’s day approaches, will the Secretary of State support the climate coalition “Show the love” campaign and encourage all Members to wear the green hearts that we have been sent, which symbolise how so much of what we love, wherever we are in the world, is affected by climate change? (903610)
T7. Dozens of my constituents are employed in the solar power industry, and I meet them regularly. May I add my voice to that of my hon. Friend the Member for Cheltenham (Alex Chalk) in asking the ministerial team to continue to assess and analyse what effect the changes to solar subsidies are having on microbusinesses and small and medium-sized businesses that are engaged in the solar industry? (903615)
As my hon. Friend knows, the solar industry is a great UK success story, and we are set to exceed massively our targets for solar power, achieving almost 13 GW of solar energy capacity forecast for 2020. With our revised tariff we expect up to 220,000 brand-new solar installations between now and 2019, which will give a rate of return of nearly 5% to well-sited installations.
T3. Pinsent Masons recently published a report on the prospects for the oil and gas sector in 2016, which highlighted that 67% of oil and gas executives see the UK as a prime opportunity for growth over the next three years, under the right fiscal environment. What fiscal support is being considered for the oil and gas industry ahead of the Budget? (903611)
The hon. Gentleman will be aware that fiscal changes are the responsibility of my right hon. Friend the Chancellor of the Exchequer, but I reassure him that we take seriously the support that we want to give to the UK continental shelf and all the jobs around it. I chair the cross-ministerial group, which also includes a member from the Treasury.
The new Anglia local enterprise partnership’s oil and gas taskforce has developed a package of measures to support businesses and workers at this difficult time. Will the Secretary of State consider a proposal from the LEP for the Government to match the local funding that it is providing?
T5. What progress is the Secretary of State making on getting state aid consent for the strike price for island communities in offshore wind projects? When does she expect to go out to consultation on what that strike price should be? (903613)
We absolutely appreciate that industry, across all technologies, needs clarity on Government policies in future allocation rounds so that it can manage its investment decisions, and we aim to support that. We are currently working with Her Majesty’s Treasury to finalise the budget for future auctions, and we will set out more information as soon as we can.
I thank the Minister for her robust and informative response to my Adjournment debate about the Humber estuary on Tuesday evening. May I draw her attention to a statement issued to the local media by DONG Energy? The statement is wet, woolly and non-committal. Will she reaffirm her determination to be involved in the future developments in northern Lincolnshire?
I pay tribute to my hon. Friend for his excellent support for his area. I was delighted to respond to him in the Adjournment debate, and I can absolutely assure him that there will be no wriggle room; in order for the UK to benefit properly from our decision to support new offshore wind, we will require UK content and the UK supply chain be a key beneficiary of it.
We do not have plans at the moment for a large-scale solar contract. What we have found is that the large-scale ground mounted solar industry has confirmed to us that it does not need any subsidy and that because costs have fallen to such a great degree, it can continue, subject to planning permission, to develop and to supply electricity without a formal contract. That is surely in the better interests of the taxpayer and the bill payer, if it can be achieved.
My hon. Friend may be aware that in the recent spending review one area where we did get an increase was in innovation. Specifically, we have allocated half of the new increase for small modular reactors. We are working on delivery in that area with universities and with Innovate UK and we will continue to do so.
T9. The Select Committee has found that scrapping the Government’s support for carbon capture and storage technology puts at risk the UK’s international commitments on tackling climate change and makes it more expensive to do this. We have also lost out on about £250 million-worth of EU investment. Can the Minister just explain to me how this makes sense? (903617)
Our view is that CCS has a potentially important role to play in long-term decarbonisation. We continue to invest in the development of CCS; we are investing more than £130 million to develop the technology through innovation support. My Department is looking at what our new policy is to develop this important technology.
T10. Electrical network losses from theft and so-called “copper losses” are estimated by the Department to cost consumers in excess of £3 billion annually. What recent analysis has the Department undertaken on the potential contribution of power line carrier technology to address this issue? (903618)
This area interests me a great deal. Obviously, it is a complete disaster if pipeline tapping—in effect, stealing—takes product away from consumers which then has to be paid for. This is a vital area and I am looking at it. I am not familiar with the proposal the hon. Gentleman has mentioned, but if he would like to write to me about it, I would be happy to take a look at it.
Historically, all mining has been prohibited under the city of York. City of York Council passed a motion to say that no licences should be given for fracking, yet a licence has been given. What guarantee will the Minister give that the local voice now will determine what happens?
I am grateful to the hon. Lady for giving me a chance to explain that the licence is not a licence to frack—that sounds a bit Bond-like; it is simply a licence to be able to consider the seismic opportunity of the shale gas that is potentially underneath. It is absolutely not a guarantee that anything will happen at all. There is then a whole planning process to go through, including environmental assessments, health and safety assessments and so on. And there is a very clear local planning process, which is very well communicated and with which she will be very familiar.
This morning, energy experts reported that we were way behind on the target emission levels set at the Paris COP and in the fourth carbon budget. This comes only weeks after the important agreement in Paris. How on earth can this be the case?
The hon. Gentleman might be aware that the Paris agreement called for temperature increases to be limited to a maximum of 2°, yet the intended nationally determined contributions—the voluntary contributions from each country—only reached 2.7°, so that comes as no surprise. Everyone who signed up to the agreement—let us celebrate the fact that nearly 200 countries did so—knows that there is more work to do. It is not the end of the journey; it is just the start.