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EnactedEnergy Act 2008

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3rd reading in the Lords

05 Nov 200875 speechesView in Hansard ↗
  • Speaker
    The Lord President of the Council (Baroness Royall of Blaisdon)The Lord President of the Council (Baroness Royall of Blaisdon)Labour
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    My Lords, I have it in command from Her Majesty the Queen and His Royal Highness the Prince of Wales to acquaint the House that they, having been informed of the purport of the Energy Bill, have consented to place their prerogative and interest, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill. Bill read a third time. Clause 37 [The renewables obligation]:
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  • Speaker
    The Minister of State, Department of Energy and Climate Change & Department for Environment, Food and Rural Affairs (Lord Hunt of Kings Heath)The Minister of State, Department of Energy and Climate Change & Department for Environment, Food and Rural Affairs (Lord Hunt of Kings Heath)Labour
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    moved Amendment No. 1:
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  • Speaker
    Lord Wallace of TankernessLord Wallace of TankernessLiberal Democrat
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    My Lords, I wish to acknowledge the amendments tabled in the Minister’s name in fulfilment of the obligation that he made on Report. Conferring powers on Scottish Ministers is consistent with both the spirit and the letter of the Scotland Act. The purpose of doing it in primary legislation rather than through a Section 63 order is to have things in place for 1 April 2009, which is eminently sensible and much to be welcomed. The other amendments in the group are technical in nature but put beyond doubt the fact that it will be possible for grants, not least research and development grants, and upbanded ROCs to be available for future developments. That was a concern expressed by the industry. The Minister has acknowledged that this does not go quite as far as I wanted at the Report stage, but nevertheless those to whom I have spoken have welcomed the Government’s move to clarify the situation. I want to put on the record my appreciation of the Minister’s response.
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    The Duke of MontroseThe Duke of MontroseConservative
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    My Lords, as the Minister said, the renewables obligation legislation was devolved to Scotland under SI 1999/1750. It has proved to be a policy of great potential. Can he tell us what level Scottish Ministers have currently laid down for the percentage of renewable energy that will be required by electricity generators in Scotland and whether any assessment has been made in the light of that of what surplus renewable energy and its certificates they expect to be available to generating stations in England and Northern Ireland? I raise this because yesterday I received a fact sheet from Ofgem, which states: “There is a significant problem in Scotland where there is already too little transmission capacity, and the National Grid is already spending substantial sums of money which they have increased from £114 million to £170 million per annum”. How much control does Ofgem have over the construction and management of these improvements? If a line is being upgraded without changing the route, at what point would planning permission be required from the local authority or Scottish Ministers? If there was a potential for a surplus of renewable energy in Scotland that had to be shut down because of a lack of transmission capacity—even though that generation could make a significant contribution towards meeting the UK’s renewable energy target—what powers in addition to financial incentives would Ofgem have to expedite the construction of the necessary capacity? I realise that the full answer to these issues might not be available to the Minister at this moment, but would he be good enough to write a response and put it in this Library and that of the Scottish Parliament?
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  • Speaker
    Lord Hunt of Kings HeathLord Hunt of Kings HeathLabour
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    My Lords, I am grateful to the noble Lord, Lord Wallace, for his support. It was with some trepidation that I brought forward amendments relating to Scotland, given his extensive knowledge and experience of both the order-making power and the power that we are using today. I thank him for his support. On the interesting series of questions raised by the noble Duke, I will accept the offer to write to him, because I am not briefed on the extensive detail of these issues. If noble Lords would like me to do so, I would be happy to try to explain some of the intricacies of the devolution settlement, but I shall write on this specific matter.
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    Baroness Carnegy of LourBaroness Carnegy of LourConservative
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    My Lords, am I out of order in rising to speak now?
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  • Speaker
    Lord Davies of OldhamLord Davies of OldhamLabour
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    My Lords, we are at Third Reading and the Minister has already responded. On Question, amendment agreed to.
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  • Speaker
    Lord Hunt of Kings HeathLord Hunt of Kings HeathLabour
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    moved Amendments Nos. 2 to 28:
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  • Speaker
    Lord Hunt of Kings HeathLord Hunt of Kings HeathLabour
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    moved Amendment No. 29:
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  • Speaker
    Baroness WilcoxBaroness WilcoxConservative
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    moved, as an amendment to Amendment No. 29, Amendment No. 30:
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  • Speaker
    Lord TeversonLord TeversonLiberal Democrat
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    My Lords, I welcome the Government’s move forward in this area over the period that the Bill has been going through Parliament and particularly through this House. One of the key areas here is ensuring not just that the Government really intend to write the enabling clauses into the Bill and accept the principle but that there really is a commitment to take this forward so that it becomes a practical and implemented part of the Government’s energy policy and we can get on and reap the benefits of it in terms of the renewable energy that is generated on a smaller scale, and households and communities can join in with the project and make it work. That is why I was pleased to put my name to a number of these amendments. I would be interested to hear from the Government some idea of the timescale in which they intend to bring a feed-in tariff into operation. It was brought to my attention by one of the groups involved in the low-carbon building programme that funds for that will now end in June 2009. I have a question mark there. That programme has been successful and important in terms of microrenewable energy generation, as part of its work. Are we introducing one incentive as we take out another?
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  • Speaker
    Lord PuttnamLord PuttnamLabour
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    My Lords, I was delighted to add my name to this flurry of amendments. I will speak only the once and hope that what I have to say will apply to everything I have added my name to. I woke up this morning, in common with many of your Lordships, to hear a young man tell almost 300 million people, “Yes we can”. It reminded me that if I go back over the 50 years I have been in the commercial world, there has been one common factor: the incumbent will always throw apparently insuperable obstacles in the way of those who wish to change the way that anything is done—in this case, we are talking about the microgeneration of power.
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  • Speaker
    Lord Campbell-SavoursLord Campbell-SavoursLabour
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    My Lords, I welcome the new clauses. The Bill has been immeasurably improved in the Lords. The amendments are welcome particularly in Woking, a town in Berkshire which has been at the forefront of the introduction of alternative renewable and sustainable energy technology developments. I shall say a few words on the relevance of Woking to the proposed government scheme. From an environmental perspective, Woking Borough Council is undoubtedly the most energy-efficient and energy-conservation-conscious local authority in the United Kingdom. I advise noble friends to visit Woking to see for themselves this exemplar in the field of green energy technology. The town and its surrounding community should potentially be a major beneficiary of this initiative by the Government through their investment in photovoltaics, which is considerable, and the proposed investment in wind power as and when sites are identified. I was able during the Recess to visit many of the town’s projects under the auspices of John Thorpe of Thameswey Energy, a British company which has brought together in a joint venture the local authority and ESCO, a Danish company which specialises in green technology. The company is spearheading the national agenda of community-based energy initiatives in every area of energy efficiency, including combined heat and power. The company also provides green-sourced energy to other local authorities, public bodies and the private sector. Its virtual private wire electricity distribution arrangements for local power consumption point the way forward in a way that should interest many local authorities nationally which want to develop their energy efficiency programmes and which, one hopes, will take advantage of the Government’s proposed scheme when it comes on stream. While I congratulate the Government, I also congratulate Woking on its ability to harness cross-party political support for what can only be described as an outstanding achievement. I only hope that the Minister will feel able to join me in paying tribute to those in the town for their work. It is clear from my most recent discussions with those involved in Woking that they believe that feed-in tariffs will give renewed stability in a market that they are constantly developing. Such stability is required if we are to meet our 2020 targets. I say to the Government, well done.
