rose to move, That this House takes note of the report of the European Union Committee on The EU’s Target for Renewable Energy: 20% by 2020 (27th Report, HL Paper 175).

The noble Lord said: My Lords, on behalf of the Select Committee, in particular my colleagues on Sub-Committee B, which deals with the internal market, perhaps I may say how pleased we are that there has been such an early opportunity for debate, particularly as the report was published only on 24 October. There are special reasons for welcoming this early debate, which I will touch on a little later.

The report was designed not only for your Lordships’ House but for the European Commission, and we very much hope that the Commission and the responsible directorate-general will respond in due course to our comments. Thanks to the encouragement of the chairman of the Select Committee, the noble Lord, Lord Grenfell—I shall touch very briefly on his impending retirement in a moment—we have taken the liberty of having the report’s conclusions and recommendations translated as a courtesy to the European Parliament and to the European Commission.

On behalf of the Select Committee, I thank our excellent clerk, James Whittle. I am constantly heartened by the great quality of the clerks who service Select Committees in this House, and I echo the views of all your Lordships in commending the quality not only of our clerks but of the clerk to Sub-Committee B. I also thank Dr Robert Gross, our special adviser from Imperial College, for his expert advice. Our report was a voyage of discovery. We certainly have not completed our understanding of the complicated issues involved in energy conservation, and indeed in meeting such targets as greenhouse gas emissions and in improving the output of renewable energy, but at least we have learnt a great deal from our deliberations.

I now pay tribute to the noble Lord, Lord Grenfell, who is at the European Parliament in Strasbourg today and cannot be with us. I also welcome the noble Lord, Lord Roper, to taking on the important role—I am not sure whether it has been publicly announced yet—of leading our deliberations in the future. The encouragement that the noble Lord, Lord Grenfell, has given to all the sub-committees, his wisdom and his calm advice are much appreciated, and we will miss him. Members on all sides of the House appreciate what a difficult job it is to be the Principal Deputy Chairman of Committees and to be responsible in particular for the European Union Select Committee. It is, in many ways, a thankless task and a full-time task.

The House is very grateful to the noble Lord, Lord Davies of Oldham, the Treasury Minister, for standing in for the noble Lord, Lord Hunt of Kings Heath—who I know has to be in Brazil today as Minister of State for Energy—and for responding to this brief debate.

I welcome the opportunity to have this debate, first, because next month the Council of Ministers in Brussels will be invited to agree the renewable energy targets for the European Union and individual targets for each country. Ministers in this country have assumed a target of 15 per cent of total energy consumption from renewable sources by 2020. That is the issue which our report seeks to address. It is a very narrow issue. It does not deal with greenhouse gas emissions or energy savings; it deals simply with the consequences of this specific target, which our Ministers will consider and, presumably, agree.

The Department of Energy and Climate Change has now finished its consultation on renewable energies, and I understand that it will publish its conclusions some time in the spring, so it is apposite to put the views of your Lordships on to the record. I also understand that it is likely that the Economic Affairs Committee will publish early next week its conclusions on some of the financial implications of an increase in sourcing energy from renewables. I hope that our report and its report will not duplicate each other too much.

Our report has not dealt with the very important issue of nuclear energy. Nor has it dealt with the 2020 target to reduce greenhouse gas emissions by 20 per cent and by significantly higher percentages in later years; so its scope was limited. One can be a strong proponent of nuclear energy. I speak as someone from the county of Suffolk, which already has Sizewell B and perhaps Sizewell C. Who knows, it may have Sizewell D in due course. I am a strong supporter of nuclear power, but I should point out to your Lordships, as we received evidence on this subject, that even if we were to complete the planning and construction of new nuclear power stations by the end of the next decade, we will largely be replacing what is already there because it will run out of operating capacity. The nuclear issue is extremely important but is not part of our inquiry.

It is proposed that 15 per cent of total energy consumption in the UK should come from wind, sun and water, whether hydro or barrage. That is lower than the average for the European Union as a whole because some countries, for reasons of geography or political decision, have made greater strides in this field. So we asked ourselves a simple question: if the target is 15 per cent by 2020—12 years from now—what are the consequences in policy terms that will face the Government and, indeed, face the nation? By total energy consumption we are talking about that from electricity, combined heat and power and transport. On combined heat and power—an extremely important part of our total energy consumption—I pay tribute to the Combined Heat and Power Association for the very sensible and practical representations it has made. It has been very level headed and our committee certainly paid great attention to what it had to say.

I remind your Lordships that only 2 per cent of our total energy consumption comes from renewables at the present time and we are facing a target of 15 per cent. That is a massive challenge facing not only the Government but ourselves as consumers. The committee concentrated on where the bulk of that contribution will come from in the next 12 years, and that is from electricity—specifically from wind power through both onshore and offshore wind turbines.

However, I shall make one or two qualifications and comments about that concentration. We welcome the Government’s agreement in the recent Energy Bill debates to include a feed-in tariff, particularly for microgeneration of energy. We think it is very sensible and can sit comfortably with the renewable obligation certificate regime which encourages the major distributors of electricity to purchase from renewable sources. We did not look in detail at biomass from agricultural crops but we welcome the announcement from Drax, the owner of the largest coal-fired power station in western Europe, which is reported as being willing to invest £2 billion in that new process. We think the target of sourcing 10 per cent of transport energy consumption from biofuel is a real challenge and must be the subject of a further inquiry.

As to water power, we have just about run out of hydro capacity in this country. We are excited by the prospect of a barrage on the Severn but we do not believe that it will be complete by 2020, either the larger barrage of 22 kilometres in length, or the slightly shorter barrage closer to the second Severn crossing. It will be a subject of great consultation, discussion and, I am sure, argument, but because it did not fall, in our judgment, within the time period we were looking at, we do not comment in detail on it.

The final qualification to our concentration on electricity and wind power is that we believe very strongly that the Government should encourage research into other technologies. We do not want wind power to crowd out other sources of renewable energy, and there are many. I mention only one—geothermal—which I am sure in the years and decades to come will be playing an important role.

Before coming on to the contribution that wind power can make, our report states that it is obvious that if we reduce our total energy consumption through energy efficiency measures, the mountain we have to climb is reduced. Therefore we hope that the Government, in the spring of next year at the latest, will come forward with recommendations about improving the rate of energy efficiency and, therefore, a reduction in the total amount of energy we consume. If the Government’s decision is that it is to be 20 per cent, that clearly reduces the target of 15 per cent for renewables by perhaps up to a fifth. We should like a policy statement from the Government as soon as possible on that front.

We accept that pursuing a target of 15 per cent for renewables will involve increased cost to the consumer. The Government have to be frank about this and the power generators have to explain the consequences. The charges for those who are emitting carbon under the carbon permit scheme—I understand that in the first round it raised about £50 million—are paid by the power generators and therefore paid by the consumers. The renewables obligation certificate, which is a scheme for encouraging the use of renewable sources of energy, is also paid for by the consumer. We have got to understand that, estimate what it is likely to cost and ensure that we protect the most vulnerable energy users in our society.

