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Energy White Paper

Volume 457: debated on Thursday 22 February 2007

5. What recent discussions he has had during the drafting process of his Department’s energy White Paper; and if he will make a statement. (122136)

Ministers have held numerous discussions with other parties and colleagues over the course of the energy review since it was launched in 2005. As I have set out in a written statement today, following last week’s court judgment it is now likely that the White Paper on energy and the new consultation on nuclear energy will be published in early May. If we can do it earlier than that, we will, but that time scale will enable the Government to make a decision on nuclear and on other issues arising from the White Paper in the autumn.

Does the Minister accept Ofgem’s criticism, and that of others, that the Government’s renewables obligations policy is unbalanced in how it treats potential sources of renewable energy? When will he deal with that criticism?

No, I am not convinced by Ofgem’s criticism. It has put forward an alternative means of encouraging renewable energy, but it seems to me to be broadly similar to the system that ran for many years until the late 1990s, which did not result in much in the way of renewable energy.

Two things must be said about the renewables obligation. First, and now for the first time, we are seventh in the world in terms of producing electricity from renewable sources. There are more and more applications to build wind farms as well as more investment in offshore energy generation, as well as wave and tidal power generation. Secondly, the industry needs some certainty. If we keep chopping and changing how we support renewable energies, we will run the risk that the whole thing will fall apart.

At the moment, we are discussing nuclear power generation and there are people who argue that renewables can fill the gap that may be left by a lower number of nuclear power stations. We need more renewable energy, not less, so I am yet to be persuaded by Ofgem’s submission. Of course I will listen to what it has to say, but it is important that we continue to provide some stability to energy policy.

Following last week's High Court ruling that the energy review consultation was “seriously flawed”, the Prime Minister said

“This won't affect the policy at all”.

Today, the Secretary of State has announced a new consultation, but in light of the Prime Minister's pre-emptive comments, surely that consultation is set to be as seriously flawed as the previous one.

Well, the hon. Lady might do worse than to read the judgment. It is perfectly possible—indeed it is highly desirable—that Government take a lead in promoting policy. The Government have to have a view on nuclear. I appreciate that, being a Liberal Democrat, the hon. Lady has never had that problem, because the Lib Dems do not have to have a view on anything. I see that her hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso) is not here, but, as she knows, his view is different from hers.

In relation to nuclear, the Government's position is that, especially at a time when the amount of electricity generated by nuclear will fall from about 20 per cent. to about 7 per cent. of the total market over the next 15 to 20 years, there is a case for replacing that amount of energy generation with new nuclear generation. What the judge found was that the process of consultation was flawed, and I fully accept that. I therefore intend that we will carry out a full and proper consultation, so that people can have their say. One thing is clear: the issue will not go away. We need to have greener sources of electricity generation and to ensure security of supply. That is something that the Liberal Democrats are constitutionally incapable of doing.

I note the Secretary of State's comments and welcome the fact that the White Paper will be published in May, if not before. Conservative Members are obviously disappointed that it has taken so long. Is the Minister aware of my constituents’ concerns about the Government's apparent lack of a coherent and credible energy policy, and their scepticism about the consultation in the light of the decision to approve the waste incinerator in Belvedere, where the consultation with local people and experts was not taken into account? Will this be a real consultation or just another sham?

It is important that there is a full and proper consultation. I used to be deeply sceptical about nuclear power. I changed my mind because the facts changed in two respects. First, the science on climate change is now very clear. Unless we get ourselves into a position where we can produce more electricity from low-carbon sources, we will continue to pump carbon into the atmosphere, and that cannot be justified. Secondly, the amount of oil and gas in the North sea is slowly but surely declining. That means that, if we do not do anything about it, we will import more oil and gas from other parts of the world. That is an especially serious prospect when we consider that that oil and gas will, in many cases, be coming from areas that have huge political problems. I therefore think that nuclear needs to be part of the mix.

That is my view and it is the Government's view, but I have given an undertaking that we will consult on that because people need to engage with the argument. As I said earlier, that argument will not go away and it is essential that we engage with it. If people have better solutions, let us hear them, but for goodness’ sake do not think that, by putting off the decision, we will not be faced with the difficult choices that any Government worth their name have to make.

