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22 Oct 2002 : Column 229—continued

Mr. Chaytor rose—

Mr. Simon Thomas rose—

Mr. Jack: I will not give way now because I want to speak for 30 more seconds and then resume my place to allow others to make their points.

If we want to have a sustainable supply of electricity with proper investments in the right sorts of energy that recognise environmental obligations—there is the long-term question of the disposal of waste for all industries, with the exception, perhaps, of wind and wave—we cannot have electricity that is so cheap that it does not generate long-term investment funds. The nuclear fuel workers in my constituency will look to the Minister for answers—if not tonight, in his White Paper—that will secure their future and the security of the nation's energy supplies.

9.27 pm

Dr. Stephen Ladyman (South Thanet): My hon. Friend the Minister said that in perhaps five years' time we shall have seen what renewables can contribute. I may have misunderstood what he was saying because we can work out now what renewables can contribute. I am a great supporter of renewables, as is everyone who has contributed to the debate. However, it is important that we are realistic about what we can and cannot achieve through them.

The 10 per cent. target that the Government have already set is a stretch target. There are already serious doubts about whether we can reach it. The 20 per cent. target that is proposed in the PIU report by 2020 is almost impossible. Any discussion with engineers or anyone else who is involved with trying to implement renewable resources will lead to them telling my hon. Friend the Minister that it is impossible.

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I shall run through one or two of the reasons why it is impossible. For example, let us consider the number of windmills that we would need to match the output from the type of power station that the right hon. Member for Fylde (Mr. Jack) mentioned—that is, a 1,000 MW nuclear power station. We would require 6,000 windmills with 20 m blades. To reach 20 per cent. production of our electricity capacity using wind by 2020, we would have to start building 40 windmills per month, every month, from now until 2020. That will not happen in Liberal Democrat constituencies, will it? It is impossible to have such targets.

I was grateful for some comments that were made by Professor Ian Fells at a meeting that was held at Portcullis House last night. He gave a vivid example. He said that if we put the whole of Kent—the entire landmass—into coppiced willow and converted that into biomass energy production, we would have only half the energy production of Dungeness B on the coast. Those are the simple facts. We can make these calculations; we do not need to wait five years to find the answers to such calculations.

The hon. Member for Twickenham (Dr. Cable), who spoke for the Liberal Democrats, talked about the problems of NETA. He said that under the current arrangement a market is being created in which nuclear power is not economic. If we take that argument to its logical conclusion—if we say that we will have only that which is economic in the short term with no intervention in the marketplace—we have to start building gas-powered stations and nothing but. There will be no renewables because by any estimate of costs, renewables are three times as expensive as nuclear power—not even taking into account the additional capacity needed for the times when renewables are not available.

Professor Laughton of the university of London sent a letter during the recess—to all of us, I assumed, although having listened to the comments of those who overestimate wind input I realise that either some hon. Members did not read the letter or it did not reach them. He points out that the times that wind capacity in this country can generate power do not coincide with the times of peak demand; therefore if we build 20 per cent. wind capacity, we have to build matching conventional capacity that can be switched on to supplement provision when wind power is not available.

Mr. Simon Thomas: Will the hon. Gentleman give way?

Dr. Ladyman: I cannot, because other hon. Members want to speak and I have only a few minutes in which to make my key points.

My hon. Friend the Minister and his team have to address the following issue when they are preparing the White Paper. The reason why intervention in the marketplace is necessary is that if we rely solely on a market mechanism, we will not achieve the balanced energy supply that we need. We will be forced into consuming increasing amounts of gas and into becoming net importers of energy—in fact, we became net importers about two weeks ago. Ultimately, we will be forced to buy our energy from Scandinavia and then the countries of the former Soviet Union. That is no way to build a stable energy supply for this country. We must not only keep the nuclear option open, but force it forward.

