Energy Bill [Lords]

Public Bill Committee, 21 June 2011.

Clause 101 - Offshore transmission and distribution of electricity: extension of time for licence modifications and property scheme applications

Huw Irranca-Davies (Labour, Ogmore)

It is good to have you here, Mr Leigh, for this penultimate sitting of the Committee. I support the clause, which extends the Secretary of State’s powers under the Energy Act 2004 and the Ofgem powers under the Electricity Act 1989 to enable implementation of the enduring offshore electricity transmission regime with the generator build option beyond 2010. The clause is eminently sensible, and I applaud the Minister for bringing it forward, but I want reassurance from him on a matter on which I understand he has been engaged with the offshore wind sector of renewables, as well as the oil, gas and Crown Estate sectors.

My query is short and simple. I would have raised it last week had there been time, but this is the last opportunity for us to ask the Minister to put his thoughts on the record. What progress has he made with the sectors on resolving the outstanding issue of compensation to offshore renewables operators in the event of the termination of a lease or a lease agreement? Will such compensation include future profits, frustration costs and decommissioning costs where appropriate? Will he confirm that, as the offshore sector expects, an oral statement will be made to Parliament on the matter? If he does not have the details to hand, I am happy for him to write to me and other members of the Committee, but I hope that I have afforded him the opportunity to put his assurances on the record.

Charles Hendry (Conservative, Wealden)

It is a pleasure to serve under your chairmanship again, Mr Leigh. We are well seized of the concerns expressed about the oil and gas clause in respect of the Crown Estates’ renewable leases and the impact that they could have on the financing of renewable projects. My Department has been working with the two representative bodies, Renewables UK and Oil & Gas UK, over the past few weeks, and progress is being made.

I should say something about the broader context of the framework within which the two industries, which both have important contributions to make to achieving our policy aims, can co-exist successfully. Our expectation is that suitable consultation, planning and phasing of the respective operations will, in most cases, allow both developments to achieve their objectives in full, or with only minor compromise. At the stage of formal consent, an application from either industry to develop the natural resources of our marine environment will be considered as part of the standard procedures of the relevant authority, and consulted on with interested stakeholders. Any user of the sea, including oil and gas and offshore renewable industry players, can make representations at a number of stages, including the formal consent process and the environment impact assessment, and we recommend that interested parties do that so that their views can be taken into account in decision making.

Circumstances could arise in which an oil and gas company might wish to proceed with a development that required the lease area of a renewables development to be reduced. The leases provide that such action can be taken if the Secretary of State so requests, but, as was made clear when the matter was debated in the other place, we do not envisage such powers being exercised except where there had been effective commercial negotiations between the companies involved and where a reasonable commercial solution had been proposed to the wind farm owner. I say categorically that, if the oil or gas company were not prepared to offer appropriate compensation, the Secretary of State would not intervene and the lease would not be affected.

As I said, we are working with the two industries to formalise the assurances that I have just given and to clarify the many detailed points that have arisen, but I do not consider that hard-wiring them into primary legislation at this stage would be the right way forward. I hope that I have given the hon. Gentleman the assurances that he seeks.

Clause 102 - Agreement about modifying decommissioning programme

Edward Leigh (Conservative, Gainsborough)

We now come to amendment 173 to clause 102, with which it will be convenient to debate amendments 174 and 175.

Charles Hendry (Conservative, Wealden)

On a point of order, Mr Leigh. Over the past week or so, I have had discussions with Members on both sides of the Committee, and there is clearly concern that the clause as drafted does not deal with the unforeseen circumstances that might arise in the course of a long-standing—perhaps for decades— agreement. Having reflected, I have decided that it would be sensible not to have clause 102 stand part of the Bill, but instead to work further on the assurances needed to deal with unforeseen circumstances in a spirit of co-operation with Opposition Front Benchers, and to table a new clause dealing with that issue on Report. Some amendments to the clause have been tabled, but I thought that it would be helpful to clarify the Government’s intentions before the debate proceeded.

Huw Irranca-Davies (Labour, Ogmore)

Further to that point of order, Mr Leigh. In the same spirit, it is clear that the Minister and Opposition Front Benchers are trying to do the right thing with the clause. The amendments, which were tabled in the names of my hon. Friends, myself and others, seek to find the right balance between the need to protect the interests of the taxpayer and the energy bill payer, the need to give certainty to potential nuclear investors that a future Secretary of State could not act unreasonably in loading disproportionate and unexpected costs on top of already agreed contracts, and the need to protect against unknown future eventualities. We recognise the tripartite consensus existing around the potential contribution of nuclear energy to a low-carbon, energy-secure future. If, as the Minister has described, his intention is to adjust and improve the measure and to bring back a new clause on Report, we support him in that aim and we hope to support the improved clause when it appears. I simply ask the Minister to give us as early a sight as possible of any changes.

Edward Leigh (Conservative, Gainsborough)

Dr Whitehead, do you wish to move your amendment?

Alan Whitehead (Labour, Southampton, Test)

Even knowing what we now know about the Government’s position on the clause, Mr Leigh, I wish to say a few words about my amendments. I therefore beg to move amendment 173, in clause 102, page 80, line 7, leave out ‘, or not to exercise’.

Edward Leigh (Conservative, Gainsborough)

With this it will be convenient to discuss the following:

Amendment 174, in clause 102, page 80, line 11, leave out

‘and the other party to agreement.’.

Amendment 175, in clause 102, page 80, line 18, at end add—

‘(4) The powers given to the Secretary of State in this section may not be exercised—

(a) in order to modify a programme in such a way that a decommissioning programme becomes less effective than would previously have been the case;

(b) in order to provide subsidy for a decommissioning programme from public funds.

(5) Section 48 of the Energy Act 2008 (approval of decommissioning programme) is amended as follows.

(6) In subsection (3) leave out “, in particular,” and insert “only”.

(7) Leave out subsection (3)(b).’.

Alan Whitehead (Labour, Southampton, Test)

I make it clear from the outset that the amendment is about nuclear decommissioning and the process under which that is undertaken, not about whether we should have nuclear power in the first place. It relates to what should be decided, when a licence agreement is made, about the decommissioning programme, particularly concerning the subsequent 60 or 100 years, or perhaps more.

The amendment would return us to the position, with some modifications, in the Energy Act 2008 in relation to the Secretary of State’s power to intervene. That Act essentially provided for nuclear site licence holders to submit a funded decommissioning programme, for that to be approved and modified by the Secretary of State and for future modifications to be accommodated should new circumstances arise. Under section 48, if new circumstances arise, proposals to modify the decommissioning agreement and programme may be made by either the Secretary of State or the operator, but the Secretary of State has a power not only to make the final decision on approving a modified programme, but to act unilaterally should unforeseen circumstances arise.

My understanding is that the clause conflates that process. The Secretary of State would decide whether he may subsequently modify a programme, whether he may give notice that someone can modify it, or whether he may take no action at all to modify it at the time the programme is agreed and the licence issued. In pursuit of attempting to modify the Secretary of State’s ability to act unilaterally should unforeseen circumstances arise, the clause effectively appears to give him no ability to act in such circumstances, or to act only should there be agreement on both sides that something different needs to be done.

The process might stretch over many decades. Many hon. Members share my view that it would be a considerable feat of clairvoyance if, at the point at which a licence was issued, the Secretary of State could imagine all the circumstances relating to a possible modification. He must operate at that level of clairvoyance, however; otherwise his options to act properly on behalf of the taxpayer and in the country’s interests might be fettered as a result of the clause. They might also be fettered in the unusual situation of a nuclear operator acting unreasonably in unforeseen circumstances in a decommissioning programme.

Although the 2008 Act sets out a number of circumstances in which a decommissioning programme can change by agreement, and those are implicit in the clause, or additional programme expenses can be built into a modified programme as it goes forward, unforeseen circumstances and balance of reason in making decisions do not appear to be taken into account in the clause. I therefore very much welcome the Minister’s statement about withdrawing it. I hope that he will introduce a new clause that, while providing as much certainty for both sides as is possible about decommissioning programmes, takes unforeseen circumstances into account and gives the Secretary of State power to deal with them, provided that such a power is used reasonably.

Caroline Lucas (Green, Brighton, Pavilion)

I rise to add my voice to the pleasure expressed by the hon. Member for Southampton, Test about the Government’s intention to withdraw the clause. The number of signatures on the amendment signal the strong feeling on both sides of the Committee and the real concern about the wording in the clause. I back the original purpose of the amendments, because I want the Secretary of State to retain his powers to modify a decommissioning agreement on his own, without requiring the agreement of the plant operator. I want to ensure that any decommissioning agreement can be modified such that obligations are added and not removed.

I am glad that the clause will not stand part, but can the Minister assure us that we will be involved in the drawing up of the new provision, so that we know what will be brought back and that it will not suddenly be presented to us? Some letter or process whereby, early on in the process, we can see what is being proposed would be helpful. We are beginning to run out of time, and all of us would appreciate not simply being presented with a solution on Report, on a take it or leave it basis. There is scope for us to find something that could get wider agreement.

Ian Lavery (Labour, Wansbeck)

There are a lot of problems with nuclear energy and not a lot of confidence that the decommissioning costs will not be borne by the taxpayer. When the provision is brought back, will the Minister ensure that there is clear and concise information on who will bear any financial costs arising from unforeseen events? There is a great fear that the Bills being pushed through Parliament and the view being taken of future energy requirements are hugely weighted in favour of nuclear power, in terms of the carbon floor price, the EU emissions trading scheme and the emissions performance standards. There are huge concerns among the general public about the direction we are taking.

Will the new clause tabled on Report set out in detail what will be or could be classified as unforeseen events? What about the finances? We cannot turn around to the taxpayer even in five, 10, or 15 years’ time and say, “This is an unforeseen circumstance. We, as a Government, will now pay the decommissioning costs.” That would show a huge bias towards nuclear that people, rightly or wrongly, believe currently prevails.

Edward Leigh (Conservative, Gainsborough)

We have had a very wide debate, far wider than the amendments, so I will rule that we have had an adequate debate when we come to clause stand part. If anyone else wants to speak about the clause, this is your chance to do so. No? I call the Minister.

Charles Hendry (Conservative, Wealden)

I am grateful for the contributions that we have had. I will start by responding to the points made by the hon. Member for Wansbeck. The issues he mentioned are already covered in legislation. The nature of the funded decommissioning programme is that there is a regular assessment every few years of how much money the programme will cost and how much is being set aside for that. If any more is needed, because costs are increasing faster than expected, there is an automatic obligation on nuclear companies to provide that extra funding. The issue that the hon. Gentleman mentioned, of potential taxpayer subsidy for the decommissioning costs, cannot apply. That is already enshrined in the process.

He asked me to explain some of the things that could be unforeseen circumstances. That would be slightly Rumsfeldian, talking about foreseeable unforeseen events or unforeseeable unforeseen events. The challenge we have is that, because we are looking so many years into the future, it is hard to be comprehensive or to give some sense of the range of issues that might apply and require this comfort to be provided. We also understand why hon. Members want these amendments to be made.

As the hon. Member for Southampton, Test said in his opening comments, the clause is about decommissioning. It is not about waste, which is separate; it is not about subsidy, which is separate. We made it clear that there will be no public subsidy. The reason for the change was that it became clear to us that the power introduced in the 2008 Act was very strong. It gave the Secretary of State an absolute power, to use at will, to change what the nuclear companies would have seen as a legal contract. They were concerned that they were being asked to invest billions and billions of pounds when at any point in the future a Secretary of State could change the ground rules. Understandably, they said that they felt that they had to have a greater sense of equity.

The proposal within the agreement that goes with the funded decommissioning programme would specify where the Secretary of State would continue to have that absolute power. In addition, that power would be reduced in other areas, so that there was a greater sense of certainty for investors. However, given that we cannot be certain what might arise in 10, 20, 30 or 40 years’ time, we have decided that it is appropriate. We understand the worries that have been expressed, and we will work on such matters before discussing them again on Report.

To answer the hon. Member for Brighton, Pavilion, we will work with the official Opposition to reach agreement. It might be challenging on some nuclear issues to reach agreement with the hon. Lady as we approach them from a slightly different direction, but we will try to find a form of words that has as much support throughout the House as possible and to share it with members of the Committee well ahead of the Bill being discussed on Report. I am grateful for the comments that we have heard during our discussion and I hope that, given my assurances, we can go forward as I have suggested.

Alan Whitehead (Labour, Southampton, Test)

Clearly, since the clause will be withdrawn, it is appropriate that the amendment should also be withdrawn, which I am happy to do. I beg to ask leave to withdraw the amendment.

Clause 103 - Additional powers of the Coal Authority: England and Wales

Huw Irranca-Davies (Labour, Ogmore)

I rise to give the Minister a proper opportunity to introduce the clause. I welcome it, because it recognises the expertise that has resided in the Coal Authority over many years in respect of subsidence, and the potential for that expertise to be applied more widely than purely in respect of coal mining. How does the hon. Gentleman see the new powers being utilised by the Coal Authority? Can he give us an assurance that its core functions in coal subsidence will not be affected by extending its remit beyond that? How has he dealt with the danger or the perils of the Coal Authority, with its special status and renowned expertise, driving out competition unfairly when it wants to competes in a wider market for its services? The same questions stand for clause 104 in respect of Scotland. Rather than repeat my comments, perhaps both I and the Minister can deal with both clauses in one go.

Charles Hendry (Conservative, Wealden)

The purpose of the clause is to extend the powers of the Coal Authority in England and Wales to allow it to make use of and charge for its expertise in remediating coal-related environmental and safety liabilities in non-coal-related contexts. The extension will not take precedence over the authority’s existing statutory duties, and I hope that that has answered the hon. Gentleman’s question about coal subsidence. It will allow the Coal Authority to assist other public bodies and private landowners in dealing with mine-water treatment, subsidence or surface-hazard remediation outside the coal-mining sphere.

The change will not lead to an additional call on the public purse, as the authority will be able to charge for the additional non-coal work. Clause 104 mirrors the clause to extend the powers to Scotland. The Coal Authority’s status has been reviewed as part of the public bodies review and the internal Department of Energy and Climate Change delivery review. Its inclusion in the Public Bodies Bill will allow the Government to undertake any changes in the future, should the outcomes of the DECC review or any future circumstances require us to do so. The change is small and sensible.

Ian Lavery (Labour, Wansbeck)

This is not an attempt to part-privatise and substitute private work within the Coal Authority to receive finance so that in the near future the Government can reduce the money that they pay the Coal Authority to act on their behalf, is it?

Charles Hendry (Conservative, Wealden)

I hope that I can give the hon. Gentleman complete assurance. There is tremendous expertise within the Coal Authority. It is quite restrained in what it can do at the moment, and can use such expertise in other areas for different mining and related activities. That should properly be remunerated so it will charge for such services, but we recognise that it has untapped skills at the moment, of which it should be allowed to make use. The clause is not an attempt to privatise.

Huw Irranca-Davies (Labour, Ogmore)

What idea does the Minister have of the size of the sector competing within the market beyond the pure coal-mining area of subsidence and the expertise within the UK? In light of his words, how can we guard against the Coal Authority driving out smaller competitors who do not have its prestigious name or weight of expertise? We do not want this well-intentioned and apposite clause driving out existing competition that is struggling to compete with the huge weight of the Coal Authority.

Charles Hendry (Conservative, Wealden)

We do not expect the work or the income to be substantial; it will be a niche area, but it is nevertheless one where the authority’s skills are relevant, and in which it should be allowed to develop. An important point is that we have to find the right balance between allowing that expertise—it is not being used as broadly as it could be—to be brought to bear and to help in other areas, and making sure that where good private sector operators can provide such services they are not squeezed out of the process. At the moment, this is a permissive change to legislation, to allow the Coal Authority to extend its work. As Ministers who strongly believe in the role of competition and the private sector, we will watch very carefully to ensure that the authority’s powers are not abused.

Clause 105 - Repeal of measures relating to home energy efficiency

Gregory Barker (Conservative, Bexhill and Battle)

I beg to move amendment 66, in clause 105, page 81, line 20, leave out subsections (1) and (2) and insert—

‘(1) The Home Energy Conservation Act 1995—

(a) ceases to have effect in Scotland;

(b) ceases to apply in relation to energy conservation authorities in Wales.

(2) In section 1 of that Act (interpretation) in the definition of “energy conservation measures” after “promotion,” insert “any available financial assistance,”.

(3) In section 1 of the Sustainable Energy Act 2003 (annual report on the progress towards sustainable energy aims)—

(a) subsection (1)(e) and the “and” immediately preceding it cease to have effect, and

(b) subsection (1AA) ceases to have effect.

(4) In section 4 of that Act (energy efficiency of residential accommodation: energy conservation authorities) subsection (13)(b) ceases to have effect.’.

Edward Leigh (Conservative, Gainsborough)

With this it will be convenient to discuss the following:

Government amendment 67.

That schedule 3 be the Third schedule to the Bill.

Government amendment 81.

Gregory Barker (Conservative, Bexhill and Battle)

Good morning, Mr Leigh. It is a pleasure to be serving under you on the last day of the Committee. With your permission, before turning to the Home Energy Conservation Act 1995, I will report to the Committee on matters arising from the last sitting.

I agreed to write to members of the Committee to set out the role of the energy company obligation in promoting innovation, and I have done so. I offered the hon. Member for Southampton, Test, the opportunity to engage, outside the Committee, with our work on the ECO brokerage concept, and I have instructed my officials to contact his office to arrange a mutually convenient date for that to begin. Following on from my original letter, the hon. Member for Brighton, Pavilion, raised another question about service charges in the private rented sector, and I have written to her with further information on that topic. Finally, by the end of the week, I will write to her again, copying in members of the Committee, about our current thinking on a strategy for a more ambitious approach to distributed energy.

Government amendments 66, 67, 75 and 81 relate to the Home Energy Conservation Act 1995. When I first turned my attention to HECA some time ago, I discovered that it was pretty moribund—dormant—with very little sign of a pulse: if not actually dead, it was doing a good impression of being so. There was certainly a logic in deleting it from the statute book as legislation that had never lived up to the hopes of its original proposers, and as such it seemed to be no longer needed. However, the more that we have considered it—certainly following the debate in the other place—and the more that I have listened to the views of colleagues and stakeholders, both inside and outside Parliament, which have been expressed during the passage of the Bill, the more I have been convinced that HECA can be resuscitated and revived. It can have an important, continuing role in the future, if it is handled in the right way and if there is a commitment from the Government to use it.

I will explain why. I am sure that hon. Members will agree that it is important that all local authorities play a role in addressing climate change. On energy efficiency, they play a role in delivering the green deal and the energy company obligations in their local communities. I am greatly encouraged by the enthusiasm that already exists among a great many local authorities. Some are actively looking to become early green deal providers themselves. Others are looking at how they can form partnerships to deliver programmes in their areas.

That enthusiasm is embodied in the memorandum of understanding between my Department and the Local Government Group. Yesterday, I addressed a conference at the Royal Society entitled “The green deal and the big society”. There were more than 300 people there, largely drawn from local government and local community action groups. That was very encouraging.