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  • Speaker
    Baroness Young of Old SconeBaroness Young of Old SconeNon-affiliated
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    My Lords, I add my praise to that offered to the Government for coming forward with this amendment on feed-in tariffs, because it is a major breakthrough in circumstances where, for many years, we have seen introduced a series of instruments designed to drive up renewables which simply have not done that at the lower scales. It took us an inordinate amount of time to come to that conclusion. We changed the system a few years ago, and we have begun to see the bigger-scale renewable schemes really start to motor along, which is to be welcomed, but we are still failing on the smaller-scale renewables. The feed-in tariff is therefore to be welcomed and hugely overdue. The series of amendments that have been tabled in this and subsequent groups are well worth the Government considering, as they might improve the amendment that they have tabled. Amendments Nos. 31, 32, 33 and 35, to which I have put my name, ginger the process up a bit. We are running out of road, as we have the 2020 target to meet for renewables, and we could well fail our obligations under the directive. All the work that has been done by the climate change commission and in previous reports has demonstrated that the early carbon reductions will be the most important ones. It is not hitting the 80 per cent 2050 target but achieving very rapid carbon reduction targets in the early stages that is necessary to prevent us running the risk of some of these irretrievable and irreversible whole-system climate changes. So well done to the Government, and two cheers. We would give the proposals three cheers if we could get some of our amendments adopted into the Government’s proposals.
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  • Speaker
    Lord O'Neill of ClackmannanLord O'Neill of ClackmannanLabour
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    My Lords, I congratulate my noble friends on introducing these amendments. I have been perhaps somewhat less than enthusiastic in every respect about the feed-in tariffs, because there are downsides to them. It is therefore quite reasonable for the Government to embrace the conditional mood and make this a duty rather than a power. It may be that in several years’ time we will have subsequent energy legislation and we will be able to refine it. We will have to return to these issues very quickly for other reasons. If the Long Title of the Bill is sufficiently sensitively drafted, it should be able to embrace amendments of the kind that might be necessary if we want to make an increase from 3 megawatts to 5 megawatts, if there is a desire and demand for that. What is important is that when we recognise the significance of small-scale developments, it is not just in the generation of power or the saving of the planet; it is also in the case of small wind farms being established on small hill farms, for example, as a means of sustaining the farming business in these small entities. I know that in my old parliamentary constituency there were several farms that wanted that little bit of assistance that would have enabled them to have small-scale wind farms, in places such as the Ochils and discrete valleys, where they would not necessarily be offensive to the eye or damaging to bird sanctuaries, and so on. That would make the difference between a farm perhaps failing and a farm being able to continue. We sometimes forget that there are quite sensible wider economic arguments in favour of renewable power and assisting renewable power. For that purpose, I am very grateful to the Government for how they have responded. It is often said that there is more rejoicing in heaven when a sinner repenteth—and, in this instance, it is perhaps the late repentance that makes it all the more welcome. Nevertheless, we have this provision, which is a start. I understand that one of the basic rules of scrutiny is that when a member of the opposition goes through the Bill and sees a “may” he should insert a “shall” and get a debate. Those are D101 opposition tactics in Committee. Nevertheless, it would be sensible for us not to have to divide on this. Those who legitimately seek scrutiny will get from the Minister the kind of response and positive statement that he gave at the beginning, which was encouraging in itself. I look forward to hearing what he has to say.
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  • Speaker
    Baroness CorstonBaroness CorstonLabour
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    My Lords, I support noble Lords who have spoken in favour of feed-in tariffs. About five years ago, in my previous residence, my husband and I had solar panels for hot water and photovoltaic panels for generating electricity. I cannot say how excited I was, watching my electricity meter going backwards in the summer when I had the fridge, the freezer and the kettle on. I have to admit that my enthusiasm was positively childlike. In the winter, of course, I used electricity from the generating company because the hours of daylight were shorter. The sums of money that we got from the company were extraordinarily small, and it always struck me that it was doing much better out of this deal than I was. There should be proper recognition of people who are prepared to install microgeneration on their property and who feed amounts of electricity into the national grid. Those amounts may be generally quite small, but when we start to get them en masse they will produce a significant amount of electricity, and there should be proper recognition of that.
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  • Speaker
    Lord ReayLord ReayConservative
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    My Lords, I declare my land-owning interest, which is listed in the Register of Members’ Interests. At last, we have the Government’s feed-in tariff amendment, which was promised by the new Minister, anxious to take the earliest opportunity to display his green credentials while committing this country to reducing its carbon-emission levels by 80 per cent by 2050, shortly after he took office in the middle of last month. His decision must have produced great strain in the department. I thought that I detected signs of that when he spoke on the subject on Report—he more or less acknowledged that today in different words—as the consultation on the Government’s renewable energy strategy document had closed less than three weeks earlier. That paper contained a whole annexe devoted to the feed-in tariff and what form any such scheme might take. It posed multiple questions—evidence of the department’s yet-to-be-settled views on the subject—and said: “In order to reach a balanced decision on whether we should introduce feed-in tariffs for small scale renewable generation, it is important to consider how such a system would work in practice. We welcome your views”. Again, at the end, it said: “We have outlined here one example of how a feed-tariff might operate for small-scale electricity generation; and set out a number of issues on which we seek views. The information provided through responses to this consultation and ongoing discussions with industry and other stakeholders will inform our decisions on how best to support electricity generation at this scale, including whether a move to a feed-in tariff system would be advantageous”. Yet, barely a fortnight after receiving the answers that they had so eagerly sought, the Government had impetuously committed themselves to the scheme and to an extremely tight legislative timetable for introducing it. It is not beside the point to raise this issue: first, because it will now be difficult for the Government to persuade those who co-operated with their inquiry and provided the replies that the Government sought that the Government paid any attention at all to what they said and that the whole consultation was not a waste of time; and, secondly, because this must go far to explain the sketchy nature of the scheme in the Bill and the amount of discretion that it leaves to the Secretary of State. The department is still groping its way. I have some questions for the Minister. First, I asked on Report about cost. I did not expect an answer then, but I hope for one now. What might any scheme cost? Do the Government expect any such scheme to grow into the same order of magnitude as the cost of the renewables obligation scheme, which is currently running at some £1.1 billion a year and calculated to rise on present policies to £32 billion a year if we are to reach our 2020 target? Is it the Government’s idea that consumers will pay it all, just as they do for the renewables obligation, and will that include the costs of the bureaucracy to run the scheme and of providing the extra low-voltage grid wherever required? Have the Government worked out their views on those issues? What will that add to consumers’ bills? Secondly, can the Government say anything on how any scheme might interact with the planning system? Is it their idea that microgeneration plants should be exempt from planning permission? Is the scheme to be open to occupants of terraced houses in urban areas, or only those living in detached houses? I hope that the Government can explain, on the later amendments, why they have set the maximum specified capacity for a plant as high as 3 megawatts. For a wind turbine, that can mean it is 400 feet high: that is thoroughly unsuitable for domestic electricity generation and far above the limit of what would normally be considered “microgeneration”.
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  • Speaker
    Lord GoodhartLord GoodhartLiberal Democrat
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    My Lords, I speak briefly in my capacity as chairman of the Delegated Powers Committee. The amendments before your Lordships’ House today contain a number of important delegated powers that did not appear at earlier stages of the Bill. Amendment No. 47, in particular, contains some important powers, as do a number of amendments in other groups. There is, unfortunately, no report from the Delegated Powers Committee on the amendments because of the short time between their publication and Third Reading. To obtain a report from the committee, it would therefore have been necessary to call an emergency meeting to consider them. After consultation with the legal adviser and the Clerk to the committee, I concluded that it was unlikely that the committee would have objected to any of these powers had it met, and it was therefore not essential to call such a meeting. However, it is undesirable that that should have happened. Had the committee had the time to do so, it would certainly have considered these amendments. Therefore, while I understand the special circumstances applying to them, I make it clear that the committee regards this as neither desirable in principle, nor an appropriate precedent.
