Energy Efficiency and Microgeneration Bill [HL]

My Lords, I, too, congratulate the noble Lord, Lord Redesdale, on enabling this interesting debate on appropriate carrot-and-stick incentives—more carrot than stick—to improve energy efficiency and encourage the use of microgeneration. He can be assured that the message in his speech opening this Second Reading debate was robustly delivered despite his croaky throat. I should tell the House that, some time ago, I investigated the possibility of emulating a number of my Dutch friends by looking at the economics of installing a wind generator in my drafty part of the Fens, much like the noble Lord, Lord Teverson. At that time, it was not a feasible proposition, and I regret to say that I doubt it would be one now, but to the extent that I have an interest, I should declare it. I am also one of the people referred to by the noble Lord, Lord Watson, who have no access to mains gas, despite the fact that the Bacton gas line goes through our farm. Not surprisingly, I have maintained my interest in the subject. A consensus is building fast that man-made climate change is one of the greatest environmental challenges faced today. Its consequences are not just environmental; they are also economic. The noble Lord, Lord Watson, rightly drew attention to that. Advocates of ecological modernisation are right to highlight that environmental policies can help boost the economy, create new jobs and stimulate revenue streams. Microrenewables are an example of that. They are part of a high-tech, value-added sector in which we as a nation could excel. They are right up our street, one might say. Indeed, it is easy to argue that the Government should be leading by example in this area. I was pleased that the microgeneration strategy that the DTI published last year suggested that: "““Government departments are in a good position to lead the way through demonstration of these technologies””." However, I have been disappointed that the only promised action is for the DTI actively to investigate the possibilities for microgeneration on its estate. With the Government publicly committed to a number of building programmes, such as community hospitals and prisons, can the Minister inform the House about what progress has been made in the past 11 months to deliver that commitment? Do the rules of the private finance initiative include provision for microgeneration in association with projects? How seriously are agencies, public bodies and government departments taking centre stage in developing exemplars? I hope that the Minister will be able to commit to a review of progress in this area that can be reported to the House. Very little that is put forward in the Bill is new or dramatically original, but I shall take the opportunity afforded by this debate to press the Minister on some of the issues. The noble Lord, Lord Redesdale, is rightly pleased with the outcome of his proposals in Clauses 1 and 2, which consider the energy rating of property. I am sure the Minister will highlight the EU directive on energy performance, which will require us to produce an energy performance certificate whenever a building is constructed, sold or rented out. From June, it will be an essential part of home information packs in which sellers prepare key information before they put a property on the market. I shall not reiterate our view of home information packs because the House knows it well. The noble Lord, Lord Whitty, spoke eloquently in their favour. How many inspectors will be fully trained to deal with property sales after 1 June, and how many will be needed to carry out the anticipated workload? Is there a contingency plan in case there are not enough trained inspectors? Have Her Majesty’s Government made an assessment of what failure—for a failure I expect it to be, unless the Minister can surprise the House—might do to property sales? These are the questions that we should be asking, not whether an estate agent should be compelled to make generic statements on his literature. As the noble Lord, Lord Redesdale, said, more than 25 per cent of UK carbon emissions come from domestic housing, and the Government are committed to a 60 per cent cut in emissions by 2050. Encouraging domestic home owners to save energy is a logical step. Yet, it has been put to me by outside organisations that the current approach to renewables, especially microgeneration, while well meaning, is a combination of underfunding and mismanagement as well as a lack of appreciation of the impact these projects can have on the real world. So, let us consider what the Government have done. The low carbon buildings programme—LCBP—is the Government’s principal mechanism to deliver their policy to expand the use of microrenewables. It issues grants for householders seeking to install microrenewables. However, the DTI’s cap on monthly allocations has meant that the total grant for this month—£0.5 million—was allocated within just 12 hours of it becoming available. That does not seem inductive of encouraging home owners to ““go green””. Indeed, the REA and trade associations have argued that it is killing demand. What assessment have Her Majesty’s Government made of whether this system is indeed adequate or efficient? Have they considered calls for the removal of the cap, which some suggest presents uncertainty to the industry and its customers? If you are one of the successful few who are given a grant under the LCPB, how successful is it? There was an article in the Times of 17 February which claimed that urban turbines were a, "““load of huff for very little puff””." Having spent £13,000 on installing a wind turbine in his urban home, a Mr Large was disappointed that the return on his investment amounted to only 9p a week. The noble Lords on the Liberal Democratic Benches might expect a better return than that from their kitchen investment. Part of the problem was that the turbine puts power directly into the national grid, but the requirements of the grid mean that power can only start being transferred once the blades have been turning fast enough for several minutes non stop. That highlights that some of the attraction of microrenewables is that, as a consumer/producer has less need to buy electricity, they can make money by selling any excess electricity back to the national grid. However, that is being made far too difficult by an inadequate infrastructure and burdensome regulations. What assessment have Her Majesty’s Government made of the current operation of the national grid, and how well is it configured for two-way energy flows from many small households? Has the Minister given consideration to the fixed-feed tariffs that are the primary support instrument for renewable energy throughout Europe? Under that system, a fixed price is paid for the renewable energy, usually with different price levels set for different technologies. These prices are linked to market penetration and development of any market. For example, elsewhere PV’s current fixed-feed tariff rates range from €15 to €62 per kWh. That seems to have successfully encouraged a range of renewables to come through under the renewables obligation, not just onshore wind as in our case. Clause 3 raises the issue of value in relation to domestic households. It is interesting that if you get an organisation to install your system, you pay a lower rate of VAT than if you bought in all the parts and installed it yourself. That is certainly inconsistent, and I would be interested to hear the thoughts of the Minister on that situation. While the noble Lord, Lord Redesdale, has discussed the impact of home improvement in terms of council tax valuation, I would like to touch on the effect that investing in renewable energy can have on business rates. What assessment have the Government made of the potential impact on small and medium-sized businesses, whose rates may increase as a direct consequence of green investment? I understand that there may be a disparity between combined heat and power, which is partially exempt from business rates, and zero-carbon renewables, which are not. I hope that the Minister can clarify that point in her reply. I am conscious of the time. We have been a happy if small band this afternoon, but it is clear to all of us that there is much to do both on individual and business levels. We need to look carefully at the working and implementation of the incentives currently available. The noble Lord, Lord Redesdale, has done the subject a great service by bringing his Bill to the House. I hope that I do not disappoint him when I say that we do not agree with all of his proposals, but we support the opportunity for debate and I hope that the Minister will use it to respond to the issues and questions raised.