| Previous Section | Index | Home Page |
“would form an increasingly important part of the mix if improved technology on safety and efficiency was taken into account. Demand would rise, but in theory there was no shortage of supply. In other words, it was all about reducing carbon.”
There is a lot of sense in that, but in the UK context the challenge is not just to reduce carbon but to ensure investment in new power station capacity in time, as other power stations—not just nuclear, but coal—go off-line.
In addition to not panicking, three other key messages have come through in other speeches this evening. The spreading of risk is always a good maxim and is absolutely central to the debate about energy supply. However, too much of our policy on carbon emission and the contribution of electricity generation to it has focused on industry. Industry has been made to bear an awful lot of the pain associated with carbon reduction in the last few years, which has an effect on UK competitiveness. Not enough has been done on households and transport—two other key areas for carbon reduction. I hope that, as the Government follow through the conclusions of the Stern report, the burden will be shared rather more equitably than it has been in the past.
There are two policy instruments that matter and that have already been highlighted in this debate. Whether we are talking about renewables or nuclear, the two key issues are carbon trading—getting a good, predictable price for carbon in the medium term—and planning. Those are the two big games in town in developing an energy policy that will actually survive.
I had intended to spend some time looking at the gas sector’s capacity, but that issue has already been covered quite well in this debate. The bottom line must be that this winter is again challenging, although probably not as challenging as last. After that, the new capacity coming on line—import infrastructure and gas storage—should give us considerable comfort. In the next year or so, such new capacity will include Langeled South, Statfjord Late Life, BBL, South Hook LNG, Dragon LNG, and the expansion of the interconnector and of the Isle of Grain. Also under consideration are Teesside LNG and Canvey Island LNG, which were mentioned earlier, so a lot of import capacity is coming on.
Of course, we in this country are not used tobeing gas importers—it is a new phenomenon for us. Much of the world has become accustomed to that, however. The run-down of the North sea may have happened a little faster than we expected, but we always knew that it was going to happen. My view is
that we should be reasonably relaxed about our dependence on imported gas.
I turn to some of the major long-term issues arising from last December’s report on the security of gas supply. Unsurprisingly, liberalisation of the gas market in Europe has featured very prominently in this debate. I share the view—expressed, I think, by the Secretary of State—that the Commission is working very hard indeed to liberalise the market, but we should not hold our breath for any short-term gains in that regard. There will be a huge struggle between the Commission and the member states, who will want to hang on to their long-term contracts. To hope for some kind of quick fix is to delude ourselves.
We need to be more honest about the UK market itself, which is not in fact that functional. It is insufficiently liquid because no one is willing to risk selling short. Producers have been scared off by Enron, for example, and professional risk takers such as hedge funds are not interested in a market that is so small. So the UK market is not working very well and will not do so until the European markets have been liberalised.
I want to say a brief word about the consequences of rising energy prices in the UK. Historically, they have been low, and the recent catch-up is perhaps not that surprising, but painful for many people living at the economic margin. The Government have focused their attention on the impact on pensioners through the winter fuel payment, but the Committee has repeatedly drawn the Government’s attention to the fact that other, non-elderly vulnerable groups also need help in dealing with rising fuel prices. I hope that they will have more to say about that.
In turning to the main issues arising from the Committee’s evidence, I return to my point about the spreading of risk. We are being repeatedly told that diversity is security, and that message is very clear. However, the market just will not deliver such diversity without the two changes to which I have already referred: a predictable planning system and a more predictable long-term market structure for carbon pricing. I do not like to add to the embarrassment that I caused my hon. Friend the Member for Wealden during my earlier intervention on him, but I genuinely believe that my own party’s proposals on carbon pricing—I am trying to be objective here, as Chairman of the Select Committee—are rather more robust than the Government’s. I am delighted that the Government are holding out the prospect of going further. To rely on the multilateral mechanism of the EU emissions trading scheme is a little over-optimistic.
The Committee recently concluded its work on nuclear power, and the Government responded to its report. I am not sure whether the report has been published, but it is certainly authorised for publication. The Government’s response to it is constructive and helpful, even when it disagrees with the Committee. I used to be quite enthusiastic about nuclear, but during our Committee’s inquiry I became a little more cautious, although I remain convinced that, broadly speaking, we need to replace our current nuclear capacity.
