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Gas Industry (Competition)

Volume 164: debated on Monday 18 December 1989

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To ask the Secretary of State for Energy what representations have been received about opening up competition in the gas industry.

I have received a number of representations about competition in the gas industry.

Does my right hon. Friend agree that competition is beginning to develop in the gas supply industry, as evidenced by the formation of Quadrant Gas by Shell and Esso which will undoubtedly bring price and other benefits to consumers? Against that background, how does he foresee competition developing along the lines envisaged in the Gas Act 1986?

Like my hon. Friend, I am delighted that new companies are beginning to compete in the market place. They include not only Quadrant Gas but Associated Gas Supplies and Kinetica Ltd. There are good prospects for producers wishing to sell gas directly to the industrial market. The Government's decision that 10 per cent. of all new gas supplies should be sold to customers other than British Gas is promoting competition. As my hon. Friend knows, the power generation sector offers a significant prospect for the early development of competition in the gas market.

Does the Secretary of State agree that an uncontrolled expansion of gas burning for power generation could result in an even greater escape of methane into the atmosphere than occurs at present, and that the escape of methane is an important, if not the most important, contributor to the greenhouse effect?

The hon. Gentleman's latter statement is wrong. CO2 emissions are by far the biggest contributor to the greenhouse effect. However, he is right to make that point. No form of energy generation is without its risks and problems, but gas has substantial advantages over several of its competitors.

Does my right hon. Friend agree that the best way to facilitate competition in the gas industry is to open a trunk pipeline to Europe? Will he do everything possible to bring that about?

At present there is no great demand for that, but there is a considerable improvement in the competitive environment for gas. I should like to see how that develops before taking further steps.

Does the Secretary of State accept that, contrary to his response to my hon. Friend the Member for Pontypridd (Dr. Howells), the latest estimates in the current issue of Nature are that the escape of methane into the atmosphere contributes as much as the burning of fossil fuels in power stations to the greenhouse effect?

Before the right hon. Gentleman authorises any gas burning in electricity generation, should he not get together with the 12 area boards forming the non-fossil purchasing agency, which has just missed the 1 December deadline for 1990? Before he allows the new players in gas to sell gas for electricity generation he should first make sure that the gas board has made its pipelines as gas-tight as they can be, instead of leaking 2 or 3 per cent. of the gas into the atmosphere. Secondly, he should get together with the waste disposal authorities to ensure that landfill gas is used first for conversion into electricity through small turbines. That would make a major contribution to resolving the greenhouse gas problem.

The hon. Gentleman asked several questions, and I am not sure that I accept most of what he said. He asked me to confirm what the hon. Member for Pontypridd (Dr. Howells) said about methane, but he did not repeat what his hon. Friend had said in his question. I stand by what I said.

The full effects of all the different forms of gas emissions are not fully known and that is why the Government are encouraging the panel that is considering those matters. That is why we recently submitted evidence to it, which is available in the Library if the hon. Gentleman wants to see it.

Since privatisation, has the price of gas fallen or risen, and is that any evidence of increased competitiveness?

As my hon. Friend is wise enough to know the answer to his question before he asks it, I confirm that the price of gas has fallen.