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  • Speaker
    Lord Hunt of Kings HeathLord Hunt of Kings HeathLabour
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    My Lords, it has been an extremely interesting debate. We have heard rather different views, but they have been none the less helpful. I welcome the opportunity that the amendments of the noble Baroness, Lady Wilcox, have given us to exercise proper scrutiny of the government amendments. I accept, as I said earlier, that a large number of amendments have been laid at a late stage. I welcome the intervention of the noble Lord, Lord Goodhart, and the work of the Delegated Powers Committee. I endorse his comment that this is not an ideal situation. Unusual circumstances have arisen but the Government’s actions have undoubtedly been a response to debates in your Lordships' House and the other place. In that sense it was appropriate for the Government to announce at Report a development of their policies and to bring forward appropriate amendments. However, I agree with him that that should not be taken as a precedent, and I certainly will not do so. The noble Lord, Lord Reay, is the only noble Lord who criticised the measure. He made some fair points, to some of which I can respond and to some of which I cannot. He said that the integrity of the consultation process on the renewables strategy is put into question because the Government have made an early decision on a matter which was in the consultation document. We believe that the consultation has been conducted perfectly properly. It set out a number of questions in relation to feed-in tariffs. Although this was part of the consultation process, the Government have taken note of the views of Parliament. I believe that the amendment I bring forward today reflects the view of Parliament and parliamentarians. That must override any consultation process. He asked whether respondents to the consultation had wasted their time. They have not. The consultation covers many areas and the responses on feed-in tariffs, which are still being carefully considered, will help us work out the details of the scheme to be implemented. He will understand that a lot of the questions he raises are matters that will have to be decided in the light of the discussions that will need to take place on the amendment, should your Lordships deem it wise to approve it. Therefore, the comments that we have received on the consultation are by no means wasted. They will be carefully considered, but in the context of a decision to introduce feed-in tariffs, which, as I said, clearly enjoy widespread support in your Lordships' House and in the other place. The noble Baroness, Lady Young, wishes to ginger me up. I have known her for many years since her time in the health service and she has done nothing but press me to do things and ginger me up. I am grateful for her support in this area. I say to my noble friend Lord Campbell-Savours that I have had many invitations to visit premises, usually farms, as Members of your Lordships’ House seem to own rather a lot of farms. However, I shall add Woking to my list of potential places to visit over the next few months. It is 11 years to the day since my noble friend Lord Puttnam was introduced in your Lordships' House and he has proven to be an extremely effective parliamentarian in terms of the number of changes that have been made to legislation as a result of his great efforts. However, I shall discuss the three megawatts issue when we reach the next group of amendments. My noble friend Lord O’Neill made the fair point that caution is necessary. I understand that. That is why we have to engage in serious work on the details of feed-in tariffs. He will know that by convention I cannot anticipate further legislation. However, I would not be surprised if further legislation were introduced at some stage. I say to my noble friend Lady Corston that I was interested in what she had to say. She clearly spelt out the benefit of feed-in tariffs, and she made a point that is relevant to our decision about smart meters. Armed with the knowledge of what was happening in her own home to her bill, as a consumer she was anxious to ensure that she used that information to its best effect. Coupled with the decision on smart meters, that gives comfort to the suggestion that the more we as individual consumers know about what is happening to our energy and our energy costs and the more we know about the imperative of the use of renewables, the more effective we will be as consumers. I am sure that is where we want to be. We come to the question of “may” and “shall”. I look at a number of distinguished Members on the Benches opposite who I am sure have dealt with these questions before as senior Ministers. They will know of the reluctance of Governments ever to substitute “may” for “shall”. While I understand why noble Lords want to do it in this case, because they wish to see tangible evidence of the Government’s good faith in this area, there are some significant reasons why I would not recommend your Lordships to go down that path. I assure noble Lords that we are committed to feed-in tariffs, but we have to ensure that we get the policy right. One has to reflect that the amendment—the noble Lord, Lord Reay, suggested this—is deliberately drafted to give us enabling powers to introduce the scheme. That is analogous to the renewables obligation, which is similarly governed by a set of enabling powers rather than a duty. There are also some practical consequences of using “shall” instead of “may”. In the proposed new clause, that would limit the discretion, and it could lead to difficulties in implementing the power. For example, if we were to accept the amendment, we would be obliged to modify all documents maintained in accordance with the conditions of a licence, as set out in proposed new subsection (1)(c), rather than those documents that are relevant. Equally, requiring the Secretary of State to modify licences within one year of Royal Assent could present problems. On the timetable, on the assumption that this might have been a probing amendment, I shall offer some information about when we think that we can implement the scheme. We intend to consult next summer on the proposed feed-in tariff mechanism to ensure that interactions with the existing licensing framework are fully considered, building on the work that was started in the renewable energy strategy concept. I say to the noble Lord, Lord Reay, that that is why I do not believe that the responses of those organisations and individuals who have responded to the consultation, even in relation to the feed-in tariffs, will be wasted. We clearly need to consult on proposed tariff levels for the scheme at that point. To ascertain the right levels, we will need to gain further evidence on cost predictions for the various technologies and develop uptake models, so that we can ensure that we introduce a scheme that can effectively encourage deployment at this scale. We hope that following consultation, through further work with the authority, the supply industry and the electricity industry we will finalise implementation aspects of the system, such as arrangements for paying processes and registration. We will then be able to propose the necessary modifications to licences that the powers allow. We also need to allow for the parliamentary scrutiny specified in the proposed new clause. Taking that into account, our hope is that a feed-in tariff scheme will be operational in 2010. Clearly, I have to say that that is a hope, and I cannot give that as an absolute commitment, because a lot of work needs to be undertaken. However, I hope that I have given noble Lords a clear understanding that we are determined to press on with this. We are committed. We will do it as quickly as possible, but a lot of matters need to be resolved.
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  • Speaker
    Lord ReayLord ReayConservative
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    My Lords, can the noble Lord say anything about the costs of any scheme and who would be likely to bear them? How will this interact with the planning system? How will the planning system be applied?
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  • Speaker
    Lord Hunt of Kings HeathLord Hunt of Kings HeathLabour
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    My Lords, the noble Lord will know that we have already made changes to the planning system to help microgeneration, such as by extending permitted development rights to microgeneration technologies and putting local renewables and low-carbon strategies at the forefront of local planning authority thinking for new developments. Permitted development for most microgeneration technologies, including solar PV, solar thermal, biomass, ground source, heat pumps and combined heat and power, came into effect on 6 April 2008. That means that householders will not be required to go through the planning system to install those technologies, as long as installations meet certain requirements. Obviously, we are keen to see the development of the microwind generation industry, building on expertise in this market. It is right that we ensure that permitted development is introduced in an appropriate way; to do so inadvertently might damage the industry. That is why further work is required to complete standards for microwind turbines and to link permitted developments to certification under the microgeneration certification scheme. One issue that needs further consideration regarding wind turbines is the point that the noble Lord raised about detached and semi-detached properties. Costs will have to be looked at in considerable detail. There is a cost in general to meeting the EU renewables target, as is well understood, and some of that cost is passed on to consumers through higher energy bills. Obviously, we want to ensure that, at the end of the day, we have a cost-effective approach. However, I cannot answer the noble Lord’s point in any more detail because, although he does not agree with what we have done, the government amendment is an enabling amendment. We need to do a great deal more work. Frankly, that is why I very much resist the “shall”, as opposed to the “may”, and the tight timetable set out in Amendment No. 32. I hope that noble Lords might be persuaded by that argument.