I turn now to the issue of wind power. The noble Lord, Lord Broers, spoke a few days ago in your Lordships’ House and I understand his point in questioning the wisdom of pursuing offshore and onshore wind because of the problems of intermittency—that is, that when the wind does not blow you do not get any energy—and the energy producers having to plan for a certain base load coming from conventional coal and gas-fired power stations and nuclear. I shall deal with the intermittency point in a few moments.

The noble Lord, Lord Oxburgh, and my noble friend Lord Dixon-Smith gave evidence. I pay tribute to my noble friend’s experience and wisdom on this subject and look forward to his comments in due course. The noble Lord, Lord Oxburgh, while being cautious about how much reliance should be placed on wind power because of the problems of intermittency, nevertheless welcomed further development of the technology.

We are all aware of the objections from householders, conservationists and many other bodies about the construction onshore of wind turbines that disfigure the countryside, particularly in large, open rural spaces. My noble friend Lord Vinson has written to me reminding me of the problems of construction in Northumberland, and I am well aware of it in my own county of Suffolk. Our report states, however, that one of the consequences for the Government is that if onshore wind turbines are going to make a contribution, then one may have to go back to the Planning Bill, after it becomes an Act, and reduce the threshold size for the responsibility passing to the Infrastructure Planning Commission to perhaps 20 megawatt output. Otherwise, even with onshore wind farms, it will take longer and longer to obtain planning permission, for reasons we all understand.

The committee believes that the real challenge and opportunity lie offshore. As regards planning, I commend what the Crown Estate has done in the third round, which is underway at the moment, of inviting bids for planning permission, essentially, offshore. It has gone about that in a positive way and I am looking forward to the outcome. It will certainly be much bigger than the second round.

The committee is attracted to the technology of laying under the sea a grid cable, essentially—perhaps around the whole of the United Kingdom—so that wind farms can be constructed not only in the North Sea but in the western approaches off the Northern Isles. If all the power generated could be transmitted using direct current and then converted to alternating current in due course—I understand that there is Swedish technology to create that—that would deal with the intermittency problem because the wind has to be blowing somewhere around the British Isles at any one time.

As to the grid, we welcome what Ofgem is doing in looking carefully at how it can encourage the grid to invest ahead of connection from not only renewable sources but conventional sources, and also making sure that the queuing system is a proper queue of those who have finance and planning rather than simply on the basis of those who have applied in the past. We think Ofgem is moving in the right direction.

Finally, I am sure that my noble friend Lord James of Blackheath, whose experience dates back to the oil and gas industry 20 or 30 years ago, will have comments to make on the supply chain—the creation of the supply mechanism for new turbines, barges and drilling systems. However, I make the point that the Swedes, the Germans, the French and the Danes have already responded to the opportunities offshore in the United Kingdom and we should welcome their manufacturing companies into this country.

Can offshore wind be a significant contributor by 2020? I believe so, and our committee believes there is a chance that there could be such a contribution so long as planning consents come on time, one hopes, by 2013; that turbines are ordered—there is certainly capacity around the world; and that we have the lifting barges to lift the turbines and place them into the seabed. Some industrialists are forecasting 25 gigawatts of capacity coming out of round 3 by 2020, and if you add what happened in round 2—6 gigawatts are likely to be in production by 2020—that is a large contribution to our target.

I end by referring to the challenge. It is not only an organisational challenge for the Government but a challenge for us as consumers. In the Second World War Lord Beaverbrook was charged by the then Prime Minister, Winston Churchill, with increasing aircraft production, and he took substantial executive powers to get the programme delivered. We believe that something like that has to happen; there are too many government agencies involved, and some form of renewables commission should be in place in order to deliver the objectives that the Government may accept. Those, like my noble friend Lord James and myself, who were involved in the development of the oil and gas industry in the North Sea in the 1970s remember that industry responded quickly. Incentives were given, there was clear planning guidance and great success was achieved in a relatively short period of time.

I look forward to the contributions of those who know a great deal more about this subject than I do. I beg to move.

Moved, That that this House takes note of the report of the European Union Committee on The EU’s Target for Renewable Energy: 20% by 2020 (27th Report, HL Paper 175).—(Lord Freeman.)

My Lords, I do not know whether I qualify as someone who knows more about the subject than the noble Lord, Lord Freeman, but I reiterate the great urgency of the situation if we are to meet our renewable targets. At the same time, I sound a note of caution for any Government of whatever colour about what will happen if there are power failures and the lights go out. We need to get a move on in the energy field.

With regard to wind power, it is something of a puzzle to me that when I went to Wellington in New Zealand last year, the first place I was taken was up a hill to see a wind turbine that was a tourist attraction and to which large numbers of people came because they thought it was well worth looking at. If ever the old adage “beauty is in the eye of the beholder” held any truth, it was certainly not contradicted there. We react with shock horror to wind farms, but they are actually not permanent blots on the landscape, if that is how people wish to refer to them; they could be taken down and improved. Much of the resistance should be taken care of in the most sensitive areas, but I am sure we are going to have to agree to wind farms in many areas.

It was rather appropriate that we should have had a Planning Bill and an Energy Bill at the same time as the committee was deliberating. I am disappointed that we are still talking about 50 megawatts being the lower limit, as it were, for the Infrastructure Planning Commission. That may have to be revisited—a lower limit should be appropriate.

Regarding the domestic feed-in tariff, it was evident to the committee on our visit to Brussels that in both Germany and Spain a good deal more energy is generated at home by photovoltaic cells. While one might say that the Spanish have a lot of sunshine so this method might be appropriate, I am not aware that it is any sunnier in Germany than it is here. However, it has the advantage of a feed-in tariff that gives generous levels, which would encourage more people to fit photovoltaic cells. If we are going to have two-way meters, and if we are not going to pay large grants to people, there has to be some financial incentive to people to go ahead and put these in. A big industry could be set up quite quickly to install them. The things on people’s roofs have very little impact on the environment because many of them can be easily hidden away.

One thing that we discussed which concerned me was the question of certificates of origin, which would be traded and which give people confidence that what they are buying results in good being done. I am thinking of garden furniture, where a certificate of origin is often a label tied around the chair that you buy saying, “The teak from which this was made was harvested in sustainable forests in Indonesia”. I just do not believe it. We need to have a system of certificates of origin where we can have confidence that the people trading them have genuinely saved the carbon and have done so for a long time, not just last week or something. It must be a continued saving, going into the future. I also look forward to the efficiency targets, which I know are coming in the spring.

