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The Minister for Energy (Malcolm Wicks):
It is important that the House has a clear and accurate picture of energy supply challenges both in the short and the longer term. We have had a useful debate, with
significant contributions not only from Front-Bench Members, but from my hon. Friends the Members for Coventry, North-West (Mr. Robinson) and for Waveney (Mr. Blizzard), the hon. Member for Mid- Worcestershire (Peter Luff)the Chair of the Select Committeemy right hon. Friend the Member for Oldham, West and Royton (Mr. Meacher), the hon. Member for Salisbury (Robert Key), my hon. Friend the Member for Selby (Mr. Grogan) and the hon. Member for Preseli Pembrokeshire (Mr. Crabb).
As my right hon. Friend the Secretary of State said earlier, the gas supply and demand balance could be tight this winter. However, there have been positive developments. The market has already delivered two major gas import projects and two more are on the way; there will be gas from Norway and the Netherlands and new and expanded routes for gas to come to the United Kingdomenergy diversity in practice. Indeed, looking forward to the next two years, as more liquefied natural gas import facilities are built, the total additional gas import capacity in the UK compared with last year will be the equivalent of about 70 per cent. of Britains annual gas consumption. That gives an idea of the scale of the investment.
The Rough storage facility, which I hope to visit on Friday, is back in action and full of gas. Medium-range storage sites are also full. There remains uncertainty about exactly how much gas will flow from the continent. However, I have been working with my continental counterparts to press for action so that more gas flows through the Belgian interconnector during periods of high demand.
We warmly welcome the hard-hitting actions taken by the European Commission, including, as we have heard, the dawn raids. It has the bit between its teeth on market liberalisation. That is good news for all European consumers, domestic and business, and not just for our consumers here in the United Kingdom. I must emphasise, however, that, under all credible scenarios, supply to domestic customers and other small users will be protected. Vulnerable sites such as hospitals and care homes are also protected. The Government are continuing work to ensure that our contingency arrangements are up to date. We are not complacent; we all know that, in reality, things can go wrong for a range of technical and other reasons, so we always needand we havegood contingency plans.
Looking ahead, we expect the gas supply situation in the UK to ease beyond the coming winter. As we have heard this evening, more significant additional gas import capacity and storage facilities are planned for the years ahead. Those are very positive developments, which should ease pressure on future prices. On electricity, the Government are working with the National Grid Company and Ofgem, and we shall keep a very careful eye on developments as we enter the winter.
I recognise that, although the wholesale gas price for the winter has fallen significantly during the past six months, prices remain uncomfortably high for householdersour constituentsand for many industrial users, not least those who are intensive users of energy. High and volatile energy prices affect the competitiveness of industry. That particularly affects the intensive users. There is a limit to what the UK Government can do on their own. The oil price is a
global price. In turn, that drives gas prices. Getting the investment climate right for new import and storage projects is critical to giving UK consumers secure and affordable energy in years to come. The Government have delivered that investment climate; £10 billion-worth of present and planned projects is evidence of that.
We will bring forward proposals to tackle problems with the planning regimemy hon. Friend the Member for Waveney was just one of the Members who talked about the significance of thatto make building new infrastructure for our energy future easier and more predictable. In the domestic market, the Government have targeted action on vulnerable consumers, particularly low-income pensioners who are eligible for pension credit. The Warm Front scheme and similar schemes have made a real difference in terms of energy efficiency; so does £2 billion of winter fuel payments.
Looking to the longer term, we face two major challenges, as a number of Members have stressed: climate change and energy security. They will become among the defining themes of our geopolitics, our European politics and our national life in the 21st century. Many Members have rightly congratulated the author of the Stern review and his team. That review was published today, and it spells out how important it is for all of us that we take action now to tackle climate change. That is why my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs has today announced a commitment to introduce Government legislation to set statutory targets to reduce greenhouse gas emissions. That makes crystal clear to industry, and to all of us, the direction in which we will be travelling in coming decades.
In July, we published the conclusions of the energy review. We set out an ambitious package of measures and further actions, and we are in the middle of a raft of consultations on the policies we need for the long term. They will deliver the low-carbon energy future we need, and deliver secure, and affordable energy supplies, in a world in which we will be less energy self-sufficient.
On tackling climate change, we signalled that we remain committed to working towards international agreement on stabilisation of temperatures. Within the EU, we are committed to taking that forward through the carbon trading scheme. The Government will secure the future of renewable energy through the renewables obligation.