In the Secretary of State’s discussions with the Chancellor of the Exchequer on the energy White Paper, will he pay specific attention to the needs of industry? There is a fashionable London view that only services count and that every product with metal or steel in it can be imported into this country, and that that is the future. I am not sure that that is the case, and our steel, glass and other industries need a coherent energy-pricing policy, which they have not had in recent years. I know that the Secretary of States has made good efforts in that respect, but please will he, with the Chancellor, focus hard on sending out the right signals for our industry electricity users?

My right hon. Friend is right. Last winter, there was a shock to the system in that we did not get the expected gas supplies. The result was that wholesale prices went up and the prices being paid by steelmakers and other heavy industrial users were far higher than they should have been. This year, because we now have additional gas coming from Norway, the Netherlands and Belgium, and because we now have greater capability in terms of bringing in liquefied natural gas, and have taken other new measures too, wholesales prices have come down by about 60 per cent. and, thankfully, those prices are about to be passed on to domestic consumers as well as industrial consumers. However, my right hon. Friend is right: if we do nothing—if we ignore the problems that we can see arising in the next 10 to 15 years—we will have very severe energy problems. I am prepared to put up with a six or seven-week delay because, frankly, it is better to get right how we deal with the big problems over the next 20 to 30 years.

My right hon. Friend will be aware of the many practical examples of renewable energy measures that have been introduced into the UK, with or without an energy White Paper, over the past 10 years. Will he join me in congratulating npower in Swindon on its plans for a wind turbine on Windmill hill, and will he further tell me what steps he is taking to encourage local councils—

My hon. Friend is right that wind power is very important. I am just sorry that so many applications are now blocked. [Interruption.] Before the hon. Member for Rutland and Melton (Alan Duncan) stands up to berate me, as a I fully expect him to do, he might like to tell me what steps he will take to persuade Conservative councils not to block applications, as we know we need such renewable energy.

Businesses in my constituency also raise the issue of the fluctuation in energy prices and the effect that that has on their trade and competitiveness. Given that, what is my right hon. Friend doing to bring the energy companies along with him in respect of the energy White Paper and other long-term measures, to ensure that such fluctuations in costs are minimised in order to give local companies more stability to plan ahead?

Again, my hon. Friend is right. What is needed more than anything else is stability, which is why energy companies—everybody, really—ought to be concerned that we have a stable policy framework that will allow generators to choose what form of generation is most appropriate. The two matters that should be concentrating our minds are, first, how to get cleaner, greener sources of energy, and, secondly, how to ensure that we have security of supply in the future. There ought to be cross-party consensus on that at least—although we can, perhaps, argue about how we actually achieve that. Those are the two big issues that face this country, and countries around the world, and I intend to address them fully during the forthcoming consultation period. As I have said, I intend to reach conclusions by the autumn.

Does the Secretary of State agree with the following two recent conclusions of the Select Committee on Trade and Industry: first, that nuclear power is generally a very low-carbon source of electricity, and secondly, that although local energy generation has interesting potential, it is not a short-term panacea for the real problems we face? If he does agree, does he also share my fear that the uncertainty created by the further delay that he has been forced to announce today risks there being investment in new gas-fired power stations—with all the implications of that for climate change and security of supply—rather than in nuclear power stations, which I agree with him are necessary?

I agree with the first part of the hon. Gentleman’s question. Nuclear is, without doubt, a lower carbon form of producing energy—it is not carbon free, but it is much lower. I also believe that although distributed energy—small-scale energy—is an important part of the mix, it can never be an answer despite what Greenpeace and others have suggested from time to time. We could not possibly end up depending on thousands of different producers to make sure that we have enough electricity, for example, to provide for our needs across the entire country. Distributed energy does, however, have a part to play.

On the delay, my soundings are that industry would prefer that we got the consultation right—that we put up with a six or seven-week delay before we publish the White Paper and the associated consultations—as long as we reach decisions in a reasonable time. I think that we will do so before the end of this year—in the autumn. If we can get that right, there is no reason to believe that we cannot make sure that we have an energy policy that is back on track and that can provide for us in the way that I have described.