The last thing I want to say concerns the management of the grid. Far be it from me to cast aspersions on witnesses who came before us, but Ofgem was not very convincing. In my view it was extremely cautious, it referred to the objectives that were set for it by the Government and it had to have the needs of present-day consumers in the forefront of its mind. To some extent, if you take the needs of present consumers too much into account, it could be at the expense of consumers in years to come. There may well be a price to pay immediately in order to get the whole process going. I hope that Ofgem will address this issue, as it must also address the issues of the management of the grid.

The grid, as we know, was designed with the idea of central power stations radiating outwards. It is likely that a lot of this renewable energy will be generated on the periphery of the United Kingdom, and we will have to be able to bring it towards the centre. Again, this seems to be an urgent problem that goes beyond the immediate economics of the next two or three years.

My Lords, I should declare my interests in this matter. I have obviously been a member of European Union Sub-Committee B and therefore a participant in the construction of this report. In an earlier life, I was chairman of North Sea Assets plc and of British Underwater Engineering which played a very large part in the supply chain for the development of the North Sea.

I should correct one impression given by my noble friend Lord Freeman: I am deeply pessimistic about the levels of investment in this round similar to those which were made to support the North Sea. The North Sea development was a disaster for the investors, for the principal reason that we did the job too quickly. As a result, the dockyards of Leith and Aberdeen are today full of ships that have not sailed for 25 years, the cost of which has never been fully paid back to the investors. I think that there will be a completely different structure when it comes to getting the finance for this: people will not invest in the individual ships, which are very short for what we need now. Some form of corporate entity will have to be created to give some form of equity participation in the eventual proceeds of the energy created. Without that, I do not think that anyone will have any chance of a fair payback. That is a very important point which is not in the report as such.

My primary concern today is about the supply chain, which is in a dire state. Before doing so, let me say that 10 days ago I attended the 8th meeting of the European renewable energy conference in Budapest, which came up with one or two surprising outcomes. My noble friend Lord Freeman referred to the fact that geothermal energy is a big issue for the future, and it may be. It was brilliantly presented in Budapest by a very attractive 28 year-old Hungarian physicist, who has just got the Nobel Prize. And she has got four children already—one wonders what she does in her spare time.

Geothermal is capable of heating the entire world twice over with the resources taken out for one year. In so doing, the earth would replenish the entire removal of geothermal within six months; it is therefore eternally renewable. However, I understand that there is a big problem with sulphur generation and that it will not be usable—cleanly usable—until the sulphur problem has been eradicated, but I am assured that in time it will be. We need to bear this in mind for the future.

A minority view among committee members was that we might be getting pushed by the 15 per cent target by 2020 into an enormous expenditure of uncertain outcome to buy something which may not represent value for money by 2020 in comparison with what else is available at that time. However, we must take it as a given that 15 per cent by 2020 is the target that must be achieved, and everything I say from now on is therefore in that context. We have to recognise that we may have to try to turn what we have got by 2020 into an even bigger opportunity and become the powerhouse for the whole of Europe by adding our wave capacity on to our wind capacity, in which case an enormous income could be generated to this country’s benefit in years to come.

The other factor which came late to the Budapest proceedings I undertook to relay to the Government, and I have not had a chance to do so until now. I was approached outside the conference by one of the commissioners from Brussels, who asked me what my reaction would be to the creation of a North Sea association. I asked him to explain this. He said that such an association might be sponsored by Brussels to require every country which bordered on to the North Sea to give up the sovereignty of its shoreline in order to gather together the entire wind resources. We take the intermittent point, but it is not intermittent for the North Sea as a whole. Overall, the wind is blowing somewhere in the North Sea every day at the necessary level for generation. If there was one central control over the whole North Sea, the theory goes, there would be enough to provide fuel for the whole of Europe. That is what is in the mind of those in Brussels.

There would also be a plan to build an artificial island somewhere in the region of the Dogger Bank to act as a massive substation for the gathering and transmission of all the created fuel into whichever country paid. Each country’s generation would cease to be its property and would have to go into a central pot. We would then have to buy back from the central pot what we needed for our own purposes. This sounds like a thoroughly bad idea to me. When he asked for my reaction, I said that it was not for me to comment, but I reminded him that when Shakespeare wrote that ours was a fortress built by nature bound in by the triumphant seas, I did not think that he had it in mind to give away 800 miles of our battlements to him. The Government should monitor closely what Brussels has in mind, because I suspect that there is a subplot to this: it does not like the plans that have come in from everybody; it is disappointed by the outcome; it has seen that the North Sea in isolation, if centrally controlled, can do the job for the whole of Europe; and there may be some attempt to strong-arm a grab on the all the resources that it needs.

The supply chain, which is the critical factor, is seriously limited by the fact that it first of all requires a variety of types of vessel of which hardly any exist in this country. Your Lordships should understand what is involved in a turbine. They cost about £2.5 million each and weigh 570 tonnes. They variously stand between 70 and 100 feet above the sea level, with 500 tonnes of the construction out of sight below the surface of the water. The other 65 or 70 tonnes sticking up on the top are the bit that you see.

I am not as optimistic as the noble Lord, Lord Freeman, about there being plenty of turbines available in the world. I think that there are only three manufacturers of turbines at present: REpower, Suzlon and Siemens. Without doubt, Siemens’ turbines are the state of the art. It is encouraging to hear that Siemens has in construction in this country a factory into which it intends to bring the manufacture of a certain number of the turbine gearboxes, which are critical. The Government should look towards developing the warmest and closest possible relationship with Siemens, with a view to trying to secure from it as much of this forward product as they can. They will need at least 3,000 turbines for the scheme to work, and they should see to it that they are being delivered. There is a two-year waiting list to get a single turbine at the moment, so they do not have long to get it up and running.

Another development that the Government should watch very closely is the floating turbine. A prototype is being tested in the Gulf of Locarno, called, somewhat promisingly, the multi-brit-ariba. It could be the answer to a quick fix. If it is made feasible, it will be ideally placed for manufacture on land before being shipped out and placed in position. All that will be needed is for it to be connected. However, the prototype has a nasty habit of severing the transmission lines for whatever it generates, therefore rather undoing its own good work.

The creation of a turbine as an operational unit requires first of all that a foundation is sunk into the sea bed. The foundation comprises something resembling a huge Lego brick of reinforced steel, a number of which have to be piled, one on top of the other interlocking, to a height of at least 10 metres and sometimes 30 metres. It then has to be hammered into the sea bed to a minimum depth of 10 metres by an explosive piledriver. There is only one ship available in this country that can do this and it is called the “Jumping Jack”, which has been used to construct pretty well every one of the wind farms that we have in this country.

