Energy Supply

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Mr. Wilson: On that point, I share a political interest in what happens off the west coast and would like to see the development of an oil and gas industry there. The problem is not that there has not been exploration, because there has been, or that people are holding it up, although some would like to veto the whole thing. It is that the returns have not so far been very promising. One discovery has been made off the Hebrides, which I hope will lead to others.

Rev. Martin Smyth: I appreciate that comment from the Minister.

Reference has been made to clean coal. I am not too sure whether we can supply clean coal, but I understand that this country has something like 300 years of reserves, while European reserves total only 200 years. Therefore, we have our own hand to play. I join the Committee in welcoming the discussions that are taking place and look forward to the people of this nation benefiting from the supplies.

Building has also been discussed. Why could not architects, with all their wisdom, perceive that when we installed central heating and closed chimney breasts, condensation was inevitable in a climate such as ours? Some of the best brains of our nation could use a little more of their intelligence, not only to encourage us to turn off switches but to ensure that houses and buildings are properly built to satisfy the climatic conditions of the modern world.

12.31 pm

Mr. Jack: The debate has been interesting, and has shown the complexity of the issues. My hon. Friend the Member for Salisbury painted a broad canvas, but referred to many important issues, and the hon. Member for South Thanet made some salient and important points about the safety of nuclear materials and the nuclear industry.

Before I pick up on a point made by the hon. Member for Teignbridge, I should declare an interest. In my constituency, apart from pressurised water reactor fuel, we make all the fuel for nuclear power stations in the country, at BNFL's plant at Springfield. We are considering the implications of a wind farm off the Fylde coast. Already, from my front room window, I can see gas extraction in Liverpool bay. Fylde is a positive little Klondike, as it also has some onshore gas, and we are enjoined in all aspects of the energy debate.

The Liberal Democrats are confusing in their minds the different challenges of legacy waste from former military and current nuclear power sources with a different waste scenario that would apply to some of the newer designs of nuclear power stations. They would produce infinitely less nuclear waste, which could be stored in dry, on-land conditions as advanced gas-cooled reactor fuel is at present. That would create a wholly different regime from the one that has left the more difficult legacy waste. Any party that tries to have its cake and eat it in terms of energy supply should bring itself up to date with the technologies and relative challenges of that issue.

One word goes to the heart of the discussion—risk. Europe is considering a strategy for energy supply to spread the question of dependency and to open up markets in order to share some of the risks that are involved. The hon. Member for South Thanet was right to mention geo-politics. What would be our defence scenario for the middle east and, indeed, Afghanistan, if we did not have to have one eye over our shoulder on oil and gas supplies in those regions? We could dramatically change our geo-politics, our sense of security and our whole defence policy. That underpins the importance of the debate, because it relates to so many issues.

I was interested by the paragraph in the summary of the Green Paper, which states:

    ``The European Union's long-term strategy for energy supply security must be geared to ensuring, for the well-being of its citizens and the proper functioning of the economy, the uninterrupted physical availability of energy products on the market, at a price which is affordable for all consumers (private and industrial), while respecting environmental concerns and looking towards sustainable development, as enshrined in the treaty.''

What a fantastic paragraph—and it might make good energy policy. I was going to ask the Minister to define the Government's energy policy, because the document described a series of positions—about competition in the marketplace, the operation of the pricing structure and the position in Europe. However, the command and control idea, a policy that would allow the Government to pull levers and strings and to make things happen, cannot be implemented in a free, liberalised market.

It is interesting to reflect on why we are debating the European energy review. It was the shock of California that made us realise that the era of limitless supplies of energy was coming to an end. The problem with that statement about Europe's energy needs is that we cannot have our cake and eat it. We cannot have a limitless, totally secure supply of energy at low prices. It certainly cannot happen if, at the same time, we are to respond to the environmental challenges that are also a key factor. We have to find the right balance if that policy is ever to mean anything.

