Enterprise and Culture Committee, 07 Mar 2006

Meeting date: Tuesday, March 7, 2006

Official Report 307KB pdf

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Subordinate Legislation

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Renewables Obligation (Scotland) Order 2006 (draft)

The deputy minister remains with us for item 4, which is about the draft Renewables Obligation (Scotland) Order 2006. I remind members that the order is a Scottish statutory instrument that is subject to the affirmative procedure.

Does the minister have any opening remarks to make before he moves the motion?

I will explain the intention behind the order. Everybody here will be familiar with the renewables obligation Scotland. The ROS is the means by which we influence the market in respect of the growth in renewable energy development and renewable technology more generally. Everybody accepts that as a key part of the future energy mix. Renewables obligation certificates have played a key role to date—and will do in the future—in driving forward the renewable energy agenda.

We are beginning to see increasing diversity in that development activity. The past year has seen consent granted for the first new large hydro scheme for many years, as well as a multimillion pound biomass plant at Lockerbie. Those are signs of diversification in the market that we want to encourage. We want to ensure that new technology comes on stream and that there is diversification in renewable energy development beyond the proven technology of onshore wind power.

We have reviewed the process with everybody concerned this year, as we do each year, and laid before the Parliament a draft order. I will refer briefly to its key provisions. First, we have amended the threshold for biomass fuel. At the moment, generators burning biomass must demonstrate that what they burn has a minimum animal and plant matter content of 98 per cent. We propose to reduce that to 90 per cent to expand the range of eligible fuels and hopefully maximise the potential contribution to ROCs from waste woods that would otherwise go to landfill. That will bring an environmental benefit and stimulate market growth in biomass. For example, the waste wood from kitchens contains small amounts of glue, varnish or paint that take it below the existing 98 per cent purity requirement. That means that, currently, it probably goes to landfill. Under the new rules, such waste woods could be burned to generate electricity, which is a good thing.

We hope that mixed waste generators that use combined heat and power will be eligible for support under the ROS. CHP is more costly than electricity, or electricity-only generation from waste to be more precise, but it is more energy efficient. That will provide additional support for the biomass element of waste fuel.

The amended order contains a number of administrative simplifications that we do not need to go into in great detail, but they provide for the introduction of a pre-accreditation procedure for generating stations that have not yet been commissioned. That will remove the uncertainty that a project might not be eligible for support under ROCs and might help projects to procure the necessary finance. If we take away some of the obstacles for qualification, it will enable the projects to go to the market to secure investment capital on the strength of their future entitlement to ROCs.

We have made changes to provide the Office of Gas and Electricity Markets with greater flexibility in the handling of ROC claims, to reduce the frequency of requirements on generators to submit fuel measurement and sampling data, and to enable the measurement of biomass fuels away from the generating station. The draft order contains a number of changes, which we hope will continue to stimulate the renewable energy market and—more important—help to diversify generation by moving us away from reliance on onshore wind towards the use of competing technologies, particularly biomass and CHP.

Thank you. I will explain the procedure. The draft order is subject to the affirmative procedure. First, members who have any technical points that they wish to clarify can put questions to the minister. I will then ask the minister to move the motion, after which we will debate the substantive issues. Is there any aspect of the order that anyone wishes to clarify? I am not talking about the substantive issues.

I have a question about what the minister said about the sampling by Ofgem of biomass products away from the site. Does that deal with cases in which coal and biomass might be blended off site, by allowing the product to be inspected and verified there?

Yes. I will not go into the detail.

That is fine.

Are there any other points of clarification?

I do not know whether it is a point of clarification; it relates to the reduction in the biomass threshold to 90 per cent. There is no definition of what the other 10 per cent might consist of, other than waste wood. Will the minister explain that?

I think that that is a fair question.

We established the figure of 10 per cent through consultation with industry. My understanding is that only one plant in Scotland—which is in the Shetlands—stands to benefit, so it is not as if we are talking about a general move towards the generation of energy from waste. It must be established that there is biomass content within the waste stream. That is sampled and authenticated, so there are safeguards. Although I favour greater reliance on the production of energy from waste, I know that Shiona Baird probably does not. It must be established and authenticated that there is genuine biomass content within the waste stream, and 10 per cent waste is the maximum that is allowed.

