Energy Bill

This is more a matter of not subsidising something twice when that was never the intention; that would be a perverse consequence. New clause 20 seeks to provide priority access to the electricity and gas transmission and distribution systems to electricity and gas produced from renewable energy sources. The text of the first part of this amendment, which relates to electricity, comes from the draft EU renewables directive. Before I start analysing the provisions further, I should make it clear that once the Commission's proposals for priority access are finished and the directive agreed, these proposals could be implemented in the UK in a number of ways, not all of them involving primary legislation. We need to be careful not to implement something now just because we have the legislative opportunity. Turning to the substance of the amendment, the first issue is that there is no current definition of priority access. Without a clear meaning of priority access, it would be difficult to avoid uncertainty, which would impact on existing generators and those planning future investments. That could discourage investments and would have serious repercussions on the meeting of our energy needs and targets. The next issue is whether priority access is both consistent with our wider energy policy goals and the best route to accelerate the growth in renewable generation. It is important to have conventional generation alongside renewables, but it is essential that the access regime encourage new investment in reserve capacity. Without that, we could have serious difficulties in maintaining a reliable electricity system. In this context, we are considering reforms to grid access arrangements as part of the transmission access review with Ofgem, to ensure that the regulatory framework remains fit for purpose in the medium and long term, and to speed up the connection of renewable generation. It is clear from this work that there are ways in which we could significantly improve the connection opportunities for renewable generation. We will set out that analysis when the final report of the review is published in May. However, it is important also to remember that from the perspective of a renewable developer, connection in a reasonable time consistent with the development programme for their project timetable is likely to be more important than whether they have been treated more favourably than other technologies. On the second part of the new clause, which is not part of the EU directive I mentioned earlier, let me reiterate what I said in Committee: the Government are keen to support and investigate the cost-effective potential of renewable gas to contribute to the UK share of the EU target to achieve 20 per cent. of the EU's energy from renewables by 2020. Renewable gas, or biogas, is produced by feeding organic material such as food waste, sewage sludge, animal slurries or energy crops into an anaerobic digestion plant, or from the decomposition of organic matter in landfill sites. It is important to remember that through this Bill anaerobic digestion—the biomethane it produces—will achieve two ROCs under the revised and reformed RO procedure. By removing the carbon dioxide and other impurities, biogas can also be used to make biomethane. Theoretically, it is possible to inject biomethane directly on to the gas network in the UK, provided that the biomethane can meet the gas quality standards and pressure requirements of the national grid. The ““Heat Call for Evidence”” invited contributions on the potential of biomethane, the barriers to its deployment, and how best to tackle these. We will be feeding these considerations into our broader work on the renewable energy strategy. Until we have reviewed the evidence about the costs and processes involved in upgrading biogas to biomethane and injecting it into the gas system, we cannot judge what potential unintended or undesirable consequences might flow from the changes to the duties of the Secretary of State and the authority that are being proposed. Moreover, we need to look at this matter in the round. We need to assess how biomethane fits with the ongoing work to develop a new renewable energy strategy by spring 2009. That will include looking at all renewable heat technologies and potential support mechanisms, rather than focusing on a single technology, as the new clause does. The kind of market enablement that it would provide thus seems entirely premature, and I ask hon. Members not to press it to a Division. New clause 21 proposes changing section 185 of the Energy Act 2004. Section 185 was introduced as a transitional provision to ease the implementation of cost-reflective transmission in Scotland. It allows the Secretary of State to adjust transmission charges in a particular area of the country to help to mitigate any material hindrance to renewables development caused by the charges. The new clause proposes the following changes to expand the scope of section 185: removing the provisions that set time limits on the duration of a scheme adjusting transmission charges, and removing the requirement that only one scheme can be in force under section 185 at any one time. We are in the process of analysing whether there is a case for adjusting transmission charges on the Scottish islands under section 185. Renewable developers also face other practical issues, and that fact, along with section 185's narrow focus on transmission charges, makes me believe that it is not the right instrument for supporting the development of renewables for the country as a whole. Moreover, as we have just discussed, negotiations are under way at a European level to grant renewables priority access to the grid, and I have also made it clear that transmission will be one of the issues that will be closely examined in this summer's consultation on our renewable energy strategy. I therefore ask hon. Members not to press the new clause to a Division. On amendment No. 65, I would like to remind hon. Members of why we have included clause 78 in the Bill. We did so, first, to introduce flexibility in the timing of our annual energy report and, secondly, to remove statutory requirements that are either replicated elsewhere or are over-prescriptive. I believe it is right that we streamline our reporting requirements to ensure that our report is topical. We need reporting to be sufficiently flexible so as to allow us to exclude less relevant technologies and to include more relevant ones as developments dictate. Our changes facilitate that and, as such, we should retain them as part of the Bill. There was some concern in Committee that we were repealing the requirement to report on energy efficiency. Let me reassure hon. Members that that important issue will still be covered in a number of reports produced by Government: under the Housing Act 2004, we are required to report on energy efficiency targets in residential accommodation; we produce the UK energy efficiency action plan, which we will regularly update as required under the EU services directive; and we would also expect to capture energy efficiency issues as part of our reporting on carbon emissions in the annual sustainable energy report. I hope I can also reassure the House that we will still be reporting on the important issue of security of supply through the energy markets outlook, which is a commitment from the 2007 energy White Paper, and as a result of the duties to report under two EU directives relating to supply of gas and electricity. I remain convinced that those reports will cover the practical information on security of supply in which Parliament and wider stakeholders would be interested. Our proposals to create some flexibility in the reporting period and cycle were designed to ensure that we could publish a report that was as relevant as possible by timing its publication around the availability of the most recent data. Such an approach would also allow us to join up with the reporting cycle proposed in the Climate Change Bill. I therefore listened with interest to the concerns being raised in Committee that our proposal to introduce flexibility on the reporting period and publication date could raise the spectre of the Government being tempted to use that flexibility to take the opportunity to delay publication of our report in order to obscure bad news. That was never our intention. The Government take the issue of reporting progress very seriously. Even so, I have reflected on those concerns and considered whether there was an alternative way to allow the Government to produce a more relevant and up-to-date report while meeting the concerns about flexibility. In view of that, I have asked my officials to review whether we should consider a specific reporting period or specifying a publication date. The Government will return to the issue in due course, and I therefore hope that the amendment will be withdrawn. Finally, I deal with feed-in tariffs and new clause 4, which I know are of some interest to the House. For those who take an interest in contemporary Labour history, it is interesting to note that this time my hon. Friend the Member for Nottingham, South (Alan Simpson) is supporting new clause 4.