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  • Speaker
    Baroness WilcoxBaroness WilcoxConservative
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    My Lords, I beg leave to withdraw the amendment. Amendment No. 30, as an amendment to Amendment No. 29, by leave, withdrawn. [Amendments Nos. 31 to 33, as amendments to Amendment No. 29, not moved.]
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  • Speaker
    Lord De MauleyLord De MauleyConservative
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    moved, as an amendment to Amendment No. 29, Amendment No. 34:
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  • Speaker
    Lord TeversonLord TeversonLiberal Democrat
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    My Lords, I have added my name to these amendments. I want to talk, in particular, about Amendment No. 34, which strikes me as a way of turning Bill language and uncertainty into plain language and clarity; hence, I consider this amendment to be particularly important. It would delete the words “financial incentives to encourage” and replace them with “payment for”. What could be better than that? It would effectively provide a definition of what we all understand to be a feed-in tariff. That would be healthy for the Bill, healthy for the Government’s objective and healthy for the renewables industry and the individuals and communities that will take advantage of this scheme, as and when it happens.
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  • Speaker
    Baroness Young of Old SconeBaroness Young of Old SconeNon-affiliated
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    My Lords, I, too, support this group of amendments, particularly the ones that try to pin these measures down as a tariff scheme rather than something else. We have heard the saying that if it looks like a duck, walks like a duck and quacks like a duck, it probably is a duck. In this case, I am not sure whether “financial incentives to encourage” are “payments for”. If they are, I suggest that the Government should support the attempt to make this clearer in the Bill. Amendment No. 34 would be controversial only if the Government were considering something other than a straightforward feed-in tariff. Perhaps we can press the Minister to confirm that we are talking about a straightforward feed-in tariff, as commonly understood. Now that I have pondered on Amendment No. 38, I think that it probably supersedes Amendment No. 37, also in my name. It is better because it has belt and braces: it specifies not only how a payment would be calculated but also the level. Amendments Nos. 40 and 41 are important in giving clarity to the feed-in tariff arrangements and will be particularly important when we discuss later amendments regarding the cap.
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  • Speaker
    Lord Hunt of Kings HeathLord Hunt of Kings HeathLabour
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    My Lords, this has been a very interesting, if short, debate. I say to the noble Lord, Lord Teverson, that he should be wary of plain language in legislation, because it can end up causing some difficulty. I may sound like an old-fashioned record player, but we have to accept that we are where we are. Because of the late decision in the light of our debates, clearly there is not as much detail as noble Lords would like. We have to allow ourselves flexibility. I have already said why. That is part of the response that I shall make to this group of amendments. Equally, I well understand why the noble Baroness, Lady Young, wants to pin down the Government. She wants assurance that the feed-in tariff scheme, which we shall eventually bring forward, is what she described as a true feed-in tariff. I understand that. I assure her that we want to learn from other schemes and take the best features of those schemes into our own. Our intention is that in the next few months we will work closely with stakeholders, looking at these schemes to see how to develop our own. It is interesting that the German feed-in tariff scheme, to which many noble Lords have referred in previous debates, has only recently been modified to provide support for the generation of electricity that is used where it is generated—for example, in households—and not just electricity that is fed into the grid. We want the option of rewarding not just electricity that is fed into a local grid but also all electricity that is generated from eligible sources. The provision in our amendment is sufficiently flexible to allow different levels of tariff payments to be made to different sources of technology as well as different scales of plant. We have included a power that will allow us to introduce what is called “degression”—a familiar concept with most feed-in tariff schemes. We expect that the level of payments for a given group of technologies may decrease year by year. That would apply only to plants that are newly installed. I do not think that that is at odds with the kind of certainties required by the noble Baroness, Lady Young. Amendment No. 42 suggests that we include a provision to exclude a plant already receiving support under the renewables obligation. That is clearly an important consideration, but we intend to address the issue through an alternative route. The powers that the Secretary of State has under the Bill to make a renewables obligation order already contain provisions for excluding certain generating stations and we have the powers there to ensure that generators benefiting under the FIT scheme would not also receive support through the renewables obligation. I well understand the importance of that. Amendment No. 43 concerns the distribution system. That important issue was raised on Report. It is demonstrative of the sort of complexities that introducing a feed-in tariff raises. Subsections (1) and (2)(b) of our new clause will address those issues by giving us the powers to modify distribution licences where we believe it necessary to do so. The noble Lord, Lord De Mauley, asked an important question about the choice between the FIT scheme and the renewables obligation. Our current intention, which is subject to consultation, is that, to ensure minimum disruption and that investors refrain from delaying potential projects, microgenerators of less than 50 kilowatts currently supported under the RO will move to the new FIT mechanism. All eligible installations above that size that are installed between now and the introduction of the FIT scheme will have a one-time opportunity to move to that scheme. Individuals and organisations that install technologies between now and the introduction of FITs and which are eligible for the scheme will have the choice of the system that is most appropriate for them. That is our preliminary thinking and we will be advised by further consultation. It shows that some preliminary thought has been given to the matters that the noble Lord raised. I hope that I have convinced noble Lords that we are committed to a feed-in tariff system. I have already said that, if all goes well, we are looking to 2010 for starters. We are looking for the best characteristics of feed-in tariff systems operated by other countries. We do not think that the precision called for in these amendments is required. I hope that I have reassured noble Lords that the Government are listening carefully to the points raised and that we are committed to having a proper scheme as soon as possible.
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    Lord De MauleyLord De MauleyConservative
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    My Lords, I am grateful to noble Lords who participated in this short debate. I am also grateful to the Minister, who started by saying that, “we are where we are”. I gently say that my understanding of the process of parliamentary debate, however late in the day the Government might produce their amendments, is that it should move us from where we are to where we ought to be. Having said that, I do not intend to press these amendments today, although there is a need for further clarity and detail. We look to the Government and the Minister, in particular, to continue to work on these matters as the Act is implemented.
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    Lord Hunt of Kings HeathLord Hunt of Kings HeathLabour
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    My Lords, I will welcome the input of noble Lords into the consultation that will take place in this area and I am happy to discuss that with noble Lords.
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    Lord De MauleyLord De MauleyConservative
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    My Lords, I beg leave to withdraw the amendment, Amendment No. 34, as an amendment to Amendment No. 29, by leave, withdrawn. [Amendments Nos. 35 to 43, as amendments to Amendment No. 29, not moved.]