Does that clarify the definition?

I think so. Time will tell.

I invite the minister to open the debate by moving the motion.

Motion moved,

That the Enterprise and Culture Committee recommends that the draft Renewables Obligation (Scotland) Order 2006 be approved.—[Allan Wilson.]

Members may now make comments. At the end of the debate, I will ask the minister to sum up.

I will be brief. I am pleased about the regime that the order will establish, which is the culmination of a great deal of consultation and lobbying by members, not least by me. I am conscious that the order has to strike a fine balance between implementing measures that will ensure stability in the price of electricity for consumers and giving gentle—or perhaps not so gentle—encouragement to companies to use more renewables in the production of electricity. I believe that the proposed measures will shift that balance towards the greater use of renewables without necessarily damaging the price to consumers any more than it has already been damaged by world events.

I am pleased that, on page 6 of the document that the Executive has provided, the point is made that the order has the broad support of the renewables sector. I recognise that many people in that sector want more emphasis to be given to their sphere, but a balance needs to be struck.

I do not think that we have reached the end of the process. As the renewables sector develops, the minister and his department will be under continuing pressure to re-examine the regime to identify whether further tweaking needs to be done. I suspect that I might be involved in some of that lobbying.

I am concerned that there is no clear definition of the 10 per cent waste that may be burned with biomass. We also need to ask how effective the flues on biomass plants will be in removing contaminants such as glue, which the minister mentioned, and possibly others. Another concern, which must always be considered in the context of energy from waste, is whether the waste, rather than being burned, could be used more effectively.

In addition, the draft order provides no definition about the type of mixed waste plants producing combined heat and power that will be eligible for ROCs. I assume that those plants will use municipal waste, but I have serious concerns about such plants being eligible for ROCs. Under any definition, municipal waste cannot be regarded as a renewable energy source. I have serious concerns about the order.

As no other member wishes to contribute to the debate, the minister may sum up.

As Christine May will know, the draft order before us is part of an annual process, but we are considering other provisions by which obligations might promote co-firing more generally and stimulate the marine tidal market. We are looking at those issues in conjunction with the Department of Trade and Industry and further proposals in that regard will come before the Parliament in due course.

In response to Shiona Baird, I should point out that the alternative in this instance is that all the waste would go to landfill. However, ROCs will be payable on only the 10 per cent waste stream, not on the remaining 90 per cent. Any move towards energy from waste from municipal waste streams will come, if it comes at all, irrespective of this measure. The measure will simply make that process—if it happens—marginally more sustainable by requiring that the 10 per cent waste stream for which ROCs are creditable comprises fuel such as waste wood, which has a biomass content.

I appreciate that Shiona Baird wants to respond, but I must follow the procedure strictly. I should also point out that the Subordinate Legislation Committee, which considered the draft order on 7 February, reported no concerns about the order.

The question is, that motion S2M-3953, in the name of Allan Wilson, on the draft Renewables Obligation (Scotland) Order 2006, be agreed to. Are we agreed?

No.

There will be a division.

For

Fraser, Murdo (Mid Scotland and Fife) (Con)
Gillon, Karen (Clydesdale) (Lab)
Matheson, Michael (Central Scotland) (SNP)
May, Christine (Central Fife) (Lab)
Neil, Alex (Central Scotland) (SNP)

Against

Baird, Shiona (North East Scotland) (Green)

The result of the division is: For 5, Against 1, Abstentions 0.

Motion agreed to.

That the Enterprise and Culture Committee recommends that the draft Renewables Obligation (Scotland) Order 2006 be approved.

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Scotland Act 1998 (Transfer of Functions to the Scottish Ministers etc) (No 2) Order 2006 (draft)

Agenda item 5 is another piece of subordinate legislation. As with the previous item, we will hear from the minister and a regular official—

James Thomson is almost an honorary member of the committee.

Do you mean that the officials accompanying the minister earlier were irregular, convener?

Mr Thomson is indeed almost an honorary member, as he has become a regular feature at the committee.

I invite the minister to make a few opening remarks about the draft order, but not to move the motion at this point.