I am told that three more are in construction, but that that is it, and that they are all booked out until 2020. We must therefore find some more. I asked Anni Podimata, who chaired the conference in Budapest, whether the renewable energy arm of the European Union would assist by compiling a register of every piece of equipment available, and whether we could have a list of all the ships, what was available and which components were resourced. I received a discouraging reply. She said: “No, we couldn’t possibly do that; it would be outside our brief; and, in any event, you haven’t got a problem with ships, because now that the billionaires are hit by the recession and can’t afford to buy any more yachts, you can go to the yacht builders and get them to build your ships for you”. I asked her whether she was a direct descendant of Marie Antoinette, because it sounded rather like the cake and the bread story to me—I do not expect to be invited back next year anyway. Driving the stack of foundation Lego bricks into the ground requires a hammer to hit it at the force of 44,000 pounds impact. The first impact will probably drive the pile about 1 metre into the ground. By the time you get to your 30th or 40th impact, you are lucky to get 2 centimetres out of it—so it is a long, slow process. Putting every turbine up takes an average of six weeks in each case and the total cost, including material, is £2.5 million.

Turbines can be manufactured, laid out flat and taken out on a flat barge but, when they get to sea and to the place of construction, they have to be lifted to their full height, which means that you have to have a marine boom crane with a minimum carrying capacity of 65 tonnes, which is the actual weight of the final component that you have to put on top of the foundation. There are no such cranes available in this country. You might be able to make some if you follow the Venetian solution used in building the tidal barrier in Venice, by making large floating pontoons, covering them with a steel plate and then driving a crane onto them and securing it by bolting it down. But you would have a very dodgy centre of gravity and you would not want to be too near one of those when it is picking up 65 tonnes.

The short answer to those problems is that you cannot use the stuff that is surplus from the North Sea, because that is a deep diving problem. You go down to a huge depth there. You put your divers down there for six weeks at a time in teams in three, with two days to put them down and two days to bring them back. You do not have a problem there in needing specialist diving vessels, because you will be diving down for only 20 metres maximum. That is easy—half-hour stints will cover all the work that is necessary. The difficulty with the other ships is that you do not have the piledriver, beyond “Jumping Jack”, and you do not have the marine crane lifts. You will have to get them and you cannot really manufacture them in time to get through.

The timetable that I have worked out for the whole exercise, to make 3,000 turbines effective down the east coast of Britain, would work on the basis that planning consents must all be achieved by 2013. If you do that, I have a fairly reliable estimate from professionals in the business that the whole 3,000 turbines needed to achieve the target could be erected in six years, with one year left up your sleeve before reaching the deadline. To do that, you have to get a turn-key operation done on it by some form of contractor, who you will have to cut in on some form of equity participation. I cannot see any other way around that problem.

There are people who can do it. You have to go to somebody who either has the boats or can bring them back from other projects on which they are using similar boats around the world. You need four different types of boat. You need a basic diving support vessel, which does not have to have a moon pool; you can dive over the side at that depth—you do not have to have a hole in the middle of the boat. You need two cranes per installation and one piledriver on every installation. You might be able to make economies by doing three farms alongside each other at one time so you can rotate the ships between them and get maximum use of the ships. But you will also need remote control submarines, of which there is a plentiful supply in this country. There are places in Aberdeen and Yarmouth which are well stocked—you will not have a problem with those. At that point, you will be in a position to have the full kit, but you will not get the kit unless you have the turbines ordered well in advance and you have to have the planning consents.

I have calculated that there are 13 agencies whose planning consents you will need. Rather than delay your Lordships this afternoon with them, I shall drop a note to the Minister with a list of the 13 agencies from which you need consent. They are all difficult ones; some of them have already objected to installations which they do not like, so they are used to arguing it out. If you get those consents, you have a reasonable chance to get through this. There is no alternative way of doing it. You have to make it work. You must get the planning consents by 2013, which means that the survey work on their location must be done in the next eight to 10 months or so. That is the first thing. The components have to be ordered now, as without them the whole thing is a failure. You will end up—

My Lords, I am sorry to interrupt the noble Lord, but the guidance in the Companion to the Standing Orders suggests:

“Other speakers are expected to keep within 15 minutes”.

I would like to point that out.

My Lords, the time was not on the speaking list today.

Therefore, you will have a very effective series of wind farms which will meet your target by the time involved, but only if you start immediately.

My Lords, first, let me apologise to your Lordships, to the noble Lord, Lord Freeman, and to the Minister for my discourtesy in not being present at the beginning of the debate. I was unavoidably detained elsewhere, to which place I have to return. I crave your Lordships’ indulgence to address the House now. Secondly, I have the pleasure to declare my normal interest for Wales—the geographical place rather than the mammals.

The noble Lord, Lord James, might make one think that our committee is always conducted in a jocular way, but it was refreshing to hear him recount some of his serious experiences at his recent meeting in Budapest.

In a recent newspaper article, Wulf Bernotat, chief executive of the world’s largest quoted energy company, E.ON, asked of the United Kingdom:

“You have old nuclear power plants, old coal, expensive gas, a need to invest in renewables to reach unrealistic targets, and a slow [planning] process. Doesn’t that sound like a problem to you?”.

As we are all aware, the European Commission’s target “20 20 by 2020” requires the UK to achieve 15 per cent of its energy from renewable sources by 2020. As we also know, this figure comprises energy used for heating, cooling, electricity generation and transport. The European Union sub-committee of your Lordships’ House published a report on this target on 24 October. Our report concluded that the UK’s 15 per cent target should be regarded as a stepping stone, not as an end in itself. In fact, it is probable that it will not be achieved. In these uncertain financial times, can we view this as phase one of a process towards building a low-carbon economy in the UK?

To do so, we shall need the will of our political leaders to look beyond 2020 to ensure that those people and organisations that commit investment and resources for sustainable and cleaner energy projects are not only encouraged to begin that process immediately but also assured of a stable and predictable planning environment in which to carry it out in the short, medium and long terms. Without such certainty, large national and regional projects, such as the Severn barrage and other methodologies to harness tidal power around our long coastline, will not even be worth consideration by those organisations capable of investing in and developing them. Focus and leadership will be needed to take us into a diverse energy programme not only to meet the United Kingdom’s renewables targets but, perhaps even more important, to increase substantially the security of our national supply. We must change our ways of doing business. We must change our ways of living.

A mega-project can of course also help to regenerate regional economies. To take south Wales and the south-west of England as an example, recent university research indicates that both areas are at an economic tipping point. Investment to develop the massive tidal resources of the Severn estuary can be raised. This, in turn, would provide us with the basis for a low-carbon economy and a better quality of life for a substantial part of the UK. In addition to the national importance of a proposed barrage, by far the UK’s largest single source of renewable energy thus far identified, may we be assured that the Government are taking full account of the national employment opportunity that will accrue from the scale of the construction and machinery production required, as well as the enormous continuing and diverse scope for employment generation to follow?

We have started the renewable energy process with wind power. We must accelerate diversification. We need to work rapidly to bring other options into the policy and planning process for the long term, both large-scale and small-scale, through new build and by improving the efficiency of what we already have. To return to the barrage for a moment, the project, which extends from the Welsh coast to Hinkley Point, not only could substantially simplify the task of providing cooling water for the next generation of nuclear stations proposed for that location, but would focus the task in establishing connections to the national electrical transmission system and protect both Somerset and south-east Wales from inundation due to a rising mean sea level.

