RT HON ALISTAIR DARLING MP, LORD TRUSCOTT, MR DARON WALKER AND MR PAUL MCINTYRE

21 JUNE 2007

  Q60  Miss Kirkbride: Going back to renewables, the Renewable Obligation was meant to bring down the cost of these technologies. Given that I understand it is going to cost around £1 billion by 2010 to meet the Renewable Obligation yet these technologies are going up in price. Can you help the Committee to explain why that is?

  Mr Darling: Firstly, the Renewable Obligation was not designed to bring down the price directly. What it was meant to do was encourage more investment in the first place. Normally when you get more of things then prices will, in the medium and long term, fall. What we have done in the White Paper is move to banding the Renewable Obligation so you get less for existing technology like biomass and you get more for marine technology which is in its infancy. That has broadly been welcomed by people. Why has it gone up? There are a number of reasons. The raw materials have gone up. More people are now building renewable and the number of people actually supplying the equipment is less than you would want. More people will come in as there is more certainty, not just in Britain but in other parts of the world. They are going to be doing more of this technology. Of course the other thing that adds to cost is planning which I keep coming back to because it is pretty central to the energy debate. If you ask a company how much does it cost you to take ten years to get planning permission to build a wind farm they will tell you a hell of a lot. In some ways it would be better if you said yes or no and they could live with either but at least do it in a timescale when the guy who put in the planning application still works for the company at the end.

  Q61  Miss Kirkbride: How optimistic are you that the government will meet its renewable target bearing in mind it is very low at the moment and it is demanding 20% or something.

  Mr Darling: I think we can. It is growing. As I said earlier, and I may have said it before you came in, it has come off a very low base but even in the last couple of years it has doubled. I opened a wind farm earlier this year which marked the first time we were in the world's top seven for wind production. If you ask me what is the biggest block between now and 2015, it is not the Renewable Obligation regime, it is not even the cost of materials, it is planning. Take the London Array which is the wind farm in the Thames Estuary, the largest wind farm in Europe and it is being blocked because the local council has decided not to give planning permission for the building where the electricity comes ashore. If you carry on doing that then people who talk about being green and make a virtue of being green and tell you they want more and more wind farms and nuclear is a last resort maybe ought to have a word to some of their colleagues who are blocking planning permission for these things. I put it no finer than that. You might know somebody I have in mind.

  Q62  Miss Kirkbride: We will pass on that point. There are other things we could have a go at and this is an exchange of views rather than party political point scoring. What progress do you expect Ofgem to have made in reducing the backlog of renewable projects awaiting good connection when you have your meeting in September?

  Mr Darling: That is a perfectly fair point. I think they are making progress. I think it is something they are now becoming quite fixed on really. There is a far better degree of engagement now between the prospective generators and Ofgem. In crude terms, simply dealing with these things and the chronological order you receive them is not entirely satisfactory, especially if some of them are not going to go ahead. They have made far more progress in the last eight or nine months than the previous couple of years. I think Sir John Mogg and his colleagues are very seized of this and I am confident they will make progress.

  Q63  Chairman: Secretary of State, unless someone is planning a comeback tour for you, which is not our current intention, we suspect this may be the final curtain as far as your appearance before this Committee is concerned following the events that will occur next week. Can I say thank you very much, in anticipation this is your final session before us, for the very constructive way you have liaised with this Committee over your time in the Department. I very much value your frankness, openness and helpfulness and that of your entire Department and its officials who I hold in very high regard. Can I ask you one final question on that? What progress have you made in making 1 Victoria Street a carbon neutral office in the past year or do you not expect the DTI to be occupying it for much longer?

  Mr Darling: Peter tells me we came top of other departments but we have some way to go. The building itself, as you well know as I think you worked in it some years ago, was designed way before anybody thought of these things and is either very hot or very cold. For some reason the windows suddenly get blanked out even on wet days and do not get blanked out on very hot days. The answer to your question is quite a lot needs to be done within the constraints of a comparatively ancient building. Your general remarks are appreciated. I enjoyed my canter around transport and I am quite sure that I shall be returning to energy in one way or another.

  Chairman: Thank you very much indeed and whatever the future holds for you I hope it is a happy one.