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Everyone seems to forget the health consequences of energy policy. We talk about global warming, but ignore air pollution. The United Nations estimates that 3 million people die each year as a consequence of air pollution caused by burning fossil fuels. The Minister for the Environment estimates that each year 24,000 people in this country die prematurely as a result of the burning of fossil fuels. Every year, the 25 per cent. of our energy production that is currently produced by nuclear generation saves 4,000 lives in this country. If our efforts to build a broad energy portfolio result only in our replacing the 25 per cent. nuclear production with 25 per cent. renewables, we will have made no contribution either to cutting greenhouse gas production or to reducing the huge number of people who die prematurely as a result of inhaling pollutants.

I ask my hon. Friend the Minister to think carefully when he is drawing up the White Paper. Not only must he keep the nuclear door open, but he must kick it down and make sure that we start actively to pursue a nuclear policy. That is right for our energy policy and right for the environment.

9.33 pm

Richard Ottaway (Croydon, South): I declare my interest as a consultant to AEP Energy Services, as set out in the register.

Two dogs have not barked tonight: first, the European Union, and secondly, the role BNFL is playing in market interaction. For the first time, we in this country have a pure market in energy, and the consequences are profound. Since 1998, there has been a 40 per cent. fall in wholesale electricity prices but, tragically, the consumer has not benefited. Ann Robinson, chair of Energywatch, the independent gas and electricity consumer watchdog, said:

That is the state of play: despite the fall in wholesale electricity prices, the consumer is receiving only about an 8 per cent. reduction.

One of the problems that we face is that, in my judgment, in the vertically integrated players—the generators and the suppliers—there may well be cross-subsidy going on, which is not feeding through to the consumer. I suggest to the Minister that he invite Ofgem to take a much harder look at what the suppliers are doing, particularly the vertically integrated suppliers, and what can be done to generate much more competition between the suppliers so that that can work its way through to the public.

The first dog that is not barking is BNFL. In focusing on British Energy tonight, we are looking at the wrong company. It happens to be the weakest of the companies in the private sector, so it is the first one that hits the stops when the going gets rough in the market. BNFL, owned by the Government, is far more uneconomic. If one draws up a list of the 10 most uneconomic power plants in this country, the five Magnox plants still in

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operation are Nos. 1, 2, 3, 4 and 5 on that list. That is what is causing the distortions in the market. Under normal circumstances, one would expect those stations to be phased out, but for reasons that we have discussed and for the reason that we have not hit the stops until now, they are being kept open.

Any restructuring of British Energy must take account of the whole market, so the Minister should not be looking just at British Energy—he should be looking at BNFL. If he were to phase out the uneconomic power stations in a sensible way, he would see the price of electricity rising, which would bring the cash back into the market and into the generators, so that alternative forms of energy could be considered, and nuclear and clean coal could become viable options again. However, he must get the price up and get more liquidity and more investment into the market.

The second dog that is not barking tonight is the European Union. I have no doubt that giving state aid to just one company in the market is discriminatory and is distorting the market. I am sure that in the long term that would be in breach of the EU state aid regulations. I appreciate that, in the short term, the Minister is doing the right thing in sorting out the problems, but if there were a long-term package that favoured British Energy against the rest of the market, in my judgment he would fall foul of the EU regulations.

That is not the Minister's fault; he is in a difficult position. He has the White Paper coming up, as well as the shake-out of the market and the problems in the nuclear sector. As other hon. Members have said, the difficulties with gas arise from the fact that from 2006 we will start importing and we do not want excessive reliance on gas. As regards coal, the rules for sulphur and nitrogen emissions will start biting, and unless the Minister can get clean coal technology into place, the coal-fired power stations will run into difficulties, but the market is too low at present, so he cannot get the investment into clean coal technology. As others have commented in respect of renewable energy, the Government will be hard pushed to hit their target of 10 per cent. by 2010. I wish them well in their efforts. The Minister is doing an admirable job in pushing the renewable project as hard as he can, but there are limitations.

Any restructuring must take into account the whole market. My advice to the Minister is to take out the uneconomic plants, let the prices come back up and get the liquidity back into the market.

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