I caution against a too heavy dependence on nuclear, however. As has been said, it is comparatively inflexible. It provides base load electricity, and therefore is a price-taker, rather than a price-setter, and, because of
large plant size, significant reserve capacity and grid reinforcement is required if the temporary loss of a nuclear plant is not to cause major disruption. That is not mere theory; such disruption has happened. For example, a serious outage affected 4 million people in southern Sweden and eastern Denmark, and blacked out Copenhagen, on 23 September 2003. That was precipitated by the failure of a nuclear generating plant because of a cooling system problem, and it caused subsequent problems for another nuclear plant. In addition, a collapse of the transmission system in the north-east of the USA and southern Ontario in August 2003 required the shutdown of all nuclear plants in the system. There are problems to do with over-dependence, particularly on the larger, more powerful new generation of nuclear power stations that might be introduced.
I tend to take issue with my party’s Front-Bench spokesmen on the subject of our dependence on imported gas. There has been a lot of talk about Russia and I can understand why, but gas from Russia currently provides a very small percentage of the supply to the UK—it is a maximum of 4 per cent. We should bear in mind the other countries that we take gas from; Norway, for example, is not exactly politically unstable. In addition, the North sea will have lots of gas for a considerable time yet. Although it cannot meet our needs—we cannot export gas—there is a lot there, and the point is that it needs to be sold. The diversity of the current import infrastructure, which involves sources from around the world, gives me considerable confidence, and we can be reasonably sure of a continuing supply of gas. I am pushing my luck a bit, because we have not actually considered our report on the subject yet, although we will do so shortly.
People say, “The pipelines will have to come all the way from Siberia”, but it does not work like that. In a particularly interesting evidence session, Gazprom made it clear to our Committee that the gas that it would import to the UK is likely to come in the form of swaps with other gas producers, such as liquefied natural gas cargoes. That is how the system works. For those reasons, I am reasonably optimistic about gas. Norway wants to recoup its investment by sending gas through the Langeled pipeline. The Qatar Government have invested heavily in the facility at Milford Haven, and will want to use it. Gasunie has committed to a 10-year contract supplying gas to Centrica through the Balgzand to Bacton pipeline. All of that does not necessarily mean that there will be no problems this winter, but it does mean that, in the medium term, gas is a reasonably secure source of supply. I would have liked to discuss coal, but in view of the time and the number of colleagues who wish to speak, I will not, except to say that I welcome the steps that the Government are taking to try to explore what is inhibiting the development of the UK deep coal mine industry.
The Committee is currently investigating the issue of microgeneration, or whatever we want to call it. The term “microgeneration” is curiously unhelpful, because it conveys a sense of producing electricity, and that is only part of what local energy production does. In fact, I think that the most low-hanging fruit is to be gained—
apart, of course, from improved energy efficiency, which is the single biggest way in which we can improve our security of supply and meet our carbon dioxide targets; but that is a given, so I will not labour the point—by exploring the issue of heat. I made that point to the Minister when he gave evidence to our Committee. The driver is not the fact that people want to behave in a saintly way and save the planet, much as they may want to, but the rising price of gas, which is forcing people to consider how they can use domestic fuel sources more efficiently.
Like the hon. Member for Waveney (Mr. Blizzard), I am having a condensing boiler installed at home, and work began on it today. That is because I need to save a lot of money on my gas bill, and although a condensing boiler is an expensive upfront cost, there are significant long-term paybacks. Solar water heating presents much greater opportunities than people realise, and I think that the Government’s documentation of the payback periods for that are rather pessimistic. There are the mysterious-sounding ground source heat pumps, too. For a long time, I thought that they had to do with thermal energy coming up from rocks underground. I now discover that they work by making a garden into one big solar panel, and as long as the garden is at a temperature above absolute zero, heat will be produced for households. Ground source heat pumps have a particular place in new social housing schemes. Where they are used, pensioners would not have any energy bills for large periods of the year, or possibly at all.
Too many of our discussions are either/or debates—one has to be in favour of nuclear or microgeneration, and in favour of distributed or centralised systems. That is nonsense. The hon. Member for Cambridge (David Howarth) made it clear in his substantial contribution that it will probably be 30 to 40 years before microgeneration can achieve its potential—we will test the Energy Saving Trust on that tomorrow—so we need to replace the current grid and distribute energy from those more conventional power stations. It is not an either/or debate—we want to spread our risk and do everything else that we can.
