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Energy Markets (Security of Supply)

Volume 515: debated on Thursday 16 September 2010

2. What progress he has made on bringing forward proposals for reform of energy markets to improve security of supply. (15494)

11. What progress he has made on bringing forward proposals for reform of energy markets to improve security of supply. (15504)

12. What progress he has made on bringing forward proposals for reform of energy markets to improve security of supply. (15506)

15. What progress he has made on bringing forward proposals for reform of energy markets to improve security of supply. (15509)

I am delighted that there is so much recognition of the need to address our energy security. The Government have moved quickly to enhance our security of energy supply. We are developing a further package of measures to improve gas security. In the autumn we will be launching the most far-reaching reforms of the electricity market, which will look at the measures needed to secure investment in new capacity, and in July we introduced a new long-term regime for new grid connections.

I was pleased to hear the Minister refer to gas security given that according to some predictions 70% of our gas supply may in future be imported from overseas. Will he reassure my constituents that when proposals are made for new gas storage sites security, safety and geological hazard will not be put second to the need for more gas sites in this country?

My hon. Friend is absolutely right that we have to look at each proposed site, location by location. We have to be satisfied about the security and safety of each location, but there is no doubt that we have historically had low levels of gas storage compared with other European countries, and we are keen to address that as well as looking at issues such as long-term contracts and more pipeline interconnections, which all have an important part to play in this process.

Does Russia’s withdrawal from the energy charter treaty cause the Minister concern about the United Kingdom’s longer term energy security?

Ministers have to be much more engaged in this process than has historically been the case. We have to have Ministers who are prepared to go around the world to identify long-term contracts and to secure those agreements in the interests of our long-term energy security. We are keen to have a relationship with Russia that is active and business-based. We think Russia can enhance our security. We are also keen to work with other European countries to identify the pressure points and to find new routes to market, and we are actively engaging with our European counterparts to achieve that.

I thank the Minister for his response. Given Yorkshire’s close proximity to the North sea and the vast amount of existing energy infrastructure across the region, are the Minister or Secretary of State pursuing any plans to develop a carbon capture scheme to prolong the life of coal-fired power stations in our area?

My hon. Friend raises an issue that is extremely important not just for Yorkshire, but for the country as a whole. We have already had significant discussions with representatives of the Yorkshire business and energy communities, and we salute the work that they are doing to identify strategic infrastructure, particularly in respect of enhanced large pipelines, which enables us to take a cluster approach. That is absolutely one of the areas that we will be looking at carefully for that type of development.

In recent years, for the first time in our nation’s history, we have become dependent on foreign fuel imports to generate enough electricity for our country. Will the Minister consider changing the capacity payment component of the electricity price to incentivise the use of indigenous fuels in power generation?

My hon. Friend has a great knowledge of these issues. We are looking at those sorts of solutions to the problems and challenges that we face. It is critical that we find long-term, robust approaches, but in that respect, it is also important to have a mix of energy solutions within the portfolio. Fuels from our own natural resources can contribute to, and greatly enhance, our energy security.

I was pleased to hear that gas is part of the future of Britain’s energy supply, but that runs contrary to a document published by the Department in July this year, “2050 Pathways Analysis”. The document looks at UK energy demands in 2050, but gas does not feature. Will the Minister look into that and have a rethink on what role gas will play in our future energy supply?

The 2050 document looked at a range of scenarios and energy mixes. However, let me reassure the hon. Lady that the Economic Secretary to the Treasury and I were in Aberdeen on Monday to talk to the industry—I think that that was the first such meeting involving both Treasury and Energy and Climate Change Ministers—to identify the long-term investment issues that are critical for the sector. It is absolutely in the national interest to develop the best possible resource return from our assets in the North sea.

The security of our future energy supply is heavily dependent on the implementation of major energy projects. Given that the Government have abolished the Infrastructure Planning Commission, which was designed to remove planning obstacles to the implementation of such projects, can the Minister assure me that he is in conversation with his colleagues in the Department for Communities and Local Government to ensure that the successor planning regime achieves the same objective?

I can give the hon. Gentleman an absolute assurance that I am in regular contact with my ministerial colleagues in other Departments, Sir Michael Pitt of the IPC, and the industry, to ensure that the transition arrangements pose no threat to such projects. The measures that we are putting in place will be a significant enhancement of the regime, because they will reduce the risk of judicial challenge and review, and provide parliamentary and democratic accountability. That is an important element of such critical infrastructure issues.