My Lords, I am grateful to the Minister for introducing this session of the Committee. I should start by declaring an additional future relevant interest. I am in negotiations about taking up a position with an American charity that will be working on climate change and energy. I have not signed anything yet, but I think that it is material and that therefore I should declare a potential future interest.
I am grateful for all the contributions to this debate and, again, to the Minister for his introduction to these clauses. I am particularly grateful to the noble and learned Lord, Lord Wallace, for—as has been said before—his forensic description and critique of the amendments as we see them today. I say at the outset that we are, as I am sure are the Government, committed fully to decarbonising the UK energy system at least cost in a way that ensures that we maintain security of
supply and, one hopes, engenders an industrial revolution that we can be proud of and export to the rest of the world. Within that, people will know that I have no particular love of any particular technology. I take a very broad view towards the groups of technologies that should be considered as we go forward in this endeavour.
In that spirit, I want to ask the Minister some specific questions relating to the amendments but also to a wider context. I am sure he appreciates that we are dealing with a somewhat febrile environment. There is now sufficient investor disquiet that people are watching very carefully for signals from the Government that this is not about the wholesale disruption of the renewables industry, and we must do everything that we can to reassure the industry that that is not the case.
I shall start with the more specific questions relating to the amendments. As was raised earlier, there are some anomalies. They may arise from the fact that it feels, in the words of the noble Lord, Lord Howell, as if we are in a liquid legislation situation, where we seem to be getting rather large chunks of detailed and complex legislation with relatively little time to assess it. I am therefore genuinely looking forward to the Minister’s responses because some of these anomalies seem to be substantial and we need a response.
The Government made this announcement on 18 June, in the first few weeks of government after the election, and then set about consulting. That is not normally the way around that we would expect a Government to behave, but there we are. We are where we are. Then, in the Minister’s own words, they consulted industry and hundreds of stakeholders. To my knowledge, however, although maybe I have missed it, we have not seen the synthesis of the results of that consultation. In normal proceedings, the Government would conduct a consultation and get the results back, and we would all be able to look at what everyone had said. As far as I am aware, we have not had that. That puts us at a great disadvantage. There is distinct informational asymmetry since the Government have been involved in all these conversations but Members of Parliament from other parties have not had that luxury. We have therefore found ourselves, in the past few days since these rather detailed amendments came forward, having to consult a large number of people to absorb their concerns, even though we have very little to go on in terms of being able to place theme in context. Noble Lords will have noticed that we have not tabled any amendments to the amendments. This is because until this morning we have been receiving people’s feedback on these complex issues.
As the Minister said, this is a complex issue. Had the draftspeople who were writing the manifesto in April and May before the election realised quite the implication of those few words in the manifesto, would we have seen them appear? Regrettably, they have led to this huge amount of complexity and disquiet and a feeling among some investors that they have not been handled with due respect. They have seen what they thought were very sensible investment decisions being completely undermined by what to them was a very sudden and surprising announcement with very little signalling that it would take place.
The government amendments are intended to clarify, but unfortunately they just raise more anomalies. This has been raised already, but it might just be worth reiterating a couple of points. We have a situation now where the grace periods will apply to projects that have had a negative decision in planning overturned at appeal. That seems to fly in the face of Clause 65, which says that local people should have the final say. Here we have a situation where a project that clearly was not very popular has been appealed and is now going forward. Such projects will continue to be eligible. However, where we have the reverse—an approval by local planning but no written documents, so we have gone through the democratic process and had approval but have not yet received the written information—the guillotine comes down and you cannot go forward. That seems to be a very odd situation. Similarly, you may have got your approval, but if you have asked for a variation and are waiting for clarity on it, that too falls foul of this artificial 18 June deadline. I would like the Minister to respond to those concerns and explain why the guillotine is being interpreted in this way, which seems to conflict with the overall desire of the Government to keep local government and local decision-making at the heart of this.
Then we move on to the issue of whether investment has been frozen out by the uncertainty created by bringing forward this clause. Again, as a general point, this could have been so different had we not embarked on this endeavour, but there we are. We are where we are. I am repeating some of the technical questions that have already been asked so eloquently by the noble and learned Lord, Lord Wallace. We question why only lenders who have investor-grade credit ratings qualify. That seems quite restrictive and could freeze out very good potential creditworthy lenders who happen not to meet that particular criterion.