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    Lord Jenkin of RodingLord Jenkin of RodingConservative
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    moved Amendment No. 44:
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    Baroness Young of Old SconeBaroness Young of Old SconeNon-affiliated
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    My Lords, the Government must be happy because one amendment seeks to change the ceiling from 3 megawatts to 1 megawatt, and another seeks to change the 3 megawatts to 10 megawatts. That is always an admirable position for a Government to find themselves in because they can split the difference and demonstrate that they have come up with the right figure. I shall explain why I think it is not the right figure. The noble Lord, Lord Jenkin, shares many of my objectives: a need for clarity for those involved in the ROC scheme and a need to promote investor confidence. On Report, the Minister stressed the need for investor confidence in the ROC system for larger-scale renewables—he used the words “larger-scale renewables” advisedly—and the noble Lord, Lord Whitty, rightly said that that works both ways and that there needs to be confidence for the small and medium-sized generators in another scheme which would suit their needs because it would be simpler and clearer. I would be sad if the Government, in adopting a 3 megawatt ceiling, boxed themselves in and left themselves with insufficient headroom in a market and a set of technologies that are moving quite rapidly. Under their outline proposals the Government can set different tariff levels for individual technologies following consultation, and so the 10-megawatt ceiling should be seen as an envelope within which the whole scheme can happen. For many technologies, as they change their capacity over time, there could be a different set of conditions attached to taking part in the feed-in tariff. That would not destroy flexibility for the Government but it would give them headroom. There has been a failure of the ROC system to incentivise investment in small to medium-size generation schemes. About 95 per cent of the wind capacity currently in the planning system is in developments larger than 10 megawatts. The renewables obligation is not incentivising adequately schemes under 10 megawatts. If we look at other countries that have had advantageous feed-in tariff arrangements as well as other mechanisms, we see that Germany is in the enviable position of having 10 times more wind power than the UK despite the fact that we are a jolly sight windier. It is quite telling that somewhere between one-third and one-half of that power is under 10 megawatts. It is possible to have the best of both worlds, with significant investment in large-scale schemes as well as in small and medium-sized schemes. There is room for both, and we have to find a way of getting feed-in tariffs and ROCs to work together to deliver both. The ROC system is certainly not doing that for schemes between 3 megawatts and 10 megawatts at the moment. At the moment we are not talking about single-house solutions such as sticking a windmill in your garden or on the side of your house. I always thought that putting one on the side of your house would probably mean that your house flew away rather than that you generated electricity. We are looking at the needs of communities and the needs of groups of farmers getting together. Some of the technologies are fairly small-scale at the moment but are rapidly increasing in the scale they are capable of in terms of on-site generation, low-cost housing, hospital on-site generation—a variety of areas where a single provider will not be well versed and well attuned in the ROCs issue and the way in which managing that system needs to take place. Those providers would be much more incentivised by the certainty of a feed-in tariff. I have watched farmers struggle with anaerobic digestion systems. Some of the biggest farming companies in the country have trouble with it for a variety of reasons, as the noble Lord, Lord Jenkin, said, but the ROC scheme is not insignificant in that matter. You can imagine what small-scale farmers, who would still have the capacity for generating substantial amounts of electricity from anaerobic digestion, must feel in trying to pull off a development. I take issue with the noble Lord’s description of these mid-range projects as “commercial ventures”. One would like to hope that they are commercial if that means they are not going to be loss-makers and a total flop, otherwise no one will invest in them at all. However, they are far from being commercial ventures by commercial energy companies; in most cases, they are concomitant to another activity being carried on at a community level by a very small-scale business. I hope that the Government will not say that, as they cannot get agreement between the two amendments, that must mean that they are probably right. I hope they will take account of the fact that a number of responsible groups have got together in support of the 10-megawatt proposition, including several of the home building associations and the Energy Saving Trust. I hope, too, that the Government will ponder on paragraph 155 of the good report by the noble Lord, Lord Freeman—who, alas, has just abandoned his slot. That paragraph, which examines the case for feed-in tariffs and recommends that system, says: “Although the evidence we received in favour of feed-in tariffs anticipated that micro-generators would benefit most from such a system, we do not believe that the benefit of feed-in tariffs would be limited only to small-scale generation. Single site operators, community developments, affordable housing schemes and farmers will often want generation capacity above the micro-generation level. They are, however, unlikely to want to trade in the ROCs market with large energy companies. Such generators are likely to favour the certainty of a medium term feed-in tariff structure over the uncertainty of the RO. Therefore, we see potential for the RO and a feed-in tariff to work in parallel with generators choosing the most appropriate support scheme for their own needs”. I hope we can encourage the Government to ponder that recommendation from the committee and not box themselves in. If the noble Lord, Lord Campbell-Savours, can wax lyrical about Woking, I hope I can wax lyrical about Willington, my local village, which, if we can get a feed-in tariff, I hope will ultimately generate its entire needs from local hydropower.
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    Baroness WilcoxBaroness WilcoxConservative
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    My Lords, I am grateful to my noble friend Lord Jenkin and the noble Baroness, Lady Young of Old Scone, for tabling the amendments and giving us the opportunity to debate the 3 megawatt cap. Without doubt, the cap, both its existence and the level at which it is set, is one of the most controversial areas of the amendment, with strong feelings expressed, as we have heard, on both sides of the House. I hope that the Minister will be able to provide us with a proper explanation of how this level was chosen.
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    Lord TeversonLord TeversonLiberal Democrat
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    My Lords, we welcome the fact that the Government have put a higher cap in the Bill than we perhaps expected. On Report, the noble Lord, Lord Redesdale, saw the minimum cap as needing to be somewhere around 2.2 megawatts. It is clear that the level is written into the Bill as a maximum, which means that it could be set in practice at any level below that. It would provide some useful certainty to the industry, which the Minister is keen to be able to do, if the Government were able to show their hand a little more as to whether it is just a technical cap or whether it highlights the level that the Government are likely to impose. We would not be against a higher level of 10 megawatts, but we are pleased to see a realistic cap. The important thing is what is implemented.
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    Lord Hunt of Kings HeathLord Hunt of Kings HeathLabour
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    My Lords, this has been an interesting discussion, following on from our discussion on Report. The noble Lord, Lord Jenkin, suggested that a 3 megawatt limit could be described as triangulation. The noble Baroness, Lady Young, suggested that the Government would always be in a happy position responding to a debate where two very different amendments are proposed and the Government seem to be coming down the middle. Indeed, I am in that happy position. However, there is a genuine reason for our thinking that 3 megawatts is about right. On the one hand, I echo the noble Lord, Lord Jenkin, in saying that investor certainty is essential. The last thing that we want to do is discourage decisions about investment. On the other hand, we want to encourage the small microgenerating schemes to which we see the FIT applying. We are trying to get the balance right, which is not easy. There are many considerations. Going for the 3 megawatt capacity cap, but allowing ourselves discretion to go into the detail of the different areas where we might set caps below that, is the right way forward, giving us some flexibility or “headroom”, as the noble Baroness said, for further discussion, consultation and work, but also ensuring that the great majority of large-scale investors have certainty. That essentially is why we have gone for the 3 megawatt cap. I have been convinced that it is essential to have a cap in the Bill, because of the critical issue of investor confidence. I do not need to go into the argument as to why we think—
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    Lord PuttnamLord PuttnamLabour
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    My Lords, I apologise for having just had to run out to a meeting. If it became evident that 3 megawatts was not an economic figure for community generation, what mechanism would be used to raise it to 5, or even 10, megawatts? It is one thing to create investment confidence for the big companies, but there is surely an obligation to create investor confidence for the small generator.