We listened to the concerns expressed during the passage of the Bill on the importance of ensuring that not only the keenest, but all local authorities take action. In particular, I recognise the contribution made to the debate by the Association for the Conservation of Energy. Having reflected on its contributions and other contributions more widely, the Government are persuaded that an appropriate provision should exist to explicitly encourage local authority action. HECA requires all authorities to report on practicable and cost-effective energy conservation measures that are likely to result in a significant improvement in the energy efficiency of residential accommodation in their areas. We have therefore decided to retain the Act in England.

The green deal will provide a cost-effective vehicle, enabling local authorities and other to make the improvements in housing stock that HECA was originally intended to drive. HECA never fulfilled its potential and never lived up to the promise of its original sponsors because it was typical of the sort of Bill that legislates for a certain outcome and makes no provision for the means to achieve it. With this Bill we are changing that and creating, with the green deal and the ECO, the means, the framework and the ability to drive that agenda on a scale that is commensurate with the challenge of retrofitting up to 14 million homes by 2020, with more in the following decade.

To help with that drive, HECA recognises the role of local authorities and requires local authorities to report accordingly. We propose a small amendment to the definition of an “energy conservation measure” in HECA to take account of the additional green deal proposition. The inclusion of the words “any available financial assistance” will encompass the types of green deal financial assistance that will be on offer, along with the potential financial assistance that the ECO might offer local residents.

We will work closely with the Local Government Association and a range of organisations to consider how we can best frame future guidance, which we will issue under HECA to local authorities, spelling out in greater detail what, in the early stages of the green deal, we expect of them, and how we propose to work with them to drive the programme forward at local level. There will be, as with other parts of the Bill, further detail in secondary legislation. We will come through with those details in due course. In the coming decades, however, HECA will have a positive role to play. It will finally be a vital tool in encouraging the engagement of all authorities—not just the usual suspects that we are familiar with—without imposing undue, unfunded burdens.

Luciana Berger (Labour, Liverpool, Wavertree)

It is a pleasure to serve under your chairmanship, Mr Leigh, in the Committee’s penultimate sitting.

In his contribution, the Minister said that there was little sign of a pulse in HECA, which had become moribund. It is true that the HECA review of 2007 concluded that authorities had been reluctant to allocate funding for monitoring HECA progress. In fact, 62% of local authorities had not allocated any financial budgets to HECA officers for their annual reports.

Limited financial resources has resulted in limited monitoring methods. I am keen to know what the Minister foresees in secondary legislation that will ensure some budget for HECA officers, which is necessary to ensure that they fulfil their commitments to do produce HECA reports. Local authorities up and down the country are finding it very difficult, because their budgets have been considerably squeezed. Will they be able to fulfil the responsibilities in the amendment and under HECA?

Under the amendment, HECA will cease to have effect in Scotland and Wales. Why is there a different approach to Scotland and Wales? What are the implications of that change?

Gregory Barker (Conservative, Bexhill and Battle)

After we consulted the Scottish and Welsh Administrations, they asked that we continue with the repeal of HECA on their behalf, so it will not apply in Scotland and Wales. The devolved Administrations will, however, continue to work with their local authorities to progress the national energy saving initiatives that they already have in place. They will continue to ensure that they fully participate in the green deal and all it has to offer. Basically, they have alternative arrangements that come under the competence of the Welsh and Scottish Executives, which, they judge, make HECA superfluous. I guess that because HECA was not seen as being effective over the past decade, the Welsh and Scottish Executives introduced their own arrangements, which they will boost to drive forward the green deal. It is not that they reject the agenda, but that they have another means of delivering it.

On finance for local authorities to deliver on HECA, it is clear that many local authorities are already supporting activities on that agenda on a voluntary basis, because we have provided voluntary guidance on it. I would go further, however, and suggest that the measure is not only an opportunity for local authorities to save money by utilising officer time that they already devote to the issue; it is an opportunity for them to make money. They could go for the green deal localist max position; they could enter into arrangements with private sector partners to create energy service companies, and into partnerships with local businesses and enterprises; or they could create national partnerships. If they use the power of their brands as trusted organisations, they will play a very important role in working in partnership to offer programmes on a large scale in their areas with the private sector.

Whether Marks and Spencer or a local plumber, those in the private sector will make profits from such action. They will be gaining a market share and making a sensible return. The opportunity to work in partnership with local authorities is an attractive, commercial proposition. It bypasses the need to engage in lots of advertising and above and below the line marketing that would otherwise be required to gain customers. Clearly, we cannot spell out such matters in legislation, as it would be at the discretion of each local authority, but by being partners in the roll-out of local programmes, enterprising local authorities will have the opportunity to capture back their costs as well as the potential to raise more money to reinvest in the agenda.

Steve Brine (Conservative, Winchester)

Given the consequences that the Minister describes, there is no reason for local authorities, either directly or indirectly through organisations with which they go into partnership, to provide green deal assessor services. They would be trusted, and residents could then buy the GDA services from their local authority or subset organisation and take them into the private marketplace.

Gregory Barker (Conservative, Bexhill and Battle)

I am not absolutely clear about the point that my hon. Friend is making. Few local authorities would go into business by themselves, but they would as part of a co-operative, partnership or social enterprise, or even at the most basic level endorse the product of a chosen partner that best fitted their scope and criteria in offering the best to their residents. As such, that will have a value to the commercial partners with which they choose to align themselves, and it is not unreasonable that they should be compensated for that.

I do not anticipate that many local authorities will want to become exclusive green deal providers directly, but that is by no means impossible. However, all sorts of innovative ideas are springing up, and several social housing providers are entertaining ambitious plans to enter the green deal market by providing green deal measures not only to their own tenants, but the wider housing area. The beauty of the green deal is that it gives rise to all sorts of possibilities. I am sure that different local authorities and community groups will respond in different ways. Our job is to provide an overarching framework to enable them to flourish and to maximise the entrepreneurial potential of the programme. It is not a case of getting local authorities or local government out of the way, but seeing that they can be a real partner in the agenda.

Clause 106 - Extent

Gregory Barker (Conservative, Bexhill and Battle)

I beg to move amendment 68, in clause 106, page 82, line 15, at end insert—

‘( ) Section [Renewable heat incentives in Northern Ireland] (renewable heat incentives in Northern Ireland) extends to Northern Ireland only.

( ) Section [Power for Gas and Electricity Markets Authority to act on behalf of Northern Ireland authority in connection with scheme under section [Renewable heat incentives in Northern Ireland]] (power for Gas and Electricity Markets Authority to act on behalf of Northern Ireland authority in connection with scheme under section [Renewable heat incentives in Northern Ireland]) extends to England and Wales, Scotland and Northern Ireland.’.

Edward Leigh (Conservative, Gainsborough)

With this it will be convenient to discuss the following: Government amendment 71.

Government new clause 15—Renewable heat incentives in Northern Ireland.

Government new clause 16—Power for Gas and Electricity Markets Authority to act on behalf of Northern Ireland authority in connection with scheme under section [Renewable heat incentives in Northern Ireland].

Government amendment 79.

Gregory Barker (Conservative, Bexhill and Battle)

The coalition Government intend shortly to introduce to Parliament regulations to establish the long-awaited renewable heat incentive scheme, which will be the first scheme of its kind in the world to incentivise and drive forward renewable heat. The RHI primary powers currently extend only to Great Britain—in other words, England, Scotland and Wales, but not Northern Ireland. The intention was to have a UK-wide scheme, but timing issues meant that the Northern Ireland Assembly could not pass a legislative consent motion during the passage of the then Energy Bill 2008 to allow us to legislate on its behalf, which is important because heat is a devolved issue.

The powers contained in the amendments and new clauses will grant the Northern Ireland Executive primary powers for renewable heat, which will allow Northern Ireland to introduce its own specific support scheme to facilitate and incentivise renewable heat generation there through secondary legislation. The scheme is expected to be administered by the Gas and Electricity Markets Authority on behalf of the Northern Ireland Authority for Utility Regulation. I hope that, given the widespread support for RHI across the Committee, hon. Members will therefore support the amendments and new clauses.

Huw Irranca-Davies (Labour, Ogmore)

I am pleased to support the amendments and new clauses, which are right and proper. As a former Wales Office Minister, I am familiar with how timetabling in devolved Governments and Assemblies can sometimes be out of kilter with UK Parliament time scales, so I understand the need for the change.

Does the Minister have any idea of the extent of the existing and the potential RHI sector in Northern Ireland? Certainly, renewable heat could be a major boost to the Northern Ireland economy in the form of green jobs and green economic growth. However, recognising what he said in his opening remarks, what does he mean by “shortly” in relation to the introduction of RHI regulations? Does it mean in a few days, in a few weeks, before the summer, when we come back in October or in the autumn? I am sure he can clarify that broad term.

Some of our debates in Committee are fascinating. One of the memorable phrases that I will take away, and which reminds me of my time as a Wales Office Minister, is the Minister’s phrase, “heat is a devolved issue”. For many of our constituents, that will be complete double Dutch, but I understand what he means and it is right and proper that such devolved competencies are respected and recognised. What does the Minister mean by “shortly”, and what is the potential of the RHI for the Northern Ireland economy?

Gregory Barker (Conservative, Bexhill and Battle)

I am happy to provide clarification. As a former Minister, the hon. Gentleman will know that when I say shortly, I mean very soon. Actually, the regulations are to be laid in Parliament this week.

Huw Irranca-Davies (Labour, Ogmore)

Fantastic.

Gregory Barker (Conservative, Bexhill and Battle)

On the hon. Gentleman’s point about Northern Ireland, I am happy to write to him with detailed economic analysis about the potential impact there of the RHI. As he will be aware, the Northern Ireland heat market is very different from that of Great Britain. Northern Ireland is largely dependent on oil, with a developing natural gas market. There are also differences in fuel prices between Great Britain and Northern Ireland, and in the amount of people’s income that goes towards heating their homes.

Finally, Northern Ireland’s geography is obviously different from Britain’s. It is more rural and has fewer larger cities, so it has a different heat intensity. All those factors have meant that it has been appropriate for a separate consideration to be given to a specific scheme for the Northern Ireland context. Nevertheless, we believe, as I am sure the hon. Member for Ogmore understands, that there are almost more arguments for the particular economic benefits. I will write to him to give him greater detail.

Huw Irranca-Davies (Labour, Ogmore)

When the Minister writes to me—and I am happy if he writes to other Committee members—will he update us on the progress in the year’s hiatus before the full introduction of the RHI on a domestic basis? That will affect England, Wales and Scotland, I understand. Part of the justification for that was to trial the efficacy of various types of RHI, whether air source thermal, ground source thermal or whatever. Perhaps the Minister will tell us in writing about the uptake of RHIs and his ambitions for that. Before we fully introduce the RHI for domestic appliances we must be confident that we will have a scale of take-up, over the next year, that will allow him to make some well-informed decisions before the full launch.

Gregory Barker (Conservative, Bexhill and Battle)

I shall not divert the Committee for too long, because I do not want to ski off-piste too far.

We hope to launch the renewable heat premium payment within the next couple of months. The scale of the scheme in the UK will be large in the first year of its life. We anticipate that it will cover as many individual customers as would have been likely to have taken it up had we started with the RHI in full. However, in the first year we will require a greater level of feedback and monitoring of the appliances, particularly those involving the more innovative technology, such as ground source and air source heat pumps, and so on. There has been less consumer-facing take-up of such technologies in the past. It is very important that we trial the scheme effectively to ensure that there is neither mis-selling nor misunderstanding.

Invariably, many of the trials have found that it is not that the technology is faulty or that it is not there, but that it is sometimes misapplied. That is why interaction between the technology and the consumers, in their homes, is really important. We want to ensure that we have learned the lessons before we go to a full market roll-out.

Huw Irranca-Davies (Labour, Ogmore)

I asked the question because I am probing whether the lessons that will be learned over the next 12 months will be shared with all the devolved Governments, including, in relation to the amendments, the Northern Ireland Assembly, so that they, too, can adapt and modify their way ahead.

Gregory Barker (Conservative, Bexhill and Battle)

Of course, we have an excellent relationship with all the Administrations and we work closely on this shared agenda. I anticipate that we will be fully engaged with them all on those issues.

Clause 107 - Commencement

Charles Hendry (Conservative, Wealden)

I beg to move amendment 69, in clause 107, page 82, line 46, at end insert—

‘(ha) section [Regulation of security of nuclear construction sites] (regulation of security of nuclear construction sites);’.

Edward Leigh (Conservative, Gainsborough)

With this it will be convenient to discuss the following: Government new clause 12—Regulation of security of nuclear construction sites.

Government amendment 77.

Charles Hendry (Conservative, Wealden)

Ensuring security in the civil nuclear industry is one of the Government’s highest priorities. We keep security arrangements in the industry under constant review. This extension of the powers will enable the Government to make regulations to require owners of civil nuclear sites, including new nuclear power stations, to put in place security measures while those sites are under construction. That change is needed, because a new generation of nuclear power stations is now a realistic prospect in the United Kingdom. Energy companies have announced plans to build up to 16 GW of new nuclear capacity by 2025. The draft nuclear national policy statement, which the Government consulted on in October, contained eight sites that had been identified as being potentially suitable for nuclear new builds. All those sites are adjacent to existing civil nuclear facilities. These amendments and the new clause will permit the regulation of security at civil nuclear construction sites from the start of construction. That will ensure that any potential security implications for existing facilities, as a result of this construction activity taking place in a vicinity, are addressed.

Current regulation is only permitted once nuclear material or other radioactive material is brought on site, which is approximately five years into the construction timeline of a new nuclear power station. Bringing in this change will ensure that the United Kingdom continues to have a robust regulatory regime in place to ensure effective and proportionate security in the civil nuclear industry. There will be a comprehensive regulation of security at nuclear new build construction sites. On that matter, as on other matters relating more generally to security in the civil nuclear industry, the Government have been closely advised by the Office for Nuclear Regulation, the security regulator for the civil nuclear industry.

Huw Irranca-Davies (Labour, Ogmore)

I welcome the amendments, which enhance the security of our nuclear sites by bringing forward the security arrangements to include the period when construction works commence. I want to ask the Minister some questions on the clause. In advance of that, I thank him for affording both me and noble Friends in the other place the opportunity to discuss the issue of security at nuclear sites. We have sought and received reassurance from both him and his officials.

First, can the Minister give us an update on how this may feed into the wider governmental review of critical infrastructure and how security generally at nuclear sites is figuring within these discussions? Secondly, can we seek his assurance that in any discussions that take place, while the No. 1 priority must be the enduring robustness of the security of our nuclear sites, the views of the existing work force and organisations are taken into account? Finally, what are his thoughts on how he will report to Parliament in future on nuclear security, either in response to the outcome of specific cross-Government initiatives, such as those on critical infrastructure, or simply on a periodic basis, recognising the limitations on the Minister for disclosing full details of security arrangements? I ask the Minister for his thoughts on that.

Charles Hendry (Conservative, Wealden)

I am grateful to the Opposition spokesman for his support for the principles behind the amendments. As he rightly said, there is an ongoing review of the security of critical infrastructure. Work with nuclear sites is clearly part of that critical nuclear infrastructure, but separate work is related to the unique nature of nuclear sites.

The amendment recognises that, as the Bill is framed, it is not sufficiently comprehensive. It had originally been drafted when nuclear new build was not especially on the agenda. Now that it is, it is appropriate from the earliest time in the construction process for security issues to be formally addressed. Yes, of course, if there is evidence from the work force about issues of concern, we are also keen to look into them. We have said that if people consider that they will be criticised for whistleblowing, protection will be afforded to those who draw attention to security and safety issues, and that applies throughout the energy infrastructure, oil and gas, nuclear and other parts of the critical national infrastructure.

Ian Lavery (Labour, Wansbeck)

Will the measure be seen by the energy companies as an extra financial burden?

Charles Hendry (Conservative, Wealden)

The energy companies are liable for the costs of security. They understand that, as part of the process of building new nuclear plants, they have to take account of the security costs involved in that process. There are no taxpayer implications in the proposals. As for how the measure will be reported to Parliament, we respond to parliamentary questions but, as members of the Committee will be aware, by definition sometimes our answers cannot be as comprehensive as we would wish. The very nature of security issues means that they have to be carefully protected, and we have to be cautious about the way in which we discuss them in public. As far as we are able, under the freedom of information request information system, we share information with the Whip and other authorities.

Caroline Lucas (Green, Brighton, Pavilion)

Will the Minister clarify whether the provision will make any material difference to the protests that I imagine we will be seeing throughout the country as the start of nuclear construction gets under way? The hon. Gentleman will know that it is a controversial subject. I am sure that many legitimate peaceful protests will take place at construction sites, and I wish to know whether anything will be different as a result of the provision in how protesters might be treated.

Charles Hendry (Conservative, Wealden)

The hon. Lady raises an important issue. She refers to security and terrorism. We completely respect the right to peaceful protests and for people to express their worries about developments that they do not like. The provision will not give the police extra powers in dealing with such issues. Those protests can go ahead, as would have been the case beforehand. It is purely about counter-terrorism and security in that respect, and I hope that I have provided the hon. Lady with the assurance that she seeks.

Charles Hendry (Conservative, Wealden)

I beg to move amendment 70, in clause 107, page 83, line 2, at end insert—

‘( ) section [Abandonment: infrastructure converted for CCS demonstration projects] (abandonment: infrastructure converted for CCS demonstration projects).’.

Edward Leigh (Conservative, Gainsborough)

With this it will be convenient to discuss the following: Government new clause 13—Abandonment: infrastructure converted for CCS demonstration projects.

Government new clause 14—Carbon dioxide pipelines: powers of compulsory acquisition.

Government amendment 78.

Charles Hendry (Conservative, Wealden)

The new clauses and associated amendments are intended to facilitate carbon capture and storage projects by removing obstacles to the reuse of existing capital intensive infrastructure. While they are relatively minor measures in legislative terms, they are nevertheless important to the demonstration of key carbon abatement technology as they will make it considerably more straightforward to reuse suitable existing infrastructure for CCS where it is suitable and no longer required for its original purpose.

New clause 13 would change the regime for decommissioning offshore pipelines and installations as set out in the Petroleum Act 1998 and would give the Secretary of State a discretionary power to designate offshore pipelines and installations that are intended to be used as part of a CCS demonstration project. The effect of designation would be to remove the possibility that the owners, operators and licensees of facilities for oil and gas purposes could be made liable for their decommissioning. The new clause would not change the obligations of the storage site operator to decommission the facilities once they are no longer required, nor would it change the guarantees the Government can require from the storage site operator to ensure that those obligations are fulfilled in a timely way.

Without the new clause, it would remain possible for a body that was responsible for decommissioning facilities, when used for oil and gas purposes, to be required to decommission them if they were subsequently used for carbon dioxide storage. We know from discussions with the industry that it is likely that owners of oil and gas facilities would choose to decommission them in such circumstances, rather than to allow them to be reused for carbon dioxide storage, which would involve uncertainty about the timing and cost of decommissioning. The new clause will remove that perverse incentive. Amendment 70 makes provision for the new clause’s commencement.