We have no time to waste. I return without apology to the Severn barrage as an illustration of the indecision that is regrettably so often a feature of our processes to address such substantial investments of this kind. The idea for such an investment was first mooted early in the last century, as I have mentioned on previous occasions in your Lordships’ House. Of course, we have to consider carefully the impacts of such a huge project, both positive and negative, on the physical environment. The feasibility study currently in progress is scheduled to have its interim findings published in the first half of 2010, but we cannot afford to continue our habit of assessing large projects at such a relaxed pace any longer. The world of our grandchildren and great-grandchildren is taking shape here today.

We all have something to contribute—the corporate giant, research laboratories, planning offices, schools, Ofgem and the consumer. The Government’s job is not only to raise awareness of the arguments but to lead and facilitate the way forward; they must show us that we can all contribute and simplify the methods by which we do so.

My Lords, from these Benches I thank the noble Lord, Lord Freeman, for an excellent and comprehensive report on an area of increasing importance. It will be, as the report says, very challenging for the UK, and even for Europe as a whole, to meet the targets, which are quite something. Over the past year we have heard rumours of rebellious civil servants and officials in government departments saying that these targets just cannot be met. Many of us, even though we wish them well, might almost say that that is the case. I shall come to one of those areas in a minute.

At the moment the European Union derives something like 8.5 per cent of its energy production from renewable energy and is aiming for 20 per cent by 2020. In trying to think how far ahead 2020 is, I go back in time to 1996 and the last full year of office of the previous Conservative Government, which seems a long time ago. However, there is little time for investment over the relevant period, and certainly very little time for invention or innovation. The relevant renewables figure for the United Kingdom is about 2 per cent, with only Malta and Luxembourg having a lower figure. Therefore, we shall have to achieve about an eightfold increase over the next 12 years for us to meet the target we are discussing. Although that may seem possible in terms of electricity generation, when we consider that it also includes heat and transport fuel, the task looks staggering.

I thank my noble friend Lord Bradshaw for mentioning the visual aspects of wind farms. I like to look at wind farms. I do not often drive up the M4, but I have noticed that there is a huge wind generator by that motorway at Reading, which I consider a good thing. Wind farms are a very controversial subject in Cornwall. However, if some of them were taken down, I believe that I would not be the only person to protest that some of our greatest landmarks were disappearing. When I was a Member of the European Parliament, some farmers wanted to show me how the landscape in a certain location would be despoiled by wind generators. Indeed, I accept that you should not put them in certain locations. The farmers invited me to visit a stunning vista in north Cornwall and asked me to consider what it would look like if wind generators were installed there. However, all I could see was the criss-cross of electricity pylons stretching for miles, which made me think that you do not notice what has been there for years, and that perhaps people feel threatened by change. However, this is a controversial area of which communities are naturally very wary.

One of the most telling pieces of evidence occurs at page 38 of the report. It states:

“Cambridge Econometrics has estimated that on current policies the UK would achieve less than 5% of final energy from renewable sources by 2020”.

I note with interest that the report continues:

“This is a view accepted by BERR”.

That is a stunning statement; namely, that on current policies we will increase our energy generation from renewables from a figure of just under 2 per cent to 5 per cent. However, the challenge is to produce another 10 per cent beyond that.

I consider that the renewables energy policy concerns principally three things. It involves reducing carbon dioxide emissions, and the European Union’s 20 per cent—possibly 30 per cent—reduction target by 2020. Importantly, not just for us but for Europe also, it concerns energy security. The report on Russia of the EU committee chaired by my noble friend Lord Roper shows that Europe is dependent on Russia for 40 per cent of its gas supplies. I think that seven of the 27 EU states are completely dependent on Russia for their gas supplies. Therefore, renewables are important in that regard, but also because renewable energy is sustainable and so we do not eat up the planet as our economies motor forward.

One sad thing about the United Kingdom, as was shown in the report, is that we are near the bottom of the league table; as the classic head teacher’s report says, we have to do not just better but hugely better. That means that we have missed out in a number of areas which will make it very difficult for us to catch up in terms of capacity, producing the technology ourselves, expertise, and our experience in applying the technologies—in all of which many of our EU partners are well ahead.

I was interested in what has been said on technology. It is clear that we cannot and should not depend, as we are, largely on wind power. It is important for reaching the 20 per cent target and the intermittency problems are not huge, but we need diversification beyond that. I was delighted that geothermal power was mentioned. In fact, the granite batholiths in the south-west are a larger potential resource than the Severn barrage. I am not aware at all of a problem with sulphur. In fact, much geothermal power is generated mainly in volcanic areas, where there may be some sulphur output naturally; but even in the UK and other parts of Europe there is potential. An experimental station in Soultz, Alsace, started operating earlier this year, but, unfortunately, the technology is unlikely to be on-stream until about 2020, along with a number of other technologies that we have talked around.

The Government’s commendable move to including heat in the Energy Bill and lay down a framework for the equivalent of renewable obligations or freedom tariffs for heat One area that makes me more positive about the targets, is. Heat accounts for some 47 per cent of carbon emissions and a large proportion of our energy consumption in the UK and Europe. It is an area that we need to tackle; and there is a lot more scope for renewables—certainly in biogas, whose industry has a great potential to increase, and in biomass in terms of timber and timber-related heating. I cannot understand, given that we realise the urgency of this issue, why in any new house or building we do not insist on heat pump technology or something equivalent being installed, as to retro-fit any of these types of technology is incredibly expensive.

I would be interested to hear the Government’s latest view on biofuels. The 10 per cent target has already been mentioned, but this is an important part of meeting Europe’s target for 20 per cent of renewables. Biofuels have gone from being a saviour to something that is seen as a threat to our ecology and the environment. Where do the Government now stand and what is their understanding of where Europe stands? There has been a fair degree of disagreement within the Commission about whether the targets should remain and how we ensure that energy resources are sustainable.

I was not aware of the issue of guarantees of origin before I read the report. I understand my noble friend’s scepticism in terms of previous forestry badges. The EU ETS has certainly shown that certification in terms of emissions and generation can be strong. However, in the United Kingdom, renewables obligation certificates are effectively a guarantee of origin already, and I would like to understand whether the two systems conflict in terms of registering renewable output, or whether they come together quite well.

However, because I still do not understand this and I do not believe that the Energy Bill, which is about to become law, really deals with it, my basic question to the Minister is: exactly how is Cambridge Econometrics wrong and how will policies in the future ensure that we bridge the gap between the predicted 5 per cent and the 15 per cent that I am sure everyone in this House wishes to achieve?

My Lords, this has been a very interesting afternoon for me. I was delighted to hear the opening remarks of my noble friend Lord Freeman, who rightly pointed out that the 15 per cent renewables target that we are looking at is the target after we achieve a 20 per cent reduction in our carbon emissions by 2020—that is, 20 per cent of our energy requirements not today but in 2020. The difference is fundamental, and my noble friend was absolutely right to draw attention to it.

