asked Her Majesty’s Government:
What steps they are taking to increase gas storage capacity.
My Lords, the Government’s statement of need for additional gas supply infrastructure, made to the House on 16 May 2006, set out our commitment to a regulatory environment that enables the market to develop timely and appropriately sited gas infrastructure projects. We have committed ourselves to streamlining and simplifying the regulatory regime for gas supply infrastructure, including gas storage. The planning White Paper, to be published later today, and the energy White Paper, to be published this Wednesday, will contain proposals related to onshore and offshore gas storage planning matters.
My Lords, I thank the Minister for that positive reply. Is he aware that some 10 gas storage projects, including the Caythorpe project in east Yorkshire, which is an important one, are going through laborious planning processes, and have been doing so for some time? According to what he said, will these be expedited under the new planning proposals? Does he agree that, at 4 per cent of annual capacity, gas storage is much lower here than it is on the Continent, which is normally about 16 per cent? In view of the likelihood of serious interruptions to the supply, despite the increase in pipeline connections with the Continent and Norway, is it not a matter of considerable urgency that we should increase our gas storage to avoid major crises, particularly in winter?
My Lords, the noble Lord’s final point is absolutely right; we need to, and are, planning to increase our gas storage capacity significantly. None of the projects is adversely affected by the planning requirements. It is true that they would have come slightly quicker on stream if we did not have our planning problems, but we are confident that we are substantially increasing our gas storage capacity and compare well with countries on the Continent, such as the Netherlands, which, like us, has its own productive capacities. We have roughly comparable gas storage capacity, which we are increasing by a substantial percentage in the next three years. The noble Lord mentioned the Yorkshire project, but he will recognise more distant projects, such as Milford Haven in 2009-10, which will substantially increase our gas supplies.
My Lords, does the Minister agree that the private sector has done very well indeed under this Government in ensuring that there is enough gas storage? Does he also agree that the last thing we want now is to agree with the Liberal Democrats that we should start to renationalise this?
My Lords, I am tempted to keep my distance from warring parties. We have no plans to nationalise our gas assets, but we are concerned to create the framework that guarantees the security of supply for the future. We had a very difficult year last year, as the whole House will recognise, but we are certainly optimistic about this winter. We are increasingly favourably placed for the years to come.
My Lords, I thank those on the Conservative Front Bench for offering to write our policy papers. I had not actually heard of that particular policy. Will the Minister say whether the fact that we have had limited gas storage has cost every consumer in the country? Last year and the year before, the gas spot price was so much higher because we had so little capacity; therefore, increasing our capacity must be good for the consumer. Not increasing capacity has cost each consumer in the country a great deal of money.
My Lords, the noble Lord will recognise that not just gas storage created the energy supply crisis. He will be all too well aware of the bottlenecks in Europe; as a consequence of Russian decisions that affected, initially, Ukraine, and did no good to the rest of Europe, there were significant bottlenecks in Belgium at the pipeline. We have increased our interconnectors with Europe and have greater facilities now. We have been hugely successful on the point that we sought to make last year; namely, that the European market with regard to energy supplies was not working satisfactorily. The Prime Minister operated at his level to ensure that the market improved. I am pleased to report to the House that very considerable progress is being made in Europe on the free market in energy supplies.
My Lords, the Minister will be aware that there is increasing concern in Europe that, already, 44 per cent of gas supplies for Europe as a whole come from the Russian state monopoly, Gazprom, which is expected to increase. There is considerable political fear that President Putin or his successor might use this power for political means. There might be a threat to cut off the gas. What is the Government’s view of this? In the light of this, under the precautionary principle which is so dear to the Government, how many months’ supply do they think that the United Kingdom should have in storage?
My Lords, clearly this country has moved from a position of very great security of supply when we had our indigenous resources in the North Sea. Because we have moved to being dependent on imports, we must have due regard to who will be the suppliers. We must ensure that the market works successfully and must increase significantly our gas storage capacity, because we need wider margins. On the Russian Federation and the president, for 18 months or two years, there were very real anxieties. However, the whole of Europe has very great interest in the security of supply from Russia and, of course, it is in Russia’s interest to sell its energy production, the basis of which is effective bargaining. The noble Lord will recognise that we are past the stage where we will ever again be able to look to purely British indigenous supplies for energy in this country, if we ever could entirely.
My Lords, what percentage of gas generation for electricity has been switched to coal-fired stations? Surely that must increase the carbon dioxide in the atmosphere, as does the failure to adopt daylight saving.
My Lords, very little gas generation has been moved to coal-fired stations. Our plans are to guarantee that gas continues to play its very important part in energy supplies.