I beg to move,
That this House acknowledges that the security of the UK’s energy supply has become of increasing importance over the last five years; understands that with over eight GW of coal and a further seven GW of nuclear generating capacity coming offline in the next decade the UK faces a potentially serious energy gap by 2016; regrets that with only 2 per cent. of the UK’s energy needs coming from renewable sources, the UK is one of the worst performers in Europe; notes that the Government’s own Renewables Advisory Board has established that the UK is set to miss its EU renewables target for 2020 even with significant policy changes; further notes that, as an island nation, the UK has major potential as a source of wave and tidal energy; deplores the fact that the Marine Renewables Deployment Fund has not delivered monies to a single project since its creation in 2005; regrets that the Government’s latest Energy Bill contains insufficient provisions for feed-in tariffs for microgeneration, the fast roll-out of smart meters or any serious help for the fuel poor; and urgently presses the Government to act now to secure the UK’s energy supplies for the future.
At the heart of this debate is the need of the entire world to wean itself off its extreme dependency on oil. I say that as a former oil trader and as someone who has been steeped in the industry for more than 20 years. May I therefore declare my interest in the sector, and make reference to my declarations in the register, the annual printed version of which is due to be printed soon?
We have called this debate to discuss an issue on which our economic survival depends. The security of our energy supplies, whether for lighting our homes, fuelling our cars or powering our industry should always be one of highest priorities. But now, as we look ahead to the next 10, 20 or 50 years, there are uncertainties and complications that never existed for previous generations, including rapid growth in the demand for energy, and the threat of a drastic climate change caused by burning fossil fuels. So, when we talk about energy security, we must acknowledge that there are three dimensions: supply security, climate security and price security. The need to resolve those three problems has become extremely urgent, and so far, a chronic lack of decision making has seriously compromised our ability to act and to adapt as needed.
Our understanding of the issue has dramatically changed over the past 20 years. I remember working with an oil company that used to specialise in supplying heating oil in winter to the fuel poor. Its promotional gizmo comprised a small Perspex cube containing a small quantity of oil, and printed on the outside was its proud slogan, “Thank you for making the world a warmer place”. I do not know what the company would happily print there today, because the whole world seems to be heating up.
The debate takes place against a background of record prices and the inevitability of further increases. Gas prices are trading at 59p today and at 107p for the first quarter of 2009, which will have a massive impact on consumers. It is widely expected that gas prices will increase by as much as 40 per cent. by the winter and that electricity prices will do so by only marginally less. That could increase the numbers in fuel poverty by up to 1 million and cause huge pain to households throughout the country, so it is clear that price security and energy security go hand in hand.
We recognise that the United Kingdom has been lucky over the past century. We were at the centre of a western-dominated system of global trade and finance that brought not only huge social and economic benefits, but underpinned our role as a formidable force on the international stage. Through a quirk of geology, we enjoyed the good fortune of having an enormous amount of natural resources at our disposal—first coal, and then oil. That has helped make us prosperous, but it may also have helped make us complacent.
Now, the world economy is undergoing a fundamental transformation. Gradually, the centre of gravity is shifting eastwards, and China and India have developed faster than many people could ever have imagined, opening up new trading corridors and creating flows of capital that completely bypass the west. Each extra 1 per cent. of economic growth results in a 1.5 per cent. increase in the demand for energy, creating unprecedented global pressure on energy demand, so we are no longer assured of being at the head of the queue for the vital commodities that sustain our economic growth. Whereas 15 years ago we may have looked to the North sea for our energy requirements, the decline of production from the continental shelf has exposed us more and more to the variables of global markets.
Does my hon. Friend agree that on the question of how to generate more power from non-carbon sources, it is highly likely that, come the next general election, we will still have no more decisions than we have today, after 11 wasted years?
My right hon. Friend is absolutely right about the importance of taking early and urgent decisions about new investment. That is exactly the point that I and my colleagues want to address and, as I often say to the Secretary of State, we endeavour to do so in a spirit of cross-party agreement, because if we form the next Government, as we hope to, it is essential that investors know that there will be continuity for their investments.
But has it not been obvious for some time that great economies, such as India’s and China’s, have been expanding fast and, inevitably, would want their share of those precious resources? Should not the Government have understood that point and done something—taken action—to provide for our future energy needs?
I am sorry; I am getting ahead of myself—two years ahead. I am always ahead of my time.
No one—not even the experts—could have predicted the ferocity of the increase in commodity prices over the past year. It was a genuine shock to our economy and to that of the entire world. We can, however, look into the future to some extent.
My hon. Friend is being generous to the Government in an unwarranted fashion. All the decisions that are being taken now in 2007-08 should have been taken in 2002-03, when the Government produced an energy White Paper that ducked all those decisions. The commodity price increases of last year apart, everything that is happening now and that we are having to deal with now was predictable.
My hon. Friend is absolutely right. We can track a good four years of dithering and delay, for which a generation risks paying a very high price.
We can look into the crystal ball and see the big picture looming. For instance, the International Energy Agency says that between now and 2030, primary energy consumption is expected to increase by two thirds. As demand growth already outstrips supply growth, the meteoric rise in energy prices that we are witnessing is likely to be a lasting feature and not just a temporary glitch. Given that crude oil is trading at around $140 today, the UK literally cannot afford to play this global game of risk.
But we do not have to play that game. This island—with its high winds and high seas, its skilled work force trained in the energy industry, its manufacturing sector restructuring towards a high-tech and value-added model and its green financial centre in the City of London which is leading the world in carbon trading—is uniquely placed to go green and secure our energy independence. Under our Conservative vision, not only is it possible to combine energy and climate security, but that is the only practical strategic choice. However, that long-term vision can be made possible only with the political will to make big decisions. As my right hon. and hon. Friends will argue, the Government’s lack of action in the past decade has not only compromised our long-term low-carbon future, but left us vulnerable in the short term as well.
I absolutely agree with the hon. Gentleman on the importance of the new emphasis on renewables and the United Kingdom’s renewables capacity. Presumably, they were also important 10 years ago. Can the hon. Gentleman remind us about the share of renewables that the Labour Government inherited from his party?
That is a slightly ridiculous question; that was such a long time ago. Renewables hardly existed 10 years ago. So much has changed in the past decade and so much could have been done.
Over the next 15 years all but one of our nuclear fleet of power stations will be withdrawn from service, a third of our coal plants will be decommissioned and we will need about 25 GW of new electricity generating capacity to keep pace with our expected needs and the predicted economic growth. As my hon. Friends have pointed out already, the Government have been aware of that impending supply gap for years. Let me remind the House of what they said in the energy review a mere two years ago. They said that if, as the modelling of the then Department of Trade and Industry suggested, the closure dates of nuclear and coal-fired power stations coincided in about 2015—and we all now know that they will—
“market participants may not be able to respond by developing and commissioning new power stations in a timely fashion.”
That was in 2006. What has happened since? We have heard a great deal about nuclear power, although new reactors are still unlikely to be operating much before 2020. However, to give credit where credit is due—I am doing my best—I recognise that the Government have worked to identify the concerns of potential investors and to put in place a framework that answers some of those concerns; I pay tribute to the work of Dr. Tim Stone in achieving that.
However, we are now waiting for talk to convert into action. In the meantime, we have added only one percentage point to our current renewable capacity, and that will not get near to meeting even the Government’s original target of 10 per cent. by 2010, let alone the targets subsequently established by the European Union. We also have a Government who seem to be intent on building a new generation of coal-fired power stations at almost any cost, leaving future generations with a massive carbon headache.
The problem for the Government is that they know that they have ducked the big decisions over the past 10 years. We have had White Papers, reviews, consultations and strategies, the latest of which—it was only a consultation—was published last Thursday, yet it still feels as though the momentum that the country needs for investment and change has hardly got beyond first base. Much of the blame attaches to the Prime Minister, who did little for the environment while Chancellor and who, now he is Prime Minister, simply does not understand energy markets. He asked Sir Nicholas Stern to write a report on climate change and then totally ignored most of its main proposals. He could have helped to establish the first UK pilot scheme for carbon capture and storage at Peterhead, but he ignored it and the project collapsed. He put £50 million into a fund to develop marine renewables, but made the conditions to access it so complex that so far not a single penny has been given away. His latest trick was to try to persuade OPEC to turn on the taps and invest its cash in our green technologies. That stunt, which turned into a humiliating begging mission abroad, showed scant understanding of what oil is or how the international commodities markets work. One cannot ask the Saudis to pump more oil when it is the wrong kind of oil and when global refining capacity is already strained, and one cannot expect the price of oil to go down when the pricing structure is far more dependent on militant attacks in Nigeria or the falling value of the dollar than on a few more barrels of Arab heavy.
I am grateful to the hon. Gentleman for giving way, especially as I was not here at the beginning of his speech. He will know that, over the next few years, energy security across Europe is likely to become more dependent on the Russian Federation for supplies of oil and, in particular, gas. Is he as disturbed as I am by the most recent harassment of the BP joint venture by the Russian authorities, and does he believe that Europe should take a much more concentrated and united approach towards Russia on energy security?
I am reluctant to delve into areas that are better answered by someone who represents the Foreign Office or has the foreign policy brief. The relationship between BP and TKK is very complicated, and I would not like to say anything rash and silly across the Dispatch Box that might in any way jeopardise the profound discussions that are going on. In terms of security, we do not get much gas from Gazprom; a lot of it goes to mainland Europe, particularly Germany. However, the interdependence between European consumers and Russian suppliers needs to be understood, because without their markets abroad, Gazprom and the producers in Russia, the former Soviet Union, would be unable to subsidise gas supplies in their own domestic economy. It is a far more complicated picture than many newspaper commentators suggest, and we have to be very responsible in what we say.
In getting the right balance between security and greenness, does my hon. Friend agree that the signal failure of the Government is not to give sufficient weight to technology, which can play a huge role, particularly in carbon capture, where the relevant technology is available and could be brought into effect with very little delay?
I will expand shortly on carbon capture and storage, which is a crucial ingredient of this debate, as is the word “technology” that my hon. Friend used. Almost all sectors of energy production are on the cusp of a scientific revolution, whether it be the fuel cell, carbon capture, cleaner coal or, indeed, nuclear. In America, instead of having the carbon regime that we think should underpin policy here, people are putting total faith in technological change and development by investing millions, if not billions, in the science. We have chosen a slightly different path towards the same end, and each is a legitimate route. In the end, technology, above all, will address the problem that we face.
Germany, which was mentioned in the context of gas from Russia, has made strenuous efforts to diversify its energy supply. I believe that it is installing something like 130,000 photovoltaic panels a year, while we are installing only about 200. That shows that other countries have taken decisions and got on with the job of providing alternative sources of energy, while our lot have been snoozing.
One of the key differences between us and Germany, which has, in our view, encouraged the development that my hon. Friend rightly identifies, is that it has feed-in tariffs and we do not. I will return to that matter in a moment.
How can anyone believe that this Government can give the lead we need for a green energy revolution when, after 10 years in office, it is their policies that have left us 25th out of the 27 EU countries in terms of the proportion of energy we generate from renewables? The price any country might face for not taking such serious decisions is clear: economic chaos. We saw that in South Africa, where 10 years ago, the power company Eskom told the Government that unless investment was made, power cuts would follow. That warning was heeded too late. Electricity blackouts have now become a common occurrence there, and they may continue for another five years. The economic costs cannot even begin to be calculated; businesses, agriculture and tourism have all been severely affected.
Such consequences in Britain would be utterly devastating, and to avoid them, we need to act now to ensure that the market delivers our energy in a way that is not skewed towards carbon-heavy fossil fuels. Our vision for energy security is built on three key planks: going green, cutting consumption and securing supplies. It is only by driving all those factors forward at the same time that we will be able to maintain clean, reliable and affordable energy. Overall, changing behaviour and championing energy efficiency will have far and away the most significant effect on the sustainability and, therefore, the security of our energy policy. The smart meter, for instance, could become one of the most important drivers of energy efficiency in the country. We are tempted to insert a new clause in the Energy Bill, requiring all homes to be fitted with a smart meter in 10 years. We are pleased that the Government have moved forward on that general principle, following the pressure applied from both sides during the Bill’s passage through the House.
We opposed the Government’s proposal for electricity display devices on the basis that the information did not give consumers the full capacity to change their behaviour, or to sell electricity back into the grid via the use of domestic microgeneration. We are glad that the Government are no longer pushing ahead with that proposal, but valuable time has been lost while they arrived at the conclusion everyone else had already accepted.