New clause 14 replicates existing powers for new pipelines in the Pipe-Lines Act 1962 to allow the compulsory acquisition of rights to transport carbon dioxide through a pipeline previously used for another purpose. It provides that, where an existing pipeline is intended to be converted to the transport of carbon dioxide, the owner of the pipeline may be authorised to acquire the rights over land that are necessary for the conversion and subsequent use of the pipeline. The procedures and rules applicable to this compulsory acquisition order will be the same as those provided by the 1962 Act for the construction of a new pipeline.

Without the new clause those seeking to reuse an existing pipeline to transport carbon dioxide would have to reach a voluntary agreement with each of the owners through whose land the pipeline passes. That might require many hundreds of agreements and failure to reach voluntary agreement with one of them could derail a project that would otherwise be in the public interest.

As the demonstration and deployment of CCS progresses, it is likely that developers will look for opportunities to convert existing pipelines where they are suitable and no longer required for their original purpose. The new clause is intended to facilitate that process, but it does not alter the basis on which the change of use would be authorised by the appropriate independent regulator to ensure the highest possible standards of safety and environmental protection. It will apply throughout Great Britain and the intention is to transfer the powers and functions in relation to pipelines that begin and end in Scotland to Scottish Ministers as soon as possible, in line with the compulsory acquisition functions that they already have.

Amendment 78 is consequential. It modifies the title of the Bill to include new clause 13 and 14.

Alan Whitehead (Labour, Southampton, Test)

Is the Minister able to add to what he has said about the new clauses and amendments, first, in relation to the effect that they will have on the approach of the Crown Estate to the decommissioning and recommissioning of existing pipelines? The existing practice, which I understand will continue, is for there to be a licence break: after decommissioning, a new licence is required for recommissioning, even if the circumstances are exactly the same except that something else is flowing through the pipeline. Giving continuous existence to facilities that can be reused for other purposes will presumably affect the approach in relation to licences.

Secondly, what effect does the Minister consider the compulsory purchase arrangements mentioned in new clause 14 will have on the existence of static national planning considerations in national planning documents as opposed to linear planning arrangements that do not exist in similar form in those documents? Linear compulsory purchase arrangements will affect the overall guidance given in relation to a linear planning arrangement that might otherwise concern many small individual planning applications and not be within national planning arrangements, notwithstanding compulsory purchase arrangements as they are currently constituted. Can the Minister shed any light on those matters?

Huw Irranca-Davies (Labour, Ogmore)

The amendments are to be welcomed. They give the Secretary of State powers, by a compulsory rights order, to acquire rights over land to enable former oil and gas pipelines to be used for our anticipated growth in CCS. Without such powers, the expansion of CCS may be stymied and we might have to come back in future with primary legislation when an inevitable logjam holds up a CCS scheme. The Minister and his team are to be congratulated on spotting this opportunity and introducing the amendments.

The Minister would expect me to say, however, that although the amendments are welcome, they are as nothing until we know the Government’s firm proposals around CCS. The amendments lay the ground work, but we do not have the full programme of CCS to deliver it. There is no point in taking those powers if we have not made the investment in CCS, which has been regularly promised from the Dispatch Box, not only by the Minister, but by the Secretary of State, the Chancellor, old Uncle Tom Cobleigh and all. I can use that phrase, because Uncle Tom Cobleigh is not a sitting Member.

Edward Leigh (Conservative, Gainsborough)

He is here in spirit, though.

Huw Irranca-Davies (Labour, Ogmore)

Smiling down on us.

We know that the Government have decided to scrap the CCS levy, arguing that the burden was unfair. We note, however, that they seem to think it fair to spread the load across taxpayers generally by asking them to fund the scheme directly from the Exchequer. The promise to fund the CCS programme was made almost a year ago; it was made in the comprehensive spending review last autumn; and it was made again in the Budget. But—and it is a big but—we are still waiting.

In the light of the amendments, can the Minister reveal his progress with the Treasury team? Can he reveal the Chancellor’s full commitment to this vital programme? I am genuinely trying to help the Minister, because I know he intends to see the programme roll out, which is why the amendments were tabled in a timely way. Opposition Members and I are determined to give any support that we can to the Minister to say, “Mr Chancellor, please get on with it.”

I know that the Minister is committed to the CCS roll-out, and we applauded him and the Secretary of State for making good on Labour’s commitment to fund the first CCS project with £1 billion. However, one swallow does not a summer make; neither does one CCS project—yet to be signed off—a coherent CCS programme make. We wait for announcements on the funding; we wait for the time scale for future projects; and we wait for the sign-off on the first project, which, we understand, may be this autumn.

Meanwhile, in China, an expansion of energy generation the size of the UK’s total energy capacity takes place every year, a sizeable part of which is in unabated coal generation. At the same time, United States-China partnerships forge ahead to develop CCS at a pace. The CCS levy was intended to fund a CCS programme, not just one CCS project. We welcome the measures, but now that the levy has been scrapped, will the Minister assure us that we will not be left behind in the race to develop a leading edge in this new technology? Such technology will bring with it green jobs at home and economic potential in the worldwide export market. I politely and helpfully suggest to the Minister that we do not want a world that burns fossil fuels while the emperor—I mean the Chancellor—continues to play on his fiddle.

Ian Lavery (Labour, Wansbeck)

I echo my hon. Friend’s sentiments. We urgently need to progress CCS. Some months ago, we welcomed the Government’s agreement to fund £1 billion for the first demonstration plant in Longannet. I believe that those contracts will be signed, sealed and delivered, and the plant will begin in December, unless that situation has changed again.

We should never underestimate the role of CCS in relation not only to coal, but to gas, although the regulations are very different. We might disagree on minor aspects of the matter, but we would all agree that in the very near future there will be a heavier reliance on gas in any event. What happens to coal, whether it is produced in the UK or abroad, is a different matter. We will increase the amount of electricity that is produced from gas, so it is important that CCS is developed. I am sure, however, that the Minister will understand my concern, which is that if we do not get a move on with CCS, we will not have a British deep mine coal industry left.

The British deep mine coal industry, which produces coal for Drax and other major power stations within the UK, is at a critical level, and there needs to be some investment in CCS in the UK. In Europe, about four or five years ago, it was suggested that each European nation should look at CCS demonstration plants. In the apportioning out, it was said that the UK should take 13 or 14 such plants. We did not do that; some years ago, under the previous Government, it was agreed that there should be four demonstration plants. The money has been focused on the plant at Longannet, but what has happened to the other three? Has any progress been made? If not, we need to make progress on CCS, or we will suffer the consequences.

If the country is to meet its emissions targets, it is extremely important that carbon capture and storage is part of the solution. That may take some financing, as will the nuclear industry, which we have already discussed this morning, but it is a matter of urgency, and the Minister should treat it as such. CCS is being delayed, and it might be kicked into the long grass.

Charles Hendry (Conservative, Wealden)

I am grateful for that short debate on the issues. In response to the question of the hon. Member for Southampton, Test, the Crown Estate has no rolling commissioning or decommissioning of offshore structures. The provisions have no impact in relation to the Crown Estate, nor do they an impact on national planning arrangements. I hope that that clarifies those points.

The hon. Member for Ogmore, who leads for the Opposition on these matters, was uncharacteristically churlish this morning. He congratulates us in most of his speeches, which we always like, but I was surprised by the extent to which he questioned the Government’s ambition for CCS. As the hon. Member for Wansbeck said, CCS is an integral part of this country’s energy future, and the Government have taken forward that work. Although the ambition is high, we are also focused on exactly what is necessary to deliver on it. At a time when other countries, such as Norway, Holland and the United States, are slipping back, Britain has continued with its ambitious programme.

The hon. Member for Ogmore talked about taking forward Labour’s £1 billion programme; Labour had a programme, but it was not a £1 billion programme. No money was allocated to it at all. There was an aspiration, but there was no money. We have come up with £1 billion, which is more money than any Government anywhere else in the world have allocated to a single project, so we have turned the previous Government’s ambition into reality.

Huw Irranca-Davies (Labour, Ogmore)

In my opening remarks, I welcomed the fact that the Minister had turned our ambition and aspiration into reality. Well done—we would have done the same—but will he flesh out his ambitions for the remaining three projects, and can he put a figure on those?

Charles Hendry (Conservative, Wealden)

If the hon. Gentleman had not interrupted me, I would have been doing exactly that already. As he will be aware, there is more interest in developing this technology in the United Kingdom than anywhere else in Europe. The new entrants’ reserve 300 scheme, run by the European Union, has had seven projects submitted from Britain, which amounts to almost half the projects across the EU. That reflects the technological, scientific and academic leadership that this country has, and the real scope for us to be a game changer in such matters.

We made a decision that the programme should not be funded by a levy, but through direct Government funding, because one condition of the levy was that it was paid per unit of output. There was no funding available for the plants until they were operational, so the companies would take on board all of the risk—every single aspect of it. If it did not work and they did not get any output, they would get no funding towards it whatever, which would clearly be a huge barrier to investment. Through direct Government funding, and through the NER where appropriate, we are looking at bringing forward funding support so that it can happen at an earlier stage. We think that will stimulate a more realistic prospect of developing the technology.

Caroline Lucas (Green, Brighton, Pavilion)

Does the Minister not agree that, rather than the use of public money, a more ambitious emissions performance standard would in itself act as a spur to innovation for these companies? I am deeply concerned about public money, whether from levies or direct taxation, going into CCS in Britain. I do not think we need CCS in Britain; I am happy to have a debate about whether it is needed in China. Right now we do not need to get more coal out of the earth, and we certainly do not need to put more taxpayers’ money into doing so.

Charles Hendry (Conservative, Wealden)

We have committed to an emissions performance standard and we will discuss that later. New gas plant could only achieve the level of ambition that the hon. Lady sets out for an emissions performance standard by having a significant amount of biogas or CCS or greater heat capture than is sometimes possible.

One reason we are looking to extend CCS in the UK to include gas is the long-term role we think gas may need to play over the coming decades. An EPS is part of that process, but here is a technology on which we are in a uniquely strong position to lead globally, and for which we also have a need in the UK. That is not just for retrofitting of some of our old plant, but for new plant that may come forward.

We recognise the need to move the programme forward. We are finalising terms and conditions now with the operators of the £1 billion Longannet project and I hope we will get financial closure in the next few months. A tremendous amount of financial detail needs to be resolved, as well as legal technical details about liabilities. We intend in the remainder of this year to bring forward the competition for the remaining three projects, to be on stream by 2020, sooner if possible. We have in programme a realistic way of delivering the ambition, which we share, of the previous Government.

Huw Irranca-Davies (Labour, Ogmore)

I thank the Minister for filling us in a little bit wider than the precise issue of pipelines. Are we likely to see any of the detail—either the time scale or the overarching plan—before the summer recess?

Charles Hendry (Conservative, Wealden)

I would not expect to see the formal competition launched before the summer. July will be a big energy month with quite enough issues, such as market reform, for the hon. Gentleman to get his teeth into. The market reform process itself and the structure of the contracts for difference in the proposals we have made are all to be integral for bringing forward investment in low-carbon technologies. That is all part of the bigger picture gradually being put into place.

Ian Lavery (Labour, Wansbeck)

There is a competition for the three remaining demonstration plants. Could that be three coal, three gas or a mixture of both? Is it up to the people who want to participate in the demonstration plants?

Charles Hendry (Conservative, Wealden)

We have said we would like at least one to be gas. The rest will be whatever makes the best technology mix. We were critical of the original competition, which was purely on retrofitted post-combustion. We felt it was a mistake to rule out pre-combustion technologies and new build. Nevertheless, we have recognised they have a role to play in the wider competition. Looking at the projects that have been submitted through the NER300, we have a good mix of pre and post-combustion, retrofit and new build. We have a good potential range of projects on which to draw.

The hon. Gentleman also talked about the importance to the deep mining industry. It is encouraging to note that last year we saw a drop in the volume of imported coal. That was partly due to de-stocking, which had been increased in the previous year. We see this as a chance to bring new opportunities to the British coal industry, which we think has a distinctly important viable future as part of the UK energy mix, but it can only do so as we take the CCS project forward. I hope the Committee will agree to the amendments.

Alan Whitehead (Labour, Southampton, Test)

In my previous comments, I sought clarification on the fact that an abandonment project, which is in new clause 13, appears to change to a continuous occupation of a pipe, and therefore the abandonment of an abandonment project. An abandonment project is part of a licensing arrangement with the Crown Estate. If an abandonment project is abandoned and the occupation of the pipeline becomes continuous, a different form of licensing would logically take place, possibly at a considerable advantage—which I understand is among the purposes of the new clause—to whoever is operating that pipeline as part of a CCS operation. Previously, they might have contemplated the prospect of an abandonment programme being completed and the pipeline being shut down and rendered unusable and then having to recreate it for the purpose of a CCS submarine operation.

I strongly support what the clause does, but I am concerned about what it does to the overall licensing arrangements at either end of the operation. It is true that the Crown Estate does not have anything central to do with commissioning and decommissioning, but it does have a lot to do with the licensing of both processes, as I have described.

Charles Hendry (Conservative, Wealden)

I hope that I can give the hon. Gentleman the assurance that he seeks. This is about the decommissioning responsibility and the CCS demonstration projects; it not about more general CCS projects. At this stage we do not know how long that will last for. It may be that, after a few years, it is decided that we have learned as much as we can from that project and that it would not be continued. There will be a change of use, but we do not know how long for.

The new clause determines who will hold the ultimate decommissioning responsibility. We are not necessarily looking at pipes that will be in continuous use for decades to come as part of a CO2 disposal programme; we are looking at ones that will be used for the duration of the trial projects, so they are likely to be finite. There is a distinct decommissioning liability that will be imposed on the new operators. I hope that that provides the clarification and comfort that the hon. Gentleman seeks.

Charles Hendry (Conservative, Wealden)

I beg to move amendment 171, in clause 107, page 83, line 2, at end insert ‘;

( ) section [Electricity from renewable sources: National Park authorities and Broads Authority] (electricity from renewable sources: National Park authorities and Broads Authority)’.

Edward Leigh (Conservative, Gainsborough)

With this it will be convenient to discuss the following:

Government new clause 42—Electricity from renewable sources: National Park authorities and Broads Authority.

Government amendment 172.

Charles Hendry (Conservative, Wealden)

Early in 2010, we gave local authorities the power to sell electricity from renewable sources and we have been delighted with the response. We made the change for local authorities through secondary legislation, which amended the existing powers. National park authorities, including the Broads Authority, did not have the same existing powers, so it was not feasible to cover the national park authorities or the Broads Authority at that time.

The national park authorities have some scope under their general powers, as we made clear at an early stage of the Bill, but we have been in discussion with them on whether the existing position is adequate. We concluded that there was uncertainty on whether the current power would allow everything that they would reasonably want to do in this area. We have therefore proposed amendment 171 to clarify the position. The amendment unambiguously states that national park authorities may generate electricity within specified constraints and sell it. It also allows them to enter into joint ventures to do so and to grant-aid others to do so.

Huw Irranca-Davies (Labour, Ogmore)

I have great pleasure in supporting the amendments, not least because of my former role as Minister with responsibility for national parks. I am happy to see the Government building on the extensive work done on sustainable development, over the last decade and more, in national parks in the north, south, east and west, including those in Wales—and especially my nearest and dearest, the Brecon Beacons national park. There are fantastic examples of park authorities, housing associations in national parks and private-sector transport initiatives in national parks and so on doing great work on sustainable development. This clause, which deals with energy renewables and energy generation, builds on that excellent work.

I once said of sustainable development and renewable energy that the national parks were like laboratories for the whole United Kingdom. In the most sympathetic way, given their special natural environment, we could trial some of the very best experiments in our national parks, particularly in respect of community generated and community owned investment in energy generation.

The amendments are to be welcomed. I hope that the Minister, in discussions with colleagues from DEFRA, will use the amendments and other provisions already in place to continue to encourage communities in national parks and the Broads Authority to do more to become living laboratories—not only for energy and renewables, but for wider sustainable development.

Charles Hendry (Conservative, Wealden)

I shall respond briefly. Any development that takes place in a national park needs to be appropriate to that park. The national parks are already under a strong obligation to ensure that that is the case, and nothing changes in that respect. However, I agree with the hon. Gentleman that we want greater community involvement. The changes that we have made on our website to encourage community schemes and the changes that we are making to encourage the community ownership of new renewable energy projects are an important part of the process. The statutory authorities, be they local authorities or parks authorities, should be encouraged to be part of that process. Liberating them to generate and sell their own electricity is important, and I am pleased to be able to make the change.

Huw Irranca-Davies (Labour, Ogmore)

The Minister may have this knowledge to hand; if not, I would be happy for him to write to me. Does he know of any energy projects, particularly in solar renewables, that have been cancelled as a result of the readjustment of feed-in tariffs announced by the Minister, the hon. Member for Bexhill and Battle (Gregory Barker)? I have received reports that at least two projects in national parks are above 50kW, but that goes against the spirit of what is a very good amendment. Is the Minister aware of the cancellation of community and national park-inspired projects as a result of that announcement?

Charles Hendry (Conservative, Wealden)

I do not have information on specific projects, but I can write to the hon. Gentleman. He brings together two separate issues, however. One is about encouraging the national park authorities and the Broads Authority to take part in renewable energy generation. The other is about funding decisions and the feed-in tariffs. We had to decide whether it was right for an above-average return to be made available to predominantly wealthy investors and paid for by less wealthy people in their electricity bills; that threatened to squeeze out smaller-scale projects.

My hon. Friend the Member for Bexhill and Battle, the Minister, has worked with tremendous attention to detail to ensure that we support the smaller projects—that was always the intention with the feed-in tariff and the microgeneration programme—and to put right the miscalculation made by the previous Government, who assumed that there would be no schemes of more than 50kW before 2013. It is now clear that megawatts were coming through planning, but although that miscalculation was made for understandable reasons, we had to put it right.

Huw Irranca-Davies (Labour, Ogmore)

Does the Minister agree that far from large, multi-megawatt schemes, if it comes to light that any community-owned, community-invested schemes of modest size—perhaps between 50 kW and 250 kW, with 50 kW being, as the Secretary of State described, two tennis courts—have been cancelled, that would be a terrible shame and run contrary to the stated ambitions of the Government to support community initiatives of that type? It would run contrary to the whole idea of localism as well.

Charles Hendry (Conservative, Wealden)

Let me give the shadow Minister some reassurance. The original system made no allowance whatever for any scheme, of whatever type, of between 100 kW and 5 MW. We have now introduced a number of subsidiary levels, which gives greater support to the smaller schemes and therefore the ones that are more likely to be community led.

The original scheme, as envisaged by the previous Government, made no distinction whatever in terms of ownership. We have said that as part of the more general review of the feed-in tariff, we will also consider ownership issues. We are, of course, keen to encourage community projects, because of the community buy-in and the acceptance that that brings—the way in which it helps to change people’s attitudes more generally towards energy issues. We are examining those matters to put right the imperfections in the scheme that we inherited.

Clause 108 - Short title

Gregory Barker (Conservative, Bexhill and Battle)

I beg to move amendment 24, in clause 108, page 83, line 23, leave out subsection (2).

This purely technical amendment removes a provision in the Bill that was inserted in the other place to ensure that this House’s privilege over financial matters is respected. I hope that hon. Members will support this technical amendment and uphold 400 years of constitutional precedent.