In this country, ultimately we are looking at an 80 per cent reduction in our carbon emissions. That is not yet written into law but it is a recommendation that will, as I understand it, be made to the Government by the Committee on Climate Change following its consideration of evidence that has accrued since the Government decided on the 60 per cent target three or four years ago when they were planning the Climate Change Bill. That is, of itself, fundamental because it probably means that by 2020 we will require a renewables target higher than 15 per cent if we are to get our emissions down to 20 per cent below where they were in 1992—or, in the case of Europe, probably today. However, getting our emissions down to that level will be very difficult.

I also sympathise with my noble friend Lord Freeman, as anyone who writes a report looking at the future is immediately in difficulties because what you expect to happen in the future never does happen. I merely draw the House’s attention to page 37 of the report, which refers to the cost to the domestic consumer of generating 37 per cent of electricity from renewable sources. The report sets out assumptions based on oil prices at $70 a barrel and $150 a barrel, which they nearly were earlier this year, although today they are at $55 a barrel. That suggests that under the present regime the price for the consumer will be much higher than anything generated in this report.

That leads me on to a different aspect of this issue. It seems to me that in the end it all comes down to economics and the climate in which everyone has to undertake these actions. I draw attention to something that appears on page 75 of today’s Times. It may not be too significant but it is, none the less, indicative. It is a report that the world’s biggest wind farm, which, curiously, was to be in Texas, has just been put on hold because the economic conditions have worsened so much in the past two or three months. Years ago, I was responsible for the whole built estate run by Essex County Council—that is, maintenance, energy use and everything else. Even in those days, we worked very hard on energy economy. Economic viability drove the programme, and projects went in and out of viability depending on the fluctuating interest rate. I say that to make the point that, ultimately, we really need to get this moving. I agree with the noble Lord, Lord Teverson, about the headmaster’s report, but the comment that I consider to be appropriate for the Government at the moment is, “Could do better if they tried”. I am not wholly convinced that the Government are really trying to tackle this; at least they give no appearance of having an absolute conviction to get to grips with the problem.

I use another illustration of the difficulties that we face. A friend of mine has a wind turbine which supplies most, if not all, his electricity and he supplies some to the grid. Until the electricity prices rose, he was on a 60-year payback period. That would not encourage people to go into this business.

Finally, we need to consider another problem. I refer to the second report of the Science and Technology Committee, 2005-06, to this House on energy efficiency. At page 27 of the report we find a graph which illustrates yet another aspect of this problem of which little has so far been said today. That report illustrates the performance of our country's economy over the past 30 years. Interestingly, it shows that GDP grew by about 110 per cent over that time. For our own sakes and for the sake of everyone in our communities, we expect to keep our economy growing. It also shows the units of energy required to produce a unit of GDP falling from 100 to 50, so effectively it halved. Energy efficiency has been ongoing for a long time. It would have accelerated had the price of oil stayed where it was, but now I am not sure what will happen.

We need to bear that in mind because the real problem revealed by that graph, and which we need to consider very seriously, is that over the same 30 years the effect of those two movements was to keep our energy use virtually flat—it grew about 5 per cent. If we are to rely on increasing energy efficiency to try to get our emissions down, in my view, it will not happen. If we become more efficient in our use of energy, it will be held up as the economy grows. We have a deep problem and the nature of change required in our energy supplies is greater than most of us are at present contemplating.

As my noble friend Lord James was saying, this question of economy applies across the board: not only do we have these problems in the United Kingdom, but every other country across Europe has a similar, parallel problem and will want to invest in this area. The noble Lord, Lord Rowe-Beddoe, who I see has temporarily had to leave the Chamber, talked about the need for stability in the economic climate in order to encourage investors in the construction and installation of all the specialist equipment to deal with the installations and then the installations themselves. Given that this is now a trans-European problem, investors ought to be able to have considerable confidence, but the brutal truth is that, looking at the economy today, there is no confidence at all. No one in manufacturing industry, and no one in the construction industry, dares to plan more than about a week ahead. Until we get that foundation laid, we shall find it extremely difficult to achieve anything. There is an urgent need to give this field and the wider economy that stability.

The Minister will undoubtedly argue that the Government are already doing what they can and that we shall hear more next week with the Pre-Budget Report and so on. I do not expect him to answer this this afternoon, but we all need to recognise that we will get nowhere without certainty in giving the people who are going to have to put their money into the construction that is necessary to bring this change about the confidence to begin doing so.

I should refer to the Planning Bill. It has been much mentioned, and I played some part in it in this House in the past few weeks. It will help, but it is not a solution. For a start, it deals with national-scale infrastructure projects only. It will take care of power stations, but a lot of other things are required. That is the first thing, but let us also consider the timescales. The Bill will be passed by the end of this Session. The planning commission will probably be in place by next April. It will, perhaps, have settled its procedures by autumn 2009. At that point, applicants will know what they have to do in order to make a valid application. It will take them a year to produce a valid application; certainly, it will take a year for an application for a power station. That takes us to the end of 2010. It will then take another year for the commission to consider it. Therefore, we should not think that we have produced a tremendous acceleration. Of course, after that, matters will be much easier and there will begin to be some benefit, but we have a two or three-year hiatus before the Act will be operating. We have to face the fact that that is so. It will help with planning problems at national level on large-scale projects, but in due course, we may have to turn our attention—dare I say it?—to the rest of the planning system, which for many people in the construction industry is still a confusing obstacle to pass.

This has been an interesting afternoon. It is a step forward. Whether one agrees or disagrees with everything that was said is neither here nor there. The more discussion we have on this issue, and the more the recognition is forced home that urgent action is required, the better. In that sense, I completely support everything that has been said this afternoon.

My Lords, I agree with the final remark made by the noble Lord, Lord Dixon-Smith: we can advance the cause only by discussing these issues intensively. I am therefore grateful to the noble Lord, Lord Freeman, for his report and for the work of the committee. I offer two apologies, neither of which should occasion too much consternation in the House. First, I, too, would have preferred that my noble friend Lord Hunt was replying to this debate, for the obvious reason, but also because, as the Minister responsible for this area, he has detailed knowledge of this matter and the report is geared towards longer-term strategy. However, when he returns from Brazil—I hasten to add that I offered to exchange roles with him this weekend so that he could have the pleasure of this debate and I would have the arduous task of looking at biofuels strategy in Brazil, but the House will recognise that he was committed to inevitable priorities—we shall get the benefit of his keen interest in this area, which is reflected in the fact that the Government will produce a further perspective on their overall priorities just before Christmas.