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    Lord Hunt of Kings HeathLord Hunt of Kings HeathLabour
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    My Lords, my noble friend is trying to tempt me down a path that I do not want to go down. I know what he wants me to say—that of course we will be flexible and respond to circumstances as they arise. It is perfectly possible that another energy Bill will come at some stage and that noble Lords may propose to come back to this issue. While I am concerned simply to leave this where it is and say that we are flexible, I am also concerned not to give the impression to companies wishing to invest seriously in this area that somehow the 3 megawatt limit is okay for the moment but that in a year or two it might have risen. That is why I am reluctant to go as far as my noble friend wishes me to go. We think that the 3 megawatt cap is right for the long term—and I really must place that on the record. I should make it clear, too, that we think that the renewables obligation is absolutely critical to delivering the vast majority of renewable electricity that we need to meet the challenging targets set by the EU for 2020. That is why maintaining investor confidence is so important, while we keep enough flexibility to ensure that we direct support to small-scale projects at the right capacity. I say in response to the remarks of the noble Baroness, Lady Young, that the types of projects that we are trying to incentivise through the feed-in tariff scheme range from the individual householder to the larger community-scale projects. As for deciding on an upper limit, our analysis shows that an upper limit of 3 megawatts will enable a feed-in tariff scheme to support a variety of projects. For example, at one end of the spectrum, a typical household might use about 4 megawatt hours of electricity per year. That electricity requirement could be provided by a 4 kilowatt wind turbine or a 4 to 5 kilowatt PV installation. A school’s electricity requirement might typically be met by a wind turbine below 50 kilowatts and a hospital by a larger system closer to 250 kilowatts. In addition, at the other end of the spectrum, a 3 megawatt wind turbine has the capacity to generate enough electricity to power in the region of 1,500-plus homes per year—potentially enough electricity to power a village. The cost of such a project would be around £4 million to £4.5 million, which is clearly not an insignificant sum. As a further example of the significant scale of 3 megawatts as an upper limit, a 3 megawatt biomass plant could support around 3,000 to 4,000 homes. That is why we think that the 3 megawatt cap is about right, as it provides investor confidence and avoids any wait-and-see behaviour for at least 95 per cent of deployment currently covered by onshore wind turbines under the renewables obligation. The noble Baroness, Lady Young, talked about headroom. I think that she suggested that we should accept the amendment proposing 10 megawatts and then have the opportunity for consultation, as a result of which we could say that we would set the limit much lower, as we have in the flexibility given by the government amendments. But there is still the problem that, if we suddenly accepted 10 megawatts as the limit, it could jeopardise investment decisions for quite a large number of projects that we wish to see go ahead immediately. The essential point is that we should go for a limit that is reasonable and defensible but which does not inhibit a lot of investment decisions. The noble Lord, Lord Teverson, is also tempting me down paths that I should not go down. He said, “You’ve got the 3 megawatt limit but, come on, give some more details about where you might place the limit, if you went below it”. I do not think that we have done enough work so far to be able to give the noble Lord an indication of that. Clearly we need to do an awful lot of work in the next few months. As I have said, we will be happy to find ways of involving Members of your Lordships’ House who have a particular interest in those discussions. The noble Lord, Lord Jenkin, is absolutely right about avoiding confusion or overlap between the FIT scheme and the ROC scheme. We are anxious to invite comments about how we should do this. I have already set out our initial thinking. He made an interesting point last week about the network operation of voltage. We will have to look into that. I hope that I did not give him the impression that I would have a definitive answer by today, because I do not have one, but I am advised that my officials will look into working with Ofgem and the energy companies. Clearly we do not want to cause the kind of problems that he has suggested, so I hope that he will accept that I am taking this seriously, even though I cannot respond immediately. I recognise that there is no simple answer. We have tried to get the balance right and to set the cap at a level that will provide enough flexibility and encourage the small-scale generation that we want through a feed-in tariff. At the same time, it is essential that we give certainty to the companies that are taking the kind of investment decisions that we need them to take if we are to meet this challenging target. On that basis, I hope that noble Lords will accept that the 3 megawatt cap, with the flexibilities given within it, is probably the right way forward.
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    Lord Jenkin of RodingLord Jenkin of RodingConservative
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    My Lords, I am grateful to those who spoke in the debate and for the Minister’s reply, which was not wholly unhelpful. We have to debate this while being uncertain how this flexibility, which the Minister has mentioned several times, will actually work. The noble Lord, Lord Teverson, asked for a bit more detail and was promptly chased off the patch altogether, albeit in polite parliamentary language. That is what makes this difficult. The Minister’s paper, which he kindly circulated a day or two ago, says that, “if the evidence points to a lower limit, we will have the necessary powers to set a lower limit for onshore wind”— but where and for whom, and how will people know what it is? There is bound to be a period of consultation and therefore a period of considerable uncertainty. My fear is that, at a juncture where great efforts are being made through the planning system to overcome planning obstacles such as the grid-link systems—I have had the same paper from Ofgem that was quoted from earlier in the debate, and one does of course hope that some of the larger schemes in the pipeline will come forward—this level will create a grey area of overlap between the operation of the RO and the feed-in tariff, thereby encouraging gaming, as it is called, where people try to juggle between the two. They may wait until a feed-in tariff becomes operative so that they get the benefit of it and in the mean time delay their investment. We shall simply have to wait and see. I hope that we have sufficiently aired the problems that the Government face. I am grateful for the Minister’s earlier offer to keep in touch with those who have spoken on this matter so that we may take part in the consultation, which I am sure will be helpful, but I am genuinely anxious, as I have said. The purpose of the amendment was to flush out a bit more of the Government’s thinking, which the Minister was good enough to provide. Therefore, I beg leave to withdraw the amendment. Amendment No.44, as an amendment to Amendment No. 29, by leave, withdrawn. [Amendment No. 45, as an amendment to Amendment No. 29, not moved.]
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    Lord De MauleyLord De MauleyConservative
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    moved, as an amendment to Amendment No. 29, Amendment No. 46:
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    Lord Hunt of Kings HeathLord Hunt of Kings HeathLabour
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    My Lords, the noble Lord, Lord De Mauley, has raised a fair point. I am happy to say that Section 47 of the Electricity Act 1989 puts a duty on the authority to keep under review, and collect, information about activities to which that section applies. The section will be extended by a provision in Schedule 4 to include small-scale low-carbon electricity generation. It will also give the Secretary of State a power of general direction to the authority to which it must have regard in reviewing those activities. In addition—this goes back to our debate on Report—we are likely to detail progress on the effectiveness of the FIT scheme as part of our annual report under the Sustainable Energy Act 2003. I hope that that provides the noble Lord with the necessary reassurance.
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    Lord De MauleyLord De MauleyConservative
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    My Lords, I thank the Minister for that answer. For this evening’s purposes, I beg leave to withdraw the amendment. Amendment No. 46, as an amendment to Amendment No. 29, by leave, withdrawn. On Question, Amendment No. 29 agreed to.
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    Lord Hunt of Kings HeathLord Hunt of Kings HeathLabour
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    moved Amendments Nos. 47 and 48:
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    Lord Davies of OldhamLord Davies of OldhamLabour
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    moved Amendment No. 49:
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    Lord Jenkin of RodingLord Jenkin of RodingConservative
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    My Lords, I am tempted just to say thank you, but I will say one more word. There is no doubt that the Minister’s officials who worked on the oil and gas amendments devoted a great deal of time and ingenuity in trying to come up with a solution that met the requirements both of the industry and of the department. That they have succeeded is a great tribute to both sides. I should like to pass on—if the noble Lord will be kind enough to do so—the thanks of the industry for the efforts that were made.
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    Lord RowlandsLord RowlandsLabour
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    My Lords, I support the sentiments of the noble Lord, Lord Jenkin. This issue was first raised in the other place. The subsection that this amendment amends was brought into the Bill as a result of representations that began in the other place and were pursued by me and others in Committee and by the noble Lord, Lord Jenkin, on Report. It is a good example of the Government listening and responding. They have always wanted to achieve what the industry was asking for. Therefore, it is a pleasure to support that achievement.
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    Lord Davies of OldhamLord Davies of OldhamLabour
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    My Lords, I am grateful to both noble Lords. As I indicated, their assiduous work earlier in the Bill’s progress enabled us to arrive at a much improved and satisfactory situation. I am particularly grateful to the noble Lord, Lord Jenkin, for his appreciation of the work done by officials on this significant task. These are complex and challenging issues and an enormous amount of work has been done, some of it under considerable pressure. We all recognise that we have not had too much time to adjust to the results of debates on the Bill in this House. My officials are so vigilant that they have indicated that I made a slip, which I wish to correct. I said that the oil and gas decommissioning amendments were Amendments Nos. 51 and 52. In fact, they are Amendments Nos. 52 and 53. I apologise for the slip and take this opportunity to correct it. I am grateful to the officials, as ever, for pointing that out. On Question, amendment agreed to.