Huw Irranca-Davies (Labour, Ogmore)

I was expecting to be fascinated by the Minister’s comments on this provision, but they have been rather brief and to the point, so may I ask him to expand on how the provision is a danger to our constitutional settlement? As a “small c” conservative, I might just agree with him on the overall settlement, but could he expand on the points that he has just touched on?

Gregory Barker (Conservative, Bexhill and Battle)

I was simply alluding to the fact that the provision deals with matters that relate to finance, which are within the privilege of this House, rather than the other place.

New Clause 3 - Early repayment of green deal finance

New Clause 4 - Exercise of scheme functions on behalf of the Secretary of State or a public body

New Clause 5 - Preparatory expenditure: framework regulations

New Clause 6 - Contribution to carbon budgeting under the Climate Change Act 2008

New Clause 7 - Energy efficiency aim

New Clause 11 - Acquisition of rights to use gas processing facilities for downstream purposes

New Clause 12 - Regulation of security of nuclear construction sites

New Clause 13 - Abandonment: infrastructure converted for CCS demonstration projects

New Clause 14 - Carbon dioxide pipelines: powers of compulsory acquisition

New Clause 15 - Renewable heat incentives in Northern Ireland

New Clause 16 - Power for Gas and Electricity Markets Authority to act on behalf of Northern Ireland authority in connection with scheme under section [Renewable heat incentives in Northern Ireland]

New Clause 17 - Amendment of section 137 of the Energy Act 2004

New Clause 32 - Domestic energy efficiency regulations: England and Wales

New Clause 33 - Further provision about domestic energy efficiency regulations

New Clause 34 - Domestic energy efficiency regulations: Scotland

New Clause 35 - Further provision about Scottish domestic energy efficiency regulations

New Clause 42 - Electricity from renewable sources: National Park authorities and Broads Authority

New Clause 1 - Carbon emissions in local authority areas

Gregory Barker (Conservative, Bexhill and Battle)

I beg to move, That the clause be read a Second time.

Edward Leigh (Conservative, Gainsborough)

With this it will be convenient to discuss the following: new clause 2—Climate change strategy for local authority areas—

‘(1) Local authorities must develop and promote a climate change strategy for their local area.

(2) In preparing the strategy, local authorities must take into account any advice given by the Committee on Climate Change on local action to meet carbon budgets.

(3) In preparing the strategy, local authorities must consult with local residents, businesses, social enterprises and co-operatives and other institutions.

(4) Local authorities must publish and promote their local climate change strategy, publish an annual report on progress towards carrying out the strategy and engage with local citizens and community groups.

(5) The Secretary of State must work with local authorities and the Local Government Association (LGA) to assist them in producing and implementing their climate change strategies, taking into account any relevant advice from the Committee on Climate Change.’.

New clause 28—Sustainable energy plans—

‘(1) A local authority must consider whether the drawing up and publishing of a sustainable energy plan would have either of the following effects, namely to—

(a) increase its efficiency regarding; or

(b) in any other way assist with

the discharge of its functions.

(2) If in the opinion of a local authority the drawing up and publishing of a sustainable energy plan would—

(a) have either of the effects specified in subsection (1); and

(b) assist with the purposes of this Act

then it must draw up, publish and implement a sustainable energy plan.

(3) Without prejudice to the generality a plan must specify the steps that the local authority proposes to take to promote—

(a) energy efficiency;

(b) microgeneration;

(c) renewable energy;

(d) combined heat and power; and

(e) cost effective action with or by residents, local organisations or businesses that would assist with the reduction of greenhouse gases, the achievement of energy security or the mitigation of fuel poverty.

(4) A plan prepared by a local authority may—

(a) request such new functions as in the opinion of the council would enable it to make a greater contribution to achieving the objectives specified in subsection (2); and

(b) make a recommendation to the Secretary of State for a transfer of functions from another body to itself provided that no such recommendation may be made unless the council has consulted the person to whose functions it relates.

(5) Within 6 months of receiving any request pursuant to subsection (4)(a) or recommendation pursuant to subsection (4)(b) the Secretary of State must—

(a) either adopt and implement, or take the necessary steps to commence the process of implementation,

(b) or reject

the request or recommendation and in either case shall give reasons for his decision.

(6) Where any functions are conferred or transferred pursuant to this section, the Secretary of State shall ensure that the monies necessary for the discharge of those functions are provided or transferred.

(7) Any principal council on which functions are conferred or to which functions are transferred under this section must determine how the functions are then performed.

(8) Where the Secretary of State is spending money in an area covered by a plan in order to achieve any of the objectives specified in section (1), and in this opinion—

(a) any measure contained in a plan is a more efficient way of achieving his objectives; and

(b) offers better value,

then he shall provide resources for the principal council to implement those measures in its plan.

(9) Where any person submits to his local authority a proposal that would in the opinion of the authority be a cost effective method of assisting with—

(a) the reduction of greenhouse gases, or

(b) the achievement of energy security, or

(c) the mitigation of fuel poverty,

the authority must include that proposal in any plan prepared pursuant to this section or, if it has not prepared such a plan, implement the proposal.’.

New clause 29—Communal schemes—

‘(1) Local housing authorities shall be empowered to arrange, with green deal providers, energy saving schemes that cover the whole or a part of housing estates, roads, districts or other local communities. They will negotiate on behalf of improvers so as to obtain savings that arise from economies of scale, which will be passed on to individual improvers.’.

New clause 46—Local carbon budgets—

‘(1) The Secretary of State shall—

(a) within 12 months of this Bill receiving Royal Assent, report to Parliament with proposals for the introduction of a system of local carbon budgets consistent with meeting national Climate Change Act 2008 carbon budgets;

(b) introduce the local carbon budget system to begin at the start of the second national carbon budget period;

(c) report to Parliament annually about the contribution of local strategies to meeting UK Climate Change Act carbon budgets;

(d) determine circumstances in which two or more councils may develop a joint strategy for cutting greenhouse gas emissions in their areas.

(2) The Secretary of State shall request advice from the Committee on Climate Change about—

(a) the scale of action need in local authority areas to help meet UK Climate Change Act carbon budgets;

(b) climate mitigation and adaptation policies that are effective when locally coordinated by councils;

(c) ensuring that individual local carbon budgets are both appropriate for the circumstances of different local areas and that the totality of all local carbon budgets is consistent with the requirements of subsection (1)(a).

(3) The proposals to be reported under subsection (1) shall include a duty on local authorities to—

(a) develop a strategy, through consultation with those groups and individuals listed in subsection (3)(b), for cutting greenhouse gas emissions across their local area in line with meeting their local carbon budget;

(b) work in partnership with local residents, businesses and stakeholders, including social enterprises and co-operatives, community groups, schools and hospitals, and other institutions in drawing up and implementing the strategy detailed in (3)(a);

(c) wherever possible, develop proposals consistent with a reduction in greenhouse gas emissions in their local authority area of 90 per cent. by 2030, compared to 1990 emissions levels;

(d) publish and promote an annual report on progress towards meeting their local carbon budget; and

(e) request additional powers or financial support from the Secretary of State as they consider necessary to meet the duty set in section (2), which shall not be unreasonably withheld.

(4) Any regulations or order made under section (1) shall not be made unless a draft has been laid before, and approved by, resolution of each House of Parliament.’.

Gregory Barker (Conservative, Bexhill and Battle)

Thank you, Mr Leigh. After that energetic burst of legislating, this group of new clauses deals with the role of local authorities in addressing climate change and delivering the green deal. I cannot agree more that local authorities have a vital role to play if we are to meet our national carbon reduction targets and maximise the benefits of the green deal. I will therefore inform the Committee of what we are doing to ensure that all local authorities step up to the plate.

I note that there is already considerable enthusiasm among many local authorities to engage with the climate change agenda, which is embodied in the memorandum of understanding between my Department and the Local Government Group. Many councils are already making great strides on the agenda, and I am delighted that under the memorandum of understanding the Nottingham declaration partnership plans to make a new declaration on climate change in the autumn.

The original declaration covered more than 90% of councils, and I understand that the new declaration will enable local authorities to set self-imposed carbon reduction ambitions and demonstrate that councils can take the lead without central Government intervention. That should give us considerable confidence on the role that councils will play, but we have reflected on the issues raised in earlier discussions on the Bill.

I am mindful of the potential need to have some mechanism at our disposal to encourage all councils to play a full part. That is why I have decided to retain the Home Energy Conservation Act 1995, as we discussed under amendments 66, 67, 75 and 81. Much of the effectiveness of HECA will lie in the guidance that DECC provides. That will give us the opportunity to work with the grain of the voluntary activity already under way but also, where appropriate, to focus with greater discipline on councils through the guidance on the specific areas set out in our new proposals.

The principle of the Committee on Climate Change—

Huw Irranca-Davies (Labour, Ogmore)

On a point of order, Mr Leigh. I do not want to be a pain in the neck—I know that I am sometimes—but the new clauses were tabled in the names of Back Benchers and Opposition Front Benchers in the expectation that the Minister would respond to their points. We are hearing a peroration in anticipation of points that may be raised subsequently. Is that correct? If it is, I am fine with that.

Edward Leigh (Conservative, Gainsborough)

I apologise. I think that it is my fault; I should have called other members of the Committee first, but everyone will have a chance to speak. The Minister will say his piece now, and then I will call the Opposition and the Minister can reply, but everyone will have their chance.

Gregory Barker (Conservative, Bexhill and Battle)

I assure the hon. Member for Ogmore that I am acting only at the direction of the Chair. I am happy to respond again, as I have on previous occasions in this rather free-wheeling Committee.

The principle of the Committee on Climate Change providing advice on local emissions to assist local authorities in setting their ambitions, as set out in new clause 1, could be explored further. I am pleased to say that, as I alluded to earlier in our proceedings, in the past few days I have written to Lord Turner, the Chair of the Committee on Climate Change, to explore his initial views on the role that his Committee might play in providing such advice. In light of his reply, I will be happy to say more on Report, if not before.

On the formalities of obtaining such advice, section 38 of the Climate Change Act 2008 establishes a duty on the Committee on Climate Change to provide advice, analysis, information or other assistance when asked by Ministers or Ministers of the devolved Administrations. Under section 14, the Secretary of State must report to Parliament on carbon budgets and on proposals and policies for meeting them. Statutory provision to that effect is therefore unnecessary.

The spirit of the new clause is in tune with existing powers and the coalition’s policies. Those existing powers and our proposals to retain and reinvigorate HECA can achieve what, in principle, new clauses 1, 28 and 46 seek. Ultimately, we are on the same page on this important issue.

Turning to new clause 28, I note that a similar amendment was moved in another place. As I have noted, the action already under way and the proposal to retain HECA can deliver a great deal of what that new clause seeks. I would add, however, that the Secretary of State for Communities and Local Government introduced the Localism Bill to provide councils and local residents with greater freedom to deliver local priorities, without Whitehall directing them on what they must and must not do and how.

Huw Irranca-Davies (Labour, Ogmore)

Will the Minister clarify whether part of his objection to this group of well-intentioned new clauses is the fear of over-regulation placing burdens further down the line?

Gregory Barker (Conservative, Bexhill and Battle)

Yes, that informs our general approach.

Huw Irranca-Davies (Labour, Ogmore)

What is the Minister’s response to the Secretary of State for Communities and Local Government, to whom he just referred, who has been reported in the papers yesterday and today as describing opponents of environmental regulation as “zealots”? Surely, he is not referring to members of his own Front-Bench team.

Gregory Barker (Conservative, Bexhill and Battle)

No, I do not think that he is. Once again, the hon. Gentleman is correct; the answer is contained in his question, and I thank him for that.

Huw Irranca-Davies (Labour, Ogmore)

Perhaps I can extend my Aristotelian logic to ask what the problem is with the group of new clauses. If they do not significantly increase burdens and if they simply put in place what the Minister is trying to do, clearly they are sensible. If environmental legislation is sometimes necessary—the Secretary of State thinks that such legislation is often necessary—why are the new clauses unnecessary?

Gregory Barker (Conservative, Bexhill and Battle)

If I was asked to define a zealot, I would probably look across the Committee aisle, because that is where I would see the zealot for new legislation and unnecessary additions to the statute book.

As I hope that I have explained to the Committee, the broad thrust of the new clauses is contained in existing legislation, and it would be zealotry, to coin a phrase, to try to gold-plate that by introducing a further layer of unnecessary statutory complexity. We will not shrink from legislating where necessary and will do so, but we take a far more sensible approach to the burdens that legislation can impose and therefore will not legislate where it is not needed or called for. Although we are on the same page in relation to what we are trying to achieve, we think that, in this instance, the hon. Gentleman and his colleagues are in danger of being over-zealous in their attempts to write this into the statute book.

On new clause 29, I thank the hon. Member for Norwich South for highlighting the benefits that can be gained from rolling out energy efficiency programmes across whole communities. Many examples of the benefits of doing that can be found across the country, because local authorities and housing authorities already have powers to do so. I fully expect to see many more such measures under the green deal, and I can assure the hon. Gentleman that nothing in the Bill or, so far as I am aware, in any legislation prevents that.

I appreciate the sentiment behind the amendments and understand the concerns that members of the Committee will no doubt express. I share their ambition, but we believe that, on balance, nothing further needs to go on to the statute book, because good provision is already available on the issues.

Luciana Berger (Labour, Liverpool, Wavertree)

I am delighted to be able to speak to new clauses 1 and 2, which are designed to work together to ensure that local authorities draw up local carbon plans. I will explain later why the Home Energy Conservation Act 1995 and the current legislation do not do exactly that. The plans under new clauses 1 and 2 would be based on data from the Committee on Climate Change and would, in effect, be a road map for how a locality would reduce its carbon emissions.

In a letter to my hon. Friend the Member for Stoke-on-Trent Central (Tristram Hunt), Lord Turner, the Chair of the Committee on Climate Change, estimates that drawing up that advice would take it about three months. Nationally, the Government would work with councils to ensure that the net scale of the local emissions reduction was sufficient to meet the UK’s carbon reduction targets. The proposals are not intended to place unnecessary burdens on local councils or to create meaningless targets; they are simply a logical extension of our national emission reduction policies to ensure that they are delivered locally.

The UK has ambitious emissions reduction targets, thanks to the Climate Change Act 2008. In the fourth carbon budget a few weeks ago, the current Government extended them until 2030, following the recommendations of the Committee on Climate Change. Setting national targets, however, is relatively easy. The real challenge is to ensure that the targets are met in a way that is realistic and fair. That is what these new clauses are about—fairness. Without local plans, it will fall to national Government to determine how emission reductions will be divided across the country. We could therefore easily end up with arbitrary targets imposed from the centre, with little regard for local communities, circumstances or economies. Local carbon plans, by comparison, would offer a reasonable and flexible approach to reducing emissions. Rather than bureaucratic Government telling local authorities, “You must do this,” this is about local communities saying, “We can do this.”

The idea is not new. In January 2010, the previous Labour Government introduced a pilot programme involving nine councils, and campaign groups such as Friends of the Earth have been long-standing supporters of the idea. For many councils the plans would build on the work that they are already doing. From pledging to cut carbon emissions by 40% by 2020, to rolling out grant-funded renewable installation schemes, councils of all political colours—from Liverpool, Manchester, Birmingham, Brighton, Islington, West Sussex and Bristol—are leading the way.

In Manchester, “A Certain Future” is a fantastic action plan for the entire city. Everyone has their part to play and its successful delivery will rely on the entire city working together, whether home owners, community groups, businesses or public agencies. The plan was written by more than 100 organisations and outlines how the city can reduce its emissions by 41% by 2020.

In Birmingham, the energy savers scheme is a city-wide energy efficiency and renewable energy scheme led by the city council, so it has a different colour from that of Manchester. The scheme will eventually be extended to up to 100,000 home owners and 100 businesses. Residents and businesses are offered loans to improve the energy efficiency of their property—similar to the green deal—together with free solar panels, and they therefore benefit from cheaper energy bills. The loans are repaid as energy bills come down, and the council and its partners collect the feed-in tariffs for the solar panels, so the scheme is self-financing.

Although some councils, such as Manchester and Birmingham, are making good progress, considering that around 80% of our emissions come from local activity, it is clear that other councils across the country need to do more. We need every council to do its bit. Indeed, the Minister said only about an hour ago that all councils must take action, “not just the keenest.”

Zac Goldsmith (Conservative, Richmond Park)

Does the hon. Lady know how much of that 80% is in the power of the local authority, as opposed to simply happening in a local area?

Luciana Berger (Labour, Liverpool, Wavertree)

I will provide further detail later about what proportion of that figure comes from business and small businesses—it is estimated to be 20% to 30%. If we consider Manchester, it produced a carbon plan in concert with businesses, and everyone signed up to it. If hon. Members look at how the scheme is working, it is a fantastic example of how local authorities, businesses, communities and housing associations are working together to deliver energy efficiency targets and emission reductions.

I am hopeful that the amendments will receive wide support from the rest of the Committee. The hon. Member for Norwich South is a long-standing supporter of local carbon plans. Indeed, just last week, I was reading an article in the Eastern Daily Press that details how the hon. Gentleman signed a Friends of the Earth pledge during the general election campaign calling for the introduction of local carbon budgets. He is in very good company. The hon. Member for Richmond Park signed the very same pledge before the election. I remind those Members that they pledged to support:

“A local carbon budget for every local authority: that caps CO2 in the local area in line with the scientific demands for emissions cuts and local circumstances.”

In April last year, the Energy Secretary also declared his support for the pledge. He said that he pledged to support:

“A local carbon budget for every local authority: that caps CO2 in the local area in line with the scientific demands for emissions cuts and local circumstances.”

Just last November, the Minister of State, Department of Energy and Climate Change, the hon. Member for Bexhill and Battle said:

“We need local people, local authorities, local communities to be empowered. In order to be really empowered they need the right information, they need to understand how that locks into the national picture and local carbon budgets are going to be a key part of that.”

As well as cross-party support in Westminster, these proposals have a broad range of support across local government. In March, 40 council leaders from all parties called for the introduction of local carbon plans.

It is not just political support. The Federation of Small Businesses, which is not normally a supporter of environmental measures, backs proposals for local carbon budgets. It argues that SMEs understand that action to cut energy can save them money, but that they need a framework to help galvanise action. It says:

“Small businesses are keen to go green but are not getting the help or incentives they need to do so”.

It says that they need

“a framework that is flexible and supportive to encourage small business rather than penalise them.”

Local carbon budgets provide such a framework. They provide certainty about the scale of carbon reductions locally, while retaining flexibility for the local authority in how they go about leading those cuts. As well as Friends of the Earth, which I mentioned earlier, the FSB, the TUC , Good Energy, B&Q and the Stop Climate Chaos Coalition all support councils taking the lead in driving action to tackle climate change and create low-carbon jobs.

It is vital that businesses play a key part in tackling climate change. According to the FSB, as I said in response to the hon. Member for Richmond Park, at least one third of the UK’s emissions are from business, and the Carbon Trust estimates that 20% of the UK’s emissions are from SMEs. The FSB also calculates that, if all UK businesses and public sector organisations undertook energy efficiency measures, at least £3.6 billion could be saved every year.

