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Adam Afriyie (Windsor) (Con): At the same time as the review, and the Government, are considering the
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regulation governing the storing of natural gas, will they also review the legislation surrounding the storage of carbon dioxide in those same geological formations?

Alan Johnson: Yes, indeed. International law requires us to do that, so it will be an important part of our review.

Mr. John Grogan (Selby) (Lab): Is there a case for giving Ofgem power to oversee offshore gas as well as onshore gas so that it can oversee the whole market and ensure that it operates efficiently?

Alan Johnson: There may be, and we shall look at that element in the review. It has been raised with us, but we have also heard the case against doing that, so the argument remains finely poised.

Our energy market, like energy markets around the world, is facing long-term challenges. The days of cheap indigenous supplies are over, and, like most other countries, we will have to import more energy and pay more for it. As we move forward with the review, my hon. Friend the Minister for Energy and I will look to involve closely the many people in the House and outside it who have a keen interest in this important issue. Ensuring safe, affordable energy for all in a way that minimises CO 2 emissions must be our first priority, and I welcome the opportunity to debate these important issues on the Floor of the House today.

3.30 pm

Mr. Alan Duncan (Rutland and Melton) (Con): I thank the Secretary of State for giving us this debate. It has been some time a-coming; we have been calling for it for six months or more, but I imagine it will be the first of many on an important topic.

The Minister for Energy (Malcolm Wicks): We were waiting for you.

Mr. Duncan: I am very flattered. I apologise, Mr. Deputy Speaker, to you and the House for not being able to be here for the winding-up speeches. They are in the capable hands of the Minister, who will, I hope, still be in his flattering mood, and of my hon. Friend the Member for Wealden (Charles Hendry).

In July, the Department issued a report on the 2003 Energy White Paper. It said:

Well, that sweeping statement might not quite be motherhood and apple pie, but it is quite a tall order in what is an increasingly highly complicated world. Two years on from the White Paper, the ambitions described in that statement look somewhat distant. The best we can say is that progress has been mixed. In some respects, and contrary to the best intentions of new Labour, we have moved not forwards but back. This winter, we shall see real signs of the Government's failure to achieve those aims over the past eight years and their failure so far—we hope it is only "so far"—to equip Britain for the energy security challenges of the 21st century.
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There is considerable upheaval and uncertainty in the energy sector worldwide, which affects both our immediate supplies and our wish to establish a viable, enduring, long-term energy policy framework. We are witnessing the massive expansion of demand from Asia. Gas and oil prices have risen significantly: insufficient domestic capacity and storage have contributed to a quadrupling of gas prices. Following the explosion in Hemel Hempstead, we have seen restrictions in the supply of jet fuel to our main airports—

Alan Johnson indicated dissent.

Mr. Duncan: No, there definitely have been. I was grounded for two hours on the apron the other day. [Interruption.] Well, I thought that the Secretary of State was shaking his head.

Malcolm Wicks: It was a big fire.

Mr. Duncan: Of course it was a big fire. It was exactly the kind of security issue that we have to grapple with in any sensible review and in the very debate we are having this afternoon.

Insurgency in Iraq and nuclear fears in Iran contribute to habitual doubts about political stability in the middle east. A spat between Russia and Ukraine has recently caused spikes in the gas price, and fears remain that Russia will again flex its political muscles and disrupt supply.

All that is but part of the global backdrop to the challenges of creating a sustainable energy policy. To that uncertainty, one needs to add all the domestic questions of the financial and economic framework in which investment decisions—necessarily long term—have to be made, some conditions of which are utterly unhelpful to those decisions.

The UK is increasingly vulnerable on energy security. That manifests itself in the higher prices we are paying for energy when compared with our competitors. I shall come to the causes and security issues shortly, but I should like first to examine the scale of the problem. Whereas we cannot, of course, be insulated from the impact of global price shifts, the problem is that we are suffering more than we need to and are paying more than we ought to. Whereas small UK companies paid 12 per cent. less for electricity than those in France in July 2004, by October 2005 they were paying 15 per cent. more.

In respect of gas, the Energy Intensive Users Group has said that

That is both unnecessary and a serious threat to our economic competitiveness.

In recent months, four European countries have overtaken us and now pay cheaper prices for natural gas. There are also increasing problems for domestic users: the consumer price index shows that end-user fuel bills rose by 14 per cent. in the past year.
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Paradoxically, as the Secretary of State was honest enough to admit earlier, Britain is becoming more dependent on gas at a time when elsewhere in the world there is greater optimism about, and progress being made in, alternative and diversified energy sources. The clean coal and carbon capture schemes, among others, offer genuine hope for the conversion of existing technologies. Meanwhile, Denmark and Portugal lead the world in the provision of wind and wave power.