Finally, I am tempted to enter the debate on fusion, about which the Committee is reasonably optimistic. As has been said, optimism is the fuel of much of this debate, but fusion is a serious prospect, providing almost unlimited supplies of energy that can be used to produce hydrogen for the transport sector and so on. Leaving fusion aside, decentralised energy has been described by hon. Members as the 21st-century energy solution. We often reinvent the wheel because, in fact, it is the 19th-century energy solution. We are simply rediscovering our roots—the Minister will be familiar with the parallel, because I suggested it to him when he appeared before the Committee. I live in Worcester, and in 1894 Worcester city council transformed Powick mills on the Teme, adjacent to the bridge where the first battle of the civil war was fought, into a combined steam and water-driven hydro-electric facility. The experimental design was the first of its kind, and electricity from that source provided about half the city’s needs until 1902, when Worcester’s coal-fired power station came on-stream. Powick—a micro-hydro scheme—continued to generate energy until the 1950s. If I have one criticism of the Government’s micro-generation strategy it is the fact that it plays down
the potential of micro-hydro schemes in England.They can work there, just as they can in Scotland and in Wales.
I have spoken for too long. I apologise for detaining the House, as other hon. Members wish to contribute. I welcome our debate, and I hope that there are many more such debates in future on this very important subject.
8.35 pm
Mr. Michael Meacher (Oldham, West and Royton) (Lab): It is always a great pleasure to follow the hon. Member for Mid-Worcestershire (Peter Luff), whose speeches as Chairman of the Select Committee are wide-ranging, extremely well informed, sound, honest and frank. I want to concentrate on a narrower point, and I will not necessarily come to the same conclusions as he did.
On the day on which the Stern report on the colossal economic costs of global economic warming is published, it must be stated at the outset that the subject of our debate—the security of energy supply which, as we all accept, is crucial—is only half the debate. The other half is the need to do absolutely everything in our power to prevent climate change and mitigate its effects. Fortunately, the direction of the policies needed to meet both objectives is the same. Approximately 40 per cent. of the UK’s primary energy supplies come from gas; 33 per cent. from oil; 17 per cent. from coal; only 8 per cent. from nuclear; and just 2 per cent. from renewables and other sources. That position is not sustainable in the long term. According to a broad consensus of expert opinion, global oil supply will peak, if it has not already done so, in the next five to 10 years, but demand, driven by frenetic growth in China, India and other major developing countries such as Brazil, will result in rising prices, probably in excess of $100 a barrel within a few years. Sharp price hikes will be caused by international events, whether war or terrorism, and by an increasing shortage of spare refinery capacity.
Furthermore, UK production of North sea oil has long since peaked, and is fast declining at a rate of between 4 and 6 per cent. a year. We are once again in the uncomfortable position of being net importers of oil. We therefore need, as far as possible—I accept that things will not happen quickly—to reduce our dependence on oil, which is a major, if not the major, source of greenhouse gas emissions. Similar considerations apply to gas. Gas prices will certainly remain high, and will steadily rise in the medium to long term. We are net importers, too, of gas which, as has often been said, comes from relatively political unstable countries such as Russia, Algeria, Libya and Iran, so it is not sensible or prudent to allow our dependence on them to increase. Again, we should seek to reduce our dependence on gas wherever possible.
Coal, by contrast, is an indigenous energy source, and significant supplies will be available in the UK for several decades if not centuries. However, of all the fossil fuels, coal produces the most greenhouse gas emissions, because it is virtually pure carbon. There are two ways in which we can address that, which is beginning to happen. One is by equipping coal stations with fuel gas desulphurisation to meet the requirements of the
EU large combustion plant directive. My understanding is that some three quarters of coal power stations are now being equipped with such plant. The other technique—my hon. Friend the Member for Waveney (Mr. Blizzard) spoke forcefully about this—is the development of new carbon capture and storage. Unquestionably, that technology has promising potential, but it has to be said that, as yet, there is no proven prototype in existence. The essential requirement is that the carbon can be stored indefinitely. That is an exacting and demanding requirement, but we should certainly seek to develop that technology.