As well as helping business to cut energy usage and reduce costs, estimates of the potential for low-carbon job creation are significant. According to DECC, the global market for low-carbon goods and services stands at an estimated £3 trillion, and is estimated to grow to more than £4.3 trillion by 2015. This growing market represents huge opportunities for every part of the UK. The LGA estimates that meeting the 15% renewables target could generate between 122,000 and 133,000 jobs in the manufacturing, construction and operation of the new technology. More significantly, research by Carbon Descent estimates that 70,000 jobs could be created throughout local government areas in domestic energy efficiency and renewable energy if all local authorities set about reducing emissions in their local areas by at least 40% by 2020, which is what the councils involved in the pilot are already doing. Given that potential, and as the idea of local carbon budgets is not new, I am surprised that the Government did not propose them in the Bill, especially as the proposals could complement the green deal.

We will hear more from other hon. Members about their proposed new clauses in a moment, but I will refer to them. First, new clause 28 includes a more prescriptive plan than ours, but it does not mandate all local authorities to produce local carbon plans, leaving the same problem of councils being able to opt out. I refer to the Minister’s comments again: we are not looking only for “the keenest” to take part but for all councils throughout the country to do so. Nor does new clause 28 ask the Committee on Climate Change to provide information on how councils would go about drawing up their plans, as the Government have scrapped the national indicator set for local government, which recorded such information. We agree with the aims of the new clause, but its proposals would not be as effective as ours, because without the data from the Committee on Climate Change, they would not be workable in practice.

We would like to support the plans in new clause 29 tabled by the hon. Member for Norwich South, but we are keen to hear what he has to say and will need some reassurance that the approach would not be so prescriptive as to override the rights of home owners and tenants. We are keen to know how his new clause would work. Would it be along the same lines as a compulsory purchase order, when councils can override the wishes of local residents? Might that approach lead to houses being renovated when the owners or tenants did not want that to happen? Has the Minister considered such an approach, and what discussions have taken place?

New clause 46 was tabled by the hon. Member for Brighton, Pavilion. It is largely similar to our new clause, with more detail about how the plans would be drawn up. We have left more flexibility to ensure that the plans are based on advice from the Committee on Climate Change, but we support her new clause.

In conclusion, a change in local action is needed if we are to meet our national emissions targets. The vast majority of UK emissions—around 80%—result from local activity: how we heat and power homes and workplaces and how we get around. As well as getting the big national decisions right, reducing local energy use is critical. Local action to cut carbon is cost-effective. Just as importantly, local people, businesses and institutions such as schools and hospitals will be able to shape their own low-carbon futures. Local government should be at the heart of our low-carbon drive. We must not allow some councils to be left behind. We need everyone pulling in the right—and the same—direction. We want all councils to take action and, again, not only “the keenest”. The challenge of climate change is too grave and urgent to be left to those councils that choose to prioritise action.

The nationwide system will support councils, ensure our emissions come down in every locality and boost the take-up of the green deal. We have heard the Minister’s response but, for reasons I have given, I urge him to reconsider and to support our proposals. I also hope that those Members who signed the pre-election Friends of the Earth pledge in support of local carbon budgets will support our new clauses.

Tessa Munt (Liberal Democrat, Wells)

The aim of new clause 28 is to give local citizens and their councils a key role in drawing up sustainable energy plans for their areas. The Government support localism and recognise the importance of community initiatives. However, the Bill does not establish a clear role of that kind for councils. I hope that the Minister’s words will give a clear indication that DECC is minded to consider the matter. In the House of Lords, Lord Marland certainly gave a positive account of the new clause:

“Having heard the arguments…we are going to consider inserting…a new clause under which local authorities will be required to produce a sustainable energy plan to help in rolling out the Green Deal.”—[Official Report, House of Lords, 26 January 2011; Vol. 724, c. GC231.]

The provision is meant as a friendly proposal that enables local authorities to draw up sustainable energy plans if they think that is a cost-effective way of dealing with climate change if, for example, there is a cash saving. The measure also enables them to come up with ideas, which is localism in its purest form, which can be implemented if they are cost-effective. I draw on the fact that the Secretary of State for Communities and Local Government said when introducing the Localism Bill:

“This long-awaited new power will mean that rather than needing to rely on specific powers, councils will have the legal reassurance and confidence to innovate and drive down costs to deliver more efficient services.”—[Official Report, 13 December 2010; Vol. 520, c. 64WS.]

That is the spirit in which the new clause was tabled.

Simon Wright (Liberal Democrat, Norwich South)

I will speak very briefly. New clause 29 is effectively a probing measure in recognition of the fact that our strongest potential partners in delivering the green deal across communities are local councils. They know their areas better than anyone else, from the estates within their districts down to the individual roads. They know better than the utilities or other providers where to focus their efforts, which is why it is important to involve them and to expect them to be drivers of change within communities.

I was encouraged by the Minister’s comments today and in previous sittings about local authorities’ enthusiasm for playing a role in delivering the green deal and acting as providers. I am encouraged by the announcement today about retaining the Home Energy Conservation Act 1995 and about the guidance to local authorities that will be issued. Further detail will appear in secondary legislation. It is important to remember that one reason why local authorities are so important is that they are trusted by their communities. They can play a fundamental role in strengthening consumer confidence in the green deal from day one. My concern before our debate was that a handful of pioneering local councils would take the lead but that the majority would not. I have been reassured by much of what I have heard today.

Huw Irranca-Davies (Labour, Ogmore)

I agree with much of what the hon. Gentleman has said and the spirit in which his new clause was tabled. Will he address directly the issue of whether he supports the other new clauses, which are in line with the Friends of the Earth commitment that he made before the election?

Simon Wright (Liberal Democrat, Norwich South)

I will not support the other new clauses if they are pressed to a vote. I certainly supported Friends of the Earth in its efforts to ensure that local authorities play a fundamental role and I have been encouraged by some of the comments that I have heard. I have also been encouraged by the fact that the Minister is in discussions with the Committee on Climate Change. I am content with what I have heard today. I look forward to seeing the thousands or tens of thousands of households in Norwich benefiting from the green deal. I will work with the local council in my area to ensure that those plans are taken forward locally within the communities so that estates across Norwich benefit from this plan. I thank the Minister for his comments today and I look forward to the conclusions of these debates.

Caroline Lucas (Green, Brighton, Pavilion)

Let me start by saying that although I tabled new clause 46, I fully support new clauses 1 and 2, and my clause complements them. New clause 46 focuses slightly more on a mandatory target and gives some more detail. That is because if we are to measure progress, build on best practice and deliver real results, we need targets, not just strategies.

The Minister spoke earlier of the success of voluntary initiatives and said that there was no need for any further statutory duties. I argue that the urgency around climate change means that we must meet targets even more quickly, even more ambitiously and even more certainly than is now the case. That is why I believe that we need further measures.

There are many examples of councils already delivering inspiring projects to cut emissions. At the end of 2009, a report highlighted some of the best examples of that work. In Kirklees, for example, the local authority delivered an energy efficiency scheme called the warm zone. That programme offered free loft and cavity wall insulation to every household in the area. It created at least 80 local jobs and brought an estimated £50 million of economic benefit to the local area by retrofitting more than 60,000 homes. The scheme received £11 million of support from Scottish Power. That funding was centrally mandated by the Government’s CERT scheme, but Kirklees actively shaped it to boost both local energy saving and regeneration.

That kind of example shows the possible win-win situations: it is good for emissions reduction, for jobs and for tackling fuel poverty. However, in order to have that kind of programme rolled out with the necessary ambition, the new clauses are needed. It is clear that many local authorities have the will to make important contributions, but new clause 46 seeks to take that best practice and roll it out across the country.

David Anderson (Labour, Blaydon)

Does the hon. Lady agree that it is not the many who want to do this that is the real worry; it is the few who may not? We are aware that the debate in this country has been polarised, and there are people in this country who do not believe that climate change is a reality. Another issue facing councils is that if they are not mandated, it will be another thing that they must deal with at a time when they are facing huge economic pressures. They might prioritise other things.

Caroline Lucas (Green, Brighton, Pavilion)

I agree with the hon. Gentleman. One advantage of the approach that I am setting out is precisely that it demonstrates that there are good economic, as well as environmental, reasons for such work. Those two things come together beautifully, but to ensure that all local councils realise that and take the proposal up, we need more of a boost behind it, which is exactly what the new clauses seek to do.

If the UK is to play its part in preventing mean global surface temperatures from rising by more than 2° C, all councils will need to act with more ambition. The latest science suggests that we should be staying below a 1.5° C increase, which is a fearsomely ambitious target. If we are to meet that, we need greater urgency than is presumed by the current legislation.

Local councils have a particular responsibility for some of the sectors where they can deliver the quickest and easiest wins, such as local transport, where the changes are relatively low cost and pain free. If they are not given the powers and support necessary to do that, the Government will have more work to do at a national level, which is often harder and more expensive.

The Minister will no doubt see my new clause as a top-down imposition on local authorities, but I stress that that simply is not the case. Local carbon budgets, which are supported by council leaders of the three largest parties, may require local authorities to have a tough target, but they leave the means of delivering it to local decision makers. What is more, new clause 46 explicitly states that the Secretary of State cannot unreasonably refuse a request for

“additional powers or financial support”

from a local authority seeking to meet its target.

Huw Irranca-Davies (Labour, Ogmore)

The hon. Lady raises a good point in her peroration. New clauses 1, 2 and 46 are not seeking to prescribe how the proposal would be delivered locally. How best to act is left up to local determination, including where the optimum generation of jobs and economic opportunities would be. If that were in transport, energy generation or any other area, it would be locally determined. It is localism in action. It is simply a logical extension of what we have just done with signing off the fourth carbon budget.

Caroline Lucas (Green, Brighton, Pavilion)

The hon. Gentleman is exactly right. Of course, people at a local level are best placed to know where they can make those win-win decisions. The new clauses would build on that.

Zac Goldsmith (Conservative, Richmond Park)

What should happen to those local authorities that fail to meet the budgets imposed on them or set? What would be the sanction?

Caroline Lucas (Green, Brighton, Pavilion)

We have not set out specific sanctions; I do not think it the right place to put them. Debate and discussion between local councils and national Government would be needed to work out why local authorities have failed to meet targets. There are plenty of examples and there is a range of legislation that could be looked at for suitable sanctions. I seek to set the principle rather than get to that level of detail. It is important for the hon. Gentleman to make the point. Unless there is a degree of sanction, the bite that I seek to achieve in proposed new clause 46 would not be there. I envisage sanctions, but the discussion about what they should be is for another time.

Steve Brine (Conservative, Winchester)

I have listened carefully to the hon. Lady, as always. To follow on from the point made by my hon. Friend the Member for Richmond Park, could that sanction be financial on a local council that did not comply with the top-down targets?

Caroline Lucas (Green, Brighton, Pavilion)

I am reluctant to go down the road of deciding what kind of sanctions there should be. I imagine that for some local councils, one reason why they might not have reached their target is resource constraint. In that case, it might be counter-productive to levy a further fine, so I am not suggesting that. I urge hon. Members not to get down to that nitty-gritty, but to stay at the level of principle.

Huw Irranca-Davies (Labour, Ogmore)

I agree entirely: these new clauses go to the point of principle. In the spirit of much of the Bill, we can deal with those issues in secondary legislation after consultation. That includes how we would deal with local authorities that have been very progressive—including my own of Bridgend and Neath Port Talbot, where they have invested extensively, not only in energy generation but energy efficiency, demand reduction and so on. We could discuss when we consider secondary legislation how to recognise appropriately what has been done within the past few years, and whether that can be done, but not here when discussing the Bill.

Caroline Lucas (Green, Brighton, Pavilion)

The hon. Gentleman is right. There is an irony, considering the vagueness from the Government about so much of the legislation, that now there is a sudden desire to drill down to a level of detail that we have frankly not reached in any other debate so far.

I return to my key point: the urgency of the need to cut emissions means that we are beyond the point, I hope, of debating whether there should be strong targets for cutting emissions locally. Instead, we should be discussing who is best placed to ensure that those greenhouse gas savings are delivered most equitably and efficiently. That is where I agree again with the hon. Member for Ogmore. Local authorities are best placed to ensure that local climate change strategies are tailored to the needs of local communities.

Many others support that view. The hon. Member for Liverpool, Wavertree cited a number of eminent people from across the political spectrum who support the principle of carbon budgets. I would add Louise Goldsmith, the Conservative leader of West Sussex county council, who makes it clear that

“Local carbon budgets would not be another top-down directive. They would provide an essential framework to help councils respond to a global challenge with locally tailored solutions.”

Indeed, in 2007, the Local Government Association’s climate change commission stated that

“Our unanimous view at present is that a statutory duty should be imposed on those councils that, within the next two years, do not respond to climate change.”

That was passed four years ago. In all, around 40 council leaders have come out in favour of local carbon budgets.

Luciana Berger (Labour, Liverpool, Wavertree)

Is the hon. Lady aware that the council in the Prime Minister’s constituency supports local carbon budgets?

Caroline Lucas (Green, Brighton, Pavilion)

I was not aware of that, but I am happy to be alerted to that fact. That being the case, it will focus the minds of Ministers.

I will draw my comments to a conclusion because I think we are all driving in the same direction. It is interesting that council leaders from all the main parties, the Federation of Small Businesses, unions, business, the Secretary of State—quoted by the hon. Member for Liverpool, Wavertree—are all saying that this is a good idea. Now that we have the opportunity to translate all these fine words into action and into legislation, it would be immensely irresponsible, if not hypocritical, not to do so. I hope that the Minister takes the proposals very seriously.

Margot James (Conservative, Stourbridge)

I shall make a few remarks on new clauses 1 and 2. I agree with many of the Opposition’s comments about the importance of local carbon reduction plans. My own area, Dudley, is not cited in any of the examples of councils that are commonly regarded as way out ahead. I speak up for the area, however, because it is a strong follower. In ’08 it established the Dudley climate change group, which hopes to have reduced emissions by 3% by the end of the year, and it is becoming more ambitious.

Opposition Members have discussed the importance of getting business on board, the employment imperative and the business sense that that all makes. The incentives offered by the green deal itself add to the momentum that will get behind the mission. On the business side, a company in my constituency, Overton Recycling Ltd, has contracts with various authorities for plastics recycling, among other things. I have been working with the company to try to get more local authorities in the surrounding areas to use it to recycle plastics, but some of them are still sending plastics to Africa. It cannot be right, but I detect some movement.

In his usual persuasive style, the hon. Member for Ogmore very nearly sweet-talked me into supporting new clause 1. I had to resist, however, because although we are almost in a bubble in this enjoyable Committee, the Government have a wider strategy, of which I am a wholehearted supporter. We want to use incentives and encouragement, we want to bring together many parties with an interest in our direction of travel, and we want to move away from setting targets for everything.

Luciana Berger rose—

Claire Perry (Devizes) (Con) rose—

Margot James (Conservative, Stourbridge)

I shall give way to the hon. Member for Liverpool, Wavertree, because I saw her first.

Luciana Berger (Labour, Liverpool, Wavertree)

What, does the hon. Lady believe, are the incentives in the Government’s provisions on HECA? How does HECA deal adequately with local carbon budgets and the proposals in our new clauses?

Margot James (Conservative, Stourbridge)

There are incentives in HECA, and at least we are retaining it. However, the essence of the green deal initiative is that local authorities can deliver some of their other business and employment objectives by becoming a partner. As the Minister said, there is nothing to stop local authorities from becoming a partner in the green deal, so a number of incentives to stimulate the right action are inherent in the Bill.

Claire Perry (Conservative, Devizes)

Does my hon. Friend agree that another important aspect that supports our agenda, about which we all agree, is transparency? If someone sits in a council meeting it will be clear that Wiltshire council is paying attention to what the council in Oxfordshire is doing—it is talking to other councils and understanding, for the first time, what they are doing. That is a very powerful motivating tool.

Margot James (Conservative, Stourbridge)

I thank my hon. Friend for her intervention. I agree that much more information is generally available and it is the Government’s duty to encourage that transparency, which will bring up the outliers to the standards of those councils that are in front.

To conclude, although I shall not formally support the proposals, I endorse the spirit behind them—particularly that behind new clause 1. I am told that the Chairman of the Committee on Climate Change has said that it would cost only £100,000 to provide the advice necessary to guide councils. I hope that the Minister will encourage the Chairman of that Committee down that direction of travel.

Zac Goldsmith (Conservative, Richmond Park)

I also support the sentiment behind some of the amendments. My hon. Friend the Member for Stourbridge mentioned new clause 1, which raises important issues. I have mixed views, however, on the amendments as a package. I would be reluctant to impose more reviews, strategies and so on, on local authorities, because it would be so easy for that to become yet another expensive, box-ticking exercise. We have seen that over and over again in so many different areas.

Luciana Berger (Labour, Liverpool, Wavertree)

Those councils that have already been doing that are saying, “It is working.”

Edward Leigh (Conservative, Gainsborough)

May I say that it has been a great pleasure to chair the Committee? It has allowed me to burnish my green credentials without saying anything of any substance.

David Crausby (Labour, Bolton North East)

I remind the Committee that with this we are discussing the following:

New clause 2—Climate change strategy for local authority areas—

‘(1) Local authorities must develop and promote a climate change strategy for their local area.

(2) In preparing the strategy, local authorities must take into account any advice given by the Committee on Climate Change on local action to meet carbon budgets.

(3) In preparing the strategy, local authorities must consult with local residents, businesses, social enterprises and co-operatives and other institutions.

(4) Local authorities must publish and promote their local climate change strategy, publish an annual report on progress towards carrying out the strategy and engage with local citizens and community groups.

(5) The Secretary of State must work with local authorities and the Local Government Association (LGA) to assist them in producing and implementing their climate change strategies, taking into account any relevant advice from the Committee on Climate Change.’.

New clause 28—Sustainable energy plans—

‘(1) A local authority must consider whether the drawing up and publishing of a sustainable energy plan would have either of the following effects, namely to—

(a) increase its efficiency regarding; or

(b) in any other way assist with

the discharge of its functions.

(2) If in the opinion of a local authority the drawing up and publishing of a sustainable energy plan would—

(a) have either of the effects specified in subsection (1); and

(b) assist with the purposes of this Act

then it must draw up, publish and implement a sustainable energy plan.

(3) Without prejudice to the generality a plan must specify the steps that the local authority proposes to take to promote—

(a) energy efficiency;

(b) microgeneration;

(c) renewable energy;

(d) combined heat and power; and

(e) cost effective action with or by residents, local organisations or businesses that would assist with the reduction of greenhouse gases, the achievement of energy security or the mitigation of fuel poverty.

(4) A plan prepared by a local authority may—

(a) request such new functions as in the opinion of the council would enable it to make a greater contribution to achieving the objectives specified in subsection (2); and

(b) make a recommendation to the Secretary of State for a transfer of functions from another body to itself provided that no such recommendation may be made unless the council has consulted the person to whose functions it relates.

(5) Within 6 months of receiving any request pursuant to subsection (4)(a) or recommendation pursuant to subsection (4)(b) the Secretary of State must—

(a) either adopt and implement, or take the necessary steps to commence the process of implementation,

(b) or reject

the request or recommendation and in either case shall give reasons for his decision.

