The recent Energy White Paper noted that, as we move towards greater dependence on imported gas, there may be implications for gas quality. The Government undertook to keep developments closely under review (Cm 5761, para. 6.21).
The DTI, working with the Health and Safety Executive (HSE) and the Office of Gas and Electricity Markets (Ofgem), has now appointed consultants to advise on whether there is in fact likely to be a significant gas quality issue, particularly (but not exclusively) in relation to Wobbe Index. The Wobbe Number represents a measure of the heat release when a gas is burned at constant gas supply pressure.
The upper and lower limits for the specification of gas in respect of Wobbe Index are set out in the HSE's Gas Safety Management Regulations (SI 1996/550). There is anecdotal evidence that some of the potential sources of gas imports for the UK market may have a Wobbe Index that exceeds the current upper limit. High Wobbe gas requires more oxygen to burn completely; and there is a risk that some of the older gas appliances may not be able to draw in sufficient oxygen to work safely.
There may be further issues affecting the specification of imported gas concerning other effects, and other parameters.
Against this background I am today launching a 3-phase strategy, as follows:
Phase one is a scoping study to look, in particular but not exclusively, at the Wobbe Index of future imported gas. It will explore the UK's capability of importing gas of the expected specification, taking into consideration existing gas terminal facilities as well as known future import projects. This phase should be completed by the end of August. ILEX Energy Consulting Ltd have been appointed to take this work forward.
During this phase my Department will hold a workshop, to provide an opportunity for stakeholders to register their interest, and to brief them.
Phase two will depend on phase one establishing that there is a gas quality issue to be addressed. It would be a tripartite (DTI, HSE, Ofgem) consultation on the appropriate policy response. One option would be to increase the current Wobbe limit with an advantage in terms of lower gas import costs but requiring the identification and removal of non-compliant gas appliances. The alternative option would be to retain the current Wobbe limit—avoiding the need to identify/ remove certain gas appliances, but with a penalty in terms of gas import costs, and ease and reliability of access to an increasingly global and liquid international gas market. I should hope to conclude that consultation by spring 2004.
The Government would propose to review the next steps at that time. I would expect that review to take into account the outcome of the consultation process, and also the state of play of the European Commission's work on interoperability of gas grids, which includes work on gas quality. The EU dimension is potentially very helpful in providing a broader context of regulatory stability. But it is important that any policy conclusions reached next spring should be robust against changes at the EU level. That may require delaying decisions here, until the EU aspect clarifies.
Phase three would be the implementation of the policy. There are unavoidable uncertainties about the timing of phase three. However, I would hope that phase three could be initiated during the first half of 2004. If the policy decision is to increase the upper Wobbe limit, that would require amendment to the HSE's GSMR, and a major exercise to identify and remove non-compliant gas appliances. Consequently the new Wobbe limit would be unlikely to take effect before the end of 2005.
I shall report to the House in due course on the outcome of phase one, and on the timetable for the remainder of the exercise as it firms up.
This exercise has been developed by the DTI as a member of the Sustainable Energy Policy Network (SEPN) which is working to deliver the Energy White Paper "Our Energy Future—creating a low carbon economy".