Next year, we will produce our full strategy, which will take into account the various matters aired today, especially the legislation that we will by then have in place. I hasten to add to all those who voiced anxiety about the effectiveness of the legislation that it is enabling legislation to improve the prospects of our hitting the targets. The legislation itself does nothing to hit the targets, especially given that—as the noble Lord, Lord Dixon-Smith, was, from his vast experience, able to point out—it will be a little time before the arrangements under the Planning Bill bear fruit. However, without them we would have been severely constrained, so I am delighted that in the week that this important report is being debated we are celebrating the fact that two of the most significant Bills in this area—the Energy Bill and the Planning Bill—have been before the House and extensively discussed. Some of the arguments that we have had today have been fairly well rehearsed in those frameworks.

I also offer the brief apology that I would have preferred that the government response to the report had been published a little earlier than today. I am grateful that noble Lords have been able to absorb it and take it into consideration when making their contributions. I wish that we had been able to provide time for substantial consideration prior to the debate, but the Government get caught between Scylla and Charybdis. The Scylla was that, if we delayed the debate, we would have missed the benefits of important contributions in this area; we had space for it, so we produced it earlier than we would ordinarily expect. The Charybdis was that we were not quite ready for the debate. I hope that noble Lords will appreciate that, in producing our response today, we offer no discourtesy to the committee but a desperate attempt to catch up with rapidly developing events and the great benefit of having this debate today.

The debate is timely, given our desire to conclude European negotiations on the renewables directive in the next few weeks and to work to finalise policy, following public consultation on the UK renewables energy strategy last June. The negotiations on the directive are ongoing, with the UK supporting the presidency’s aim to reach political agreement on the 2020 climate and energy package, of which the directive is a part. We want to reach agreement by the end of this year. We are now assessing the many responses received to the consultation on the renewables directive with the intention of publishing our final energy strategy in the spring of next year. This debate feeds into that consultation.

A number of important decisions for future renewables policy will need to be finalised over the next few months. We are pleased that the report highlights the scale of the challenge faced by the UK in meeting the proposed target. If there were doubts about aspects of the technologies to be deployed, this debate has added to them. I know that the anxieties of the noble Lord, Lord James, are shared by others. He well articulated the practicalities of getting various installations in place. I am grateful to him, but he will forgive me for not following him down those intricacies; if I did, I would finish up at the bottom of a deep ocean and not make a great deal of sense.

Let me reassure the noble Lord, however. First, the Government are all too mindful of the constraints. Secondly, the noble Lord will recognise that renewables development will be very significant in Europe and across the world. It would therefore be more than surprising if acute businessmen did not recognise the opportunities that will be vouchsafed to them with the demand of so many powerful Governments and rich economies.

I know that we are in a period of difficulty. The noble Lord, Lord Dixon-Smith, did not exactly call me out on this issue, although he expressed his anxieties about the next few months, which I understand. However, he will also know that this debate has a more-than-a-decade dimension to it. The report is about a decade of investment and delivery. The noble Lord, Lord James, and the noble Lord, Lord Freeman, in a rather milder form, also expressed anxieties on this point. We anticipate that the investment decisions will be seized by business in an area of considerable growth. I want to assure the House that the Government are well aware that they will need to have a keen eye to these practicalities if they want to see the issues being realised.

The noble Lord, Lord Teverson, put me somewhat on the spot by referring to the Cambridge Econometrics report and its doubts about the position. In 2007, our energy White Paper was clear that we could not just carry on with comfortable strategies. The requirements of the target for Europe of 20 per cent and for us of 15 per cent need a step change. I understand entirely the anxieties that are bound to be expressed when some current policy predictions are that we will deliver only 5 per cent in 2020 when we have to hit 20 per cent. In every aspect of their policy on this issue, the Government are concerned about the step change. I hope that noble Lords will appreciate that we cannot prove that we have made that step change yet, but the Government are fully aware of the necessity in certain clear areas—not least the legislative one but also in relation to the structures that we are already putting in place—to reach those targets.

Why are we concentrating on renewables? Obviously, we have to ensure the security of our energy supply; that is an absolute prerequisite. Noble Lords are all too aware that our indigenous resources of energy are decreasing. It is important for the nation that we find alternative indigenous supplies. We all know that we will have dependence on externalities, but excessive dependence would be dangerous, which is why the Government’s long-term energy policy takes into account the fact that we want to increase the amount of indigenous resource if we can. Renewables play an important part in that and help to reduce our reliance on imported oil and gas. We realise that we are dependent on such sources in the foreseeable future, but overdependence would be dangerous.

We estimate that a 15 per cent renewables target could lead to achieving carbon savings of some 20 million tonnes by 2020 and a reduction of between 12 per cent and 16 per cent of gas imports. That is a significant contribution. Moreover, it is estimated that by 2050 the overall value of the low-carbon energy sector globally could be as high as $3 trillion per year and could employ more than 25 million people. That is the nature of the world’s necessary response to different forms of energy production and the reduction of carbon. It also establishes the opportunities that are necessary. Our environment sector is flourishing, with more than 400,000 people employed, 17,000 companies and an annual turnover of £25 billion. We are already leaders in offshore wind, integrated pollution control, energy control systems, carbon trading, water and waste management and environmental instruments and monitoring.

We want to build on these developments to ensure not only that the gaps to which the noble Lord, Lord James, drew attention in terms of supply are filled, but also that opportunities are in place for British business to create jobs for British people. All this can contribute to the expansion of our economy in what is going to be an enormous increase in economic activity in this area.

The starting point of our energy policy is, of course, to save energy. In introducing the debate the noble Lord, Lord Freeman, said that it is also the starting point of the committee’s report. I am glad that we have coincided on starting points, and indeed much of the report points in exactly the same direction as the Government want to go. We accept the chidings set out in the report and the anxieties expressed in certain areas, but in broad terms the committee substantially reinforces and helps to guide the Government down paths which I hope to establish we are already engaged in travelling. Moreover, later this year we will carry out a further consultation on measures to encourage energy efficiency.

The noble Lord, Lord Freeman, and other members of the committee no doubt share in recognising that the 15 per cent target is ambitious for this country. It would involve a tenfold increase from the current level in the share of renewable provision as a percentage of total energy production. The noble Lord, Lord Teverson, not just in this debate but on other occasions has emphasised just what a challenge that represents, and he is right to do so. We believe that we can meet the challenge if the policy is appropriate and the market responds effectively, and as I said earlier, I acknowledge the immediate impacts on industrial economic investment through the credit crunch and the depression resulting from a loss of confidence in the economy in the short term. However, that is in the short term against the background of the committee’s report, the policy we are discussing, and what the Government hope to achieve.

