Future of Energy in Wales

[back to previous text]

The Chairman: Order.
Mrs. Gillan: Will he give us a more detailed status report on Wylfa B and assure us that no subsides will given in support of new nuclear power stations that will face future lifetime and decommissioning costs? Carbon capture and storage is important to Wales. [Interruption.]
The Chairman: Order. I ask the hon. Lady to make this the last question.
Mrs. Gillan: Carbon capture and storage is important to Wales, and I understand that there is only one sample project. The pilot scheme has ruled out a whole technology—pre-combustion—and is relying on an old technology, closed combustion. Will the Minister update us on the CCS project and tell us why there is only one?
Malcolm Wicks: I hope that the hon. Lady will forgive me if I reply rather quickly to those questions, but I will touch on all of them. First, when we combine the Warm Front moneys with those of the successor to the energy efficiency commitment, known as the carbon emissions reduction target, there is more money for energy efficiency programmes than ever before, and rightly so, because they play an important role.
Secondly, there are no plans to change planning responsibilities between the UK Government and Wales or to revisit the devolution settlement on that issue. Thirdly, yes, lagoon issues around the Severn barrier work will be addressed and, of course, a full environmental assessment will be made.
The Port Talbot project is important and, as the hon. Lady knows, planning consent has been given for the world’s biggest biomass plant. That single plant will generate the 350 MW—enough clean electricity to power the equivalent of half the homes in Wales, so it is a significant advance in renewables.
On the Anglesey issue, I shall simply say that wave and tidal power technologies are still very new, but I am encouraged by the development of schemes and companies across the UK, and we are backing them fully. The LNG terminal in Pembrokeshire is about to become a reality. It is a major project, which will enable us to bring in LNG, from Qatar in particular, and that will make a crucial contribution to UK energy supplies.
We looked at nuclear energy very carefully, and rightly so; it is complex and controversial. We had an energy review, four consultations and a White Paper before making the decision, and we now have a Bill. If I wanted to be combative—I do not wish to be with my neighbouring MP in England—we could swap chapter and verse on the Conservative Party’s dithering on another occasion. Nuclear is important to Wylfa, not least because of the importance of Anglesey Aluminium, which we bore in mind when making our decision.
Finally, together with only a few nations—Norway and the United States—we are leading the development of the important new technology of carbon capture and storage. One demonstration plant will cost hundreds of millions of pounds. We chose post-combustion technology, because it will have most application in China, which is building many coal power stations, and we want to develop a technology that will help us to make climate change impacts worldwide.
Nick Ainger: Does the Minister accept that the latest modelling indicates that for every energy price increase of 1 per cent., another 40,000 people in the United Kingdom go into fuel poverty? Will he look at why energy prices are so high and have been rising so quickly over the past 18 months, and will he look at the US Senate Permanent Subcommittee on Investigations report, “The Role of Market Speculation in Rising Oil and Gas Prices”, published in June 2006? It concluded that
“there is substantial evidence supporting the conclusion that a large of amount of speculation in the current market has significantly increased prices.”
Will he also ask the Financial Services Authority to investigate electronic trading in oil on the inter-continental exchange futures market in London?
Malcolm Wicks: I am conscious that the Business, Enterprise and Regulatory Reform Committee is undertaking an inquiry into the market in the UK. Ofgem is also conducting its own inquiry.
Economic fundamentals are the main issue on global price increases. That relates to the huge global rise in demand, to which I alluded earlier—it is about China and India. Many people feel that speculation and financial markets are playing an unhelpful part in that. I heard that view in Saudi, where I was a few days ago. At the Jeddah summit on Sunday, which was called by the King of Saudi Arabia and which will be attended by our Prime Minister, we have asked three international organisations—the International Energy Agency, the International Energy Forum and Organisation of Petroleum Exporting Countries—to see whether they can come up with a shared analysis on what is driving the costs of energy.
Mr. Roger Williams (Brecon and Radnorshire) (LD): I, too, welcome the Minister to the Welsh Grand Committee and thank him for the role and responsibility that he has taken on miners’ compensation and clearing up some of the difficult outstanding cases.
The Minister is right to focus on energy poverty. Customers in south Wales are paying 10 per cent. more than the rest of England, which we find very difficult to understand. Will the Minister undertake to ensure that the regulators look at that problem?
Liquid petroleum gas has been looked at by the Office of Fair Trading, which wants to see regulation to ensure proper competition in this market, but, as I understand it, such regulation has not been put before Parliament yet because of objections from park home owners who have difficulties with it.
While we welcome the increase in expenditure by the energy companies on social tariffs, will the Minister try to do more for those people on pre-payment meters who, by definition, are probably on low incomes and most in danger of fuel poverty, yet find themselves paying a tariff that is higher than most?
I also want to ask the Minister about BERR’s role in issuing consent for major infrastructure projects, such as the pipeline from Milford Haven to Tirley in Gloucestershire. Will the Department ensure that the conditions put on those consents are implemented over the period of time that the reconstruction of the sites takes place? There is a lot of concern locally in Wales that BERR, after issuing consents, does not carry out and ensure that the conditions are implemented.
