Clause 10 - Renewable heat obligation

Part of Climate Change and Sustainable Energy Bill – in a Public Bill Committee am 5:00 pm ar 25 Ionawr 2006.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Photo of Malcolm Wicks Malcolm Wicks Minister for energy, Department of Trade and Industry 5:00, 25 Ionawr 2006

Although it is important to promote renewable heat, it is also important to find an effective way of doing so, particularly in terms of carbon savings and costs to the consumer. The heat market is vastly different from the electricity market—for example, in the number of suppliers and the scale of installations. We do not consider that an obligation in relation to heat similar to the renewables obligation is necessarily the most effective measure to support renewable heat generation.

The biomass taskforce and the Scottish renewables forum recently suggested that the complexity of such an obligation led them to believe that other measures were more appropriate to bring forward renewable heat at this time. The Government agree, and therefore do not support the proposal for a renewable heat obligation in clause 10. Although a renewable heat obligation is not the correct approach, we remain committed to promoting renewable heat. We already support renewable heat projects through the bioenergy capital grant scheme, the clear skies initiative and the community energy programme. Support for renewable heat will continue in the low carbon buildings programme, to which I referred earlier.

The Government are considering their overall approach to renewable heat in the context of our response to the biomass taskforce. We are carrying out further analysis on all the taskforce’s recommendations. That analysis will take account of the recent study by Future Energy Solutions, which carefully considered renewable heat, combined heat and power and the carbon savings likely to be associated with each, and the Carbon Trust report on biomass.

Bioenergy is the largest potential contributor of renewable heat, and the Government are committed to responding fully to the taskforce report by the end of April. That will include responding to its recommendation for a capital grant towards bioenergy heat and combined heat and power projects, and the recommendation on longer-term support measures. The Carbon Trust is currently scoping a project to accelerate the development of biomass in the United Kingdom, focusing on heat. The European Commission is likely this year to bring forward measures to support biomass under its biomass action plan. Measures to support renewable heat are being considered also in the context of the climate change review and the new energy review.

As the hon. Member for Edinburgh, North and Leith indicated, amendment (a) to new clause 3 would require the Secretary of State to publish his considerations on the cost-effectiveness and the practicality of methods of promoting renewable heat. The Secretary of State would of course have regard to those issues in putting forward options to promote renewable heat. However, there are significant difficulties in defining them in the Bill. For example, how does the amendment define cost-effectiveness? For whom would the measure be most cost-effective—the Exchequer or the consumer? What is the relationship between the potentially conflicting requirements of practicality and cost-effectiveness?

Given the difficulties attached to the implementation of amendment (a), the Government do not support it. We are content to consider reporting on the Secretary of State’s duty to promote renewable heat as proposed in amendment (b) to new clause 3, but we do not feel that the reporting requirement should be expressed in the Bill in that way. We would  prefer to report on the duty to promote renewable heat in the context of our reporting under the Sustainable Energy Act 2003. That would be more appropriate, given the need for a consistent approach on all our reporting responsibilities on other aspects of energy policy. We will consider the reporting requirements further, and we aim to table a new clause for the next sitting.

In case anyone has not followed all that I have said, let me say that I oppose clause 10 standing part, but support new clause 3. I support amending the title of the Bill, as proposed in Government amendment No. 14, to reflect the content of new clause 3. I would resist amendment (a) to the new clause, but I will consider amendment (b).