Would the hon. Gentleman agree that the country faces two massive barriers that the Government must deal with very quickly? One is the planning system, which is relevant to the roll-out of renewables, because it clearly militates against making the required decisions in the time needed. What do the hon. Gentleman and his party have to say about that? The second barrier is the availability of the national grid to those wanting to put electricity into it, and its fitness for purpose in the 21st century to deliver what the hon. Gentleman, our party and, I am sure, the Government want. What does he think about that?
The hon. Gentleman’s attack on the national grid is unwarranted. It faces a massive challenge. The infrastructure has served us well over the years, and Britain has been very lucky to have a national grid. Massive challenges face the National Grid Company in investing money to cope with, for instance, a new nuclear power station with a far greater capacity than existing ones. Rather than attack National Grid, the hon. Gentleman ought to understand the challenges, and support its efforts.
On the Planning Bill, we agree that there needs to be a swifter planning process, but we were unhappy with the Bill because of the undemocratic nature of the decisions to be taken. We did not approve of the independent planning commission, and I even think that some decisions should rest with the Secretary of State. We are concerned that there is no clear explanation of how the community infrastructure levy will work, and national policy statements that do not come to this House will lack any democratic warrant. That is why we expressed concerns about the Bill.
I am grateful. There is 9.3 GW of renewable energy waiting to come on to the national grid. What is the hon. Gentleman’s party’s policy on the national grid, considering that that huge amount of energy is waiting, never mind the energy that is queuing up behind it?
The national grid needs to be able to take the energy that is ready to come on, rather than take it from power stations in the order in which planning was applied for. It is not easy, and I suspect that there will be a shift from onshore wind, which represents most of the energy that the hon. Gentleman identifies, to greater input from offshore wind. I shall come to that in a moment, because I wish to talk briefly about the renewables obligation.
What would we do? First, we need to kick-start a renewables revolution in the UK. At the moment, that is proceeding at a snail’s pace and a lot of targets have been missed. The UK has 40 per cent. of Europe’s wind resources, but just one tenth of Germany’s 20 GW of wind capacity. That is related to the point that my hon. Friend the Member for North-East Hertfordshire (Mr. Heald) made a moment ago. The current renewables obligation has skewed investment heavily in favour of onshore wind and methane, so we support the Government’s decision to band the obligation and clear the path for the necessary massive expansion of offshore wind.
Does the hon. Gentleman mind if I press on? I think that I am taking too much time, and the time for the debate has been compressed because of the statement.
With offshore wind operating at a load factor of about 35 per cent., it is clear that the Secretary of State’s plan for 33 GW of sea-based turbines by 2020 is, to say the least, ambitious. We need a major roll-out of microgeneration for domestic households, schools, hospitals and public buildings. Even a report by the then Department of Trade and Industry estimated that we could get up to 40 per cent. of our electricity from microgeneration in the next 45 years. Even that figure lacks ambition, because ground source heat pumps, wind turbines and photovoltaic solar panels are increasing in efficiency and decreasing in cost all the time.
The best way to create a commercial market for microgeneration would be a system of feed-in tariffs. There should be no doubt about that. More than 16 countries in Europe have such tariffs, and there is about 16 times more microgeneration in those countries than here in the UK. The Government’s refusal to implement them in their latest Energy Bill is baffling. Alongside microgeneration, we need a comprehensive strategy to be implemented for the capture and use of heat. In Holland, combined heat and power became the biggest generating force in the country during the 1980s, yet UK power stations are losing £5 billion-worth of heat every year. We need to harness it as a source of energy, not dissipate it as a source of global warming.
Small-scale renewable projects do not go far enough. We still need a massive expansion of major renewable and low-carbon projects to suit the scale of the challenge that we face. Britain has an incredibly rich range of natural resources to build on. This emerald isle sits in a sea the power of which, if harnessed, could provide huge amounts of electricity to both the UK and Europe. It is clear, too, from a report by EEF, that marine technologies represent a gold mine for British companies looking to establish themselves in the low-carbon industry.
Is the hon. Gentleman aware, however, that there is a provision in the Energy Bill on the banding of renewables obligation certificates, which would give those undertaking demonstration offshore wind and marine renewables projects the choice of either a double-banded ROC or repaying the large grant? There is great concern among those in demonstration renewables projects that they will not proceed. What is his party’s position on that?
I understand the hon. Gentleman’s concern and I know that exchanges between him and the Secretary of State about that have taken place in the past. I think that the Secretary of State undertook to write to him.
However, the Government have not capitalised on our extraordinary advantages. For example, I would like an explanation of why their much vaunted marine renewables deployment fund has neither attracted significant interest nor distributed any funding in more than three years. It is all the more perplexing because Britain has more businesses engaged in developing marine energy devices than any other country. Why have the Government created eligibility criteria that are so complicated that companies simply cannot find the wherewithal to apply?
Furthermore, as was said earlier, we all recognise that coal could play a fundamental role in our future energy security. However, where we could have expected leadership, there has been muddled thinking. The Government’s delays have resulted in our one developed carbon capture programme closing down. What has happened to it? BP is working to develop it in Abu Dhabi, so a great British scientific breakthrough has been lost to this country.
The Government’s lack of vision has resulted in only one carbon capture and storage pilot project, whereas we know that there will be demand for more new coal-fired plants over the next few years. Are they to go ahead without CCS? The right and sensible way forward would be for the Government to accept our proposals for three CCS projects and move towards maximum limits on emissions so that the industry has absolute clarity about how it needs to change.
There is also the question of storage. Our onshore gas storage is currently among the lowest in Europe. Some European countries are required to retain 80 days’ worth of gas, but we have the lowest storage, yet we are at the end of the pipe. Our position contrasts starkly with that in the winter of 2005-06, when we came within days of running out of gas.
For legitimate reasons historically, which are associated largely with North sea production, we have not developed the sort of onshore storage infrastructure that is normal elsewhere. That must change. I accept the contribution that new pipelines and liquefied natural gas can make, but as our domestic gas supplies dwindle, we need to be sure that we have sufficient supplies for several weeks, not just days.
We tabled a new clause to the Energy Bill that would require the Secretary of State to make an annual statement on his assessment of our long-term storage needs and the steps that the Government were taking to deliver them. The Government’s refusal to accept the new clause again makes us fear that they will not take the necessary steps to ensure our long-term energy security.
The debate must be seen against the EU targets for renewables, which the Government negotiated. The Secretary of State knows that few people believe that they are achievable except at massive cost to businesses and households in this country. It is not a time for the Government to say that we should aim high—of course we must, but the aims must be achievable and realistic. Time after time, the Government have set targets and slid away from them as it becomes apparent that they are undeliverable. That happened with renewables and with fuel poverty targets, but the EU targets are on a different scale. The Government must explain in much greater detail the way in which we can achieve a target of generating 15 per cent. of our energy and perhaps 40 per cent. of our electricity from renewables.
What do the Government perceive as the role of marine and tidal energy? How would we achieve those targets if the Severn barrage either were deemed too damaging to the environment or was held up for years by wrangling? They need to explain how they have decided how much it will all cost. The Government’s estimate is £5 billion to £6 billion a year, but the Renewables Advisory Board estimates that the cost could be as high as £100 billion in capital investment from UK industry and property owners. Indeed, it was reported this month that Paul Goldby of E.ON believes that the Government’s green energy targets could add £400 to the average household’s fuel bills as utilities companies pass on the additional investment costs to consumers.
Of course, we want tough targets for renewables and low-carbon energy, but we also want them to be realistic and achievable so that investments are made on sound business principles to establish as much energy independence as we can, not to satisfy the EU’s arbitrary whims.
Energy security is one of the most important issues on the political agenda and its significance is growing. The various elements that make up this country’s approach to energy should not be taken in isolation. It is no exaggeration to say that, together, properly structured and implemented, they will determine our very survival. To avoid a period of profound peril 10 years hence, the decisions to avoid that peril must be taken now. Too few such decisions have been taken. For the sake of our future, we urge the Secretary of State to get on with it without delay.
I beg to move, To leave out from “House” to the end of the Question, and to add instead thereof:
“acknowledges that the Government is addressing the recent sharp increases in fossil fuel prices, which reflect an imbalance between supply and demand in global markets, through international engagement; recognises that the UK has the most competitive energy markets among the G7 nations, as recognised by independent analysts; acknowledges the Government’s success in establishing a market framework which encourages sharp increases in gas import and storage capacity; further acknowledges the Government’s success in establishing a clear framework for investment in new nuclear generation capacity through the Nuclear White Paper, and in setting out a blueprint for a historic expansion of renewable generation through the Renewable Energy Strategy consultation; recognises the Government’s work in promoting energy efficiency as an integral part of its strategy; commends the Government’s efforts to counter fuel poverty through the Winter Fuel Payment and through securing major financial commitments from energy supply companies; notes the Government’s support for microgeneration; recognises that the Energy, Climate Change and Planning Bills will provide a legislative framework that is fit for purpose in changing market conditions and that supports the Government’s policy objectives; believes that the Opposition’s failure to show clear leadership on energy could put at risk Great Britain’s energy security; condemns their failure to support the Government’s Renewables Obligation; and deplores their opposition to the Planning Bill, which will provide greater certainty for major infrastructure building and help secure Great Britain’s future energy independence.”.
I welcome much in what the hon. Member for Rutland and Melton (Alan Duncan) said, particularly his analysis of what is happening in energy markets and his appreciation of the scale of the challenge that we face in responding to it. I agree with a lot of what he said about the importance of tackling the threat of climate change, too. He is right that in some respects there is a measure of cross-party consensus in the House about the right way of dealing with those challenges. However, he will not be surprised to hear that I disagree strongly with his analysis of the actions that Her Majesty’s Government have taken so far to address those considerable challenges.
May I offer the hon. Gentleman a little bit of friendly advice? I am not sure whether he chose the topic for today’s debate or whether he was frog-marched, as it were, into tabling such a motion—we can speculate about that—but I thought that the point of Opposition Supply days was for the Opposition to showcase their policies. However, I obviously had that wrong, because I listened intently to what he said and he clearly has no policies to showcase. We heard nothing from him or in any of his hon. Friends’ interventions that shed any light on what his approach would be. In a week when his party—and, I am afraid to say, the Liberal Democrats—voted against the Planning Bill, which is probably the most important reform of recent times and which can help us to secure our country’s energy future, the hon. Gentleman has some cheek in moving his motion today.
The Secretary of State says that we have not put forward any policies. Which of our policies did he miss? Was it feed-in tariffs, smart meters, agreeing with the changes to the renewables obligation certificate or carbon capture and storage? I could continue with the list, but it would appear that he was not listening.
No, I was listening to the hon. Gentleman’s comments, and I want to talk about what I understand his party’s policies to be in a minute. Indeed, I wish that they were as straightforward as he is now presenting them to be. I want to highlight some of the confusions that characterise his party’s policy on energy.
The Government have taken the necessary decisions to help secure our country’s energy future, not ducked them, on climate change, nuclear power and shaking up our planning system, as I said, so that we can get on and make the important changes that need to be made. The Government have made the right decisions. On renewables, we have set out what I believe to be the best way of securing our long-term energy needs, lessening our dependency on fossil fuels in the process. On every one of those issues, the Opposition have been found wanting—pandering, dithering, gesturing.
If a company wanted to embark on getting planning permission to build a nuclear power station today, would the Secretary of State advise it to wait until the quango is set up and the national policy statements are in place and to use the new system, or would it be quicker to go under the old system?
We are likely to see planning applications being made in the next couple of years, and they will be dealt with under the new system. The new system will be more streamlined and effective. I do not know whether the right hon. Gentleman has talked to potential nuclear investors, but strong support is being expressed, and not just by the CBI and some other industry organisations, for the reforms that Her Majesty’s Government have proposed. Let me say to him and others that the status quo is not a credible option. The current planning regime has woefully let down the country’s needs in relation to major energy infrastructure projects. If we need confirmation of that point, we need only cast our minds back to the six-year long Sizewell B inquiry, which I believe significantly delayed investment in nuclear power.
Does my right hon. Friend agree that the Liberal Democrats, who oppose nuclear power, and the Conservatives, who are not prepared to vote for the planning means to get nuclear power, not only put at risk our future energy security but create an obstacle for the British engineering companies that make a huge contribution to world technology and jobs in this country? It is envisaged that up to 200 nuclear power stations will be built over the next 30 years worldwide.
