Senior Labour peers confirm party will seek to strike out clause again if
government closes Renewable Obligation scheme
Henry Zeffman
The government is expected to be forced into a renewed standoff with the
House of Lords over David Cameron’s reversal on green energy subsidies.
After a series of constitutional rows, the tensions between the government
and the upper chamber will reach a new flashpoint as the energy secretary,
Amber Rudd, presses ahead with a scheme to end subsidies for new onshore
windfarms.
The plan, contained in the energy bill, was rejected by peers last year,
when an alliance of Labour, Liberal Democrat and crossbench peers took on
the government over the proposed closure of the Renewable Obligation
subsidy scheme.
Despite being urged by the revising chamber to look again at the proposal,
the Observer understands that the government will this week reinsert the
excised clause into the bill, which will be debated for the first time in
the Commons on Monday. Senior Labour Lords confirmed that if the government
succeeds in restoring the legislation to its original form in the Commons,
the party will seek to strike out the clause in the Lords again.
The government is unable to invoke the Parliament Act, whereby legislation
can be passed without the consent of the House of Lords, because the bill
started life in the upper chamber. Rudd may therefore be faced with a
choice of backing down or pursuing another fight with the House of Lords,
whose non-Conservative majority forced George Osborne to scrap planned tax
credits cuts last year and is expected to disrupt the impending trade union
bill and the housing bill.
The prime minister vowed in 2010 that he would lead the “greenest
government ever”, but has since rowed back from green policies over the
course of his first term, under pressure from his campaign chief, Sir
Lynton Crosby.
In June, the government announced that it intended to end subsidies for
onshore windfarms at the start of April, rather than in 2017, as had been
planned by the coalition government. The subsidies are funded by the
Renewables Obligation, a scheme which requires energy companies to source
some of their energy from renewable sources. It is funded by levies added
to household fuel bills, rather than government expenditure.
The environment secretary insists that the measure will reduce household
bills, but critics argue that because onshore wind is the cheapest
low-carbon electricity, bills will go up unless windfarms are to be
replaced by high-carbon electricity such as gas or coal. In 2013, the total
cost to the average household of the Renewables Obligation scheme, which
covers other renewable energy sources as well as wind, was just £30 a year,
or 2.4% of the average fuel bill. According to the DECC’s own impact
assessment, the proposed change will only save consumers an extra 30p a year.
Before the anticipated showdown between the government and the Lords,
Labour will use the Commons debate on the energy bill this week to open up
a second front in the battle against the prime minister’s retreat from
green policies.
The Observer understands that Labour will this week urge the government to
produce new plans for carbon capture and storage. The government abruptly
axed its £1bn CCS programme last November – despite Cameron repeatedly
praising the process – which deposits waste carbon dioxide where it will
not enter the atmosphere.
In 2007, when leader of the opposition, Cameron said that CCS “could
increase our energy security and help tackle climate change at the same
time”. He said: “All existing coal-fired power stations should be
retro-fitted with CCS, and all future coal-fired power stations should be
built with CCS.”
At the 2014 UN climate summit, just 14 months before he scrapped the
scheme, Cameron told world leaders that the £1bn had already been invested.
When questioned at PMQs in December about the end of the scheme, Cameron
said: “In government you have to make tough choices: you have to make
decisions about technology that works and technology that isn’t working.”
Last week, the US energy secretary, Ernest Moniz, tweeted:
Labour will table an amendment to the energy bill this week requiring the
energy secretary “to develop, promote and implement a comprehensive
national strategy for CCS to deliver the emissions reductions required” by
June 2016, that is “sufficient to build confidence for private investment
in the CCS industry”.
Labour will also question the cost to the taxpayer of the government’s
scrapping the scheme. The Observer can reveal that earlier this week Lisa
Nandy, the shadow energy secretary, wrote to Sir Amyas Morse, the
comptroller and auditor general at the National Audit Office, requesting
that the NAO runs “a fresh investigation into the Treasury’s whole approach
to the government’s CCS programme”. The Observer has been told that at
least one of the companies that has invested in CCS in the UK is
negotiating compensation from the government and may sue, which could
result in the government paying out tens of millions of pounds.
Nandy wrote, “in exasperation”, that after the NAO criticised the manner of
the government’s cancellation of a separate CCS programme in 2011, “it
appears that the chancellor has not learned the lessons [and] has not
followed the advice the NAO gave him”. Nandy also stated that “the Labour
Party considers that CCS is a crucial technology that could play a vital
role in creating and sustaining jobs and businesses across Britain, as well
as helping our country – and the international community – progress towards
climate safety”.
Though the wind industry has rowed back from threats of legal action aired
when the changes to the subsidy regime were first mooted, wind companies
expressed their anger over the early end to the subsidy. Gordon Edge,
director of policy at trade body Renewable UK, said: “It is a mistake to
close the Renewables Obligation prematurely, but the government seems
determined to press ahead with this policy change regardless. Further
evidence is stacking up that onshore wind makes sense for consumers.
onshore wind is one of the cheapest ways to generate electricity from any
source, including fossil fuels, and it enjoys massive public support, so it
has a big part to play in a competitive, low-carbon market.”
Gordon MacDougall, the managing director of RES Group, said on behalf of
the British Wind partnership: “Onshore wind projects with community support
are a ready and reliable way to provide a cheap, secure, home-grown energy.
In tackling climate change the chancellor is on record as saying that we
should do it in the cheapest way possible and we should not be ‘too
theological about which technology we use’. All we are asking is that the
government abides by this principle.”
Caroline Lucas, the Green MP for Brighton Pavilion, has tabled a reasoned
amendment to the energy bill, urging the scrapping of the entire
legislation. Lucas told the Observer: “The way in which the government is
treating the renewables sector is cavalier, reckless and irresponsible.
Even in narrow economic terms they are undermining jobs and investment, and
many investors are simply saying they can’t take the risk of investing in
UK energy any more because they don’t know what the rules are going to be
from one year to the next.”
The Liberal Democrats have also indicated that they will continue to fight
the legislation, in both chambers. Lynne Featherstone, the party’s energy
spokeswoman, said: “Liberal Democrats have made changes to the government’s
energy bill in the House of Lords, and will be fighting to protect onshore
wind subsidies in the debate on Monday. We will be fighting to keep these
changes, which will help protect our renewable energy industry in the face
of Conservative cuts. Now they are in government alone the Tories have
reverted to type and have shown they have no commitment to green energy to
help tackling climate change to protect our world for future generations.
Britain risks falling behind other countries as the government pursues
ideological cuts.”
A spokesperson for the Department of Energy and Climate Change said: “Our
priority is providing secure, clean and affordable energy for hard-working
families and businesses. We want to protect bill payers, ensuring
technologies stand on their own two feet whilst also meeting our renewable
energy commitments.”
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