(6) Where any functions are conferred or transferred pursuant to this section, the Secretary of State shall ensure that the monies necessary for the discharge of those functions are provided or transferred.

(7) Any principal council on which functions are conferred or to which functions are transferred under this section must determine how the functions are then performed.

(8) Where the Secretary of State is spending money in an area covered by a plan in order to achieve any of the objectives specified in section (1), and in this opinion—

(a) any measure contained in a plan is a more efficient way of achieving his objectives; and

(b) offers better value,

then he shall provide resources for the principal council to implement those measures in its plan.

(9) Where any person submits to his local authority a proposal that would in the opinion of the authority be a cost effective method of assisting with—

(a) the reduction of greenhouse gases, or

(b) the achievement of energy security, or

(c) the mitigation of fuel poverty,

the authority must include that proposal in any plan prepared pursuant to this section or, if it has not prepared such a plan, implement the proposal.’.

New clause 29—Communal schemes—

‘(1) Local housing authorities shall be empowered to arrange, with green deal providers, energy saving schemes that cover the whole or a part of housing estates, roads, districts or other local communities. They will negotiate on behalf of improvers so as to obtain savings that arise from economies of scale, which will be passed on to individual improvers.’.

New clause 46—Local carbon budgets—

‘(1) The Secretary of State shall—

(a) within 12 months of this Bill receiving Royal Assent, report to Parliament with proposals for the introduction of a system of local carbon budgets consistent with meeting national Climate Change Act 2008 carbon budgets;

(b) introduce the local carbon budget system to begin at the start of the second national carbon budget period;

(c) report to Parliament annually about the contribution of local strategies to meeting UK Climate Change Act carbon budgets;

(d) determine circumstances in which two or more councils may develop a joint strategy for cutting greenhouse gas emissions in their areas.

(2) The Secretary of State shall request advice from the Committee on Climate Change about—

(a) the scale of action need in local authority areas to help meet UK Climate Change Act carbon budgets;

(b) climate mitigation and adaptation policies that are effective when locally coordinated by councils;

(c) ensuring that individual local carbon budgets are both appropriate for the circumstances of different local areas and that the totality of all local carbon budgets is consistent with the requirements of subsection (1)(a).

(3) The proposals to be reported under subsection (1) shall include a duty on local authorities to—

(a) develop a strategy, through consultation with those groups and individuals listed in subsection (3)(b), for cutting greenhouse gas emissions across their local area in line with meeting their local carbon budget;

(b) work in partnership with local residents, businesses and stakeholders, including social enterprises and co-operatives, community groups, schools and hospitals, and other institutions in drawing up and implementing the strategy detailed in (3)(a);

(c) wherever possible, develop proposals consistent with a reduction in greenhouse gas emissions in their local authority area of 90 per cent. by 2030, compared to 1990 emissions levels;

(d) publish and promote an annual report on progress towards meeting their local carbon budget; and

(e) request additional powers or financial support from the Secretary of State as they consider necessary to meet the duty set in section (2), which shall not be unreasonably withheld.

(4) Any regulations or order made under section (1) shall not be made unless a draft has been laid before, and approved by, resolution of each House of Parliament.’.

Luciana Berger (Labour, Liverpool, Wavertree)

It is a pleasure to serve under your chairmanship in the last sitting of the Committee, Mr Crausby.

At the end of this morning’s sitting, I was saying to the hon. Member for Richmond Park that many councils already undertake environmental activities. I referred earlier to the Prime Minister’s constituency, and during lunch time I found a quote from the cabinet member for environment in West Oxfordshire district council, who said:

“I’m happy to see the Government introduce targets on the environment… It is helpful if they are mandatory—it means no wriggle room and everyone in the council pulling together.”

Ultimately, the issue is so important—some issues in society, such as child protection, are very important—that every council must do its bit if we are to achieve our national climate commitments. Councils that are not already doing it cannot use the excuse that it is too difficult or that there is too much responsibility and onus, which is why new clauses 1 and 2 are so important.

Zac Goldsmith (Conservative, Richmond Park)

I totally agree with almost everything the hon. Lady said. Local authorities have to get involved, but councils that are already engaged, of which examples have been given, are up for the plan because they are already engaged. If a council is not engaged, being required to come up with a review, a strategy or a plan will allow them, as ever, to do straightforward, routine box-ticking. That is not what will drive councils to join the examples of best practice; I have seen no evidence of that.

I am not opposed to the new clauses, as it happens; I just do not believe that they will be the difference between success and failure. What will make a difference is a strong national framework. We see the beginning of that in the Bill and the green investment bank will, one hopes, provide a lot of fuel.

Huw Irranca-Davies (Labour, Ogmore)

What the Conservative cabinet member was just quoted as saying was effectively a testament to “Vote blue, go green”—

Gregory Barker (Conservative, Bexhill and Battle)

Hear, hear!

Huw Irranca-Davies (Labour, Ogmore)

Indeed. On that basis, what is the difference between the application of the new clause to the local context and the fourth carbon budget that sets a national direction? It is the same principle, but taken down to local determination.

Zac Goldsmith (Conservative, Richmond Park)

The difference is that it is very hard to know what belongs in the local area and what does not. I question the figure of 80% that we heard earlier; I think it is more like 100%. Every emission released in this country happens within one local authority or another. If a local authority has a large coal plant or a large road going through its area, does that count in the local budget? Perhaps the Opposition can answer that.

Luciana Berger (Labour, Liverpool, Wavertree)

If it is 100%, is that not even more of reason why local councils and local authorities should be under an obligation to meet our national target for reductions?

Zac Goldsmith (Conservative, Richmond Park)

The hon. Lady has misunderstood, but perhaps I was not clear enough. One hundred per cent. of emissions happens in local authorities. In many cases, those emissions will not be reduced by local action, but by having a strong national framework. With the landfill tax, a heavy-duty national stick has been applied throughout the country, which has resulted in local authorities finding ways to minimise their waste. It is not applied by the Government in a bespoke manner for each and every local authority; it is interpreted by local authorities.

The large signals sent by the Government are what will make a difference: the sticks and carrots across the board, the green deal, the green investment bank, electricity market reform—we hope to see it in the next few months and it may be a game-changer if the Government are as ambitious as we are led to believe they will be—feed-in tariffs, renewable heat incentives and, I hope, more action from the Department for Transport, which is not yet doing as much as it should. Those things will lead to a rapid reduction not only in our dependence on overseas fuel, but in our emissions.

Luciana Berger (Labour, Liverpool, Wavertree)

The hon. Gentleman says that he hopes that other Departments will do something in the future and he anticipates that they will, but do we not have the opportunity to do something today that will have a massive impact throughout the country?

Zac Goldsmith (Conservative, Richmond Park)

Absolutely, and that is exactly what we are doing under this magnificent Bill, which I believe is a great step in the right direction. That is not to say that it cannot be improved. I take this opportunity to say that our proceedings are probably the only example since the election of a scrutiny Committee actually engaging in real scrutiny, and that is a testament to the Department. It has gone out of its way to find the most awkward people imaginable to apply themselves to the job of scrutiny, and that is a great thing. It is a template and adds weight to the argument that the hon. Member for Brighton, Pavilion has made many times for elected members of Bill Committees. I accept that I am well off-track, Mr Crausby, but if we did have elected members of Committees, we would have much more engaged discussions than is usually the case in such proceedings.

I am a fan of the Bill. It is a step in the right direction. Many of the other examples of action that I have provided are already in the pipeline. The renewable heat incentive and feed-in tariffs are not futuristic aspirations; they are happening. The green investment bank is not as ambitious as many people hoped, but it is many times more ambitious than most people expected. Electricity market reform in the next few months could be—I think will be—an absolute game changer. Such measures will put a price on pollution. There will be big incentives for energy reduction and energy efficiency, and that will necessarily lead to the action at local authority level for which Opposition Members are calling.

I do not believe that the strategies, the reports, the processes and the bureaucracy entailed in the new clauses would make the slightest difference. I do not object to their existence. If the Minister accepts them, that is fine, but they are not proposals that personally excite me. Yes, I signed the pledge before the election because I believe in the direction in which we are going and in the aspirations behind the new clauses, but it is hard to see them making the slightest difference. We seem to be talking about the process, not the outcome and the substance.

Ian Lavery (Labour, Wansbeck)

The hon. Gentleman mentioned the EMR, which will be happening in the next few months. What main part of that will have an impact on local authorities?

Zac Goldsmith (Conservative, Richmond Park)

I can give the hon. Gentleman one example. Clearly, EMR has not happened yet, but I hope that energy reduction will be put on a par with energy generation, so that when local authorities engage in or organise energy contracts, there will be a direct incentive for them to pursue contracts that have energy efficiency at their heart. If that happens, the dynamic will change completely. Instead of companies having a direct incentive to sell as much energy as they can, they will have an incentive to sell as little energy as they can, albeit enough to power homes, hospitals and God knows what else to keep the lights on. They dynamic will change so profoundly that that in itself will probably be the biggest single thing that the Government can do to start weaning us off dependence. The reform must be ambitious, and I believe that it will be ambitious.

Caroline Lucas (Green, Brighton, Pavilion)

It is interesting that the hon. Gentleman is so sceptical about what can be achieved at local level, yet so hopefully ambitious about what will happen at national level. There seems to be a lack of logic. Why has he so much ambition for national level, but not for what will happen at local level? The new clauses are about empowering local authorities to take the action that will be needed at local level if those national aspirations are to come true. They are not about red tape, which can be used to characterise measures in a lazy way.

Zac Goldsmith (Conservative, Richmond Park)

Perhaps I have misunderstood, but I do not think that the measures are about empowering local authorities; I think they are about providing direction for local authorities, which I shall come to in a second. I am certainly not sceptical about what can happen locally, but I am sceptical about targets because it is unclear what is the responsibility of local authorities and what is the responsibility of the Government. Where can the local authorities make a difference, and where can they not? Because that is necessarily ambiguous, it is hard to imagine what sanctions should be put in place.

My original question about sanctions at our previous sitting was not mischievous. There is not much point in having specified and prescriptive targets and goals unless we also have sanctions; otherwise, they will be ignored. It is hard to imagine how we can work out what sanctions to apply to local authorities for exceeding the budget that is set for them, given that we do not even know which parts they will have the power to deal with, and which parts they will not. I can imagine the policy becoming an absolute bureaucratic nightmare. It will not have the desired outcome. Local authorities that do not want to engage will not engage. Most local authorities want to engage, but they have no idea how to do so.

We have heard examples of local authorities blazing a trail. I spoke to a council leader, Louise Goldsmith, this morning—she is not a relation of mine, although there probably is a link about 500 years back. She gave wonderful, inspiring examples of what is happening in her local authority. We need to learn from those examples. We will hear from the Minister later, but what I hope we will be able to do is facilitate a process whereby best practice is centralised, so that we develop a bank of best practice that local authorities can draw on, because I do not think that the expertise exists in many local authorities to pursue the types of measures that we are talking about.

Huw Irranca-Davies (Labour, Ogmore)

I think the hon. Gentleman’s heart and soul are with us, but his political head is telling him, “Whatever you do, don’t go with them over there.” I suggest to him that the expertise does reside in local authorities. Because they have, not direct levers of power, but influence over waste policy, transport, industrial development and so on, they can make decisions such as the one my local authority made to have Tata Steel, one of the most intensive energy users, on its doorstep, but to adopt compensatory measures to minimise its carbon footprint, which it has done so very intelligently. All the new clause would do is to allow that sort of local determination in balancing the books on green matters.

Zac Goldsmith (Conservative, Richmond Park)

I do not want to be misunderstood. I recognise that there is a lot that local authorities can do. What I do not believe is possible is to identify exactly how much a local authority must do about things over which it has control and then apply targets and consequently sanctions. I do not believe that that is possible. I think that that is messy, bureaucratic and complicated, and it will take us down the wrong path. I just do not think that approach works.

My local authority is Richmond upon Thames and part of its area is in my constituency. The authority has been very keen in the last few years to reduce emissions, and it introduced a scheme to try to reduce emissions from cars. It turned out to be one of the least attractive, clumsiest and most unpopular environmental initiatives that I have ever seen, and it absolutely exhausted local people’s appetite for green initiatives. It was very well intentioned and it was absolutely the right aspiration, but it was completely the wrong idea and the effect was that we took a big step backwards. Why? Because car emissions cannot be addressed locally. It is an issue that we need our Government to address and indeed it must also be addressed at the level of the EU.

I very much hope that the coalition Government will finally take on the car industry and push for lower emissions standards. It is not something that we have seen yet, but I very much hope that it will happen. That is what needs to happen. It will not be down to local authorities to deal with it.

Huw Irranca-Davies (Labour, Ogmore)

The hon. Gentleman seems to be arguing against local determination. We accept that in local determination—in fact, in localism as a concept—errors will be made, including political errors and judgments on policy. However, setting local authorities a target and then saying to them, “You go ahead and determine how you will do that,” is what local democracy is about. It seems that he is now arguing against local determination of how local authorities can achieve reductions in their carbon footprint.

Zac Goldsmith (Conservative, Richmond Park)

I think that it is about the national approach. Let us go back to the landfill tax, which for the first time made waste into a liability—a heavy liability. Local authorities could have chosen to ignore that and pay out vast amounts of what they raised through council tax, in order to ignore the potential savings available to them by engaging in clever waste policy.

Alan Whitehead (Labour, Southampton, Test)

I think the hon. Gentleman is confusing targets and budgets.

Zac Goldsmith (Conservative, Richmond Park)

I am talking about the whole collection of new clauses.

Alan Whitehead (Labour, Southampton, Test)

I understand that and I was hoping to catch your eye, Mr Crausby, in a moment to expand on that, but landfill tax is essentially a budget for landfill; it is not a target. Essentially, that is why it has worked, because it says, “This is what you can landfill and these are the decisions that you can make relative to it, and you must work within a budget for your landfill.” I am with him on that, but I think that what he is saying actually supports our argument, rather than opposes it.

Zac Goldsmith (Conservative, Richmond Park)

I am not sure that I completely agree with that interpretation. The difference is that the landfill tax exists, and local authorities can either minimise their exposure to it or they can ignore it, but if they ignore it, there are financial penalties. I do not think that it is a budget in the normal sense. My original point is not about whether it is a budget, or a target or anything else, but that it is a national disincentive that was created to turn waste into a liability. That is the sort of measure that we need across the board. We need incentives and disincentives to push us in the direction that we need to go in.

My concern is not that local authorities should not be required to do everything they possibly can to minimise their emissions. My concern is that the tools set out in the new clauses will not deliver that outcome, because they are just too difficult to work out. I can imagine that as a result of the new clauses being accepted, we would have to develop an ancillary carbon Government, just to monitor the progress in the local authorities. There are easier ways.

I am being more strident than I had intended to be. I do not believe that the proposals are the solution. I am interested to hear what the Minister has to say. I hope that in addition to the bank of best practice ideas, which I know would be useful for my local authorities and, I am sure, for many others, the Minister will pursue the negotiations and discussions with the Committee on Climate Change, and take advice on the implications of its providing each local authority with an indication of what its contribution to the reductions should be. That would be a fascinating exercise, assuming that it was not too bureaucratic and expensive. I hope that we shall be able to return to the matter on Report.

Huw Irranca-Davies (Labour, Ogmore)

Knowing that there is another stage to be gone through in consideration of the Bill, would the hon. Gentleman be more comfortable with a wider enabling power, at the discretion of the Secretary of State, which, subject to the recommendations of the Committee on Climate Change, could be put into place? If the difficulty is with the parameters of the new clause, perhaps he would welcome an alternative amendment, which would give the Secretary of State at least that enabling power?

Zac Goldsmith (Conservative, Richmond Park)

I know that we will have an opportunity on Report for a version of the new clauses to be brought in. The Minister is nodding his head. That is news to me. My understanding was that on some of the issues where there is not complete disagreement with the principles, notwithstanding disagreement over the wording, there is an opportunity on Report for the Minister to table amendments. I know that the Minister is having discussions with the Committee on Climate Change, particularly on new clause 1, about carbon budgets. I hope that that discussion will follow. We shall see what happens on Report.

I have misunderstood the Minister and I hope that he will explain the possible ramifications of his discussions with the Committee on Climate Change. Where could they lead, and how do they relate to Report? I think that I have misunderstood the process. I shall stop there, and waited excitedly for the Minister’s comments.

Alan Whitehead (Labour, Southampton, Test)

I do not quite understand certain elements of the debate. In Climate Change Act 2008 we set a number of targets. We subsequently went substantially beyond those in the architecture of the Act to make things happen. In One can generally characterise targets as similar to saying, “I want to lose a stone in weight.” That is my target. Then the question is “How do I go about it?” What I may do then is give myself a diet, or a budget, to achieve that target. That is what was done with the Climate Change Act. We have our five-year carbon budgets, which are not targets. They constrain the overall envelope of what can be done; within that, it is possible to move around considerably, but it provides the shaping for the way forward. We produced a national allocation plan—difficult to undertake, but we did it nevertheless—for large parts of UK industry and electricity producers on what their emissions could be and how they would need to trade them to stay within the budget allocations they had been given.

That is how we have done it under the Climate Change Act, so it seems a little odd that under the Bill, because we cannot easily determine what is within the budget of the local authority, the instrument has apparently no worth. I take the opposite view. Provided one states in a budget its parameters, the value of the budget then relates to its examination on the same terms over a period—it tells those involved where they are going, and does it properly at each level of governance. Indeed, it enjoins them to stick within it, but it does not constrain their policy options, because it does not mean they must do this, that or the other. It is not an imposition on local government to do particular things. It is a shaping arrangement that ensures that we have in common the ability to get carbon emissions down, while retaining an enormous amount of initiative in different aspects of our lives and in how we go about our business. It does not interfere with or bureaucratise policy making, as has sometimes been suggested.

Local authority carbon budgets could be an important element of what we do and what we have to do under climate change legislation. We have an opportunity today to make serious progress on what I think is a neglected element, perhaps, as my hon. Friend the Member for Ogmore suggested, by the Minister taking away the exact architecture of how this works.

Luciana Berger (Labour, Liverpool, Wavertree)

I want to clarify what new clauses 1 and 2 would do. The council could make the case for not accepting the advice and could draw up a strategy based on a larger or a smaller scale of action. The difference is that the actions would be transparent and that local people could hold the council to account. Most importantly, no council would be able entirely to opt out of tackling climate change, as they can at present. To respond to the hon. Member for Richmond Park, there is an opportunity here for councils to put forward a smaller strategy for action—not that we would necessarily support that.

Alan Whitehead (Labour, Southampton, Test)

I thank my hon. Friend for underlining the new clause’s impact on local authorities. In many ways, it goes in the same direction as budgets from the Committee on Climate Change. The Government recently accepted the fourth carbon budget, but not every element of the Committee’s recommendations. However, the climate change budget is in place—a good thing too—and that provides the shaping and the corset within which we then work through different policies, perhaps, depending on one’s point of view, towards that overall target.