I strongly agree with my hon. Friend, and I pay tribute to his lifetime support for the nuclear industry. There was an unfortunate unholy alliance between the Liberal Democrats, who opposed the planning reforms and who oppose nuclear, and the Conservatives, who say that they support nuclear but opposed the planning reforms. One is a means of achieving the other, and I believe that the hon. Member for Rutland and Melton needs to go back to the drawing board and reconsider his position on this issue and many others.
If undemocratic planning procedures are so essential to promoting renewables, why have 22 out of 25 European Union countries managed to promote renewables with a lot more community involvement and democratic consultation in planning than the Government are proposing?
If we look at the planning arrangements in many other European countries, we see a much more streamlined system. It is not part of the Government’s reforms, which the hon. Gentleman is deliberately mis-describing for his own reasons, to take away the opportunity for people to lodge a proper objection to a development. It would be quite wrong to do that, and I challenge him to say that that is the right way to describe the reforms that we have proposed.
There can be little doubt that securing the UK’s energy supplies as we make the transition to a low-carbon economy is one of the greatest challenges that our country faces. As the hon. Member for Rutland and Melton has rightly said, we are doing this against a backdrop of rapidly rising energy prices. In the face of this new global landscape, our efforts are focused on three principal issues. First, we must ensure the greatest degree of energy security and independence for the United Kingdom. Secondly, we must address the threat of climate change. Thirdly, we must do all that we can to mitigate the impact on consumers of the rising cost of energy.
I shall deal first with the issue of energy security. As we all know, global competition for energy resources is intensifying. Resource nationalism, closed-off markets, subsidies and state-owned monopolies are all combining to remove investment incentives to exploit the world’s energy resources. Another pressing reality that we need to face is the ageing nature of many of our existing power plants. Over the next two decades, we will need to replace one third of our energy generating capacity. Nine of our current power stations will be substantially affected by the implementation of the large combustion plant directive, and might have to close by 2015. All but one of our nuclear power plants will have closed by 2023. This domestic reality demands that we all take decisive action.
First, we need to maximise domestic energy production. The UK still meets about two thirds of its energy needs from the UK continental shelf. There could be at least 25 billion barrels of oil and gas equivalent left in the North sea, and we need to do all that we can to utilise those remaining resources. In 2007, the highest number of offshore exploration and appraisal wells was drilled since 1996. About 300 million to 400 million new barrels equivalent was discovered, and this year has seen the highest levels of interest in new licences for more than 30 years.
However, we cannot afford to be complacent. We are committed to maximising UK oil and gas production, and that is why I recently announced measures to incentivise increased production in our existing oilfields and to enable new fields to come on stream as soon as possible.
Why did the Government spend the previous years increasing taxes and tweaking the tax system against the producers of North sea oil and gas in a way which they warned would result in their not optimising production? Are not the Government only now belatedly realising what a mistake that was? Why do they posture with the Saudis when we could do more to raise production at home if we had the right tax system?
My right hon. Friend the Chancellor is responsible for petroleum revenue tax. He regularly meets the oil and gas industry to discuss these issues, and it has strongly welcomed our recent proposals and announcements. As to the right hon. Gentleman’s comments about the Saudis, it is quite wrong to characterise the discussions with them as pandering; that does not do him any justice at all.
As I said, we need to create the right investment climate for UK energy infrastructure, which is rightly our No. 1 priority. Billions of pounds have been invested in new gas storage, which the hon. Member for Rutland and Melton mentioned, and new import infrastructure. He rightly referred to the new LNG terminal at Milford Haven, which will bring Qatari liquefied natural gas into the UK. Also under construction is 8 GW of new generating plant.
We are also forging ahead to develop the low-carbon technologies that we need to support our security of supply and climate change objectives. Last year, we set out measures in the energy White Paper to triple renewable energy capacity through the renewables obligation. In September, we began a feasibility study on a barrage across the Severn estuary—one that could provide as much as 5 per cent. of the UK’s total electricity requirements. In December, I announced plans that could allow companies to build 25 GW of new offshore wind capacity by 2020. Last week, we announced with Ofgem immediate action to strengthen grid access for renewables—a matter to which my hon. Friend the Member for Bolton, South-East (Dr. Iddon) referred. Our proposals on connect and manage should help unblock some of the current delays in getting new renewable projects connected to the grid much more quickly. Perhaps as much as an extra gigawatt could now come on stream much more rapidly.
Last year, there was a 20 per cent. increase in offshore wind generation capacity, and we will soon overtake Denmark to become the world’s leading offshore wind generator. The hon. Member for Rutland and Melton was highly critical of the Government’s record on the promotion of wind power. It is worth reflecting on one fact: as a country, it took us 20 years to generate the first gigawatt of wind-generated electricity; the second gigawatt, under the present Government, took 20 months to bring on stream. We must do more, and do it urgently, to meet our share of the EU 2020 renewables target.
I hear what the right hon. Gentleman is saying about offshore wind, which is clearly an important way forward. However, the deep offshore wind and marine renewables sector has expressed concern about changes in energy legislation and I have corresponded with the Minister for Energy on this matter. Although there are grants under the present system, I understand that they are repaid by future profit, but under the new scheme a choice will have to be made between the double-banded renewables obligation certificates or these grants, and I am told that that will result in the sector being unable to get investment for many of these projects. Will the Secretary of State look at that again, because deep offshore wind and marine renewables are an important part of the renewables future, and unless we get this right, it could have a serious impact on our ability to meet the targets?
It is true that companies cannot choose between grants or renewable obligation certificates. That has been the long-standing position, but perhaps the hon. Gentleman would like to intervene later on my hon. Friend the Minister for Energy. I am sure that that debate will be a fascinating one for us all to read in Hansard at our leisure.
Last week, as the hon. Member for Rutland and Melton pointed out, the Government published our own route map for achieving our ambition on renewable energy. A tenfold increase in renewable energy within the next 12 years is, I accept, a hugely ambitious target. We also aim for a sevenfold increase in the amount of renewable electricity generated in the UK and we are proposing measures that will extend and raise the value of the renewables obligation—the principal mechanism of incentivising such investment. We are proposing to introduce a new financial incentive to deliver a tenfold increase in renewable heat sources as well. Again, the hon. Gentleman referred to many of the technologies, including ground-source heat pumps, that could make a difference in that respect. We will consider increasing financial support, including feed-in tariffs, to stimulate microgeneration of heat and electricity in our homes.
I have to say that the policies of the Conservative party, as I understand them, represent in all those regards not a step forward, but a step backwards. The one thing that investors tell us time and again is to keep the incentive regime predictable and not to scrap the renewables obligation for large-scale electricity generation. So what do the hon. Member for Rutland and Melton and his party actually propose to do? They still propose to scrap the renewables obligation—[Interruption.] If the hon. Gentleman would like to correct that position, he is welcome to intervene.
The Secretary of State should go back to the consideration in Committee of the Energy Bill, where we made it quite clear that we support the banding of ROCs for larger-scale projects. On feed-in tariffs, the measures that we proposed would give the Secretary of State discretion. He could therefore decide at what level feed-in tariffs would be appropriate for microgeneration and at what level ROCs would be appropriate. We would give him as much flexibility as possible because we recognise that the two systems can work side by side, but we want to give him the discretion to decide at what level they come in.
I suppose that that is a clarification. [Interruption.] It is a clarification of sorts. I confess that I have simply referred to the Conservative party policy documents. Obviously, the hon. Gentleman has announced today that they have all changed. I very much—[Interruption.] Am I wrong to say that they have changed or am I right? I am not sure what the hon. Gentleman is talking about. I suggest that he read his own party’s policy documents. He will find them quite explicit—later in the debate, we can confer about that—and they confirm the Conservatives’ current policy.
May we perhaps concentrate on Government policy, and may I ask the Secretary of State a simple question? There have been estimates that up to £100 billion will be needed to fulfil the obligations courageously set out last week. Will that will be loaded through the taxpayer or entirely through energy bills?
This is an Opposition Supply day, so it is quite reasonable for me to question the hon. Member for Rutland and Melton about his party’s policy.
Returning to the point raised by the hon. Member for Harrogate and Knaresborough (Mr. Willis), the £100 billion figure is the sum total of private sector investment needed to finance this change in our electricity consumption. Yes, it will be paid for, ultimately, by consumers. That is true, and we have set out in the document our baseline assumption about the impact on bills and what it will mean.
We will need to do more on energy efficiency and providing further help and support for fuel-poor households—we accept that challenge—but as I am sure the hon. Gentleman understands, as a distinguished Select Committee Chairman, there is no way of somehow conjuring up that money out of nowhere, with no consumer ever being affected by it and all of us getting on with the rest of our lives without noticing that £100 billion. We will notice the £100 billion in our bills over the next 10 years. There is simply no other reality for us to address. The challenge for the Government is to mitigate the impact of those rising bills. Again, in our renewable energy strategy, we set out some ways in which, sensibly, we could do that, but we must all keep in mind that simple reality.
I want to come back to the point made by the hon. Member for Rutland and Melton about feed-in tariffs, because he is right that they have had a significant effect in many other countries in bringing on new technologies, but at significant cost to consumers. Germany, for example, is often cited, as it was today by the hon. Gentleman. He, like the House, will be aware that there are moves to reduce the feed-in tariff because of the impact on consumer bills.
At a time of rising energy prices, it is incumbent on us to take into account how we make the transition to a greener power generation system. We must take into account the impact on people’s bills, because our constituents will come to us and say, “Why are my energy bills going up to meet the costs of going green?” We must have convincing arguments for that.
Indeed, that impact will be not only on everyday folk through their energy use, but on companies in the ceramics industry in my constituency, which are high users of gas, for example. There will be an impact on the ability to produce products that can be sold at a price that people can afford.
We have to be aware of the impact not just on consumers, but on industry. I want to come to that in the context of my remarks on the emissions trading scheme.
On the question of costs, how has my right hon. Friend become bewitched by the pied piper of nuclear power? It has been heavily subsidised, never delivered on cost or on time, and left us a £73 billion legacy. The new nuclear facility in Finland is already two years late and £1 billion over budget. Are not all the other alternatives—wind, wave and the other renewables—far more attractive and practical? They will certainly come in at better value than nuclear.
I do not think we should say no to any low-carbon form of power generation. Nuclear power is a proven and reliable way of generating low-carbon electricity, and I think it would be wrong for a generation that has taken advantage of the benefits of reliable nuclear power, as this generation has, to say to future generations “We are sorry, but we are not going to give you the option of nuclear power in the energy mix.”
My hon. Friend has a difference of opinion with the Government on nuclear power, and I am sorry about that. I do not think that he takes into account the new economics of energy in the world, the high—probably sustainedly high—prices of fossil fuels, and the necessity of action on climate change and the impact of a carbon pricing mechanism such as the emissions trading scheme. All those changes have opened up a space in which new nuclear facilities can operate, which is why so many countries around the world are actively pursuing the nuclear option, wisely and sensibly in my view. At the end of the day, however, it is for the private sector, not the taxpayer, to finance investment in a new nuclear power station, and my hon. Friend’s concern about subsidy is therefore misplaced.
Some of us are sitting on the fence in relation to nuclear power, and like others I am still to be convinced, although I am not closing my mind to it. As consumption in China and India is expected to rise by 50 per cent. between now and 2030 and as coal will have to be burnt, surely a country that has extracted only 15 per cent. of its coal reserves should be talking about major investment in the coal industry as well as the nuclear industry.
I strongly agree with my hon. Friend. I think that we must keep the option of clean coal on the table as well, and that it would be wrong to introduce new measures, as proposed by the Conservatives, which would make it impossible for new coal-fired power stations to be commissioned at any time soon in the United Kingdom.
The nuclear industry is complaining of a shortage of skills in the sector. Its main complaint is that it has nothing to plan against when it comes to recruiting and training people. What certainty can the Secretary of State give the industry, and how will he provide the skills that are needed?
I agree with the hon. Gentleman; the issue of skills is a potential key bottleneck in the United Kingdom’s nuclear renaissance, and we must address it systematically. How can we do that? We can do it in a number of ways. Obviously a deal flow on new nuclear power generation will create the certainty to which the hon. Gentleman refers, and I hope we will begin to see that. In the meantime, however, there are things that we can do, and are trying to do, to address the problem that he has highlighted. The National Skills Academy for Nuclear, for instance, has recently started to function, and it is taking on and planning to train 1,000 extra apprentices in the industry.