All of us have a part to play in being smarter in using energy to help deliver a low-carbon future. The hon. Member for Mid-Worcestershire, who is Chairman of the Trade and Industry Committee, rightly emphasised the need for action from all of us as householders to make our homes more energy efficient. As we said in the review, the way ahead is to talk to the supply companies and for them to move away from having a financial interest in persuading us to use more and more gas and electricity, and to become instead energy service companies that can enable us to become more efficient and to reduce energy demand in our homes. That is the discussion that we will be having.
Robert Key: The Minister is absolutely right to talk about the need to improve building regulations and standards and specifications for heat insulation in our houses. Only last month, I opened an extension built by a small family builder in Salisbury. He told me that he built that extension to his own offices to a standard 10 times higher than that required under building regulations, and at virtually no cost to himself. However, there was no pressure for anybody else to do likewise. Is that right?
Malcolm Wicks: What is right is that we are driving up housing construction standards through the criteria that we are introducing. The homes now being built are far more thermally efficient than those that were built only a few years ago, and that is not the end of the story.
We have also heard about the significance of electrical appliances. Indeed, it was the hon. Member for Salisbury who gave us dazzling statistics on the increase in the number of electrical appliances in our homes, which is why we want to drive up standards in electrical appliances and lighting. Through the power of Government procurement, we can make considerable progress. The hon. Member for Hertford and Stortford (Mr. Prisk) challenged the Government on what we are going to do, and compared that with the saintly actions that he pursues in respect of his own carbon footprint. It is our ambition that central Governments own operations will become carbon neutral.
Mr. Prisk: The Minister is very generous, but I shall try not to approach sainthood. While he is thinking about what he is going to do, could he examine part L of building regulations? The problem that my hon. Friend the Member for Salisbury (Mr. Key) just referred to is that these regulations, which are concerned directly with energy saving, were introduced with barely two weeks for companies in the building trade to put them into practice. That left many companies completely incapable of responding. Could the Minister and his departmental colleagues look at this issue, because frankly, the situation is one of chaos?
Malcolm Wicks: I do not believe that the situation is in chaos. We are making great improvements to housing construction standards, but I will draw the hon. Gentlemans comments to the attention of the relevant Department.
Several colleagues talked about the importance of the coal industry. At one stage last winter, 50 per cent. of our electricity was being generated from coal. We have established the coal forum to test the seemingly sensible hypothesis that there should be a future for
British coal, given the supply of indigenous coal, and if only we could get a reasonable and proper dialogue going between the generators and the coal industryas my right hon. Friend the Secretary of State said, we should not negotiate; we are not negotiatorsallied to clean coal technology. All of us are committed to that.
A number of colleagues talked about clean coal technology, and I share the enthusiasm for the development globally of carbon capture and storage, which is absolutely vital. We are ambitious for renewables. Yes, currently renewables constitute only 4 per cent. of our electricity supply, but very significant progress is made every year. We will reform the renewables obligation, as the energy review states, and we are consulting on that. A critic might say that at the moment, it is rather a blunt instrument, in that it promotes one form of technologyonshore windand is insufficiently sensitive to those that are at an earlier stage in their development history. That is what reform is about. Because of our commitment to renewables, we will increase the renewables obligation in due course to 20 per cent. That is a very considerable achievement.
Mr. Geoffrey Robinson: On the subject of renewables, is my hon. Friend confident that we will even approach the 20 per cent. target if our policies remain unchanged? All Members, of every party, accept the validity of the arguments for the target, and the necessity of meeting it, but we are not making the progress that would reasonably lead us to expect to achieve it.
Malcolm Wicks: The 4 per cent. figure, which seems small, is misleading because, as I said, considerable progress is being made every year. By obliging the supply companies to source 20 per cent. of their electricity from renewables in due course, we can take things forward. The reforms that we will introduce and publish after the consultation on the renewables obligation will enable us to give proper support to marine technology, tidal power, wave power and so on, so that we can ensure diversity in renewables. May I turn, in the final few moments of my speech, to the policies
May I turn to the views of Her Majestys loyal Opposition? The hon. Member for Wealden (Charles Hendry) began by saying that when his constituents heard about global warming, they were enthusiastic about doing something, but that their enthusiasm was allied with confusion. The more I heard him attempt to espouse Tory party policyhis party has a new enthusiasm for the subject that was not evident when his party was in powerthe greater the confusion of that policy. That was illustrated in two ways. First, his partys policyI use the word generously, but put inverted commas around iton nuclear includes the curious idea that nuclear is a last resort, and not one of the preferred options.
We hope to speed up the planning process for nuclear reactors, should the market come forward with proposals, but reactors are a long-term prospect. I gently ask the hon. Gentleman what commercial companies and investors considering the subject would think of a Government who, rather reluctantly, said, Well, perhaps, if other things do not quite work out, we might consider them one day, as a last resort? I do not think that that attitude is impressive, particularly as he acknowledges that most reactors are ageing. It is not a very credible position, it is not very enthusiastic, and it is certainly confused.