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    Lord Hunt of Kings HeathLord Hunt of Kings HeathLabour
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    moved Amendment No. 50:
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    Lord Hunt of Kings HeathLord Hunt of Kings HeathLabour
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    moved Amendment No. 51:
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    Lord Hunt of Kings HeathLord Hunt of Kings HeathLabour
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    moved Amendments Nos. 52 and 53:
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    Lord Hunt of Kings HeathLord Hunt of Kings HeathLabour
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    moved Amendment No. 54:
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    Lord Jenkin of RodingLord Jenkin of RodingConservative
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    My Lords, I have to say thank you again to the Government. Amendment No. 69 meets exactly the case that I made on Report and I am grateful for that. On Amendment No. 54, I consulted Ofgem and told it that I would say that it is happy with the amendment. Ofgem has always recognised that it is for Ministers to set policy and for Ofgem as the regulator to operate the policy. I previously had discussions with Ofgem on the amendments that we discussed on Report and it is content with what is being done. I would add that, quite rightly, the Minister had to add rather more words than was in the rather simple amendment of the noble Lord, Lord Oxburgh. I refer to the substantial superstructure that he had built upon some very slender foundations. However, sustainability is now expressly in the amendment and that is good. I am slightly more critical of the amendment on the two-year power which the Government are taking. I have received a representation from one of the companies involved in the negotiations, which states: “We understand that the Government is using it as a sword above our heads in order to ensure a conclusion is reached, but it is a concern nonetheless”. The noble Lord has given some explanation as to how he sees the Government proceeding on this, but he must be aware that the industry is not totally happy with the deadline. I am sure that it will do its best to try to negotiate proper arrangements. It is the enormously important issue of getting proper access to the grid, as the Ofgem report clearly made out. Will the noble Lord just be aware that there is a feeling that the sword of Damocles is not far away and that the Government need to be reasonably sensitive to that?
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    Lord Hunt of Kings HeathLord Hunt of Kings HeathLabour
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    My Lords, I do not want to prolong the proceedings but I think that referring to the sword of Damocles is a bit of an exaggeration. We want to see a successful outcome and I have already stressed that we want the parties to come to an agreement. We think that we need this as a reserve power but it is also important that the power is not held for ever—we need to see a successful conclusion. I am encouraged by what the noble Lord says in that I think he is reflecting that, despite the challenges, the parties are determined to do everything they can to see a successful resolution. We would much prefer that, and I very much hope that we do not have to make the order. I prefer to describe this as a reserve power and one that is time-limited.
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    Baroness WilcoxBaroness WilcoxConservative
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    My Lords, I thank the Minister for tabling these amendments. Through the long and convoluted arguments, I am glad that the Government have agreed that something that ensures sustainability is properly taken account of in a workable and appropriate way. On Question, amendment agreed to.
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    Lord Hunt of Kings HeathLord Hunt of Kings HeathLabour
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    moved Amendments Nos. 55 to 57:
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    Lord Davies of OldhamLord Davies of OldhamLabour
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    moved Amendment No. 58:
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    Lord Jenkin of RodingLord Jenkin of RodingConservative
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    My Lords, I speak to my two amendments in this group. I can promise noble Lords who are awaiting the next debate that I shall be much shorter than I was last time. This is a very short point. The question arises about negative or affirmative procedures for the parliamentary approval of the many orders and regulations to be made under these government amendments. Almost all the clauses in the Bill that provide for parliamentary scrutiny of subordinate legislation use the negative procedure. There are four exceptions in the Bill: Clause 13, about the enforcement of licensing and the regime for the importation and storage of gas; Clause 27, exactly the same for CO2; Clause 42, about the funded decommissioning schemes for nuclear operators; and Clause 59, which gives the Secretary of State power to modify Clause 42. All those powers require an affirmative resolution by both Houses. Almost all the government amendments will be subject to the negative procedure, except for the powers taken in the new schedule proposed by the Government. As noble Lords may have noticed, the Secretary of State’s power under the schedule to create by order new licensable activities in relation to smart metering will be subject to the affirmative procedure. That seems to me to be entirely right because this is a wholly new and very large operation. As the noble Lord said, a vast operation will be required. They are subject to affirmative procedures because the power has been taken under the gas and electricity Acts; and because these are amendments to those Acts, the affirmative procedure already required in relation to such powers will apply to this one. That appears to be almost automatic. However, the clauses that deal with regulations providing for competitive tendering processes for the award of licences for smart metering require the negative procedure. I do not understand why that should be so.
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    Lord De MauleyLord De MauleyConservative
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    My Lords, I am glad to have an opportunity to welcome once again the Government’s change of heart on the rollout of smart meters. However, I have some sympathy for my noble friend’s amendments requiring that the regulations defining the details of the competition be subject to affirmative resolution. We have had debates earlier in the Bill’s passage on another government competition, and despite the precedent of handling larger projects than this behind the scenes, a general concern that the Government might be somewhat lukewarm in their support for this technology, as shown by the time it has taken us to get to this stage, does argue the need for increased transparency and scrutiny.
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    Lord Davies of OldhamLord Davies of OldhamLabour
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    My Lords, I am grateful to both noble Lords who contributed to the debate. The last contribution was brief and to the point. I hear what the noble Lord says about transparency, but he can scarcely berate the Government by saying that this is yet another indication of the Government changing their mind. Governments should be flexible and responsive to parliamentary debate, and it is what we are usually enjoined to do. The Government have clearly done so on several occasions during the Bill’s passage, including this one, but the noble Lord seems to suggest that they are somehow not fulfilling their duty. I contest that. As ever, the noble Lord, Lord Jenkin, has a case which he has deployed very ably. We have taken due cognisance of it. As I think he recognised in his remarks on his amendment, the Government have already taken significant steps to ensure that Parliament has an opportunity to examine the details of a smart metering rollout as we move forward. We have, for example, taken the unusual step of making the licence modification powers which will be the central element in mandating smart meters for all households subject to parliamentary scrutiny. Such powers would not normally carry additional scrutiny procedures; but it is a reflection of the broad theme of the noble Lord’s case that this is a massive task and that it impacts on every household in the United Kingdom. The Government have also taken steps to ensure an appropriate level of parliamentary scrutiny in the new clauses that they tabled at Third Reading. The government amendments enable the Secretary of State by order to create new licensable activities in connection with smart meters or the related communications infrastructure. As the noble Lord, Lord Jenkin, recognised, that order will be subject to affirmative resolution and will therefore need to be debated and to receive the approval of both Houses. It will contain the detail of what activities are being made licensable and the conditions of those licences. In effect, the Government will set out in detail within that order the market model selected to underpin a smart meter rollout. For that reason we believe it right to provide for affirmative parliamentary scrutiny of that crucial aspect of the legislation. The regulations for the process of awarding the license, which the noble Lord covered in his amendment, are procedural in nature and subsidiary to the issues of substance contained in the affirmative order. The regulations will set out in detail the competitive tendering process—specifying, for example, the time periods in which licence applications must be made—and will be largely technical in nature. It would be very unusual for them to be subject to the affirmative procedure, as the noble Lord suggests. The clause is very similar to Section 6C of the Electricity Act, which concerns regulations for awarding offshore transmission licences by competitive tender. Those regulations are subject to the negative resolution procedure. The amendments we have tabled ensure that we can deliver a wide range of market-model options in order to deliver a successful rollout of smart meters to the domestic sector. The level of parliamentary scrutiny within these smart metering clauses already goes somewhat beyond what might normally be expected for these kinds of powers, and the scrutiny procedures are rightly focused on the most important elements of the powers, which are subject to the affirmative procedure. I listened carefully to what the noble Lord, Lord Jenkin, contended on his amendments, which we have not yet reached. I hope he believes that we have had sufficient debate to enable him not to move them when the time arrives. The Government have thought carefully about this issue. When we eventually rollout smart meters, we have an affirmative order for the crucial part of this important concept for the whole nation. On Question, amendment agreed to.