What we cannot afford to do is wait three or four years before doing anything to address the skills problem. If we do that, our ambition will be constrained and we will probably have to rely on migrant experts to come and help us with our nuclear programme. I see this very much as an opportunity for the nuclear industry in the United Kingdom to undergo a significant revival.
I heard a Liberal Democrat say in response to a comment from my hon. Friend the Member for Newcastle upon Tyne, North (Mr. Henderson) that there were no suitable British companies. If that is really the Liberal Democrats’ view, I think that they should get out of the House a little more and travel around to see some of our outstanding manufacturing companies, which have tremendous potential to create tens of thousands of highly skilled jobs in this sector, many in parts of Britain that desperately need them.
While we may disagree on other matters, does the Secretary of State not share my concern that, paradoxically, those who are most worried about global warming appear to have shut their minds to the only reliable form of electricity generation that does not generate any form of carbon dioxide? Does he not find that puzzling? Will he ensure that we get on with building nuclear power stations as quickly as possible? Rather than building only enough to generate 24 per cent. of our electricity, should we not go beyond that, as the French have?
I hope the hon. Gentleman feels better for that. I agree with him about the scale of our ambition. At present about 19 per cent. of our electricity comes from nuclear sources, and I have made it clear that we should not set a cap on the contribution of nuclear power in the future. That is for the market to decide, not Ministers. My personal sense is that our ambition should be significantly higher, for the good and sensible reason the hon. Gentleman has given: that such power is low-carbon and reliable, and the technology is proven and safe.
We would be cutting off our nose to spite ourselves if we were to take an ideological view about nuclear. In the 12 months that I have been in this post, I have learned that the ideologues on energy policy are those who jeopardise our energy security the most. What we need is a hard-headed, practical, common-sense view about how we can have a broad-based energy policy in the UK that utilises all the technology available to us, including nuclear. We are going to need all those energy sources in order to be sure about our energy supplies in the future.
There is a long section of my speech dealing with nuclear, but I might already have dealt with the subject.
Before my right hon. Friend departs from the issue of nuclear, on skills retention and development in the UK, will he confirm that the national nuclear laboratory will be of fundamental importance in making us a world leader yet again? Also, as to the decommissioning costs of the civil nuclear programme, can he confirm that the £73 billion or £78 billion that is often talked about—sometimes rather glibly—is principally a military waste inventory?
My hon. Friend probably knows more about the nuclear industry than any other Member, having worked in it for many years and now representing Copeland, which adjoins my constituency. He is right about the legacy issue, and he is right generally about the role of nuclear going forward. I pay tribute to his work.
I hope that we are all agreed—perhaps with the exception of my hon. Friend the Member for Newport, West (Paul Flynn) and others who share his view—that the job in terms of nuclear is to clear away the barriers to investment in new nuclear, strengthen the regulatory framework, create a clear, fair and predictable planning process, incentivise the UK supply chain, where there are tens of thousands of jobs in the making, and continue to build public confidence in a long-term solution to waste management.
Will the hon. Lady allow me to speak for a little longer?
We are beginning to develop an important consensus with the Opposition party on the importance of new nuclear as part of the UK’s energy mix. I very much welcome that, and I also welcome the distance travelled by the hon. Member for Rutland and Melton, although even now a nuclear investor could be forgiven for not being entirely clear about his party’s view on some of these matters. Not that far into the past, I and many others heard the Leader of the Opposition say that his
“policy, green energy first, nuclear as a last resort, is absolutely right.”
The hon. Member for Rutland and Melton very shortly afterwards popped up and said, in an attempt to correct his leader, that it was not a last resort, but just “two words” in a document that “we binned months ago”. The Conservative party’s green supremo, Mr. Zac Goldsmith, upon whose shoulders the Tory detoxification process largely resides, then described nuclear power as a total waste of money and stated that
“if the party said nuclear power was good, I’d fight like hell against that.”
No wonder, then, that recently Baroness Warsi—a member of the shadow Cabinet, no less—in response to a question from Andrew Neil about whether the Tory nuclear policy was unfathomable, replied simply, “Um, it is.”
The planning reform Bill debated in the House last week is seen by every potential nuclear investor as critical, and we cannot afford a rerun of the six-year Sizewell B inquiry. Those who opposed the Bill—
I have not yet quite finished this point. I will give way to the hon. Lady shortly. [Interruption.] This is the only part of my speech that I am actually enjoying, so I hope that she will let me finish it.
Those who oppose the Planning Bill put our country’s energy security and our climate change objectives at direct risk. Investors need predictability. We are in a fiercely competitive global market for new nuclear and I want to ensure that investors see the UK as the best new-build market in the world. Our planning reforms will help us to achieve that.
I thank the Secretary of State for giving way. Will he briefly address the comments of Hamish Roberts, managing director of the Aon natural resources team for strategic risk management? He said that the Government’s plans for nuclear expansion are unachievable unless they think beyond the risks of safety. Will the Secretary of State address the terrorism risks in future plans for fuel security?
I have not seen that comment, and I do not believe that the ambition we have set out for nuclear is unachievable. Of course we must address the issue of nuclear safety, but nuclear power in the UK is a safe and secure form of technology. There is very substantial security designed specifically to deal with terrorism, as I am sure the hon. Lady will know if she has ever visited a UK nuclear power plant. So I do not think that terrorism is the issue here. Security certainly is, but our nuclear industry is a secure industry. Nuclear is not a last resort, as some have said, but a vital resource for our country and I hope that there is emerging common ground between us on that.
As we bring on these low-carbon technologies, we are not naive enough to dismiss the importance of fossil fuels for UK energy security. Generators will want to continue to have the flexibility that fossil fuels provide to cope with peaking demands, and they can have that flexibility while meeting our international climate change obligations. As we all know, emissions are capped by the EU emissions trading scheme—not an emissions cap on individual technologies, because that is not necessary, but a cap for power and energy-intensive sectors as a whole.
That is why I believe that the Opposition’s new policy on the future of coal is another potential threat to UK energy security. In practice, it would place an effective moratorium on new cleaner coal facilities in the UK. It would place a double dose of regulation on energy investors for no beneficial effect. It would lock in older, higher- emitting coal generators and would not make a jot of difference to whether we were more or less likely to meet our climate change targets. Instead, it would necessarily make us more reliant on gas imports—at a time when gas supplies around the world, as we all know, are increasingly politicised.
Policies that might get three cheers from some lobby groups usually turn out not to be worth the paper they are written on. If one prods this latest one from the Opposition for 30 seconds or so, it becomes clear that it is ridiculous—short-term, populist, headline-seeking and naive. In fact, it looks at first like a Lib Dem policy, not a policy from a party that aspires to be in government. It is not just my views on these matters that, I am sure, the hon. Member for Rutland and Melton would take seriously; it is the views of Richard Lambert, from the CBI, who has condemned this policy in very trenchant terms, and David Porter, from the Association of Electricity Producers. Effectively, the Opposition policy is to make carbon capture and storage mandatory before it has been demonstrated successfully as a technology. That is the wrong approach.
Does the Secretary of State agree with me that thousands of millions of tonnes of coal remain to be worked in the United Kingdom, perhaps via technologies that we do not yet fully understand? The next key stage in the process is a viable carbon capture and storage system, and we know that work is going on in that regard. If, by some mischance, the Conservatives returned to power in 2015 or beyond, they would have access to CCS. However, does the Secretary of State agree that it is unlikely that they would pursue that route, not least because the shadow Secretary of State has a constituency, in north-east Leicestershire, with almost 1,000 million tonnes of coal that remains to be worked? That looks a very juicy prospect to me, and it is about time that he moved into it.
The option of using clean coal is one that we should keep, which is why we have taken the decisions that we have in relation to carbon capture readiness and CCS. The option of new clean coal technology would be effectively ruled out by the policies that we have heard recently from the hon. Member for Rutland and Melton.
I have described this Opposition policy as naive, which is not a word I would usually use, but on this occasion it is totally justifiable. However, I do not accept at all that the hon. Member for Rutland and Melton is naive. He has had a very substantial career in the oil industry. He and many of his colleagues cannot really believe in the approach that has just been put forward by the right hon. Member for Witney (Mr. Cameron). It must be the panderers who have come out on top again. The panderers used to be an endangered species, as we all remember, but sadly they now seem to be alive and well—[Interruption.] That was the joke, actually; it is not coming—it has been delivered. There are a lot of panderers in the Leader of the Opposition’s office, and a lot of wildlife organisations will welcome that, but I personally do not.
I made the point in Committee that post-combustion capture of carbon is the most inefficient method, but that is the direction that the Government are taking. As a chemist, I know that pre-combustion capture allows us to generate chemicals, especially hydrogen. Why have we chosen post-combustion capture?
We made that decision on advice, because it is the most globally relevant technology if one considers what is happening in India and China, where a gigawatt of new coal-fired capacity is being added every week. There is no doubt, given the reality of that sort of use of fossil fuel, that we need a technology capable of being applied to that type of power generation, and that is why we have chosen post-combustion carbon capture and storage. Other countries are exploring other technologies—for example, Norway is looking at a gas scheme, and the US is considering a project along the lines that my hon. Friend mentions.
Does my right hon. Friend understand the great sadness felt by my constituents and others in north Staffordshire? They sit on vast reserves of coal, but the mines were closed in the 1980s by the party that now talks about what should have been done in the past in terms of investing for the future—[Interruption.] My constituents are frustrated that those resources are there, but it appears that nothing will be done with them in the future.
I do understand that. It is especially unbecoming for Conservative Members to barrack my hon. Friend when he makes a fair and valid point. They obviously do not like to be reminded of their record in government.
It is worthy of note that significant investment is now going into coal extraction, and that should be welcomed because it is a source of energy security for the UK. However, we must ensure that we use it in as clean a way as possible, and that is what we are trying to do.
My final point is about the action that we are taking on energy prices. Unprecedented global demand for fossil fuel has resulted, as we all know, in wholesale gas and electricity prices more than doubling since 2007. Producers and consumers have a mutual interest in avoiding high oil prices in the short term and a shared interest in decarbonising our economy over the long term. That is why, at the recent energy summit in Jeddah, we proposed that consuming nations open up their energy markets to new investment from oil producers—a sensible suggestion—so that oil-producing countries have a stake in the future of tomorrow’s energy technologies. In return, we need oil-producing nations to open the door to increased investment in expertise to exploit the full potential of the world’s oil supply in the short term.
Clearly, high oil prices impact disproportionately on the poor, so we must continue to make the eradication of fuel poverty a priority for action. Since 1996, more than 4 million households have been lifted out of fuel poverty. Since 2000, £20 billion has been spent on fuel poverty benefits and programmes. When it comes to fuel poverty, therefore, we will take no lessons from the party that, as we all remember, imposed VAT on gas and electricity bills. One of the first things that we did when we came to office in 1997 was cut VAT on fuel bills, helping millions of consumers in the process. I do not dispute that we can and should look to do more, and we will make further proposals in due course.
We have made progress in that regard. The hon. Gentleman will be aware of the recent outcome of the Energy Council, which my hon. Friend the Minister for Energy attended and where he did a very good job for the UK. We have made progress, but we have not got everything we wanted. We also have a two-year review, so we can take another look in two years. It is not true to say that nothing has been done.
As I said, we are focused on ensuring that the UK has the most resilient energy system that it can through a diverse low-carbon energy mix. That demands nothing less than a revolution in our energy systems both at home and abroad. We must move away from the old carbon-intensive economy of the first industrial revolution and embrace the new low-carbon technologies of the next industrial revolution. This is the right time to accelerate our progress towards that end, securing not just our long-term national interests but a new generation of green-collar jobs in the British economy. That is why I am pleased to announce today that the companies shortlisted from the pre-qualification stage of our carbon capture and storage demonstration competition have been announced. I am also publishing proposals today that will help us to develop the right regulatory framework to make carbon storage a reality and to explore what carbon capture-ready means for new power stations. Copies of both documents are available in the Library.