The compatibility of what is in the new clauses with what we are already doing and know we have to do is of a high order. The new clauses make eminent common sense about where we should go. Over the next few years, if we are to deal with the imperative before us and get anywhere near our carbon abatement aims, we cannot avoid a degree of regulation and shaping, alongside best practice and examples of people far exceeding what the budget suggests. I hope that the provision will be the bedrock of a process of people exceeding the targets. It is not a particularly big ask, and it could be of great benefit to what we know we have to do to achieve our climate change targets in the years ahead.

Gregory Barker (Conservative, Bexhill and Battle)

It is a pleasure to see you in the Chair again, Mr Crausby, in what I am afraid is the Committee’s final sitting. This has been an important debate, and in the course of our discussions we have identified some slight differences of approach.

I am not against carbon budgets; in due course they might have a place. I supported the budgets before the general election and I continue to support the principle behind them, but we have to be clear about the volume of asks that we are making of local authorities at this particular point in time. We have looked at this matter through the wrong end of the telescope during this debate. We have been talking about the many local authorities that are doing phenomenal things. Only today, I heard that Birmingham intends to be a green deal provider in its own right. I am grateful to the hon. Member for Brighton, Pavilion who raised the excellent example of Kirklees council, which did some really pioneering things in conjunction with one of the energy companies. That is a model from which we have learned a lot at the Department of Energy and Climate Change. Extraordinary things are happening and we have heard about these exemplars. My concern for carbon budgets is not about the fact that they will be the icing on the cake for large metropolitan authorities, other go-ahead councils such as West Sussex or the impressive list that the hon. Member for Liverpool, Wavertree reeled off, and with which I totally concur—

Steve Brine (Conservative, Winchester)

Winchester.

Gregory Barker (Conservative, Bexhill and Battle)

Exactly—or Stourbridge. There are a significant number of local authorities—we should not underestimate their number—that will struggle to fulfil their obligations under the green deal. The last thing that I want is to put another piece of legislation on to the statute book—one that becomes Home Energy Conservation Act 2. There is a real danger that we will overload local authorities with carbon complexity. The arguments advanced by my hon. Friend the Member for Richmond Park were right. More work needs to be done to come up with a robust consensus around what falls within a carbon budget and how it is determined.

Members were right to question what penalties would be incurred by local authorities if they failed to meet those carbon budgets. I want local authorities to focus not on carbon complexity or things that are outside their control—motorways running through a constituency, large industrial sites or worries about the impact that this will have on planning permissions—but on the dynamic role that they can play in rolling out the green deal and taking practical action. Perhaps this is the mirror image of previous Government practice, which was to set targets and obligations, then walk away from the responsibility of delivering them. I want to give local authorities maximum opportunity and capacity to deliver energy efficiency and to transform the housing stock and small businesses. That is the transformational genie within this Bill. If we introduce another layer of complexity, there could be problems. Although some local authorities may be able to adjust their existing plans, it could overload the very local authorities that the Bill is intended to help the most.

Simon Wright (Liberal Democrat, Norwich South)

The Minister said that he is not opposed to the principle of local carbon budgets. Will he assure supporters of local carbon budgets, including me, that if this amendment is withdrawn or voted down, it will not be the end of the matter as far as local carbon budgets are concerned? If we cannot deal with this matter in the Bill, will he leave the door ajar so that we can revisit the matter?

Gregory Barker (Conservative, Bexhill and Battle)

Absolutely. I was one of the few members of this Committee— I think that the hon. Member for Southampton, Test was also there—who served on the Climate Change Bill. I am in favour of budgets in principle, and in due course we will reach a point where carbon budgets can be rolled out for local authorities, but we need to do more.

There are practical matters to consider. It would impose a burden on local authorities, and burdens have to be costed. The Department does not have a budget to pay for it; we would have to cancel another project to roll it out, but we are intent on pushing the agenda forward. However, although we do not support the new clause, we do support low-carbon frameworks.

Caroline Lucas (Green, Brighton, Pavilion)

I think that the Minister is misrepresenting our argument. He makes it sound as if somehow the sort of proposals that we want to bring in would be a distraction from the green deal, whereas they will help it to meet certain targets and aspirations. As it is, councils will say, “This green deal is all very well, but how much of it do we have to do and when do we have do it?” It does not help them very much.

In 2007, the Local Government Association said:

“Our unanimous view at present is that a statutory duty should be imposed on those councils that, within the next two years, do not respond to climate change.”

That was back in 2007. Local councils want the help that such proposals would give them. It would not be a distraction or a burden, but a help.

Gregory Barker (Conservative, Bexhill and Battle)

The hon. Lady is right, and they are getting that in spades with a revitalised Home Energy Conservation Act. HECA is exactly that, a focused and clearly designated piece of legislation that imposes a legal obligation on local authorities to drive energy efficiency throughout their areas. In the short term, HECA is the means of delivering that. To add a further layer of carbon complexity, asking councils to consider industrial gases, transport and other things, could be quite baffling to under-resourced and overstretched local authority officers. It would be a distraction from the real opportunities of the green deal.

Zac Goldsmith (Conservative, Richmond Park)

If the green deal can be made a runaway success only as a result of reviews, strategies and targets being imposed, with local authorities effectively required to engage in it, that reflects badly on it. The green deal ought to be attractive enough to individuals, streets, businesses and local authorities to become a runaway success without compulsion being necessary. Will the Minister reassure the Committee that it is attractive enough, and that the Treasury will continue to be lobbied to provide incentives along the lines mentioned, to ensure that it succeeds without people having to be put into an arm lock to accept it?

Gregory Barker (Conservative, Bexhill and Battle)

I assure my hon. Friend that the huge degree of stakeholder engagement, from the largest FTSE companies to organisations that represent the small entrepreneur, residents associations and community groups, shows that there is a real appetite to get going on the green deal. We should not have any undue concerns about that. We clearly need the right framework in place, however, and we need incentives.

This is an ongoing programme. At the beginning of the Committee stage, I often said that we should realise that the Bill is not the last word on the green deal. We are setting in train a two-decade programme that will run all the way to 2030. The number of homes involved is so large that it is mind-boggling. Ultimately, it will touch 26 million homes. I do not suggest that we have anticipated the way in which the market will react in the latter stages of this decade and into the 2020s, but I am sure that we will need to return to secondary or other legislation and financial incentives to drive the market further.

Steve Brine (Conservative, Winchester)

Equally, the Bill, the green deal and the market that will be created will not be the last word in the Government’s ambitions for their carbon reduction programmes, nor for their overall carbon budgets. Including a new clause on the action that local authorities must take may be putting such provisions in the wrong place, but it is not the only part of the Government’s carbon-reduction strategy, is it?

Gregory Barker (Conservative, Bexhill and Battle)

No, the Government’s carbon reduction strategy spans not only this Department, but the Treasury, the Department for Transport, the Department for Communities and Local Government, the Department for Environment, Food and Rural Affairs, and the Department for Business, Innovation and Skills. Carbon reduction is a pan-Government, holistic programme, and this is one part of it.

I will return to carbon budgets and why we are taking steps in the right direction. To move this agenda forward and to move closer to the point where we can adopt a comprehensive approach to carbon budgets, we have provided £2.5 million for local carbon framework pilots in nine areas, involving some 30 local authorities. We will publish the lessons learned from those pilots later this year, for the benefit of all local authorities. In addition, we have agreed a groundbreaking memorandum of understanding between my Department and the Local Government Group, again providing a framework for local authorities to set their own levels of ambition on climate change through a new Nottingham declaration partnership.

I would hate members of the Committee to have the impression that we have set our face against carbon budgets. There is more work to be done, however, and we do not believe that an unfunded obligation imposed on local authorities, particularly on those who are least engaged in this agenda, is the right priority, as we want them to engage in the green deal through HECA. Once they have got to grips with the green deal and rolling out energy efficiency, and once we have collated more information from our local carbon frameworks, we will continue to push this agenda forward. The new clause is asking for too much, too soon.

Luciana Berger (Labour, Liverpool, Wavertree)

A pilot took place last year, and we have evidence from nine councils. All in all, 40 councils are signed up and want this to go forward. The Minister mentioned the memorandum of understanding, but it provides no clarity on the scale of action. It is not comparable with what we are discussing today. The Minister has said that it is not the last word and that there is a 20-year plan but, ultimately, the time is now. These targets are too important. The reason and motivation for these new clauses is that we have put this into action. It is already happening in 40 councils across the country who are saying, “We can do this.” I do not accept what the Minister is saying, because we have already heard councils saying that they are doing it pretty effectively and that it has worked. We used the example of Manchester, where 100 organisations, businesses and local authorities are all working hand in hand.

Gregory Barker (Conservative, Bexhill and Battle)

There was a small pilot programme. We are building on that and we recognise the good work that was set in train by the previous Government. The new programme, to which we have committed £2.5 million, involves 30 local authorities. We are using the previous programme to inform further our thinking on this. Overall, however, we do not yet have a framework, let alone a funded framework.

The last thing I want, because it is so easy to come here full of enthusiasm and passion for this subject, is to put more and more on to the statute book. It is that same passion and those same good intentions that led to the creation of the Home Energy Conservation Act back in 1995, but because there were not the resources available to roll it out fully, because it was slightly ahead of its time and because it was out of kilter with other policy sets, it languished on the statute book. It was up to the coalition to rescue it.

The last thing that I want is to push the local carbon budget to a point where it is a universal obligation, but where only the faster moving councils pick it up and run with it and it becomes slightly discretionary; the currency of the local carbon budget would be slightly devalued. We are gradually moving towards that point, but it must be on the basis of a strong consensus. There must be funding, and people must feel that it is right. The measure must not be only for the early movers, the fast adopters and the big metropolitan authorities; we are talking about a statute that will impose an obligation on every single local authority, including a small rural district council with perhaps only a part-time officer working on it.

Nadhim Zahawi (Conservative, Stratford-on-Avon)

I think the Minister’s point is that HECA is the mechanism that will, effectively, ensure that local authorities are focused on delivering the green deal. We all have ambitions to go further than that, but the Minister is right in saying that some councils, such as Stratford-on-Avon district council, are already resource-thin and finding life pretty difficult in the current economic climate. Such councils would struggle if we were to make it mandatory to go further on carbon reduction without first having been responsible enough to have costed that in. The Minister rightly makes the point that it would be highly irresponsible to accept the new clause, which would, in fact, damage what we all want to see: the success of the green deal.

Gregory Barker (Conservative, Bexhill and Battle)

My hon. Friend is spot on. At this point, the absolute priority of local authorities should be the green deal. They should be focused on rolling out practical actions, not diverting officer time to drawing up hypothetical carbon plans and grappling with very complex issues. They should not be diverting very scarce, often non-existent, resources into drawing up ambitious plans. I want real progress on the ground now.

When we are into the scheme, that will be the time to use experience in this agenda to translate into a wider, more ambitious programme. That approach is sensible and pragmatic. I understand the Opposition’s frustration, but our approach is more likely to yield dividends in the longer term than taking our fences too soon.

Huw Irranca-Davies (Labour, Ogmore)

I am quite encouraged, because I think the Minister is on the Opposition’s side. He keeps saying, “We’re nearly there; it is almost time for this.” New pilots are running on top of the pilots that ran before, and he has referred the matter to the Committee on Climate Change. Why does the Minister not take the power or bring something back on Report and fashion his own way? The enthusiasm that he has referred to is, indeed, on these Benches; it was also on those Benches before the election—so just do it.

Gregory Barker (Conservative, Bexhill and Battle)

I am grateful for the hon. Gentleman’s beguiling encouragement. The fact is that we are not weeks or months away from the programme. I want local authorities to focus, over the next 12 months, on preparation for the green deal, and focus on rolling it out in the following 12 months. We are a little way from the aim—we are not so far away from it, but we need to take much more evidence. The last thing I want is to distract local authorities by making them start to think that they need to draw up complex local carbon plans and strategies when they should be focusing absolutely on rolling out the green deal and allocating the relatively scarce and pressured resource of officer time on preparing for it.

Once the green deal is under way, we will benefit from the programmes that we have set up and from the increasing best practice that we are seeing around the country of councils that are further ahead on the agenda. I hope that we will be able to martial that and perhaps return with a further contribution to this live debate.

Luciana Berger (Labour, Liverpool, Wavertree)

I am delighted that councils will be preparing for the green deal. It is most important that they be ready to be green deal providers, or to work hand in hand with them and assessors, and so on. However, as we said in our earlier discussions, 30% of our emissions come from properties, be they household or commercial. It is great that councils can play a part in reducing that 30%. However, anything between 80% or, as the hon. Member for Richmond Park said, 100% of our emissions come from localities. It is that additional 50% that we want councils, through our amendment, to have a responsibility to do something about.

Gregory Barker (Conservative, Bexhill and Battle)

I think the hon. Lady is a little confused. Obviously, 100% of our emissions come from localities; I cannot think of a single area in the UK that is not covered by a local authority. By definition, unless they are in space, they have to come from within a local authority area. My hon. Friend the Member for Richmond Park made a key point: the hon. Member for Liverpool, Wavertree seeks to give local authorities the responsibility for emissions that are created within their area, despite the fact that they do not have the powers to control them. That is the difference.

There is a whole range of things outside the scope, remit and certainly the finances of local authorities, although, under the hon. Lady’s definition, local authorities are responsible for 100% of emissions in the UK. There is a definitional inexactitude. We must define what we really mean. This is a complex area. That is why I have spoken about carbon complexity. I particularly do not want the smaller, less well resourced local authorities wading into this issue unnecessarily, potentially at the risk of distracting them from making real progress and giving absolute 20:20 focus to preparations for the green deal. I think there is a way that we can advance the agenda, but seeking to rush this fence now would not be the sensible way forward.

We will continue to engage in our pilot programmes and work with local authorities, which are in a position to show leadership, and I salute, welcome and encourage them to go further. We will engage with Friends of the Earth, which has done a great deal to inform thinking around carbon budgets and push the agenda further forward. We will engage with my colleagues at the Cabinet Office and the Department for Communities and Local Government. This is not a dead subject. This is a live agenda that we will continue to return to and advance on, but we are not in a position—we need to be honest—to crack this one today. I hope, therefore, that members of the Committee will understand why I will resist the new clauses.

David Crausby (Labour, Bolton North East)

It is appropriate at this point to establish whether hon. Members intend to press the new clauses that are grouped with new clause 1 to a Division. Simon Wright?

Simon Wright (Liberal Democrat, Norwich South)

No.

David Crausby (Labour, Bolton North East)

Tessa Munt?

Tessa Munt (Liberal Democrat, Wells)

No.

David Crausby (Labour, Bolton North East)

Caroline Lucas?

Caroline Lucas (Green, Brighton, Pavilion)

Yes.

David Crausby (Labour, Bolton North East)

Luciana Berger?

Luciana Berger (Labour, Liverpool, Wavertree)

Are we going to conclude?

David Crausby (Labour, Bolton North East)

No. We are going to deal with new clauses 1 and 2 now. We will deal with the clauses in numerical order. We will not deal with new clauses 28, 29 and 46 from the point of view of voting now, but we will deal with new clauses 1 and 2.

Luciana Berger (Labour, Liverpool, Wavertree)

May I respond to the Minister?

David Crausby (Labour, Bolton North East)

Yes.

Luciana Berger (Labour, Liverpool, Wavertree)

It was very positive to hear the Minister say that he was not against carbon budgets and that he would like to see them in due course, although not just now. However, we are ambitious; we think that the time is now and that we should be doing everything that we possibly can. We had the pilot and it worked very successfully. That is why we think it should be extended and expanded across the country. On that basis, we are going to be ambitious and press new clauses 1 and 2 to a Division.

David Anderson (Labour, Blaydon)

On a point of order, Mr Crausby. May I clarify the position on new clause 46? I thought that I heard the hon. Member for Brighton, Pavilion say that she wanted to press the new clause to a vote and that you said it would not be discussed. Perhaps I am wrong.

David Crausby (Labour, Bolton North East)

Not at this point. We will consider the new clauses in numerical order and so the opportunity will be there later.

New Clause 2 - Climate change strategy for local authority areas

New Clause 8 - Purpose of Part 1

New Clause 9 - Duty of the Secretary of State to improve energy efficiency

New Clause 10 - Annual report on progress

New Clause 18 - Carbon dioxide emissions performance standards for electricity generation

Caroline Lucas (Green, Brighton, Pavilion)

I beg to move, That the clause be read a Second time.

The new clause would be an important step towards decarbonising the UK’s energy supply. I am taking the opportunity to propose the introduction of an emissions performance standard for the power sector, because it is unclear when the next chance will come. At the earliest, I understand that the Government do not expect a new Energy Bill to be presented before next spring and, as I have said on many previous occasions in Committee, the urgent need to tackle climate change does not allow for that kind of delay. By inserting the enabling powers for an EPS into the Bill, the Committee would allow the Government to set out detailed EPS measures in secondary legislation immediately before the outcome of the EMR, as opposed to having to wait for at least another year.

Before the general election, the Prime Minister and the Chancellor of the Exchequer promised that they would support an emissions performance standard, but it would restrict greenhouse gas from carbon gas plants to the level of a modern gas-powered power plant—about 300 to 400 grams of CO2 per kWh. Indeed, both coalition parties criticised the previous Government’s policies which aimed for a standard of 600 to 700 grams of CO2 per kWh. I was surprised therefore to find proposals for a standard of 600 grams of CO2 per kWh in the recent consultation on electricity market reform. The Select Committee on Energy and Climate Change recently argued that, in order to be worth while, the EPS level needs to be much higher, stating that the Government

“should either abandon its half-baked Emissions Performance Standard proposals or replace them with a much tighter option, with a long-term trajectory for tightening the standard progressively over time.”

It is extremely important, if we are to minimise greenhouse gas emissions from fossil fuel power generation, to place a strong emissions performance standard at the centre of the Government’s proposals for reforming and decarbonising the UK’s electricity market. That is why I want an EPS of 300 grams of CO2 per kWh to apply to all new and modified power plants of over 50 MW within 12 months of the Energy Bill being enacted. The WWF, the Royal Society for the Protection of Birds, Greenpeace, Christian Aid and Friends of the Earth all support this approach, which would prevent the building of unabated coal-fired power stations while ensuring that new gas plants would require heat recovery, and hence a more strategic and appropriate siting closer to demand centres.

The Government’s EPS proposals are much too weak, and will have limited impact in producing the decarbonised electricity market that they should be aiming for. Many observers have described them as being merely a backstop. For example, I am greatly concerned that the Government’s proposed EPS levels fail to ensure that the maximum power will be extracted from each unit of coal and gas through the inclusion of combined heat and power in all fossil fuel energy plants. A stronger EPS, as set out in the new clause, should form part of a formal decarbonisation objective for the power sector by 2030. Such an objective would help to provide a clear sense of direction for the electricity market framework and ensure that the framework as a whole is focused on delivering a low-carbon power sector during the next 20 years or so. It would also ensure that investments are directed towards the lowest carbon forms of electricity generation by providing regulatory certainty.

Experts in the field have made it clear that an EPS is the only mechanism that can guarantee that only the least carbon-intensive forms of electricity generation will be allowed to be built in the UK. Without the EPS that I propose in the new clause, there is a risk that the UK will be locked into the use of highly carbon-intensive forms of electricity. The standards proposed under the Government’s electricity market reform mean that carbon capture and storage will need to be fitted only to a limited amount of capacity in a new coal-fired power station, which means both that new coal plants could still be built with a significant amount of unabated emissions, and that gas plants will continue to be built completely unabated for the foreseeable future.