We would like to know exactly how the investment freezing will be interpreted. Do you have to prove that you have been frozen out for the entire time of the legislation from the start to Royal Assent, or just a part of that? How much of the delay counts and what does not count?
My final point has already been raised. Once you have proof that you have been frozen out, you have to show this by a certain date—I think it is March 31 2016. How long will it take before you get a reply? You have to have already built your project by December 2017. There is nothing in here to say that there must be a time limit by which any final decision is made. It could drag on. It has been said before that some of these things drag on for reasons outside government control. We need more clarity on how that will work practically. I know that it seems slightly odd to be arguing over and/or, but it is material about whether we are talking about a grace period for grid and radar delays or whether it is just grid as one category and radar as another. We need clarity on that.
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From what I and others have said, it is quite clear that these amendments are not yet fit for purpose. We have had very little time to consider them. Indeed, it
feels very much like liquid legislation. It feels slightly as though we are making this up as we go along. It is a regrettable situation.
I want to pause and reflect on why we are doing this. What is the reason behind it? It has been stated that it is to save consumers money. Actually, that is not true. It is more to do with how the levy control framework has been interpreted. The impact assessment makes rather a lame attempt to explain some options that were considered. The only options that were really considered in the impact assessment were do nothing or do this, but that is not a great set of options. There is a far wider range of things that could have been considered to stay within the levy control framework budgets, as imagined by the Government—not least simply reopening the levels of CFD allocations to onshore wind, leaving the ERO as it is, because that has already been debated. We have had a closure date and we know what is happening there: there is certainty. Why not look at the CFD regime instead? That option was not considered in the impact assessment and not brought forward.
Reading the impact assessment, we now find that we are in a curious position where we make an announcement, and it is not thought through. We then consult. We then find that everyone is very unhappy so we bring in grace periods to make everyone happy. That almost completely undermines the purpose of the intervention in the first place, since we are now looking, in the central scenario, at avoiding 200 megawatts of extra onshore wind, which probably has local approval and is probably in Scotland. Would it really have killed us to allow those to go forward and keep investor confidence? Instead, we could have focused our collective efforts, in much more of a spirit of collaboration, on the bigger picture, which is what are we going to do going forward on contracts for difference. That is by far and away the biggest issue. How will we apply those to onshore wind?
That leads me to another serious question. I have asked it before and I have not had a direct answer. When will we hear about the next auctions for contracts for difference, and, most importantly, will onshore wind be given an allocation within that? We have had no categorical statement from the Government, but I can read between the lines. If the Government insist on staying within their rigid view of how they will meet the renewables targets that were set for us by Brussels, they will have to set a zero quota for onshore wind. In their mind, they think that we are on track and ahead of schedule and we will make it. But we are not on track and what we should be looking at in the entirety of this is the cost of renewable energy across the board. Is it not more sensible to pursue lower-cost technologies that are proven, that are generating jobs and putting investment into parts of the world that need it? Mostly that is in Scotland, where we see unemployment rising and we need to see inward investment. We could perhaps look again at some of the more expensive and less proven things that we are trying to do at the same time.
It is simply a question of prudence. We should do the things that are delivering and do them well, and do not use the promise of some fictional future that we
have very little confidence will be delivered as an excuse to cut off at the knees the technologies that we know are delivering.
As I said at the outset, I am not a particular fan of any one technology. I abide by all of the above and I want to see least-cost decarbonisation. But every time I come to this subject, I keep returning to the question of why. Why have we singled out onshore wind in the way that we have? I do not have a good answer and I would like the Minister to answer to that question. It should not be because the department says that we have overspent a particular bit of budget, because that is not going to cut it, I am afraid. We know that that is not how targets have been set by Europe and we know that it is within the Government’s discretion to move things around.
Many more points could be delved into in the detail, but one of our greatest concerns is that there is an information asymmetry here. We are still processing a large part of information. I am almost certain that we will return to this on Report next week with amendments. In the mean time, I very much look forward to hearing the Minister’s response.