The criticisms of the Government that we have heard today are misplaced. They are nothing less than opposition for opposition’s sake. The Opposition’s policies would not help to steer our country through the difficult times ahead but would instead make matters worse. As I said earlier, the hon. Member for Rutland and Melton has not set out a coherent alternative because he has none to offer. I urge all my right hon. and hon. Friends to reject the Opposition motion tonight and to support the amendment in the name of my right hon. Friend the Prime Minister.
We welcome the opportunity for this debate. It is timely given the state of the international energy markets, the state of our constituents’ fuel bills and, of course, the publication last week of the Government’s renewable energy strategy consultation. We will support the motion because it contains much that is right, but it also has some weaknesses that I shall consider in my remarks.
The motion is right at least to mention fuel poverty, although I think the subject could have been highlighted rather more. It is absolutely essential that we ensure there is a fundamental shift in the way that energy companies’ tariffs work in this country, if necessary through changing the remit of Ofgem, so that we can guarantee the lowest tariffs for the poorest customers, so that price spikes deliver benefits to poor customers as well as the energy companies, and so that we can ensure that energy efficiency measures are prioritised for the least well-off customers first. I am sure that the Conservatives’ response to fuel poverty and the specific policies, rather than the rhetoric, will emerge during the course of the debate, but I might have missed them during the speech made by the hon. Member for Rutland and Melton (Alan Duncan).
The motion is also right to highlight the problem of the potential energy gap. We are indulging in an important national debate about how we deliver a sufficient, affordable, reliable and sustainable energy supply for this country. I am surprised that, although it is about the threat to energy security, the motion is rather silent on the potentially greater threat of climate change. That might be because there is an emerging split among those on the Conservative Benches about some of the issues relating to climate change. That was evident in Committee on the Climate Change Bill last week, when the right hon. Member for Suffolk, Coastal (Mr. Gummer) and others led a rebellion against their Front-Bench team on whether the Bill should include a reduction of 80 per cent. in carbon emissions by 2050. The Conservative rebels supported Liberal Democrats and Labour Back Benchers, while the Conservative Front Benchers sat on their hands on that vital issue. I can therefore understand why Conservative Front Benchers might not be highlighting the climate change dimension to this debate.
I shall come to explain how we would do that in the course of my remarks. The hon. Gentleman should just be patient.
The motion is also right to highlight the UK’s renewable energy potential, which was estimated by the Renewable Energy Association at some 14 to 18 times the current level of electricity sales in the UK. The hon. Member for Rutland and Melton said that 1997, when Labour took over from his Government, was such a long time ago that renewables hardly existed then. Nevertheless, for a full six years the Liberal Democrat policy had been to increase the renewables proportion of energy generated to 20 per cent. I think our original target was to do that by 2005. The fact that we spotted the potential so much earlier than other parties is regrettable. It is nice to say, “I told you so,” but our job would be much easier now if anyone had listened to the Liberal Democrats and the green movement in those days. The Secretary of State was rather dismissive of Liberal Democrat policies, but the Government do come around to them, albeit 20 years later.
The motion rightly mentions the potential of wind and tidal energy, and highlights the issue of the marine renewables deployment fund. It is quite wrong that such a high proportion of the money—£42 million of the £50 million in the fund—will go to technologies that are already commercial. We are thereby missing the opportunity to develop and support pre-commercial technologies. In contrast, the Scottish Ministers’ wave and tidal energy support scheme specifically includes pre-commercial technologies, and so it has supported important developments such as the European Marine Energy Centre in Orkney, which already funds nine projects. That is in stark contrast to the performance of the MRDF, which, as the motion points out, has yet to fund a single project.
Supporting pre-commercial technologies would enable us to make progress on issues such as the Severn barrage. I support the exploration of the technology that the Government are undertaking, but things are made more difficult by the fact that there are no demonstration projects up and running, or even planned, for alternative scenarios that might have a lesser environmental impact, such as the creation of tidal lagoons. An MRDF that considered pre-commercial technologies might be able to fund a lagoon demonstration project, and therefore make an important contribution to exploiting the enormously important Severn estuary, and other renewable resources, with minimal environmental damage.
I entirely agree that we should consider tidal flow energy and lagoons—options that the Government are avoiding. They are sleepwalking towards the construction of a Severn barrage, an absurdity that will be bitterly opposed. There is very little evidence that it will be cost-effective. The Government should stop behaving as though there will be no opposition to the Severn barrage. The Minister for Energy made a big mistake in rubbishing what the Royal Society for the Protection of Birds said on the subject recently. I hope that the Government will learn better ways in future. The barrage would have a devastating, irreversible impact on the whole Severn estuary.
I am grateful to the hon. Gentleman for his intervention, and he is right to highlight the real environmental concerns of the RSPB and bodies such as the Wildfowl and Wetlands Trust. However, it is a little premature to say that there is no economic case for a barrage until we have seen the progress made in the Government’s review. I would support the Government continuing with the process that they are undertaking on the Severn estuary and considering all the possible options. I simply seek to make that a more productive exercise by suggesting that they look at how the MRDF is used.
Oddly, the motion omits to mention a range of renewable technologies, including solar, photovoltaic, solar thermal, geothermal and biomass. I would have thought that friends and colleagues of the hon. Member for Rutland and Melton from the National Farmers Union would lobby him hard to make that a priority. Nor is there mention of hydroelectric, micro-hydro—a potential new addition to hydroelectric power in this country—or even the much maligned biofuels. I believe that biofuels have potential. That is not a very trendy thing to say, because many people are highlighting the real risks that they pose to the rain forests, land use and food prices, and highlight the fact that in north America biofuels are being produced that have, if anything, a negative impact on global warming. I welcome the Government’s commitment to strict sustainability criteria in the document published last week. It is therefore strange that they are ploughing ahead with the renewable transport fuel obligation without putting those strict sustainability criteria in place.
The motion also omits clean coal technology, which has been mentioned by various hon. Members. That is regrettable, especially as the Conservatives have shared our criticism of the Government’s carbon capture and storage regime, which has been too lax on new coal-fired power stations such as that at Kingsnorth, refuses to accept any kind of locking-in of carbon capture technology, and is too unambitious in its limited post-combustion competition for a demonstration project on carbon capture and storage.
I was slightly surprised to hear the hon. Member for Rutland and Melton say that he supports an emissions performance standard for new power stations, although that is in line with comments made by the right hon. Member for Witney (Mr. Cameron). During proceedings on the Energy Bill, the hon. Member for Wealden (Charles Hendry), who is now sitting on the Conservative Front Bench, opposed our amendment to introduce precisely such a system, saying:
“Although I am sympathetic to and understand what Governor Schwarzenegger has achieved in California, my concern about the new clause is that it would introduce too many uncertainties into people’s investment decisions”––[Official Report, Energy Public Bill Committee, 26 February 2008; c. 221.]
The Conservatives do not seem to have all their ducks in a row when it comes to clean technology.
Most notably of all, the motion is silent on energy efficiency, with the sole exception of a passing reference to smart meters. Energy efficiency is, of course, the most cost-effective path to energy security that we can take, and it is vital that energy efficiency is a major part of our energy strategy. We should all be aware of the risk of the lights going out. It is worrying that in the coming decades we simultaneously face perhaps up to 20 GW of generating capacity coming to an end and a rising dependence on imported oil. We have been a net importer of oil since 2006, and a net importer of gas since 2004. The context worldwide is that there is 252 years’-worth of coal left, but perhaps only 72 years’-worth of gas and 45 years-worth of oil. There is also a dramatic increase in demand, as a result of the relentless growth of new economies such as that of China.
I confess to having been sceptical of the alarming scenarios painted by some green movement members who have talked about peak oil, but I am a complete convert; peak oil seems to have been reached, and we face very serious economic as well as environmental consequences. A worrying scenario is set out in the Stern report, which mentions some historically successful ways of reducing carbon emissions. The most successful reduction of all was achieved by Russia after 1989, but it came about essentially through economic collapse. I hope that that is not the scenario the Government are aiming for—a scenario in which we walk blindfolded towards the edge of a cliff. I suppose that that would be the Northern Rock approach to ensuring housing affordability.
It is sobering that although we face an oil price of $140 a barrel—Goldman Sachs and Morgan Stanley say it is not inconceivable that it will shortly be as high as $200—consumption is still rising. Disruption to supply was recently experienced in Nigeria, and is still possible in many other parts of the world. Speculation appears to be adding to the problem; people are betting on the prices getting higher in future. There also seems to be a greater lack of reserves and of flexibility in world markets now, and the combination of all those factors is potentially economically devastating. Similar factors are influencing European gas markets, especially as state-owned oil and gas monopolies are very influential, in terms of the link between gas and oil prices.
The more reliant we are on imported fossil fuels, the more risky the picture looks, especially when we consider where the energy comes from. The oil comes from notoriously unstable regimes such as Iraq and Nigeria. We have a huge reliance on Saudi Arabia; although it is, in some senses, stable at the moment, it is nevertheless a monarchical dictatorship that relies on repression to maintain its political situation. In the long term, therefore, it cannot be regarded as a very stable source. Supplies of oil go through some very narrow choke-points, such as the Suez canal and the strait of Hormuz, and we have some very vulnerable installations. I was alarmed to read in the New Scientist only recently that the Ras Tanura oil terminal in the Persian gulf handles fully one tenth of the entire world’s oil supply. Those are very vulnerable and risky pieces of critical infrastructure. I come from Gloucestershire, where we are very much aware of the need not to put all of one’s energy supply eggs in one basket: last summer, we nearly lost our electricity supply altogether as a result of relying too heavily on one single power supply station.
The solution has been staring us in the face for generations. It is not, as some Conservative councillors in the south downs have suggested, to start drilling for more oil on the south downs. It is not nuclear; there is no example anywhere in the world of a nuclear power station being built without public subsidy, and it would leave a poisonous legacy to future generations. The previous generation of nuclear power stations still cost us some £1.5 billion per annum in clean-up costs, and an eventual long-term storage repository has not been found, even for first-generation nuclear waste. The location of such a repository is unknown, its price cannot be calculated, and it would be a cause of concern for thousands of years. Clean coal technology is part of the solution, but only as a transitional technology. The long-term answer is renewable energy in all its various forms.
The hon. Gentleman makes an interesting point, and there are parallels between the long-term storage of carbon and of radioactive waste, which is why it is a priority to develop carbon capture. We should think carefully about storage, and the use of CO2 to feed anaerobic digestion or create biomass might be a more a sustainable and, in the long term, safer way of using some of the carbon that is captured. We must all work together to find solutions to the problem that the nuclear industry left from the last generation of nuclear power stations. I am simply urging that we do not repeat that mistake.
We have talked about various sources of renewable energy, so I shall not repeat what was said, except to say that we have enormous potential. The more diverse and decentralised our energy supply, the more resilient and safe it will be. We are supported in that view by the Government’s own advisers. The Government sometimes listen to some advisers and not others, but a 2006 Sustainable Development Commission report on the role of nuclear power in a low-carbon economy—I am sure the Minister knows this quote very well—said:
“Having examined a broad range of studies that offer different scenarios of our energy future, it is clear that there is more than enough renewable resource in the UK to provide a diverse, low carbon electricity supply. All the scenario results suggest that it is possible to meet our energy needs in a carbon constrained economy without nuclear power.”
It is a disgrace that we should languish close to the bottom of the renewable energy league table. It is a disgrace that the Government are still resisting feed-in tariffs, and are promising yet more consultation, thereby delaying their vital implementation, possibly for years. It is pretty much a disgrace that the Government are proud to have overtaken Denmark in offshore wind, as that country has a population of little more than 5 million and far less coastline than the UK. It is a disgrace that, having retreated from their commitment or aspiration to generate 20 per cent. of our energy needs from renewable sources by 2020, even the lower 15 per cent. target is in some doubt. The Minister for Energy has occasionally referred to “15 per cent. or thereabouts” in recent statements, so perhaps we will receive clarification at some stage today.
To end on a positive note, the Government have placed a more substantial focus on renewable energy than we have yet seen. The consultation offers us the opportunity to push the Government further on renewable energy: all that we can hope is that it is not too little, too late.
I take on board your strictures, Mr. Deputy Speaker. This is a timely debate on energy issues, but there are only about 45 minutes left. When it began, we had only two and a half hours for debate, but the Front-Bench spokesmen took an hour and a quarter. As you suggested, Mr. Deputy Speaker, I shall keep my comments brief.