By contrast, a strong EPS would require the retrofitting of CCS technology on existing unabated coal and gas plants by a particular date, thus sending a clear and early signal to stimulate the CCS supply chain in the UK. Given that coal plants have an operational life of up to 40 years or more, and that gas plants have an expected operational life of 25 years or more, it is clear that a strong EPS is needed if policy is to remain consistent with the decarbonisation trajectory called for by the Committee on Climate Change in the fourth carbon budget.

In addition, introducing a tight EPS structured to deliver a substantial decarbonisation of the power sector by 2030 would send a strong signal to the international community about the UK’s unequivocal commitment to tapping its own emissions of greenhouse gases. If it does not introduce a co-mechanism such as a tight EPS, the UK would miss the opportunity of substantially reinforcing its negotiating influence at international climate talks. While there would, of course, be some costs related to introducing a strong EPS, the Government’s own impact assessment of their electricity market reform proposals suggests that there would also be significant savings. For example, even under a weaker EPS, the UK power sector would have to buy fewer European Union emissions trading scheme allowances, saving about £11.8 billion, and the running costs per power plant—fuel, for example—could be about £7.7 million lower. There would also be air quality benefits, which some have estimated at between £500 million and £1 billion.

In conclusion, by failing sufficiently to limit the emissions allowed from electricity generation, the Government risk not only locking the UK into carbon-intensive energy generation for the foreseeable future, but dangerously limiting the attractiveness of low and dearer carbon power alternatives.

Huw Irranca-Davies (Labour, Ogmore)

It is great to serve under your stewardship this afternoon, Mr Crausby, as we head into the closing part of our discussions. I welcome the intention of the new clause tabled by the hon. Member for Brighton, Pavilion, and I also share some of her worries—to which I shall return in a moment. However, I wish to express a strong word of caution. According to my reading of the new clause, it sets out not only a firm direction of travel in decarbonisation, but the specifics through a detailed EPS right here, right now under the Bill. The hon. Lady has explained eloquently why she considers that that is not only rational, but appropriate. I wish to explain why we need to apply a little caution right here, right now, and that is related to recent history.

The Government were wrong to rush ahead of their wider EMR reforms by announcing the carbon floor price in the Budget. Carbon floor prices are usually a signal, but that announcement did several things in a “cart before horse” way. It put the Treasury clearly in control of an agenda that should be driven by DECC through the Government and assisted by the Treasury, not the other way round. The carbon floor price has now set the context in which all other measures will be framed and judged by industry and others, including the fear of duplication of measures and the overloading of certain industry sectors with unnecessary costs and complexity; and, of course, as has often been remarked, the windfall that this has created for both the nuclear industry and the existing renewables industry.

On the latter point, the Government still have the opportunity to rescue the windfall in such tight, stringent financial times—of which we keep being reminded—and target it effectively, if they want to, at energy-efficiency and demand reduction in energy-intensive industries. That is why I want to add a word of caution about adding another item outside the whole package in one go. We have done it wrong already, and we now need to bring forward a package as an entity.

We firmly believe that the Government should have presented the elements of the EMR together as a package, under the leadership of DECC. The Minister should have explained the interrelationships between the elements and how he will balance the different measures; it should not be done in a piecemeal fashion. We would apply the same logic to the EPS, the detail of which would best be dealt with together with the whole of the EMR, albeit with the proviso that one of the most significant elements has already been laid out. I suspect that the summer and autumn will be a time for lively debate and for fashioning consensus out of areas of agreement and disagreement, including the calibration of the EPS and other measures in the EMR.

The new clause does not, as described in the very good and detailed supporting brief from Greenpeace and others, constitute what is termed an enabling clause that would allow the detail to be thrashed out later; it puts forward a detailed, prescriptive and precise level for the EPS that, far from enabling, is disabling of any further debate in the light of other mechanisms in the EMR. If it were an enabling clause, we might see more potential in supporting it to produce the fine detail, but we will go into the autumn with the 40 or 50 other pieces of secondary legislation in the Bill and the EMR, so we will be busy.

We agree with the principle of an EPS—it is important to put that clearly on the record—and the spirit of the new clause that, with other measures, will ensure that the setting of the EPS drives us with real determination towards a low-carbon future. We do not believe that the Bill is the right place to repeat the lesson of the carbon floor price and to glue another piece of the jigsaw immovably in place, separate from the other pieces, so that we can unstick them only by returning to primary legislation.

It is worth restating that Labour members of the Committee support an EPS. We will have the opportunity to introduce real detail into the package when the next energy Bill is brought forward. The detail in the new clause may be appropriate in that context, and I recognise the coalescence around the precise positions set out in the new clause of the many organisations cited by the hon. Member for Brighton, Pavilion, including Friends of the Earth, WWF, the RSPB, Greenpeace and Christian Aid. However, that needs to be done in context and not set out in another measure on its own.

While we recognise the need, in the transition to a low-carbon future, for carbon sources—including gas, hopefully with CCS, at the earliest opportunity, as we discussed in a previous debate—the new clause gives us the opportunity to ask the Minister how he will avoid the UK being drawn inadvertently into a high-carbon electricity system by default. Month by month and year by year, he will come under increasing pressure to consent to more and more higher-performing but traditional unabated gas power stations before the EMR is fully in place.

What monitoring is the Minister doing of the growth in megawatt capacity of consents both now, and of what he can see coming down the line? Will he be willing to decline consents if, as was mentioned by the hon. Member for Brighton, Pavilion, there is a fear of being locked into a high-carbon future and he determines that there is a risk of that happening? If so, at what point will that take place? What forecast of the expansion of new gas generation does he anticipate, and has he assessed whether that forecast is still compatible with the transition to a low-carbon future?

As the Minister will know, we recognise that we need gas as part of the transition to where we should go. But the question is: how far and how fast should that be, and how do we avoid getting locked inadvertently into what might be a high-carbon future, simply because of the pressure or because other things do not happen in time—be they CCS, nuclear, grid connectivity, the round 3 renewables take-off or any of those “what if?” scenarios? At what point will he say that we cannot rush headlong down the road of unabated gas or, for that matter, coal?

If the actual limit was not set in the new clause, could the Minister accept it as a true enabling clause, thus allowing the levels to be debated in full and set in secondary legislation, or is it his intention to set the fine detail in the next energy Bill? If the former, he could bring forward a wider enabling clause on Report. If the latter, could he indicate his thinking on the appropriate calibration, and whether the levels described in the detailed provision are completely out of line, or broadly in line, with a scenario he can envisage?

Charles Hendry (Conservative, Wealden)

It is a pleasure to serve under your chairmanship, Mr Crausby, in our final session. The Government have made clear their absolute commitment to introduce an emissions performance standard, and to set it in law. We were the first party to commit to an emissions performance standard. We have consulted on the measure, further demonstrating that commitment. We propose that the emissions performance standard should act as a regulatory backstop regarding the amount of carbon that new fossil-fuel power stations are allowed to emit, ensuring that new coal provides the UK with security of supply consistent with our carbon targets.

The EPS should also provide regulatory certainty. It must not deter the investment in capacity we need over the coming years to keep the lights on, and it should support our ambitious plans on carbon capture and storage, which has yet to be demonstrated at commercial scale. Set at the right level, an emissions performance standard can be a real driver for new investment, but if set at the wrong level it will stifle the investment we need to see.

As the hon. Member for Ogmore has said, this should also be seen as one of a range of measures. It needs to be seen alongside the other measures in the market reform package. The hon. Gentleman mentioned the carbon floor price, which is a tax measure, so it is right that the Treasury lead on that matter. That measure starts in 2013, and it is important to give longer-term clarity ahead of other measures starting in about 2017. It was right for the Treasury to set that out, in order to give industry clear confidence at an early stage. That is why the two aspects have been separated. On all other measures within the electricity market reform process, the Department of Energy and Climate Change is clearly leading and developing policies.

Huw Irranca-Davies (Labour, Ogmore)

If, as the Minister says, the measure needs to be taken then, will he consider advocating that the Treasury ensure that, in these stringent times and as a general principle, we target any windfall? It was described as a measure to incentivise new low carbon, not to reward existing low carbon. Will he argue to the Treasury that we should find a way to identify the amount of windfall, and to target that at the energy-intensive industries with which he is in discussion as a result of that measure?

Charles Hendry (Conservative, Wealden)

I know the hon. Gentleman has an inevitable desire to tax anything he sees moving. We do not share that view. We believe it is right to try to give investors confidence. One reason for the time scale we have set is that it gives clarity. Had we said that we would introduce the measure in 2017, with an election coming along in 2015, people would have said, “Well, we will have to wait and see. We cannot make commercial decisions based on what one Government say they expect their successors to do.”

By introducing the measure in 2013, we have given a much greater degree of investor confidence. Alongside that, we recognise that there are other consequences on high-energy users. That is why we are working with the Department for Business, Innovation and Skills and the Treasury to ensure we address those concerns. Having seen the effect in Germany, we would not be tempted down the path of simply putting a windfall tax on the renewable or nuclear industry.

Huw Irranca-Davies (Labour, Ogmore)

Does the Minister accept that in effect, we have a windfall tax on the taxpayer in order to fund existing renewables and nuclear? That was not the intention of the carbon price floor. The measure has been poorly designed. I am advocating not a new tax but getting back the money we have just thrown away.

Charles Hendry (Conservative, Wealden)

I wish the hon. Gentleman success in selling that to the renewables industry—that he expects it to pay extra taxes at a time when it says it is not getting sufficient support from any of the technologies it wishes to see developed. We take a different view. We have set out a perspective on how to give certainty to investors over the longer term. That is going to be an important part of the process in future.

The issue we must deal with is the need for a significant amount of new investment in our electricity system. The words “barefaced cheek” came to mind when I listened to the Opposition spokesman, because we are trying to make up for an incredible lack of investment in our energy infrastructure over a long period. Over the course of this decade, we have to secure twice as much investment as we secured in the last decade—when the last Government were in power—every single year in order to give us energy security and keep the lights on.

This is an incredible challenge. Had we not been almost at the bottom of the European league table for renewables—above just Malta and Luxembourg—and if we had had more investment in renewables, that challenge would not have been so big. Had we not had the five-year moratorium on nuclear under the hon. Gentleman’s Government, we would have been five years further forward on new low-carbon nuclear technology. The investment that is necessary was knocked back because of decisions that were made, and that gives us a much greater mountain to climb now.

Huw Irranca-Davies (Labour, Ogmore)

I do not want to delay the Committee, but first, we put the groundwork in place that is now leading to the round 2 and round 3 expansion. Secondly, why in the past year have we slipped from fifth to 13th in the global ranking of attractiveness for investment in renewables? That is under the coalition government, in one year. What has happened?

Charles Hendry (Conservative, Wealden)

When a process of market reform is being undertaken, as we are doing and which the hon. Gentleman and his party said was not necessary when they were in government, that inevitably creates market uncertainty. We are looking at all the areas of uncertainty to give clarity. Because of the urgency—we are losing a third of our coal plant in the next five years and much of the rest by the end of the decade, and we are losing all of our nuclear except for Sizewell B by 2023—we must do much more to bring forward investment. Nuclear will take, at best, 10 years; the development of offshore wind will happen towards the end of this decade; the development of carbon capture and storage on a commercial scale will take to the end of this decade and into the 2020s; the development of renewable technologies like wave and tidal will come in the 2020s. We have a looming energy gap towards the end of this decade, for which the Labour Government were directly responsible, so we are going to need new investment in gas to give this country the energy security it needs. Gas needs to be a more important part in the mix, and we recognised in our “Pathways to 2050” that the role played by gas will be greater than the hon. Gentleman envisaged.

Charles Hendry (Conservative, Wealden)

Before the Division, I was explaining that the appalling legacy that we inherited requires a tremendous amount of new investment in our infrastructure, on an unprecedented scale.

David Anderson (Labour, Blaydon)

The Minister will be amazed to hear that I agree with quite a lot of what he says, but he surely must take cognisance of the fact that the last Tory Government did away with the cleanest, most technically advanced coal industry in the world. If our coal industry had been sustained and carried forward, we would not have the current problems with security of supply.

Charles Hendry (Conservative, Wealden)

We completely agree that there is a very important long-term role for coal, although we could debate at great length why the coal industry went into decline and the problems of security of supply. Our coal supply became unreliable at the same time as gas became more greatly available; the combination of those two factors brought about a dramatic switch from coal to gas. That is one reason why we were better able to meet some of our Kyoto commitments than most countries.

The hon. Member for Ogmore asked whether I would be willing to consent gas plant without question. At present, there are no set rules on that, but we have said under the national policy statements that the Minister can take a view on whether the downside of consenting additional plant is sufficiently great to overturn a planning recommendation. Those issues can be taken into account, and we have clearly said that we will carefully monitor the growth, but we are not in that situation at the moment.

In the main, it comes down to company decisions and whether the company wishes to make the investment. In making such decisions, companies will take close account of the market structures that we are putting in place, which are designed to incentivise the investment in low-carbon technologies. The proposed contracts for difference and the carbon support price are designed to encourage people to invest in low-carbon technologies and give a clear signal to investors. It is against that background that the proposal for emissions performance standards within our market reform proposals should be considered. The EPS should support our commitment to decarbonisation and also provide sufficient certainty to make the UK an attractive place in which to invest.

We need new gas plant to be built as we make the transition to a low-carbon electricity system, so we must ensure that investors have sufficient confidence and certainty to build these plants. That is one of the reasons why we consulted on levels equivalent to 450 grams per kWh and 600 grams per kWh, which are above the emissions of a new gas plant. Those two very different perspectives were offered so that industry could let its views be known on which it thought would stifle or stimulate investment, and to ensure that we heard from the environmental groups about their concerns.

Introducing an emissions performance standard now at 300 grams per kWh would require plant to take measures that could prove to be both impractical and uneconomic, and would be likely to make investment in gas unattractive; that in turn would be detrimental to the security of the UK’s electricity supply. The Government are already taking action on measures such as efficiency in generation and the use of biogas. It would also be a hammer blow to the long-term viability of the British coal industry, which the hon. Member for Wansbeck raised this morning and which the hon. Member for Blaydon mentioned just now. Any sense that coal was being taken off the agenda for the future would make it much more difficult to sustain the viability of the pits that have remained open in this country. Before the summer recess, we will launch a White Paper that will set out the way forward on the package of electricity market reform measures, including the EPS.

Ian Lavery (Labour, Wansbeck)

The Committee on Climate Change has recommended on a number of occasions that new build gas-fired power stations after 2020 should be fitted with carbon capture and storage. Have the Government taken that on board and will that be done?

Charles Hendry (Conservative, Wealden)

We will listen very carefully to the recommendations and will respond formally. Some of our responses to the Committee’s more recent advice will be forthcoming in the autumn. What we have said is that, like the CCC, we recognise that electricity generation needs to be decarbonised in 2030 and afterwards, so we need to take steps now to ensure that the investment that takes place understands and takes into account the need to decarbonise.

What we will also set out in the White Paper is how the EPS needs to evolve over time—the process in response to consultation on how it might be tightened, and the approach to grandfathering—so that people investing in gas now understand how that will happen and what will be expected of them in the future and so that there can be no doubt about the long-term environment. That will need to be tied in with our wider package of measures. The national policy statement will also be relevant to how we believe the electricity network needs to be decarbonised.

I agree with the hon. Member for Ogmore that to be as specific as the hon. Member for Brighton, Pavilion proposes in the new clause would deter investment. We do not have the luxury of a huge amount of surplus capacity on our side. We need to secure a great deal of new investment.

The hon. Gentleman asked whether we believe that this is a subject for enabling or detailed legislation. My instinct is towards more detailed legislation in due course, because I think that investors want the clarity of knowing that it has been enshrined in primary legislation. The sense that it is an enabling power, which in the run-up to every election there is pressure on ministers to tighten through a statutory instrument, does not give investors the secure investment scenario they need. The right way to go is to be as definite as we can be in primary legislation, but the approach the hon. Lady has set out is too tight. It would be damaging to investment, so I urge the Committee to resist the new clause.

Caroline Lucas (Green, Brighton, Pavilion)

In response to the hon. Member for Ogmore, I do not follow his reasoning for opposing the amendment. I do not see the negative implications of agreeing an EPS now—on the contrary, I see many advantages. The key advantage is precisely the investor confidence that the Minister says he supports. I am very glad that he supports investor confidence. The Government have not demonstrated that strongly in the energy field—we need only to look at the FITs review to see that. If the Government do now care about investor confidence that is a very good thing. Setting an ambitious EPS now would send a clear message to investors that we are serious about this agenda, and it would help to shape the decisions being made now about the kind of energy mix that we will have in this country. I am glad to hear the Minister re-emphasise his commitment to an EPS in principle.

Charles Hendry (Conservative, Wealden)

I agree with the hon. Lady that it would give clarity, but the consequence would be that investment which might come to Britain would go somewhere else. There is no doubt that the measure she proposes, with the tightness she suggests, would drive away investment in coal and gas and lead to an energy shortage towards the end of this decade. We need some of that investment to come here. If by clarity she means driving it away, we cannot agree with that.

Caroline Lucas (Green, Brighton, Pavilion)

I do not mean driving all of that away, but I accept that there are some difficult questions to be answered. What the strict EPS would do is send the message that there is no role in this country for unabated coal. That is a bottom line if we are serious about climate change. We need then to work with the miners and others to make sure that there is transition and support for them into more sustainable industries, but the idea that in the 21st century we are going to see decades more of unabated coal—I stress unabated—is a fantasy. If the Government are serious about wanting green credentials, this will be a way of demonstrating it.

Ian Lavery (Labour, Wansbeck)

That we can reduce emission levels to 300 grams of CO2 per kWh as opposed to the suggested EPS of 650 grams of CO2 per kWh is pure fantasy. I am all in favour of looking at a policy of developing renewables, but to continue to attack the coal industry is unfair. The fantasy that we can get down to the levels the hon. Lady suggests will drive customers away and close British industry. We will then have to increase the net importation of energy, which in turn could result in huge carbon leakage between nations. The fantasy is reality as far as she is concerned, but I suggest she looks at the figures.

Caroline Lucas (Green, Brighton, Pavilion)

It is not just me saying this. Several of the Government’s own pathways to a greener economy do not use nuclear or coal. There is no fantasy in saying that we need to shift to that kind of green economy. However, the unions and miners and people who are in unsustainable industries have to be part of shaping that whole process. The idea we can just put our head in the sand and pretend we can have business as usual is wrong.

If we had a tighter EPS, the message would not be that we are shedding jobs, but that that Britain is at the forefront of the green revolution—that we are at the forefront of wanting more combined heat and power, for example, and that we are being much more serious about decentralised energy and the whole energy efficiency agenda. We are talking about one aspect of that in the green deal, but the agenda is much greater than that. I do not want to take up the Committee’s time, but I disagree with the Minister’s interpretation. A strong EPS would be good for jobs, for the economy and for the environment.

David Crausby (Labour, Bolton North East)

Is it your intention to press the new clause to a Division?

The rest of the debate is in Hansard.