Caroline Flint (Don Valley) (Lab): I beg to move,
That this House has considered the future of clean energy investment.
It is a pleasure, Mr Bailey, to serve under your chairmanship. I thank the powers that be for accepting my application for an Adjournment debate on this subject.
Last week, I spoke in the debate on climate change, responding to the Pope’s encyclical in which His Holiness said:
“Never have we so hurt and mistreated our common home as we have in the last two hundred years.”
As the Paris talks begin on Monday, it is vital that the world gets a strong deal to ensure the future of our planet for generations to come. We must also speak loudly and clearly about the new economic opportunities within our grasp. The challenge for the 21st century is how quickly we can fully benefit from the clean energy revolution.
As a patriot, I want the United Kingdom to be a global player, leading and innovating in the latest energy technologies and reaping the rewards, jobs and investment that will go to the leaders in this race. This requires an industrial and economic strategy fit for a world kept at less than 2° of warming. If that is the challenge and if that indicates the direction, I am afraid the Government have lost their satnav. The latest Ernst and Young renewable energy country attractiveness index puts the UK out of the top 10 for the first time ever. We now sit at 11th, behind Chile and the Netherlands, and the reason is simple. According to Ernst and Young it is
“death by a thousand cuts…At best it may be a case of misguided short-term politics getting in the way of long-term policy. At worst, however, it’s policymaking in a vacuum, lacking any rationale or clear intent.”
That is a damning verdict on the Government’s record over the past five years, a record with a very real cost from jobs and investment lost.
Investors do not have to choose the UK. If we do not make it attractive for them to invest in clean energy here, we will lose jobs in new technologies and their supply chains for the lifetime of those investments. That is exactly what happened when we lost out in the 1980s to other countries which saw the potential of wind energy.
I would never advocate that new technologies have never-ending subsidies or that taxpayers and energy bill payers pay a penny more than required, but the Government’s actions cannot be justified only on those terms. The decision to charge renewable generators the climate change levy was a grab by the Treasury, pure and simple. Business plans that relied on that income have had to be ripped up. Drax lost a third of its share value in one day following the announcement, and as a
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result it and Infinis have launched legal proceedings against the Government. On 25 September, Drax said that policy certainty is no longer there to continue its involvement with the White Rose carbon capture and storage project.
Developing CCS is an important part of our clean energy infrastructure and I thought the Conservatives thought so too. Perhaps the Minister will confirm whether what we hear through the media—that the Government’s allocation of £1 billion to support CCS innovation is to be cut—is true. In October, the report of the Committee on Climate Change, “Power sector scenarios for the 5th Carbon Budget”, said:
“CCS is very important for reducing emissions across the economy and could almost halve the cost of meeting the 2050 target in the Climate Change Act.”
Ian Lavery (Wansbeck) (Lab): I congratulate my right hon. Friend on bringing this timely debate to the Chamber. Does she agree that without carbon capture and storage, there is no likelihood whatever of the UK or Europe meeting the emissions level targets that have been set for 2050?
Caroline Flint: I agree with my hon. Friend, and what is so sad is that we have the brains, the skills and the interest from investors, but we do not have the Government’s political will to be a leader in this important area of innovation. Too often, we talk big but end up following, and lose the chances that are opened up to us.
Under the coalition Government, the ambition for CCS stalled. The Government’s favoured projects, Peterhead and White Rose, have suffered from dithering and delay, and they have put a brake on the other part of CCS—the development of industrial CCS, which can protect our energy-intensive industries such as steel from carbon leakage, watching our jobs exported elsewhere in the world. Alongside that, the cheapest forms of renewable energy seem to be constantly under attack.
Philip Boswell (Coatbridge, Chryston and Bellshill) (SNP): I speak as the contract lead for Shell at the Peterhead carbon capture project. I obviously cannot say too much about it, but it is in the public domain that SSE and Drax have both withdrawn from each of those programmes. Is it incumbent on us to ask the Minister whether she can give assurances that the projects will go ahead?
Caroline Flint: That is a very good question to ask the Minister. I hope that she will give some attention to the hon. Gentleman’s point. I have visited Peterhead and I know how important those projects are to communities around the UK and, importantly, to future generations in creating more jobs and opportunities for work here at home, but also for exporting those skills and expertise overseas.
The cheapest forms of renewable energy are under attack. We have seen rapid changes to the renewables obligation and the feed-in tariff, which have already cost UK jobs and are putting off investors. Cuts of up to 87% in the feed-in tariff for small-scale wind and solar are being proposed. The Solar Trade Association predicts that it could put 35,000 jobs in the sector and supply chain at risk, affecting jobs in almost every town in the country. Its latest survey, which is currently being
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carried out, has found that at least 1,500 jobs have been lost already. More than 70% of companies that have responded so far have put employees on notice.
The ending of the renewable obligation one year earlier than expected in April 2016 and changes to the planning system seem economically illiterate when onshore wind is the cheapest form of clean energy. The latest analysis from the Committee on Climate Change of the power sector, which will feed into the carbon budget to be produced this month, shows that the potential of onshore wind is around 80 TW, over four times its current deployment.
As with all development, account should be taken of location and impact, but I have become used to big statements from Tory Ministers about changes to onshore wind planning guidance to placate their Back Benchers. When the dust has settled, that has not amounted to much, but it damages and undermines an industry that provides nearly £900 million in gross value added. We know the damage that business short-termism has inflicted on our economy, but this is political short-termism at its worst.
In June, the Minister, in answer to a question from my hon. Friend the Member for Heywood and Middleton (Liz McInnes), said the UK was on track to meet our interim EU 2020 target for renewable energy generation. Thanks to a leaked letter, we now know the UK will miss our EU 2020 renewables target by a large margin. In that letter, the Secretary of State is frantically lobbying the Chancellor to keep support in place for renewable heat and I hope that the Minister will tell us how that is going. The Secretary of State goes on to suggest that to meet our EU 2020 renewables target we—bill payers and taxpayers—should pay for renewable projects in other countries. Where is the patriotism and ambition for our country in that? It is an affront to people in renewables industries who have lost their jobs or fear for them.
The Secretary of State seems to have woken up belatedly to a car crash about to happen on her watch. The renewables sector does not want or expect to rely on subsidies for ever. Across the sector, it wants to work with the Government to set ambitious and achievable cost reduction milestones. For example, solar provides 2% of UK electricity, but the Government are leaving no room for future growth. That does not make sense when the sector is so close to parity.
How do we get the UK back on track? Here are five recommendations and I look forward to hearing the Minister’s response—if not today, perhaps in writing. First, the Government should set out right away the levy control framework for 2020-21 to 2025 or beyond. That would provide investors with confidence and certainty about what support will be available. Secondly, the contracts for difference auctions should proceed as soon as possible, including for onshore wind and solar. Contracts for difference were designed to drive down costs, so it is right that those technologies should be able to bid for them.
Thirdly, I ask the Government to look seriously at the Solar Trade Association’s £1 plan to safeguard the bulk of the industry and to sustain cost reductions that depend on market volume. Fourthly, the Government must stop shilly-shallying and commit to our CCS projects, both in Scotland and in Yorkshire. Finally, the
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Government should give their full backing to those councils that this week pledged to make their towns and cities 100% clean by 2050.
Clean energy technologies are an industrial revolution unfolding before our eyes. It is not tomorrow’s world; it is here today and gaining pace. Britain was at the forefront of the 19th-century industrial revolution, and the UK was instrumental in the computer revolution and the development of the internet. This is the industrial revolution that will shape our planet beyond our lifetimes and I urge the Government not to squander this opportunity for the UK to seize the prize.