We have had an interesting debate, and we have had a good tour d’horizon of a number of issues. I do not want to pursue that too much, because I want to make some points about the energy situation, and point out—this has not been referred to very much—the effect on industry of high energy prices, which are absolutely crippling. Energy prices for consumers have increased dramatically. On TV the other day, someone from the gas industry said that domestic consumers could expect price increases of 40 per cent. in the not-too-distant future. Those increases in gas prices and the squeeze on gas affect electricity prices as well, because we made the mistake a good few years ago, in 1988, of generating a lot of our electricity from gas.
I was interested to hear the hon. Member for Rutland and Melton (Alan Duncan) begin his history lesson on the British energy situation in 1997. He should have started in 1988, when we privatised it and liberalised the markets, because that is when many of the problems started. We went into a privatised energy market, and we did away with the coal industry shortly afterwards in 1990. We tried to privatise the nuclear power industry in 1990, but we failed. When the City looked at the books—the former Select Committee on Energy, on which I served, saw those documents and reports by Rothschild, Kleinwort Benson and the other major finance houses—it saw how much the industry cost, and it ran a mile, so the Government could not privatise the nuclear industry. Many of the decisions that we are debating and the issues that we face go back much further than the past 10 years or so.
At the same time as energy prices, including electricity, have increased, commodity prices have increased around the world. The price of everything is beginning to increase, and much of that is down to the increased cost of energy and the increase in demand. The amendment discusses the
“imbalance between supply and demand”.
Presumably that refers to developing countries such as China and India, which have been mentioned, and whose economies are growing at a remarkable rate. Those countries, particularly China, are drawing in many raw materials and commodities, and demand many energy resources, too. Many of China’s—and, to some extent, India’s—energy resources are based on coal. Those countries are perverting the world supply and demand for gas and oil, because they are building their economy—as we have heard, by a gigawatt every week or so—on coal.
There was a good article in The Guardian last week devoted to carbon capture. It stated that last year, China built about 100 large coal-fired stations, and India built 30. Supply and demand for those countries is therefore based on coal. I am told by the UK’s major energy-intensive companies that supply and demand for energy in Europe are pretty much in equilibrium, so the industry there is not suffering the same high energy prices that industry in this country is suffering. That makes our industry dramatically uncompetitive. The reason why Europe does not have the problems that we face goes back to the fact that we have a liberalised energy industry.
I hope that I am not going to anticipate the point that the hon. Gentleman is about to make. The liberalised energy market is a European Union initiative and directive. It is our colleagues in Europe who are not playing fair, not the Government: it is not our side—it is the French and the Germans.
I do not disagree. The question is why we have been left with a liberalised energy market. We have been banging on about Europe liberalising its energy market to level the playing field and so on, but it is simply not happening. Our European partners are not playing ball, but if they look across the channel at what happened to us, they can see the problems that we face. They might therefore think that if they do that to their energy industry, they will go down the same route and be in the same predicament, so their reluctance is understandable.
I remember in 2006 being in the Czech Republic when that country took over the presidency of the European Union. The presidency statement made a commitment to energy liberalisation, mainly because gas prices had gone up that winter, but two years later, nothing seems to be happening. The hon. Member for Reigate (Mr. Blunt), who is not in his place, made the point that we had an energy White Paper as far back as 2003. Since then, we have had another White Paper and a review of nuclear power and, last week, we had the £100 billion renewables review, but we are not doing anything. We are not making the decisions, and nothing is happening; we are simply talking about the same energy gap that we talked about in 2003. We are nowhere nearer bridging it, so we must address the question of why the energy problem affects our industries but not those in the rest of Europe.
In my constituency, there is a glass-producing company that is part of a Europe-wide chain. Compared with the chain’s plants in western Europe, the plant in my constituency is the most unprofitable, because of the energy crisis that it faces. The other day I saw some figures for the projected energy costs of another energy-intensive user. Its costs in 2002 were about £3 million per annum, by 2006 they had increased to £8 million, and its projected figure for next year is £21 million. It cannot continue in business with such energy costs. Unless the situation changes, we are staring down the barrel of major job losses and factory closures, because we are simply uncompetitive.
May I make the point to which I think my hon. Friend is alluding? We need to stabilise the market in the United Kingdom and try to drive it forward while we wait for renewables to come along. We must talk not only about long-term investment in the nuclear industry, but about engineering and mining companies achieving the necessary long-term stability to invest long term in the coal industry while we wait for renewables.
My hon. Friend is right. As I said, we have been talking about the issue since 2003, and we must have stability. However, high energy prices are our short-term problem, and we have no way of addressing it—or it would appear that we do not at the moment. I shall come to the issue of the energy gap, but we also have the long-term problem of how we produce our energy from here on in.
On the issues of oil and gas prices, energy generation and the rest of it, the Government ought to consider whether our supplies are too heavily traded and speculated on because of this country’s market liberalisation. Other countries are not affected by such activity, but I read somewhere the other day that every barrel of oil in this country is traded 12 separate times before it is consumed. Obviously, somebody is going to try to make a profit out of each trade, and that is probably why our prices have been shunted further and further upwards.
I remember speaking two years ago to representatives of a company in my constituency, who told me that one of their concerns about high energy prices was that the biggest gas customer in this country was Barclays bank. The banks were buying all the gas and speculating on it, because of the issues about future supplies. Members have already referred to the countries that supply our gas and to the fact that they are not exactly the most stable countries on which to rely for long-term supplies. The Government have to take urgent steps in the forthcoming months. They must look at what is happening to our industries and at the problems that we will face unless we get our energy prices down.
On the issue of the energy gap, I am opposed to nuclear power and have been for a long time, but we have waited so long and our energy supplies have dwindled so much. Coal-fired stations are closing because of the large combustion plant directive, and the nuclear stations are coming to the end of their useful lives, so we have to do something, and if that something is a nuclear plant, let us get on with it. By the same token, nobody has been stopped from building a nuclear power plant in this country; the market simply has not wanted to do so, because of the disguised costs of nuclear power and the cost of nuclear waste, which we cannot ignore. If we were to examine the cost of the coal industry, we would have to take into account the disposal of all its waste.
On what has happened over the past 11 years since 1997, I remember that back in the 1980s, the then Central Electricity Generating Board falsified the figures that were used to compare renewable and nuclear sources in order to make nuclear look more favourable. The wave energy machine of that time—electricity would be created from wave power—was heavily referred to as Salter’s Duck. The origin of many renewables issues and of the current situation go back a very long time.
We have talked about renewables, coal and nuclear power. The hon. Member for Cheltenham (Martin Horwood) made a good speech about nuclear energy, and I endorse everything that he said in what was quite an interesting contribution. We should have renewable sources of energy, but even if we carpet this country with windmills, we cannot hope that they will meet our energy requirements for the next 30 years. They clearly will not. We need some heavy-duty generating capacity to replace what we are going to lose, and the answer lies with coal. This country and the rest of the world are going to burn coal for a long time, and the coal industry is buoyant: about 600 million tonnes will be needed simply to fuel the power stations that have been built in the past two years. That is a lot of coal, and we have to face the fact that we are going to be reliant on it.
Kingsnorth power station has been opposed because it does not have a carbon capture and storage facility, and it has been suggested that every planning application for a coal-fired power station will be held back unless it includes carbon capture and storage. That is a major problem. If we stop coal-fired generation on that basis, there will still be concerns about nuclear generation, and in the end, we will not have achieved very much.
The answer is of course carbon capture and storage. It is not a proven technology, but the Secretary of State referred to what I understand to be a competition. He was challenged by my hon. Friend the Member for Bolton, South-East (Dr. Iddon) about pre and post-combustion carbon capture, but pre-combustion carbon capture already exists, and it is operating in my constituency in the form of a coke oven. By converting coal to coke, much of the carbon and many of the gases are extracted from the fuel before it is burned, and they are easier to get rid of at that point in the process.
I am too young to remember town gas and the burning of coke to create gas, but my hon. Friend the Member for Midlothian (Mr. Hamilton) will well remember it. The technology removed many pollutants from coal before it was burned and, as that technology is currently under consideration, it should not be too difficult to enhance it. Funnily enough, all the clean coal technology plants in this country, including the coal gasification plant at Point of Ayr and the fluidised bed at Grimethorpe, were closed in 1990 by the previous Conservative Government, who decided not to conduct clean coal technology research. We have to look at all aspects of generation, including renewables and nuclear, but we must get carbon capture and storage under way. We must realise that burning coal will be a major issue, and that we will have to rely on coal for a very long time.
Finally, one line in the Government’s amendment makes me raise my eyebrows. It says that this House
“believes that the Opposition’s failure to show clear leadership on energy could put at risk Great Britain’s energy security.”
Why we are calling on the Opposition to show leadership on energy matters is completely beyond me, and I would worry about voting for that later. Perhaps the Minister will explain that line to us, and then tell us why it is the Government who need to show a little more leadership—and show it now. Let us make the decisions on new generating capacity.
As ever, the hon. Member for Barnsley, Central (Mr. Illsley) has brought some Yorkshire common sense to the debate. He made important points about the history of this issue and about our resources as a country. He also touched on energy efficiency, a point ably covered by the hon. Member for Cheltenham (Martin Horwood) as well.
How can a country such as ours—an island that is lapped by the waves, that can have tidal power and that has offshore wind, substantial reserves of coal and oil, and a population who would be happy to try microgeneration—be in the position of worrying about energy security of all things? We have more energy potential than most. It must be a reflection on the Government that they have not done better to ensure that we have the resources that we need for the future. Furthermore, it is an absolute gift to couple microgeneration with energy efficiency. In that way, we can say to people, “Look, do what you can to save energy. You as a citizen can influence things. At the same time, we will help you to produce energy if you can.” That should be right at the heart of the Government’s approach: they should be trying to get people to volunteer and help in this important cause.
Yet what is the history of the past 11 years? Seven years ago, a royal commission looked at the issue and pointed to the coming energy gap. About five years ago, the Geological Society of London produced a major report to which 150 people contributed. It pointed out that in 10 years’ time, we would be able to produce only 80 per cent. of the electricity that we need.
Yes, the Government have had White Papers, consultations and so on, but what have they actually done? Other countries have been considering the issues. Germany, for example, is doing so much on solar power. Last year, 130,000 photovoltaic panels were installed in Germany, but only 270 were in Britain. Other countries have thought about what their natural solutions should be. Like France, Finland has decided to go with nuclear, and Iceland is doing work with geothermals. Those countries seem to have grasped the nettle. In our country, however, there has been a failure of action. That has been because the Government have not been prepared to take tough decisions; it is another example of dithering. It is not good enough that this country, with the potential that it has, should have been led to the poor situation that we are in today.
Some of the incompetence is appalling. The marine renewables development fund had £50 million but not a single project was backed, as the hon. Member for Cheltenham said. BP was actually developing a carbon capture and storage plant at Peterhead, but did the Government back it? No. Why on earth not? We do not have a trained work force in respect of nuclear power, and we do not have enough transmission infrastructure, so people who have wind farms in Scotland cannot get on the national grid. The Government have been slow on solar power, have had no workers for nuclear power, have been clunking on carbon capture and are off target when it comes to offshore power generation. We are ending up with the situation described by the hon. Member for Barnsley, Central: we are covering some of our beautiful countryside with onshore wind farms, when the Government could have made decisions that meant that that was not necessary and we could have had a policy that really worked. The Government’s policy has been careless and lazy.
The Beane valley is a chalk river valley in my constituency. It has no pylons and its countryside has been the same for 1,000 years. [Interruption.] The Minister should listen, because I am talking about the effect of his silly policy. Three wind turbines, each the size of the London Eye, have been proposed for that landscape, which comprises small rolling hills, copses and a tracery of fine lanes in the heart of Hertfordshire. The Minister says that that is a good policy for this country. It is not.
The Government have been lazy for 11 years. We do not have what Germany, France and the other major European countries have. The Minister has sold us short, and the price that we are paying is the planning applications in the most heavily populated county of Hertfordshire that would ruin some of the precious landscape to which people throughout the county look for enjoyment and recreation. It is being spoiled because the Minister and his Prime Minister, including when he was Chancellor, were so lazy that they could not do a proper job.
Does the hon. Gentleman share my concern about microgeneration, which is perhaps something of a middle-class conceit? Does he have any idea, for instance, about how much it would cost an average family in the north of England to install a wind turbine on their home?