What would we do for energy if we had no gas—perhaps it became politically unavailable—and no European oil. The United Kingdom is sitting pretty; people would say, ``We are all right, Jack.'' We are sitting on a large chunk of coal—we have been reluctant to burn it in ever-increasing quantities because of the CO2 emissions. We have nuclear technology. If we really looked after our oil and gas reserves in the North sea, we could make them last a little while longer. We are doing a good job with renewables. However, other European countries are not so well placed. That is an important perspective.

Price versus security is also important. One of the reasons why I changed from driving a high consumption diesel-engined car—I changed to that from an even higher consumption petrol-driven car—was that the price of fuel went up. It concentrated my mind as no other signal could have done that Mr. Jack and his family had to reduce their consumption of energy.

The Minister said that if using renewables meant increasing the price of electricity, it might not be popular. If we are going to have our cake—a clean environment, and meeting our CO2 obligations—we will need a Government brave enough to say that there will be a price to pay. We have seen the price of energy come down in real terms, but if Europe is to address the problem it must start a debate so that people know the price that they may have to pay. That is true also of the nuclear industry. The hon. Member for South Thanet spoke about investment in what we would consider to be an expensive source of energy if we took account of the cost of disposing of some of the raw materials. On the other hand, if we want secure energy supplies in our quarter of the globe and if we want CO2 targets to be met, we shall have to bite the bullet—on that and on renewables.

The tables on page 83 of the Green Paper spell out the projections for oil and gas consumption. The first shows the EU's share of oil and gas as a proportion of total energy consumption. It starts with a figure of 64 per cent. for 1998 and makes a projection for 2030 of 67 per cent. The second shows the projected increases in CO2 emissions set against the 1990 Kyoto base, in which the EU has a projected increase of 5 per cent. by 2010 and 22 per cent. by 2030. The third table shows that the EU's import dependency is forecast to increase from 49 per cent. in 1998 to 71 per cent. by 2030. Those simple statistics made clear what challenges we face.

Europe must press forward on renewables. We cannot duck the issue of nuclear power if we do not want to find ourselves 71 per cent. dependent on imported energy, as is projected in the Green Paper. That seems to sum up the whole challenge. While I will not say that the issues of liberalisation of the French electricity market, the German market and the gas market are sideshows—because proper development of the physical interconnections provides us with an opportunity for sharing burdens if there are problems, which is something to be applauded—the real issue is to get to grips with the consumption of energy. If we do not really drive down our consumption we shall be stuck with the inexorable rise in the demand for energy, and the intractable issues involved with that.

I shall paint a small picture: if we wanted to burn more coal, but were reluctant to do so because of CO2 considerations, a way round the problem would be to reduce energy consumption, so that within the total we could afford to burn coal while achieving our environmental output. That would be a very secure position for the United Kingdom, but we are a long way off it.

It is interesting to consider transport, as there has been virtually no serious development. There has been some work on fuel cell cars, but since the internal combustion engine was introduced more than 100 years ago, transport technology has been firmly based on the hydrocarbon cycle. To break out of that, we need to motor on very quickly towards alternative technologies.

I am glad that the Minister underscored the fact that the Government are re-examining NETA and that he knows about some of the problems affecting combined heat and power. A delegation from British Sugar was in my office yesterday. What is happening seems to me a potty way to deal with something that is 89 per cent. efficient in thermal terms. The interaction of NETA and the climate change levy is turning a company like British Sugar away from conducting its activity in an energy-efficient way while helping to sustain a part of British agriculture—sugar production—that is doing reasonably well.

If the Government are keen on a sustainability agenda they should look after rural Britain by maintaining successful farming activities such as sugar beet production, which is dependent on British Sugar's knocking down its energy costs by means of good quality CHP. That is just one example. Bruner Mond in the chemical industry is another.

There are many interconnections, not just relating to energy, but in a wider sense relating to the energy market. In developing a new policy, hopefully in the context of this European debate, the Government must get to grips with some of the big issues that I have identified. If they think only about the short term, they are in grave danger of losing some of the long-term benefits that we crave.

12.43 pm

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