I will try to be brief, given that time is moving on.

The draft order is about stimulating the marine energy market. As members will know, we have invested millions in the European Marine Energy Centre up in Orkney, and are conducting a strategic environmental assessment of the coastline that will not only help to predict the impact of marine devices on the environment but guide developers to the best places in which to site such devices. If the development of onshore wind is anything to go by, members can bet their boots that arguments will arise over the optimum place for locating such devices.

The draft order consolidates in one instrument the devolution of functions covered by section 38 of the Electricity Act 1989, which gave Scottish ministers the power to consent to the construction, extension and operation of electricity generating station developments in Scotland. The 1989 act has now been amended at Westminster and the draft order transfers to Scottish ministers the additional powers that were added by the Westminster amendments.

One of those additional powers is the power to give consent for offshore generating stations in the new renewable energy zone. Has the committee seen the map showing the boundary of that zone?

Yes.

The zone is an area of sea beyond territorial waters that can be used for the installation and development of renewable energy stations. The boundaries of the Scottish section were designated last year, and the powers transferred by the draft order will allow ministers to give consent for offshore wind stations and wave devices, in the same way as we can currently give consent for terrestrial stations. Obviously, that will greatly extend the area in which we can place renewable energy developments, and will give the marine industry more area in which to develop. We will be able to assess the impact of such developments, just as we assess the impact of terrestrial developments.

We have to do things in an environmentally sustainable manner, so we will introduce risk-based controls to assess the impact that developments have on Scotland's water environment. The overriding policy objective will be to adhere to the controlled activities regulations—with which members will be familiar—which protect the water environment and the social and economic needs of those who use it.

Until now, Scottish ministers have used the powers under section 36 of and schedule 5 to the 1989 act to set the operating conditions of renewables stations in order to protect the water environment. In the interests of having better regulations, we propose to transfer functions, by means of the draft order, to the Scottish Environment Protection Agency, which will have a more formal and explicit advisory role in the assessment of cases. That will ensure that we take an integrated approach to the regulation of activities that impact on Scotland's water environment and prevent any duplication of regulatory controls.

To sum up, we are extending ministerial powers over new consents in the renewable energy zone beyond territorial waters and are giving SEPA the power to advise Scottish ministers on how we should implement the policy objectives of making our developments more sustainable and protecting the water environment. I am sure that the committee will agree that those powers are important. They will ensure that we can grow marine renewables—offshore wind and wave technology—in a sustainable manner in a vastly increased area of Scottish waters.

Thank you, minister. Do members have any questions or points of clarification?

This point might be totally inappropriate, minister, but an offshore wind farm in the south of Scotland required a private bill before it could be introduced. Will the draft order prohibit such bills in future?

It will give Scottish ministers the power to consent to such developments under the 1989 act.

So we will not have any more private bills for offshore wind farms.

My recollection from being involved in—was it Crystal Rigg?

Robin Rigg.

Of course. The draft order will give Scottish ministers the power to consent to any such application in the renewable energy zone.

As there seem to be no further points from members, I ask the minister to move the motion.

We will write to the committee with an answer to Karen Gillon's point. The Robin Rigg development may have been dealt with as it was because it was cross-border.

If you would like to come back to us to clarify the point, it would be easiest to do so in writing. I presume that waiting for an answer will not affect the way in which Karen Gillon will vote, if there is a division.

Motion moved,

That the Enterprise and Culture Committee recommends that the draft Scotland Act 1998 (Transfer of Functions to the Scottish Ministers etc) (No.2) Order 2006 be approved— [Allan Wilson.]

We move to open debate. Are there any substantive points on the draft order?

No.

Do you wish to sum up, minister?

No.

The Subordinate Legislation Committee did not have any concerns about the draft order. I take it that there is unanimity on the draft order among members, since it represents a transfer of functions to Scottish ministers. Therefore, the question is, that motion S2M-4044 be agreed to.

Motion agreed to,

That the Enterprise and Culture Committee recommends that the draft Scotland Act 1998 (Transfer of Functions to the Scottish Ministers etc) (No.2) Order 2006 be approved.

I thank the minister and all the officials who attended today.