It surprises me that the Labour party has forgotten everything that Tony Blair taught it. There was the “toffs” campaign in Crewe and Nantwich, and now we are told that allowing the citizen to do something to tackle the problem of energy need is not relevant in the north of England. Let us forget the class war—the fact is that we have an energy security problem and everybody should be able to take part in solving it. If people want to do that through microgeneration or some of the other energy-saving schemes, they should be able to. We should not say, “Oh, that is middle class—let’s not do it.”
I regret that the hon. Gentleman has sought to misrepresent my views, but I admire the fact that he is facing both ways at once on the issue of renewables. The issue is about not class, but affordability. Class has nothing to do with it. I am simply pointing out that in some of the poorer parts of the country, microgeneration is simply not doable or achievable, and the idea that it should be a principal element of policy is, frankly, for the birds.
I was making the point that we can all save energy. We can all influence what happens in our country. If some people want to try microgeneration, that will be an additional help. The Government should be pressing on both fronts: they should be encouraging people to generate and to save energy. Their performance has not been strong.
My first speech at a Conservative party conference, in 1989, was about energy efficiency labelling for white goods—something that the Conservative Government introduced in 1991. Many here will remember Margaret Thatcher’s great speech about our having a leasehold, not a freehold, on the world. She explained the importance of energy efficiency in the modern world. That was all those years ago, and what have the Government really done on energy efficiency in the past few years? I have signed up to the Energy Saving Trust’s plan to make each household more energy-efficient. The Government have not given much of a push to that plan; it has not been a central crusade for them.
Thank you, Mr. Deputy Speaker; I have made the points that I wanted to make.
You will be delighted to know, Mr. Deputy Speaker, that I had planned to make the most moving and effective speech on clean coal ever delivered in this Parliament’s history, but tragically, in trying to accede to your request and be brief, I have cut it to the point where I cannot do so.
We have heard right hon. and hon. Members outline the Government’s failure in recent years, especially in terms of renewable energy, microgeneration and the roll-out of smart meters. We have talked about this country’s abysmal lack of gas storage—we have 14 days’ capacity, Germany has 99 and France has 122. That lack is part of a policy framework that suggests that the Government have abysmally failed the whole population.
I want to concentrate on carbon capture and storage, on which the Government have acted with great timidity, caused disinvestment and, above all, created great uncertainty in the industry. That is a matter of great sadness. Large investment is required for CCS projects, which cannot proceed against a background of uncertainty, but people are having to invest in such a climate. Government policy is unclear: it appears that they support a single demonstration model of perhaps 300 MW and hope that eventually the emissions trading scheme will deliver a carbon price that allows investment to flow thereafter. That policy of wishful thinking has no certainty to underline it. Several large carbon capture projects were under development, but they have been frozen out thanks to the Government’s indecision.
The opportunity is obvious with between 240 and 250 years of coal beneath our feet and the ability to extend our oil production by up to 25 years. Together, those energy sources could solve our energy security problem, but the Government are not tackling that problem with any courage. As a result of a competition they decided in favour of a post-combustion working model—not a commercial station—to be in place by 2014. That decision shows that they do not see the need for any urgency whatsoever, yet that urgency is staring us in the face. That decision has undermined confidence in pre-combustion, where, conversely, technology is in place and we could create a commercial station by 2014. I need only mention the Centrica progressive energy project at Eston Grange to offer a good example of the impact of the Government’s decision: a proposed 850 MW integrated gasification combined cycle coal-fired power station was being worked on, but, although it remains in being, its capability is likely to be scaled down drastically. That presents a massive problem—and so it goes on.
We have undermined investment in clean coal to the country’s great detriment. What a missed opportunity! On 17 June, Professor Stuart Hazeldine of Edinburgh university said:
“Carbon storage could not only help the world, it could aid Great Britain plc. Develop expertise and hardware and we could sell them to China, India and other developing nations, and so make money while saving the world.”
That was a slightly romantic notion, but none the less it underlines a great truth in this debate.
Could the hon. Gentleman row back a little in saying that he is disappointed with this Government? Thirty years ago, CO2 emissions capture was being developed by the National Coal Board, and 25 years ago it was happening at a time when the Conservatives were closing all the pits in the United Kingdom. Both Governments have left a lot to be desired on such developments.
I am grateful for the hon. Gentleman’s comments. I was not opposing such developments at that time—I was playing football and chasing birds, but that is another matter altogether. We are dealing with the here and now, and the situation is that the Government do not have enough confidence in clean coal technology, have not put enough investment into it, and have not planned enough for a proper policy. They are simply waiting until 2014, when we might see the outcome of a possible post-combustion project that will not have any commercial impact until 2020, 2022 or thereafter.
I am not sure why the Government are being so timid. We have an Energy Minister who is normally robust and speaks his mind, yet I fear that his hand has been forced and he is displaying a level of timidity that he secretly would not want to show. I hope that he can tell us the reason for that timidity. Is it because he felt that the battle to secure the nuclear option would be greater that it has turned out to be, and that he could not have developed CCS adequately against that background? Is it because the oil companies have told him that it would be expensive and take too long, as Mr. Guerrant, the European director of ExxonMobil Gas and Power Marketing told the Business, Enterprise and Regulatory Reform Committee two weeks ago? Is that why the Government have baulked at the challenge? Or is it because they, as the Government, did not have the confidence to grasp the nettle? By their timidity, the Government have held back the whole CCS process, and Britain’s future energy security has been placed in jeopardy. We all must recognise that that is a great pity, to say the least.
It is a great honour to follow my Northamptonshire colleague, my hon. Friend the Member for Northampton, South (Mr. Binley), who made a splendid speech that went to the heart of the matter. I sometimes feel that the Energy Minister must go away at night and bang his head against his bedroom wall at the Government’s indecision. If Prime Minister Blair were still here serving the full term that he promised at the last general election, I think that we would have had a lot more decisiveness.
I should declare an interest as listed in the Register of Members’ Interests and say that I drive a biofuel car. I want to make two brief points. The first concerns biofuel, which has not been much discussed during this interesting and constructive debate. For Members who are not aware of it, I should explain that a biofuel car can run both on petrol and on E85, which is a mixture of 15 per cent. petrol and biofuel and is sometimes called flex-fuel. There are only 19 biofuel stations in the country, one of which is at Morrisons in Wellingborough.
It seems strange that the Government are not encouraging more people to use biofuel to power their cars. I remember the former Deputy Prime Minister saying that he intended to reduce the number of miles that were travelled by car, but unfortunately the Government have failed in that regard. In 1997, motor vehicle traffic stood at 450.3 billion vehicle kilometres, whereas in 2006 the figure was 506.4 billion vehicle kilometres—an increase of 12.5 per cent. If we could reduce the amount of carbon that cars emit, it would be far better for the country. We know that biofuel does that, but there is a problem with a biofuel car, as I can testify—it can run quite happily on petrol, when it does the same mileage per gallon as a normal car, but when it runs on biofuel, its efficiency is significantly reduced, so one has to use a third more to get the same number of miles.
Is the hon. Gentleman aware that the Government’s chief scientific adviser, Professor Beddington, has said that the global rush to grow biofuels was compounding the problem of climate change and that cutting down rain forest to produce biofuel crops was “profoundly stupid”?
I realise that I have got very little time, so I will try to deal with that point straight away. One of the arguments against biofuels has been about the Brazilian rain forest, to the effect that when I drive down the motorway, instead of saving the planet, I am destroying it. However, the facts do not bear that out. Only 1 per cent. of the rain forest is being used for biofuel products, and the oil that it is generated is also being used in other industries. That argument is a bit of a red herring.
That is entirely right, and if I had the time I would have argued for sustainability. The situation is rather like that of the mobile phone. The first mobile phones were great clunky things that we carried around, and now they are very small. If we do not get the first run of biofuel efficiency right, and if we do not encourage it, we will never get what we want. We now have aeroplanes that can fly on biofuel; Virgin flew a plane across the Atlantic with one if its engines running on biofuel.
I want the Government to take biofuels into account, and briefly, I put the following points to the Minister. If we are to have a level playing field for biofuel, the duty must be reduced. It should be reduced by the maximum amount allowed under European Union rules, which is 25 per cent. I would like to know whether the Minister supports that idea. Why not make 50 per cent. of the Government agency fleet eco-friendly vehicles, such as those that use biofuel? Why not exempt flex-fuel cars from the congestion charge? Why not give free parking to people who use biofuel cars, or low energy emitting cars?
I am sure that the Mayor of London is listening to this debate with great interest. Finally, why not encourage companies to have biofuel pumps on their sites? If we are to encourage biofuel use, it is completely hopeless that there are only 19 biofuel stations in the country.
This has been an important, but somewhat brief debate. Nevertheless, we have covered good ground during the course of it. We have heard important contributions from a number of colleagues, and I give my sympathy to those colleagues who hoped to be called to speak, but did not have the chance to do so. I pick out in particular the comments of the hon. Member for Cheltenham (Martin Horwood), because it is clear from those remarks that a lot of common ground is developing between the parties, although there are matters that still divide us. When there is such cross-party agreement, which the Government could work with, it seems all the more strange to many of us that they choose to stand in its way.
The hon. Member for Barnsley, Central (Mr. Illsley) rightly highlighted the cost to business and consumers of energy prices. Just a few years ago, our industrial energy cost 15 per cent. less than the European average, and today it is 15 per cent. more. That difference is getting greater, so a real issue is at stake. Companies, such as the one in the hon. Gentleman’s constituency to which he referred, are facing the risk of closure because they can no longer afford to manufacture in this country. That is a matter of profound concern. Just as, a few years ago, business was moving abroad because of cheap labour, we now face the risk of business moving around the world to where it can get cheap energy.
However, it should be pointed out that consumers in this country were charged, until very recently, the lowest energy prices in Europe, one of the reasons being the liberalisation of British energy markets. The response to price rises should not be to move back to nationalisation, as the hon. Member for Barnsley, Central seemed to suggest, but to push the rest of the EU to liberalise its markets. The hon. Member’s final point was the most telling of all; he said that it was not for the Opposition to show leadership—although I think that we are—but for the Government to do so. That has been missing from this debate.
My hon. Friend the Member for North-East Hertfordshire (Mr. Heald) spoke of international comparisons and explained how we are lagging behind precisely because the Government have not made the tough decisions that are so important. He also made clear the real battle that will be fought in a number of constituencies between the desire to move forward with renewables and the concerns about damaging unspoilt natural landscape. That real debate is one which we should have in this House.
My hon. Friend the Member for Northampton, South (Mr. Binley) spoke with great passion about carbon capture and storage, and he rightly highlighted the lack of vision and the lack of a sense of urgency that we have seen from the Government. My hon. Friend the Member for Wellingborough (Mr. Bone) made interesting points about biofuels. One of the concerns expressed about using them in aeroplanes is that, using current technology, biofuels freeze at altitude, which is not desirable in an aeroplane. More work needs to be done on that, but the most important issue is the one raised by the hon. Member for Cheltenham—sustainability. Biofuels can make an important contribution as long as they are produced in a sustainable manner.
I was particularly struck by the speech of the Secretary of State, which was unusual because it contained a joke—perhaps it will read better in Hansard than it sounded in the House. When he was talking about Conservative energy policy, it was a bit like listening to the Monty Python routine, “What have the Romans ever done for us?” We have called for nuclear power without subsidy, for more resources for the nuclear installations inspectorate, for type and site approval, for changes in the planning system to allow for local democracy to be involved and for the Government to push towards a long-term waste disposal strategy. Putting that aside, however, what else is in the Conservatives’ policy? We have said that there should be a cap and trade system, we have called for smart meters to encourage microgeneration—
The Secretary of State says, “Hardly”, but we did it well ahead of the Government. We pushed for feed-in tariffs and for changes to the national grid to allow for priority access, and we want to look at the way in which Ofgem operates to see what more can be done to encourage renewables. We have called for more carbon capture and storage projects and for more general gas storage because we are concerned about the national lack of storage. We have pushed the Government to reform the renewables obligation certificate system to allow for banding. We have not called in any Conservative policy document for ROCs to be scrapped.
We called for a heat strategy, and we called for energy efficiency and fuel poverty to be dealt with in the Energy Bill, but the Government refused. We have pushed for more energy to be derived from waste, and we wanted more information for consumers on their CO2 emissions and their environmental charges. We wanted the public to know what contribution was made from their bills towards those charges. In spite of all that, the Secretary of State says, “Yes, but can you tell us what the Conservatives want in energy policy?” We could not have been clearer in showing the way, and it is unfortunate that the Government have been lagging.