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    Lord Davies of OldhamLord Davies of OldhamLabour
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    moved Amendment No. 59:
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    Lord Hunt of Kings HeathLord Hunt of Kings HeathLabour
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    moved Amendment No. 60:
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    Baroness WilcoxBaroness WilcoxConservative
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    moved, as an amendment to Amendment No. 60, Amendment No. 63:
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    Lord TeversonLord TeversonLiberal Democrat
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    My Lords, I welcome the government amendment. As we are all aware from the Climate Change Bill and this Bill, heating accounts for about half of energy consumption in this country and 47 per cent of carbon emissions, and half of that energy and carbon emission is from the domestic sector. I should like to explore that area a little more with the Minister, because, as the White Paper stated last year, only 1 per cent of that sector is currently renewable. To meet the targets that we are being set in Europe, major challenges have to be met through that sector as much as through energy generation. I shall return to some of the issues that the noble Baroness raised, but I congratulate the Minister on listing as a source geothermal energy. That is very positive and perhaps covers heat pumps, which are often powered in that way. Given the very distributed nature of the domestic heat sector, we can all understand how it could work on a large scale with the equivalent of renewables obligation certificates; but with small scale, which is much more prominent in this type of energy use, what we do about, for instance, my two wood-burning stoves? What do we do about the 80,000 solar water-heating installations nationally? A lot of the 49 per cent is generated by very small domestic or small business installations. I find it difficult to understand how that will work—not that I in any way want to put the Government off taking on that challenge. I, too, raise the issue of combined heat and power, because that has played a big part in the Government’s energy strategy. CHP can save up to 25 per cent of CO2 emissions—there is quite a broad range depending on the individual installation—but most of it is fossil-fuel based and is less efficient than if it was producing heat alone, so there is naturally a potential discrimination against that important sector, which I know we all want to be successful. I would be very interested to hear from the Minister how the department will ensure that the two strategies will not conflict.
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    Lord Hunt of Kings HeathLord Hunt of Kings HeathLabour
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    My Lords, I thank noble Lords for their interesting comments. I cannot apologise for the vague provisions, but I understand why noble Lords would like some more information on how we will go forward. In a sense, that is the hardest information to share with noble Lords tonight. To start with, I reassure noble Lords that we see the renewable heat incentive as an important measure and, therefore, want to introduce it as soon as possible. On FIT, I have already said that we hope to start by 2010, although I cannot guarantee that. I cannot say the same about the renewable heat incentive, but I can say that we intend to set out a more robust timetable in the new year. The noble Lord, Lord Teverson, has already raised one or two complex issues. As the noble Lord, Lord Oxburgh, said on Report, it is important that we get it right. It is unwise for me to go any further in terms of providing a timetable. The noble Lord, Lord Teverson, is quite right about small applications. I reiterate that under the heat incentive scheme that we will produce we want a set rate for each unit of renewable heat energy produced. We expect those opportunities to exist at all scales, from large industrial sites down to the smallest household level, with all scales eligible to receive support. He goes on to ask whether I can tell him some more about some of the practical issues. No, but I acknowledge that he is right: clearly there are practical issues that we will have to work through over the next few months. The noble Baroness, Lady Wilcox, has done a great service in tabling her amendment and asking her question. I of course understand that some sectors will argue for different treatment under the heat incentive. I know that there are some concerns that my amendment may disadvantage fossil-fuel CHP operators. I would say to the noble Baroness that the levy proposed would apply to suppliers of fossil fuel to consumers for the purpose of generating heat and not directly to consumers—that is, the owners of the CHP plant. I know that the powers in the government amendment are broad, but that has one advantage. As we develop the regulations and the consultation, we can take into account the argument put forward by the noble Baroness and the organisation that has talked to her. Provision to designate fossil-fuel suppliers will allow the Secretary of State to exempt certain classes of fossil-fuel supplier if, after sufficient analysis and evidence, we believe that there is a disproportionate negative impact on any particular sector. A renewable heat incentive is designed to incentivise renewable heat. It is right to focus on that mode of heat. I assure the noble Baroness that we think that heat pumps are covered and that a renewable heat incentive will cover that technology. The noble Lord, Lord Teverson, mentioned domestic-scale renewable, which we intend to be covered. I hope that I have reassured the noble Baroness on that point and that noble Lords will support this group of amendments.
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    Baroness WilcoxBaroness WilcoxConservative
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    My Lords, we are at the end of Third Reading. I take some comfort from the Minister’s reply, certainly on renewable heat and heat pumps. Obviously, we are nervous. Given that the Government have had a Damascene conversion so late in our consideration of the Bill and at Third Reading have brought forward amendments when we have so little time or information to go on, my colleagues in another place more than likely think that we have been rather wimpy and should have kept dividing the House.
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    Lord Hunt of Kings HeathLord Hunt of Kings HeathLabour
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    My Lords, as I have said in relation to the FIT scheme, I will make it clear to noble Lords how they can make a contribution during the consultation process. I should like to say at the Dispatch Box that I will do the same for the renewable heat incentive.
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    Baroness WilcoxBaroness WilcoxConservative
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    My Lords, I thank the noble Lord for that. There are times when one has to take on trust what the Government say they are going to do. The noble Lord, Lord Teverson, and I were quite nervous at some stages that these things would not come forward, but the Minister seems to have been true to his word, as well as he could be, albeit in broad terms. We can accept only what is before us. I agree with the noble Lord, Lord Teverson, that it is nice to see the word “geothermal”, but we have admitted that we have a special interest from Cornwall in that. I suspect that we will face another energy Bill before too long. I beg leave to withdraw my amendment. Amendment No. 63, as an amendment to Amendment No. 60, by leave, withdrawn. [Amendment No. 64, as an amendment to Amendment No. 60, not moved.] On Question, Amendment No. 60 agreed to.
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    Lord Hunt of Kings HeathLord Hunt of Kings HeathLabour
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    moved Amendment No. 65:
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    Lord Hunt of Kings HeathLord Hunt of Kings HeathLabour
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    moved Amendments Nos. 66 to 69:
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    Lord Hunt of Kings HeathLord Hunt of Kings HeathLabour
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    moved Amendments Nos. 70 and 71:
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    Lord Hunt of Kings HeathLord Hunt of Kings HeathLabour
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    moved Amendments Nos. 72 to 75:
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    Lord Hunt of Kings HeathLord Hunt of Kings HeathLabour
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    moved Amendments Nos. 76 and 77:
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    Lord Hunt of Kings HeathLord Hunt of Kings HeathLabour
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    moved Amendment No. 78:
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    Lord Hunt of Kings HeathLord Hunt of Kings HeathLabour
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    moved Amendments Nos. 81 to 88:
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    Lord Hunt of Kings HeathLord Hunt of Kings HeathLabour
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    moved Amendments Nos. 89 and 90:
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    Lord Hunt of Kings HeathLord Hunt of Kings HeathLabour
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    moved Amendments Nos. 91 to 94:
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    Lord Hunt of Kings HeathLord Hunt of Kings HeathLabour
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    My Lords, I beg to move that this Bill do now pass. I thank noble Lords for their contributions to this Bill. Clearly, a great deal of progress has been made. The Government have welcomed the scrutiny that the Bill has received in your Lordships’ House. The numerous amendments that I have brought today are a product of the debate that has taken place in your Lordships’ House and the other place. I have no doubt whatever that this is a vastly improved, significant Bill. I am most grateful to all noble Lords for their constructive approach. I do not think that I am supposed to do this but, since much of the work was done by my noble friends Lord Davies and Lord Bach, I should like to pay tribute to them. I should also like to thank the outstanding Bill team who have worked with all noble Lords and have played a significant role. Moved, That the Bill do now pass.—(Lord Hunt of Kings Heath.) On Question, Bill passed, and returned to the Commons with amendments.
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