Does the Secretary of State accept that a key issue for the White Paper is introducing mechanisms to enable carbon to be traded at a high and stable price not just in the UK, but in Europe and, ultimately, globally?

Yes, I do, which is why the Government have spent a great deal of time and effort persuading other European countries that the EU emissions trading scheme ought to be strengthened. If there is no carbon price, it will be very difficult to persuade people to go for the low-carbon options. That issue is very important; indeed, it is equally as important as clean coal—coal was mentioned earlier—and carbon capture. All those things should be part of an approach that will get us secure and greener supplies.

The whole energy review is clearly in a complete mess. It began back in November 2005, and it was two months before the consultation document was published. Six months later, the report came out and said virtually nothing. The High Court now says that the process was flawed. The Government are delaying the White Paper yet again, and we will have no decision on anything until the autumn, which means that this supposedly urgent policy will have taken more than two years. I suspect, Mr. Speaker—

I immediately withdraw that assertion, Mr. Speaker.

Is it not clear for all to see that the Government are totally paralysed, and that we Conservatives are better prepared for government than the Government themselves?

I was tempted to ask the hon. Gentleman, if he is so well prepared, whether he has a policy on nuclear yet. As I understand it, his policy is to wait to see whether anything else works and to come to a decision at the last moment. On his general point—if there was one—most people can see the thrust of what the Government are proposing in a broad range of measures. We need to ensure that we have the right sources of electricity and other energy generation, and to concentrate on reducing our demand for energy, which is a key part of any approach. We need to make sure that industry and households have incentives to use less gas and electricity, but we also need to ensure that we get the generation capacity that we will need. We should remember that a third of all our power stations will come out of commission in the next 20 years, so decisions need to be made. However, having spoken to many people in the industry over the past nine months since becoming Secretary of State, my sense is that they are more concerned that we get the consultation process right. Frankly, given that we are establishing policies that will last 20 or 30 years, a six or seven week delay—although we would ideally do without it—is something that we can live with.

Can the Secretary of State tell us what the Chancellor’s view is on nuclear power, and can he explain how his own policy of having nuclear power only as an option to be considered by companies in any way matches the Prime Minister’s assertion that we must and will have nuclear power? How does the Secretary of State’s “it may/will happen” policy tally with the Prime Minister’s “it definitely will happen” rhetoric?

The Chancellor and I are in complete agreement on this and most other matters, so that deals with the hon. Gentleman’s first point. On his second point, the Government are saying to generators that, whereas successive Governments have been very reluctant to sanction additional nuclear capacity, nuclear—subject to consultation—ought to be part of the mix. In other words, generators need be able to consider the option of nuclear alongside others. It is not for the Government to decide that it has got to be nuclear, as opposed to oil or gas.

I think that the difference between us and the Conservatives—inasmuch as I can understand their policy—is that they have not got a clue on nuclear.

I welcome the Government’s decision not to appeal Mr. Justice Sullivan’s judgment, which was scathing, to put it mildly. He did not apply the term “misleading” to the economic section, but he did call it “jejune” and an “empty husk”. In the consultation that is to take place, the Secretary of State will be aware that most of the supporting documents for the economic case have not been put into the public arena or have been put in only in much reduced form. Can he give us an assurance that he will provide those documents to this consultation, or can he tell us which aspects of the economic case he is not willing to make public?

As I said to the hon. Member for East Dunbartonshire (Jo Swinson) a few moments ago, we did make a considerable amount of economic data available. I fully accept in retrospect that it probably should have been made available when the consultation was launched back in January 2006. I want to ensure that we can have an informed debate in the House and among the wider public. All I would say to the hon. Member for Richmond Park (Susan Kramer) is that she, too, should perhaps open her mind to all the options, because it is not clear to me that she has a policy to deal with the two pressures of security of supply and achieving greener sources of energy. Until she does, I strongly advise her to reflect further before venturing into the public domain.