Energy Bill

The issue at stake is how that relates to the renewables obligation, but I hope I have given the hon. Gentleman the reassurances that he wanted. New clause 17 amends the Sustainable Energy Act 2003 to increase the money available for spending on the promotion of renewables that is available from the non-fossil fuel obligation levy fund. That money arises from transitional arrangements introduced when the support system for renewable electricity generation moved from the non-fossil fuel obligation to the renewables obligation. Through the Sustainable Energy Act, we have already made available £60 million of the money arising from the NFFO transitional arrangements for spending on renewables. I understand what hon. Members are trying to achieve in seeking to increase Government expenditure on renewables, but I think we should focus on the bigger picture and the Government's existing wide range of support for renewables. Public sector funding for renewables and low-carbon technology innovation is increasing steadily, both in the UK and more generally in the European Union. Research councils' expenditure on energy-related basic, strategic and applied research is planned to reach £300 million over the current comprehensive spending review period. The Energy Technologies Institute, a new public-private partnership designed to co-ordinate research on and development funding for low-carbon energy technologies, currently has a budget of £600 million over the next 10 years, with the potential to increase to £1 billion with the addition of new partners. The Technology Strategy Board has a total budget of more than £1 billion over the current CSR period, which will include funding for energy development technologies. The UK element of the environmental transformation fund has £400 million over the next CSR period to invest in low-carbon and energy efficiency demonstration technologies. Most important of all, we must not forget the substantial support that is available through the renewables obligation. Along with exemptions from the climate change levy, the RO will provide around £1 billion of support each year by 2010. Moreover, we will be considering a full range of policy options for supporting a step change in the deployment of renewable energy as part of our renewable energy strategy. Any decisions on additional funding will be made in the context of future spending settlements. In the light of the assurances that I have given, I hope that the new clause will not be pressed to a Division. Before I deal with amendment No. 1, let me explain the purpose of the subsections that the amendment seeks to remove. Because of the importance of getting our reforms of the RO right, it has taken some time for the Government—consulting industry and others—to develop the proposals. To ensure that developers continued to contribute new investment in the interim, we made a commitment to allow any projects becoming operational after 11 July 2006, before the banding proposals come into effect, to benefit from the greater levels of support afforded through banding. A tidal power station coming on stream tomorrow would receive two ROCs per MWh when banding comes into effect. There was a significant risk that, without such a commitment, developers would hold back vital investment in renewables while waiting for the increased levels of support to kick in. That would not have been an acceptable outcome. However, some of the existing projects that will become eligible for a higher level of support once banding is introduced will also be in receipt of grant funding. The grants will have been notified to the European Commission as state aid, and will have been assessed on the basis that the generators will receive one ROC per MWh. We therefore need a mechanism to ensure that we do not find ourselves in breach of state aid rules through generators' accumulating subsidies from different support mechanisms beyond the allowable thresholds. The amendment proposes to remove the power for the order to allow generators in receipt of a grant to choose between receiving the new higher band for ROCs but surrendering the grant, and retaining the grant and continuing to receive one ROC per MWh. Ultimately that will be a commercial decision for generators, but it allows them the option of ““banding up”” when they could otherwise be barred from doing so by state aid rules. It is important for that power to remain in the Bill so that when a banded RO is introduced generators can make a commercial decision on the path that they prefer, while ensuring both that state aid rules are not infringed and that consumers and taxpayers are given value for money. I hope that the amendment will not be pressed to a vote.