David Taylor (North-West Leicestershire) (Lab/Co-op): The hon. Gentleman mentioned the potential for clean coal technology. There has been a bonfire of the policies in the Opposition, so will he say whether the Conservatives can see emerging from the smoke a substantial role for coal in increasing diversity of supply? If so, would that include the 800 million tonnes in the Asfordby coalfield, which largely lies beneath his constituency?

Mr. Duncan: It is very sad that the Britain's most modern deep mine, which is in my constituency, ended up being closed because of geological faults. We can have an honest discussion of these matters, and I commend the Government for holding the energy review. It is a bit late, but it is happening. The Opposition will track the review, and hold a parallel one of our own. The challenge facing us is a cross-party matter: if there exists usable domestic coal that meets the environmental objectives about which we all agree, coal will indeed have a role in future. However, we must prove that the technology that renders coal clean for use is available and generally applicable. If we can do that, the answer is yes, we can use coal; if not, the answer is more likely to be no.

Mr. Skinner: Will the hon. Gentleman give way?

Mr. Duncan: It is always a deep pleasure to give way to the hon. Gentleman.

Mr. Skinner: If the shadow Minister is so concerned about clean coal technology, why, when the Tories were in power, did he support the closure of the Grimethorpe processing plant? That plant used clean coal technology.

Mr. Duncan: I supported the closure because the technology was not ready and the economic argument was not convincing. However, if the Secretary of State thinks that it is a viable option now, I am sure that he will open it up again especially for the hon. Gentleman.

As I said, the Opposition called for ages on the Government to hold a comprehensive review. We repeated that call for more than six months, and it was echoed by the director general of the Department's own energy group. However, we have the review at last, and we look forward to doing our bit and making as good a contribution as possible.

My objective this afternoon is to present what we consider to be the key issues in energy security that we hope will be addressed by the energy review. I shall be interested to hear from the Minister for Energy when he thinks that the review will be concluded. That will give us an idea of the full timetable, given that the Secretary of State helpfully announced the beginning of the review earlier this afternoon.
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The first issue is energy efficiency. Unnecessary energy consumption is a burden on the environment, costs the UK more than needs to be the case, and makes us more vulnerable than other countries. The Opposition's second concern has to do with our dependence on imports. Our supplies of fuel should come from the most diverse possible range of sources, and we should favour liberalised markets over those that might be subject to irrational Government diktats.

The third issue is renewable energy and the diversity of technology. The energy supplies that we need should come from a diverse pool of technologies, so that there is sufficient flexibility to adapt and adjust to changes in individual markets. That is a medium to long-term aim, but we need to get moving on it as soon as possible.

Let us start with energy efficiency. Energy efficiency encompasses everything from the insulation in our lofts to the decentralisation of our energy supply. We need a proper programme for efficiency that reduces our dependence on energy, and in our homes we need to be doing more with less, which reduces demand and thus CO 2 emissions. This is not just a marginal issue: it is essential for alleviating fuel poverty.

We need to become more efficient in the way that we use energy and we need to lose less in the way that we transmit it. On 30 January last year, the Environmental Audit Committee reported that the Government

That is especially true with regard to new builds from the Office of the Deputy Prime Minister. Without dramatic reforms, housing could account for 55 per cent. of the UK's carbon emissions by 2050. That is almost double today's amount. We are alarmed to see that, yet again, the ODPM has committed itself to a course of action aimed at increasing the number of new houses built, without considering sufficiently the wider implications for sustainability or energy efficiency.

We therefore hope that the energy review will look further into encouraging and improving energy efficiency, which is especially important given the rise in CO 2 emissions in each of the past two years. Measures to do with better insulation and hybrid cars could be a start, but more radical options are becoming available that offer even greater benefits. For example, as I have mentioned, the current centralised infrastructure of energy production and distribution is an area for further study. An astonishing 65 per cent. of the energy available from the fossil fuels burnt never reaches the homes and businesses that pay the bills. Some is lost in the inefficient generation process, but yet more is lost in transmitting electricity over great distances. Decentralised models, including combined heat and power systems, substantially reduce that loss. If the Government were serious about climate change and energy security, they would look seriously at decentralised models. Instead of following the good examples that have been set, the Government are setting one of the worst examples imaginable by failing to convert their talk about microgeneration into a serious policy to achieve it.

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