I am not going to be drawn too far into those areas that look towards energy solutions beyond 2020—sufficient unto the year is the challenge thereof. If noble Lords will forgive me, I will not stray too far into the details of geothermal energy, which is some way off. I recognise its advantages and I do not see why the noble Lord, Lord James, and others should not take this opportunity to make these points, but nevertheless the report of the committee overwhelmingly addresses strategy up to the year 2020. Neither geothermal nor, realistically, the Severn Barrage, can be readily encompassed in that perspective. We are not certain about the economics of a tidal barrage because it is an enormously complex area. I heard what the noble Lord, Lord Rowe-Beddoe, said in his contribution, and I am sorry that he is not able to be with us, but in his absence I should say that we remain to be persuaded about the economics of the proposal. In any case, it cannot deliver for 2020 and is therefore rather outwith our considerations. However, the discussion reflected the fact that the UK has access to extensive and diverse renewable energy resources. We have one of the best offshore wind profiles in Europe and many opportunities to harness both wave and tidal energy.

Since its introduction in 2002, the renewables obligation as a primary means of providing long-term certainty to the market about the returns available to renewable electricity generation has increased UK renewable electricity generation from 1.5 per cent of total output in 2001 to three times as much in 2007.

We have to go as fast as we can, if not faster. We have, however, made some impressive progress, and the challenge is now to build on that progress. Wind power is now the UK’s fastest growing renewable energy technology. There has been a 33 per cent year-on-year growth rate in the investment in wind power. The UK is only one of seven countries with more than 3 gigawatts of wind power operating offshore and onshore, and we have recently gone past Denmark as the No. 1 country in the world for installed offshore wind capacity. We supply the equivalent of more than 400,000 homes with clean, green electricity, so we should not minimise the achievements made so far.

The wind farms that are currently under construction, together with those that have planning consent but await construction, will produce electricity for a further 5.5 million UK homes. A decision on a further 25 gigawatts of offshore wind development will be announced in spring 2009, following a strategic environmental assessment, in addition to the 8 gigawatts from offshore wind farms that have already been built or planned. The market has responded to energy opportunities of this kind in the past, and I have no doubt that it will develop strategies to bridge the gap which several noble Lords have identified in their contributions to this debate.

We have taken action to ensure that the work of government-funded research organisations is properly co-ordinated. Expenditure by the research councils on energy-related basic research has more than trebled since 2003-04 to more than £90 million, and we have spent an additional £200 million between 2005 and 2008 on the work of the Energy Technologies Institute. The new Environmental Transformation Fund is a significant simplification of funding for demonstration projects.

We recognise that we need to act now if we are to achieve these 2020 targets, and we have made great progress with the two Bills to which I have already referred and which provide the legislative structure for expansion. It was said that some parts of the Energy Bill have a certain rigidity, but that is not so. Its terms may look rigid when it becomes an Act, but it provides a framework under secondary legislation for expansion in exactly the areas about which anxiety has been expressed. I therefore assure the House that, aided by its careful consideration of both Bills, we have a framework for building for the future by making the energy changes that we need to make.

The results of the renewables obligation to encourage smaller-scale projects are indeed somewhat patchy, but that is why we have tabled an amendment—I do not underestimate the degree of pressure that came from other parts of the House about this—to introduce a feed-in tariff for low-carbon generation of up to 5 megawatts to allow homeowners, schools and communities to benefit from a guaranteed price for generation. This shows the flexibility that is built into the Bill, and I hope noble Lords will appreciate that the Government have accepted arguments that have been advanced in this House and have made appropriate arrangements to ensure that the Bill meets the approval of both Houses.

We fully support the committee’s recommendation to introduce financial support for renewable heat, which the noble Lord, Lord Freeman, emphasised when he introduced the debate, and we have tabled a further amendment to the Bill to create a power for the introduction of a renewable heat incentive to ensure that homes and businesses are heated from low-carbon sources.

I emphasise again the appropriateness of the legislative measures that we are taking. This is also true of the planning process. As I have indicated, I recognise the noble Lord’s keen interest in this area, his long acquaintance with it and the fact that he survived the rigours of the Planning Bill and the extensive discussions on it over the past year. Those of us who were not directly involved in consideration of the Planning Bill were all too well aware of the intensiveness of the discussion and the lengths of the debates, but we have, as a result of that, a framework for the future.

We have also announced measures to address the issues key to the successful deployment of the renewable technologies. To shorten the timescales to connect to the grid, for example, the department, Ofgem and the electricity suppliers are working together to speed up connections of projects that are ready to go. There is no doubt that connection with the grid is absolutely crucial to electricity generation and the opportunities for all those who may provide it through various sources. We are developing a new regulatory regime for the offshore grid to enable connection of the significantly increased amounts of offshore wind-generating capacity. I am grateful to the noble Lord, Lord Bradshaw, who drew attention to this issue. It is fundamental.

I do not know whether the noble Lord, Lord Bradshaw, produced an analogy between the grid and a main railway structure, but in trying to get past my obtuseness in grasping some of these matters my officials have used as a comparison the nature of the feed-in to the national railway system, from a whole range of branch lines, and connection to the national grid. We were doing a reverse Beeching, if you like. I am not sure whether I have enlightened the House with that analogy but, I confess, it was of help to me.

As part of the manufacturing strategy we have announced an intention to create a new Office for Renewable Energy Deployment, ORED, to help address issues such as the time taken to reach planning decisions and encouragement to business to identify and seize the opportunities in the supply chain for renewables technology. I recognise that we need to do more. I merely seek to establish that, thanks to this report, we now have the signposts on where we need to go. I hope that I have indicated that we are already quite a long way down these paths with the strategies we are pursuing. But a great deal more needs to be done, and all noble Lords who have taken part in this and related debates will be watching the evolution of government policy closely over the next six months as crucial aspects of the building blocks in relationship to the European requirements are put in place.

I emphasise again that although this debate is about the UK’s targets and the UK’s contribution, we should recognise that this report is that of a sub-committee of the European Union Committee. That is because this is a European issue, and the strategies we pursue are those which we hope will give a lead to others who are more slowly off the mark, or to others such as the Danes. Denmark is a unique country both in relationship to Europe and in wind energy, but the House will have noted that I took some pride in the fact that we went past the Danes this year in the amount of energy generated from wind farms. So I am sure the Government are on the right tack.

My Lords, this has been a very interesting debate. I thank the Minister and the Department for Energy for achieving what is almost a parliamentary record: responding within four weeks to a Select Committee report. On behalf of the committee I am most grateful for that speedy and comprehensive response, in so far as it is possible to give one before publication of a detailed policy in the spring. I suggest to your Lordships that that is when we should return to this subject either in Select Committee or in your Lordships’ House or in both.

I also thank the noble Lords on the two Front Benches, who are rarely thanked in these debates: the noble Lord, Lord Teverson, and, in particular, my noble friend Lord Dixon-Smith, with his vast experience. I also thank my noble friend Lord James of Blackheath, the noble Lord, Lord Bradshaw, and the noble Lord, Lord Rowe-Beddoe, who sends his apologies because he has been involved in, as I understand it, a semi-judicial hearing today. It was particularly kind of him to come and contribute to the debate. I thank your Lordships. The state of parliamentary knowledge has been advanced.

On Question, Motion agreed to.