Peter Luff: I am genuinely grateful to the Minister for giving way. I will try to help both sides of the House, impartially, wearing my hat as Chairman of the Select Committee. Does he not think that the Conservative partys much more robust proposals on carbon pricingto which, disappointingly, he has not referred in his winding-up speechare more likely to deliver nuclear power stations than the Governments rather limp proposals on carbon pricing, although they hold out the prospect of making those proposals tighter?
Malcolm Wicks: My officials have never let me down, so I am sure that if the Opposition had robust proposals, the details would have been put on my desk. I simply have not seen them. We, on the other hand, have ambitions for the European Unions emissions trading scheme. We want it to grow, we want to introduce phase 3 and bring in aviation measures, carbon capture and storage, and we want it to lead the argument in Europe. That represents a robust proposaland not only for Europe. As colleagues have said, it could be the start of an international emissions trading scheme that Norway, California, and, one hopes, many other states could join. The further confusion
Michael Connarty: The concept of carbon pricing has been raised time and again in meetings of the all-party group on nuclear energy by companies that aspire to build in this country. Will the Minister talk to his officials and find out whether a robust system of proper carbon pricing could be put in place, because such a system could lead the market? I hope that we will take that lead in the market by creating the right conditions for the private sector.
The second and final way in which I want to help the Conservative party is by asking Conservative Members, with all due respect, as they say on these occasions, to try to think through the logicor the illogicof the Torys partys policy on renewables. I read the documents. The interim findings of the Conservative partys energy review, from 6 July this year, state:
We therefore believe it is now vital to give green energy a chance to demonstrate its potential
on a level playing field with other sources of electricity.
It seems to me that that is a non sequitur wrapped up in a misunderstanding. If one really wants to demonstrate the potential, one has to have a mechanism such as the renewables obligationby all means, a reformed one. If the Conservatives are seriously talking about a level playing field, and they understand the meaning of the term, that must mean, vis-Ã -vis nuclear for example, abolishing a renewables obligation. I do not know whether that is the policy, but I genuinely think that there is confusion. There is also confusion about nuclear. So, there is more work to be done. Perhaps that work could start in the final minutes of the debate.
Mr. Prisk: I know that the Minister lists as one of his recreations occasional white-water rafting and therefore he is used to ducking and weaving, but the carbon issue will not go away. He needs to bear in mind that we have made where we stand on the issue quite clear. He seems to be unwilling to nail his colours to the mast. What about carbon pricing?
Malcolm Wicks: I have talked a great deal about the development of the emissions trading scheme, but I am trying to put it gently to the hon. Gentlemanperhaps the drafting is poorthat the Conservatives cannot have it both ways. A level playing field would either mean everything, including nuclear, being subsidised, presumably at the same levelI do not think that that is their policy; it is certainly not oursor it would mean abolishing the support to the renewables industry. So, the Conservatives should please think again.
We have had a useful debatea long debate at certain stages from the Liberal Democrat Benches. When it comes to the Liberal Democrats policy, I will not even go there. One needs some energy to be efficient with in the first place. The policy cannot just be energy efficiency. First, bring us some energyhopefully diverse energy. Those are two of the great issues facing us. I am not as relaxed about energy security and, in the future, a heavy dependency on imports as some of the colleagues whom I have heard today. In the light of a future in which 80 or 90 per cent. of our gas could come from foreign fields by 2020 compared to just 10 per cent. now, we need to be smart about gas supplies, which is why we are consulting, and certainly about storage, but we also need more home-grown energy.
The useful thing, as a colleague said, is that many of the things that we need to do to save the planet in terms of climate change are the same things that we need to do in terms of energy security: yes, energy efficiency; yes, renewables; yes, clean coal technology, carbon capture and storage; and yes, a green light, if the market can come forward, for a new generation of nuclear reactors. However, there is no one silver bullet or single answer. There is no uranium bullet. Diversity is the name of the game. I am sure that we will return to these issues in the century to come and probably in the weeks to come.
That Mr David Anderson be discharged from the Procedure Committee and Ms Celia Barlow be added. [Tony Cunningham on behalf of the Committee of Selection.]
Mr. Jeremy Browne (Taunton) (LD): I am pleased to present a petition that was organised by the Somerset County Gazette. It has been signed by hundreds of my constituents and it expresses opposition to any plans to move the United Kingdom Hydrographic Office away from Taunton. The United Kingdom Hydrographic Office is a world-class organisation with a proud and distinguished history in Taunton. It also provides much-valued employment for about 1,000 people in my constituency.
To the House of Commons.
The Petition of the residents of the constituency of Taunton and others,
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