Energy Bill Report Stage

Mr. Robert Key (Salisbury) (Con): It is a particular pleasure to follow the right hon. Member for Cunninghame, North (Mr. Wilson), whom I had the pleasure of shadowing when he was a Minister, and we rarely disagreed about anything. Of course, that may be the reason why he is no longer the Minister. It is also a pleasure to have the current Minister here today—

Mr. Wilson: Has the hon. Gentleman considered the possibility that it is also the reason why he is no longer shadowing anyone?

Mr. Key: The right hon. Gentleman is very kind, and we go back a long way.

The present holder of the office, however, has helped us in admirable ways through the passage of this Bill, but it is nevertheless good to hear the common sense being spoken by the right hon. Member for Cunninghame, North. Of course, he is right about planning. For all sorts of reasons, it was a great disappointment to me that the Government produced a Green Paper on planning that looked as if it was going to move forward, and within months, all the things that would take us forward had been abandoned and taken out of the original proposals.

I want to support Government new clause 4, for the reasons that my hon. Friend the Member for Tewkesbury (Mr. Robertson) has suggested, and his new clauses 2 and 3. I feel that combined heat and power has been neglected for far too long. I have thought that for a very long time, and I have been disappointed that the Government have not seemed to know quite what they are doing about it. It must be some four years since I visited the combined heat and power plant at Slough estates, for example. Since then, the situation has steadily deteriorated. If we see what is happening on the ground on such an estate, and if we listen to the day-to-day problems in relation to the sources of fuel, rules and regulations, and different tax levels depending on what waste is being burned on a particular day, we realise that it is not being addressed seriously.

I was therefore particularly sorry, but by no means surprised, to read in Hansard this morning, in a written answer, in a section on combined heat and power, at column 878W, that the study on combined heat and power potential due for release in January 2004 will be published shortly. Come on—January 2004 was the date when we were told that it would be published, and it still has not happened. In the same section, there is a question from a Member asking whether the Secretary of State

"will publish details of the Combined Heat and Power Quality Improvement Programme mentioned in the CHP Strategy."

The DEFRA Minister replied:

"In common with the other measures set out in the strategy that have not yet been implemented, this programme is currently in development."—[Official Report, 12 July 2004; Vol. 423, c. 878W.]

Here we are, in the closing stages of the Energy Bill, and the Government have simply not decided what to do about combined heat and power. I regret that very much, because it is extremely important.

I also want to support new clause 19. There was an interesting little dispute earlier—a little flurry. The Liberal Democrats showed a bit of amour propre, feeling that their new clause had been pinched by a Scottish Member. There is a lot of thinking behind it, from Friends of the Earth among others. If Friends of the Earth think that the Liberal Democrats can deliver anything at all in terms of energy policy, they are making a sad mistake—but of course they do not think that, so they are not making a sad mistake.

Many good Conservatives in my constituency support a number of Friends of the Earth's objectives. I just wish that Friends of the Earth would go a step further. Go the extra mile, Friends of the Earth, and admit that we cannot reach our emissions targets over the next 20 years unless we embrace a new generation of nuclear power. It cannot be done: there can be no argument about that. Come on, Friends of the Earth, get real. Then we can make some progress instead of sniping from the sidelines.

What I like about new clause 19 is the provision relating to employment in the United Kingdom's agriculture industry. That is hugely important, especially in constituencies like mine. Opportunities for the rural economy would be revolutionised if our farmers could produce crops for energy, not just for fuel, subject to the vagaries of the international markets. That would also make a real contribution to the energy security of our country.

Heat accounts for roughly a third of our demand for energy, and renewable heat is a low-cost way of reducing carbon emissions. Currently, however, it receives no dedicated support in the market place. There is no doubt that energy policy in this country is skewed in all sorts of ways, not least because we do not have a carbon tax. I do not think we believe in a carbon tax, but in my opinion we should reconsider. One reason for the imbalance is that energy policy supports renewable sources of electricity, but not of heat. As I have said, a third of our demand is for heat.

We are a long way from our national climate change target. Emissions levels since 1997 have remained virtually unchanged. Renewable heat is a low-cost form of carbon abatement. Under the climate change levy, tax on heating fuels is a third of that on electricity, 0.15p per unit compared with 0.43p. That implies that the buy-out price of a unit of renewable heat would be only a third of that for renewable electricity—£10 per megawatt hour. The Government could achieve carbon savings at minimal cost to the consumer and to industry. The new clause is an enabling provision which does not appear to commit the Government to any action, but maximises the legislative opportunity provided by the Bill. The results of consultations on renewable heat could be quickly enacted by means of secondary legislation.

Sources of renewable heat use proven technologies and can be quickly deployed. They include wood-fuelled boilers, biogas, solar thermal and ground source heat pumps. I am particularly keen on the latter. We have heard nothing about them during the Bill's passage so far, but we need only cross the English channel to see them being developed on the continent. There are one or two exceptions in this country: I believe that Leicester is using ground source heat pumps in municipal developments, and other towns may be doing the same.

Dr. Alan Whitehead (Southampton, Test) (Lab): The hon. Gentleman may wish to visit Southampton and see the geothermal energy project at work.

Mr. Key: I am delighted to hear that that is happening in Southampton, which is just down the road from Salisbury. Such technology, however, is having a minimal impact, and not many people know about it.

Unlike, for example, direct solar panels on roofs, ground source energy is already there. As we have seen in Canada, heat can be extracted from soil whose temperature is below freezing. It is a remarkable technology, and we should take it more seriously. Long-term investment is required, but it is certainly a possibility. We need this enabling legislation, which is supported in recent reports including one from the royal commission on environmental pollution. Page 39 of "Biomass as a Renewable Energy Source", published in May, states:

"It has become clear to us that the most obvious gap in current support schemes is the lack of any mechanism for supporting the generation of renewable heat energy, comparable for example to the Renewables Obligation scheme for renewable electricity. We recommend that the government introduce such a support mechanism."

The Department for Environment, Food and Rural Affairs commissioned a report from Ilex Energy Consulting in December 2003. That report, entitled "Policy Mechanisms to Support Biomass-Generated Heat", states:

"Ilex recommends that the government focus on the option that appears to be the most effective in terms of delivering significant quantities of renewable energy at least cost. In Ilex's view this would be some form of obligation mechanism with tradable certificates similar to the existing Renewables Obligation."

Those strike me as pretty good reasons for supporting new clause 19.

In the spirit of the national interest rather than party policy, I am prepared to support new clause 19, which I find interesting. Above all, however, I hope that the message sent during the closing stages of the Bill's progress will be that we must all get real, and stop sniping at each other about whether we are greener than the next man or woman. That is not really relevant. We need to get together, and conclude that of equal value in tackling the problems of global warming are nuclear energy and renewables of all kinds, including tidal movements. If we could make some progress, even at this late stage, it would be very welcome to our constituents.