Those limitations, in various forms, on the utilisation of fossil fuels have led the Government to conclude that a new round of nuclear build is therefore necessary to fill the gap as the Magnox and AGR reactors are steadily phased out and the nuclear contribution to electricity generation is reduced, as we are repeatedly told, from about 20 per cent. now to, it is alleged, some 7 per cent. in 2020 or shortly after.
That argument is flawed on a number of counts. First, the so-called gap is likely to be far less than is alleged. In September of last year, British Energy reviewed the Dungeness B nuclear power station and I understand that it is now investing to extend the life of the power station by 10 years. British Energy is also reviewing six other nuclear power stations for exactly the same purpose. Undoubtedly, some of those will be closed, but it is a reasonable expectation that a number will be invested in to give them some further extension of their life. Similarly, fitting desulphurisation plants to coal station chimneys will also reduce the gap significantly.
Secondly, nuclear plants—on this point, I disagree with the hon. Member for Mid-Worcestershire; this is a contentious issue—have well recognised disadvantages that are difficult to remedy. In its report at the time of the first energy White Paper three years ago, the performance and innovation unit—the No. 10 strategic unit—calculated that, on its best estimate, by 2020 nuclear would be about twice as expensive as wind power. I am not saying whether that is right or wrong. I am saying that that was its calculation.
There is also the unresolved problem of what to do with the huge and mounting piles of nuclear waste. It is reckoned that, by the end of this century, there will be as much as half a million tonnes of some of the most toxic intermediate and high level waste. In relation to CoRWM, it is true that the problem is more political than technical, but to say that it is political does not get over the problem. The question is, where is the waste going to be stored? Governments from both parties have repeatedly tried to resolve the problem, but it remains, at least at the moment, as insoluble as ever.
The cost of decommissioning and waste management for existing nuclear plants, let alone new ones if we go down that route, is already calculated by the Nuclear Decommissioning Authority to be more than £75 billion. That is a colossal figure. It is about 7 per cent. of our gross national product.
Mr. Meacher: I will gladly give way, but I am simply quoting the statement given by Sir Anthony Cleaver, who is the chair of the NDA. If the hon. Gentleman wishes to intervene on that figure, he may.
Peter Luff: I recognise that figure as the cost for the NDA—my Committee actually thinks that it will rise. Although the Minister will correct me if I am wrong, I understand that that figure includes the cost of addressing all the earlier military experimentation. It is the cost of dealing with the total nuclear waste legacy, not just that from power stations.
Mr. Meacher: That is absolutely true. The two figures cannot be readily disentangled. The figure that I cited includes the cost of dealing with the early stages of military nuclear development in the 1950s and 1960s. However, even if we do not know the exact cost of dealing with civil nuclear waste, it is still absolutely enormous, and that is quite apart from any consideration of the associated serious terrorism risk. It is true that gas and oil pipelines are probably an even greater hazard, but one cannot deny that nuclear is a target. Moreover, although it is absolutely true that nuclear plants do not generate CO2 when they are operating, the mining of uranium, the milling of the ore and the enrichment, as well as the 10-year building programme of a £2 billion nuclear plant, generate significant CO2 emissions.
Mr. Meacher: The hon. Gentleman shakes his head, but that is widely viewed to be the case.
Peter Luff: That is the one canard in this whole debate that we should not allow to stand on record. There is a consensus—the view is shared by Sir Jonathon Porritt, for example, who gave evidence to the Select Committee—that nuclear power is definitely a low-carbon source of electricity generation. It might have disadvantages related to security and proliferation, but it is a low-carbon source. The right hon. Gentleman does not do his argument much credit by recycling that rather tired old point.
Mr. Meacher: The hon. Gentleman took what I said incorrectly. Nuclear is undoubtedly a low-carbon source compared with oil and coal. However, it is often claimed that it is a carbon-neutral or nil-carbon source, but that is not quite true either. The carbon contribution of nuclear reactors is something like 4 to8 per cent., although I agree that that figure is considerably less than that for other fossil fuels.
There is also a question over the supply of uranium. The UK has no indigenous uranium resources. Due to the enormous demand that is being exerted by China and India, which propose to build 30 or 40 nuclear reactors in the next 20 to 30 years, the supply of uranium might turn out over that time scale to be as insecure and uncertain as that of oil and gas today. One cannot expect that uranium will be readily available indefinitely.
| Next Section | Index | Home Page |