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Mr. Blizzard: Does the hon. Gentleman think that we will achieve greater liberalisation of European energy markets—an aim that I think we share—by ensuring that this country becomes more or less engaged with the European Union?
Mr. Whittingdale: I remain absolutely committed to achieving a free and open market throughout Europe. That is the reason why I have always supported membership of the European Union, and it is why the vast majority of people in this country voted to stay in it.
Richard Ottaway (Croydon, South): My hon. Friend is making an excellent point about the failure of EU liberalisation. Is he aware that, at the present rate of progress, the majority of the EU market will be owned in a few years' time by just three national champions? That failure arises from EU competition policy, whose scope for movement in this sector is very limited.
Mr. Whittingdale: I entirely agree with my hon. Friend that that is one of the challenges that we will have to confront. I hope that it will feature in the discussions at Seville this weekend. There is no doubt that there is currently a lack of competition throughout Europe in terms of energy, with the single exception of this country.
Mr. Gareth Thomas: The hon. Gentleman rightly talks about the need to continue to develop our indigenous energy resources. In the context of his comments about Europe, does he recognise that in Britain, our wind resource potential is massively better than that of any other country in Europe? Will he try to exercise some influence on some of the more notorious flat earth opponents of wind power, such as the notorious figure Bernard Ingham?
Mr. Whittingdale: I have a high regard for Bernard Ingham, as we worked together for a number of years, and he has valid views about wind power. I want to speak further about wind power, as it is a valuable resource that we should exploit, although it is not true to say that it is without its difficulties.
Before I leave security of supply and the energy mix, I point out that, although there is considerable danger of our becoming too heavily dependent on one energy source, I am not suggesting that the Government should seek to dictate our future fuel mix. I agree entirely that that is best left to the market, but the matter is not so simple that we can stand back and let market forces work. Many of
the key determinants of the outcome are under the Government's control, and their decisions will hugely influence the economics of investment in different fuels.
Dr. Ladyman: Before the hon. Gentleman leaves the subject of liberalisation, I should like to point out that my constituency, in east Kent, uses French nuclear-generated electricity that is sold to us by a French-owned company to boil water in our kettles that is also sold to us by a French-owned company. I wonder what we will sell back to the French in the liberal markets that he is talking about. As we are running down our nuclear power stations, we are unlikely to have any excess capacity to sell.
Mr. Whittingdale: I want to say more about nuclear power, but I will not be tempted to do so now. Obviously, we have to look only a short distance across the channel to see a country that has invested heavily in nuclear power and still clearly sees that it has a major part to play in its energy supply.
To finish my point about the mix of fuels, I think that the Select Committee was correct in drawing this conclusion:
- "Even if the exact mix of fuels is left to market forces, it is arguable that the Government should at the very least take no action that closes off options, and perhaps should make adjustments to its policies to keep its options open."
There is one area where the Government have not adopted a market approach. Instead, they have set a very precise figure for the proportion of our energy that must be sourced from renewables. There is a target of 10 per cent. by 2010, with a PIU recommendation that that should rise to 20 per cent. by 2020. However, it is very important to bear in mind that the target is qualified by these words:
- "provided the costs to consumers are acceptable".
We entirely share the Government's wish to see a significant increase in the proportion of our energy that is provided from renewable sources. The environmental benefits of generation from renewables that harness the energy in our natural world—the wind, tides, sunlight and the earth—are enormous. It is now almost beyond scientific doubt that we must reduce our reliance on energy whose generation results in the emission of carbon dioxide into the atmosphere. That must be done if we are to avoid potentially catastrophic climate change.
Ms Shipley: On that point of catastrophe, will the hon. Gentleman be clarifying his party's position on the construction industry, and the real need for that industry to be reformed and given statutory requirements, not merely guidance, on energy and on ways of capturing energy so that new buildings are energy self-sufficient?
Mr. Whittingdale: A certain amount of regulation is already in place, but I agree with the hon. Lady that it may well be that more can be done. Energy efficiency is certainly an important component in this debate, but before considering that, I should like to consider renewables, which also constitute an important component.
Despite one or two instances of slight party political point scoring, which of course I expect, it is the case that we have sought over quite a long time to encourage the use of renewables under both Conservative and Labour Governments. It is also the case that progress has been extremely slow. There are a number of reasons for that, one of which is planning requirements. As a result, less than 3 per cent. of our energy comes from renewable sources.
The Government's decision to require energy supply companies to increase that proportion to 10 per cent. will bring about change. Although I might not necessarily have chosen such a blunt instrument to effect that change, we fully support the Government's objectives. For that reason, we have not opposed the renewables obligation. However, the Minister will be aware that there are real doubts about whether the target can be achieved. One of the criticisms of the PIU report is that there was insufficient engineering input into the review, with the result that it fails to recognise practical constraints on the speed with which expansion of renewable electricity generation can occur.
Our electricity transmission and distribution system was built to cope with bulk generation from relatively few power stations. A significant increase in renewable energy will require many embedded generators producing small amounts of power and feeding directly into the distribution system. That will increase the potential for local damage to the network in the event of a fault, and the required extra investment in the network has already made some projects uneconomic.
It appears that the National Grid Company is reasonably confident that the 10 per cent. target will not cause insuperable difficulties for the network, but that is not the case for the PIU's 20 per cent. target. Problems become particularly serious if renewable energy comes largely from wind sources, which are both intermittent and unpredictable. These disadvantages mean that it may be necessary to construct standby plant, which can easily be switched on and off, but that will also further increase costs.
It is such considerations that have led Professors Michael Laughton and Bert Whittington to conclude:
- "the brutal reality is that 20GW of wind power cannot be accommodated in the UK electricity system."
Paddy Tipping: The hon. Gentleman is making an important engineering point. Let me help him on the scale of wind power. Radcliffe power station in Nottinghamshire is an important energy supplier. To build a field of windmills capable of producing the same amount of power would depend upon the spacing of the windmills and the strength of the wind. The best estimates suggest that to produce the equivalent amount of power would require a field of windmills as large as Greater Manchester. That would not be environmentally friendly.
Mr. Whittingdale: I want to deal precisely with environmental questions. However, the hon. Gentleman is right. With all the technical advances in wind generation, a wind farm can still produce only a small fraction of the power produced by a conventional power station.
Developments of wind power—especially offshore wind power, which probably seems the most promising area for development—are expensive in terms of plant and will require huge investment in the transmission network. That has not yet been properly taken into account. For example, the limited spare capacity in the Anglo-Scottish interconnector is a serious inhibiting factor. Yet the cost of a new west coast electricity interconnector, which was originally estimated at about £500 million, is now estimated to be about £2.3 billion. The economics are enormous and have not yet been properly calculated.
Such developments have not only an economic cost but an environmental price. This is where, perhaps, I have some sympathy with my former colleague in the civil service, Sir Bernard Ingham. Opinions differ about the attractiveness of large numbers of wind turbines, but there is no doubt that one of the biggest obstacles to development has been strong opposition to specific proposals during the planning process. To date, about 80 per cent. of planning applications for onshore wind farms have been rejected. Offshore projects have been the subject of protests from local fishermen and, as we have heard, from the Ministry of Defence. Even if a wind farm can be sited offshore where it does not blot the landscape, the necessary infrastructure to connect it with the grid—pylons and sub-stations—will still require planning consent.
Let us be clear that a deliberate policy to increase the proportion of renewables will have to be paid for by higher electricity prices.
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