The greatest risk to our energy policy is the Government’s failure to make long-term decisions. My hon. Friend the Member for Rutland and Melton (Alan Duncan) and I are fans of much of what the Secretary of State has done. The nuclear industry and its potential investors will be profoundly concerned by the reports in yesterday’s papers that the unions want him sacked in return for continuing to bail out the Labour party. He has been listening and he has been acting, but there remains a worry that there is no plan B if people choose not to invest in this country on the terms set out by the Government.
Concerns arise relating to our energy security in other respects. On gas storage, there is no sense of urgency and no steps have been taken to put an increased number of gas storage facilities in place, even though we have some of the worst storage facilities in Europe. We have 10 or 12 days’ worth of supplies, compared with 80 days in other countries. On carbon capture and storage, the Government ducked one of the great technological opportunities of this decade in opting purely for one technology. They said that they wanted to export the technology to China, but anyone who knows anything about the matter knows that the Chinese will be developing it, too, that they will be there by Wednesday of next week, rather than in 12 years’ time, and that they will be considering how they can export it to us, rather than expecting to take it from us. The Government have turned away from one of the most exciting technologies, which will be a matter of shame for them for ever.
Everyone believes that energy efficiency can make a fundamental contribution to our energy security. At the moment, only 40 per cent. of the properties of this country are effectively insulated. There was nothing in the Energy Bill to improve insulation. We charge 5 per cent. VAT on fuel, but 17.5 per cent. on energy-efficient measures to make our homes warmer. People tell us constantly that they are not getting the independent guidance that they need to determine which technology is right for their homes. The Government have held back and have not been sufficiently dedicated to the roll-out of smart meters. We could have sent a very clear message in the Energy Bill that we wanted every home in this country to have a smart meter within 10 years. They would help to tackle energy inefficiency and fuel poverty, and they are exactly the right way to go. The Government moved some way in that direction but were still not prepared to take the necessary key steps. They continue to run the low-carbon buildings programme, and when the money is used up within a few hours of being unveiled they say that that is a success, showing how popular the programme is, rather than a fiasco because people cannot get access to the support that they are looking for.
We recognise the contribution that microgeneration can play, but the Government are still stalling its development by refusing to accept feed-in tariffs now because they want to consult more on them. That means that it will be years before we can take them forward as is necessary.
We find perhaps the greatest complacency of all on renewables. We have heard about how the marine renewables deployment fund has not worked. The Minister has said on other occasions, “But look, we have almost as much tidal power and wave power as they have in Portugal.” We have 11,000 miles of coastline, compared with 1,000 miles in Portugal. We should be leading, but we find that the new renewables strategy that the Government announced last week is not so much a strategy for success as a shocking admission of the Government’s failure. We are third from bottom in the whole EU in the development of renewables. In spite of all the Government’s fine words, we have simply not made progress.
All that we get from this Government is consultations. There was a consultation programme on smart meters, and at the end of it their conclusion was that there should be three more consultation exercises. That is this Government’s approach; rather than make decisions, they have a further consultation programme. That is simply not good enough.
We are concerned about reliance on imported energy, which will include 80 per cent. of gas by 2020. That will lead to higher prices and less security. That is the challenge for the Government, and it is unprecedented, as we have heard in the debate. We are not getting the leadership that we need from this Government. Their legacy will be terrible in many areas, but the worst legacy of all will be that they have failed to make the key decisions. That will result in a loss of vital supplies, which in turn will lead to higher prices and, potentially, power cuts.
We have had a lively and wide-ranging debate, ostensibly about the security of the energy supply but in practice ranging very much wider. I shall start with energy security, which is a serious challenge.
Our task is to ensure that we continue to have a secure and reliable supply of energy in a world in which global demand is growing rapidly and supply has struggled to keep pace. We have to import far more fuel than in recent decades, and energy resources are concentrated in certain regions, including the middle east and the former Soviet Union. Energy therefore becomes a vital component of our nation’s security, not just because we need the supply but because we must ensure, through diversity, that our sources of supply do not affect our independent foreign policy on issues such as human rights. The energy security aspect of national security is vital.
The imbalance between supply and demand affects prices. As we have heard, the price of oil has gone over $140 a barrel, having doubled in the past year. That has had knock-on effects on gas—wholesale forward gas prices have increased by more than 135 per cent. since June 2007—and on coal, with spot prices increasing by more than 150 per cent. since then; on electricity, whose price has more than doubled since June last year; and on petrol and diesel, whose prices are respectively about 35 per cent. and 25 per cent. higher than last year. Of course, that is affecting every household, motorist and business.
My hon. Friend the Member for Barnsley, Central (Mr. Illsley) talked about prices and their impact on industry. We need to be careful when making comparisons, because they are quite complex. Indeed, available data suggest that for industry, gas prices for medium consumers were above the median in the UK, while prices for small and large consumers were below the median. Similarly, in the case of electricity, some people are better off than in Europe and some are worse off. I shall happily send my hon. Friend the detailed data.
Of course, energy security cannot be seen in isolation but must be addressed in the context of the need to tackle climate change internationally. Global warming is, by definition, a global problem requiring global solutions. Domestically, and even individually, we need to tackle it by reducing demand and decarbonising our energy supply.
Let us be careful about European comparisons. We have heard a lot about feed-in tariffs, but I do not think that any of the Members who spoke acknowledged the very important fact that per capita CO2 emissions are higher in Germany than in the UK. We must also be aware of some siren voices that argue that, faced with rising energy prices, we cannot now afford to tackle global warming. I judge that that would be the wrong signal at precisely the wrong time. We must rather pursue the most economical and cost-effective climate measures. Those are among the greatest challenges that Governments around the world face, and although there is no doubt that the current high prices place a strain on households, motorists and businesses, the UK is in a fundamentally strong position for the following reasons.
First, I emphasise the policy strategy. Our policy of a diverse and increasingly low-carbon energy mix is surely the right way to ensure security of supply. I want to be absolutely clear about that, because one sometimes hears particular interests proclaim that one solution is the answer. Sometimes it is nuclear, sometimes it is renewables. Those voices are surely mistaken. Putting all our energy eggs in any one basket would seriously reduce our nation’s security.
I beg the right hon. Gentleman’s pardon; I do not have time. I heard his earlier comments, which were interesting. Turning our back on coal and encouraging a new dash for gas would be foolish and against diversity, and it would certainly not help our nation’s security.
Secondly, we have taken, and continue to take, the tough decisions required for the long term, including our decision in January in favour of new nuclear power stations and our proposals last week for a massive expansion of renewable generation by 2020. I listened carefully to the hon. Member for North-East Hertfordshire (Mr. Heald), who was passionate about the need for renewables, but not in his own constituency. That is surely the problem. I often meet Members who support renewables in the Chamber but are opposed to them when it comes to proposals in their own backyard.
The hon. Gentleman has already expressed that approach, and I cannot now give way to him.
The hon. Member for Wellingborough (Mr. Bone) talked about the importance of biofuels, and I agree that they are important. The Gallagher review, which will examine the issue of sustainability, will be published very shortly. We have announced today proposals that will push forward carbon capture and storage—a vital technology in the fight against climate change. Indeed, my right hon. Friend the Secretary of State noted that we have published today a consultation document on CCS. Although that consultation is ongoing, we intend to continue to process power station applications and take decisions under section 36 of the Electricity Act 1989. [Interruption.] I judge that there is an appetite for CCS, but along only with Norway and possibly the United States, we are one of the leading nations in the whole world on it. It is right to have had a proper competition to decide who should build the demonstration projects, but apparently some on the Opposition Benches say that we should have simply given the contract to one company that had a proposal. That would have been wrong, and it was absolutely right that we went for post-combustion technology because of its application to China.
Some interest was expressed in marine funding for wave and tidal power. We are interested in that, but I warn hon. Members that it is new technology and not an alternative to wind. We have spent a great deal of money on research and development and we hope that two projects will be funded through the marine deployment fund this year. It is a deployment fund, not a science fund, and when the technology is ready, we want to spend the money. However, it is clear that we cannot do that until the technology is ready for deployment.
We are making the tough decisions on renewables and nuclear. We need to do more about energy efficiency and we will. I repeat that I am proud that we are one of the leading nations in the world on carbon capture and storage. We take the nation’s security, and therefore energy security, most seriously. We are tackling the biggest challenges of all—climate change and global warming. We are mindful of the social aspects and the need to protect our most vulnerable citizens against rising prices. We have one of the most sophisticated social policies on tackling climate change.
I judge that the Opposition have an appetite to hear more from me and I am happy to comply. We need to be consistent about planning. The Opposition spokesman talked about gas storage. Our planning system is one of the barriers to gas storage and we therefore introduced the Planning Bill, which the Opposition opposed. One cannot talk about the ends without willing the means. The Planning Bill is the means and will enable us, while always taking account of public opinion, especially local public opinion, to make the necessary decisions speedily.
Let me deal with nuclear—I am happy to discuss the subject of the debate all night.
The Minister criticised me for saying that it was wrong to put three wind turbines in a small valley in Hertfordshire with a domestic landscape. Is he aware that landscape is one of the most important aspects of the planning systems in Scotland and France? It is mentioned in their planning notes. Will he take note of what is done in Scotland and France when deciding where wind turbines should go?
I take note of what happens all over the world. I cannot comment on the projects that the hon. Gentleman mentions because I do not know the details, but he may wish to listen because I gave way to him. Given that we have an hour or so of the debate to go, I shall give way to anyone who would like to intervene. However, I was gently chiding the hon. Gentleman because he made a passionate plea about the importance of renewables and I believe that he was gently criticising the Government for our policy. However, he then got most passionate in saying that the projects should not be in his constituency. That is the problem.
When does the Minister believe that the first new nuclear power station under the Government’s plans will open? Will it be agreed under their new planning system? How long will it take, given that there is to be two more years’ delay before setting it up?
I recall how many power stations were built under the Administration of whom the right hon. Gentleman was a distinguished member. I listen to the talk, but I also look at the record, and I find one more impressive than the other. On a cautious estimate, the first new nuclear power station should be up and producing clean and green energy by 2020—some optimists say 2017-18.
I do not know how up to date the hon. Gentleman is with the recent Luxembourg meeting of Energy Ministers that I attended, where legal unbundling was agreed. We did not get all the unbundling that we wanted, and we will continue to press for full liberalisation, but it was a significant step forward, of which we can be proud.
There was a question earlier about nimbys in England. I assure my hon. Friend that there are as many nimbys in Scotland as in England, irrespective of the planning system in Scotland. Members of the Opposition parties are the very people who behave like that, yet they always profess to be in favour of renewable energy.
Let us be clear: when there are good environmental or other reasons for saying no to a project—a power station or a wind farm—the answer should be no. That is right and proper. However, we must say yes if we want energy security and if we wish to tackle global warming. That is why the not-in-my-backyard people need to be faced down.
Question, That the proposed words be there added, put forthwith, pursuant to Standing Order No. 31 (Questions on amendments), and agreed to.
Mr. Deputy Speaker forthwith declared the main Question, as amended, to be agreed to.
That this House acknowledges that the Government is addressing the recent sharp increases in fossil fuel prices, which reflect an imbalance between supply and demand in global markets, through international engagement; recognises that the UK has the most competitive energy markets among the G7 nations, as recognised by independent analysts; acknowledges the Government’s success in establishing a market framework which encourages sharp increases in gas import and storage capacity; further acknowledges the Government’s success in establishing a clear framework for investment in new nuclear generation capacity through the Nuclear White Paper, and in setting out a blueprint for a historic expansion of renewable generation through the Renewable Energy Strategy consultation; recognises the Government’s work in promoting energy efficiency as an integral part of its strategy; commends the Government’s efforts to counter fuel poverty through the Winter Fuel Payment and through securing major financial commitments from energy supply companies; notes the Government’s support for microgeneration; recognises that the Energy, Climate Change and Planning Bills will provide a legislative framework that is fit for purpose in changing market conditions and that supports the Government’s policy objectives; believes that the Opposition’s failure to show clear leadership on energy could put at risk Great Britain’s energy security; condemns their failure to support the Government’s Renewables Obligation; and deplores their opposition to the Planning Bill, which will provide greater certainty for major infrastructure building and help secure Great Britain’s future energy independence.