Malcolm Wicks: I am aware of understandable controversies about how costs vary from one part of the UK to another, and I understand the issues in Wales. Obviously, the fundamental costs vary depending on topography and so on, but I assure the hon. Gentleman that the regulator considers such matters, and I will bring his comments to the regulator’s attention.
I am concerned about the rising cost of liquefied petroleum gas, which means that people do not have easy choices. We are considering that matter, which has implications for some of the renewable technologies that he discussed. For people who are off-grid and who are heavily dependent on oil, for example, some of the renewable technologies, such as ground-source heat pumps, have a special application. I welcome the hon. Gentleman’s interest in the subject. My judgment is that tackling climate change is about not only big institutions, such as the UN, the G8 and the EU, Governments and companies, but the ability of citizens to become not only concerned citizens but empowered citizens. That is why I am very interested in microgeneration. I have signalled that we will re-examine whether new financial incentives, feed-in tariffs or other mechanisms are required to facilitate microgeneration, which I am keenly aware of.
On social tariffs, the hon. Gentleman has mentioned pre-payment meters. I have no doubt that the cost of pre-payment meters has risen in general to alarming rates. It cannot be right that people such as me and the hon. Gentleman often pay less per unit than some of our poorest constituents. That is why we have asked the regulator, Ofgem, to have an urgent look at the matter, and I expect action to be taken.
The hon. Gentleman has urged me to ensure that my Department not only talks about conditions but monitors them. If there is an issue—the hon. Gentleman has said that there is—I will look at it and write to the hon. Gentleman.
Ann Clwyd (Cynon Valley) (Lab): I sought to intervene on the Minister earlier to thank him for all the support and assistance that he has given over the years to the workers at Tower colliery in my constituency. In both his periods as Energy Minister, he has been extremely supportive. Does he agree with the conclusion of the Welsh Affairs Committee report on energy, which states that
“a long term future for Welsh coal can be guaranteed, if carbon capture technology is fully exploited and a new generation of skilled Welsh miners can be assured”?
Does he have policies in place to support those conclusions?
Malcolm Wicks: I thank my right hon. Friend for her kind words. Tower colliery is a shining example of what can be achieved when people empower themselves. It is a great example of workers’ empowerment, which encourages many of us.
How do we square the circle between the stark reality of how the world fuels itself and the pre-eminent challenge of climate change? The answer is by developing carbon capture and storage, which is why I pay the matter a great deal of attention. It is very good news that the Government are funding the demonstration project. The Conservatives have indicated that they, too, might fund such a project, and we look forward to their spending proposals, because such new technologies are extraordinarily expensive. Every demonstration project costs hundreds of millions of pounds, so I hope that the Opposition have thought through the tax implications. We are working closely with Saudi Arabia and the United Arab Emirates, which I visited recently and which are both interested, and with the Norwegians—Norway is a leading nation. We are also following developments in the United States, where there is much interest—there is even interest in Canada now. I assure my right hon. Friend that I feel, although this is controversial, that we need coal as part of the energy mix in the United Kingdom, for reasons of balance and flexibility. However, we need to bring on CCS as soon as we can to ensure that new plants that use fossil fuels are capture ready. Soon, we will consult on what that means and try to provoke a discussion about capture readiness.
Mr. Elfyn Llwyd (Meirionnydd Nant Conwy) (PC): It would be ungracious of me not to thank the Minister and the Wales Office for an advance copy of the statement, although, as hon. Members have mentioned, it is not quite the same statement as the one that the Minister delivered. I have no issue with the Minister on that, because he made a full statement this morning.
I spent some weeks in Public Bill Committee dealing with the Planning Bill. I am not sure why I was sent there, but there we are—I ended up in Committee and spent a few weeks discussing the relationship between Ministers in Wales and those in Westminster. On the Severn barrage scheme, the Environment Minister in Wales has clearly stated on the record that he favours a tidal lagoon model. If that were the model that the Welsh Government preferred, but the Westminster Government thought that a barrage would be preferable, who would prevail? There is some concern about that. I do not say that from a position of not wanting to get real: we must get real and there should be a major infrastructure project—there is no doubt about it—but would the Minister accept a tidal lagoon if the science in the review backed up that option?
Malcolm Wicks: Yes. If the science, environmental assessments, economics and costings were to point to a lagoon or lagoons rather than the Severn barrier, we would, of course, accept it, because we want the process to be rational and evidence-based. We are working closely with colleagues in Wales: I will be looking at the area on Friday, and I am meeting Jane Davidson on the previous evening to discuss these matters.
The programme of work, as dictated by the Sustainable Development Commission, looks not only at a grand barrier—there are issues about where it might be sited—but at lagoons. I want to reassure the hon. Gentleman on this matter. I understand that lagoons would produce far less renewable electricity than a great barrier, which could produce 5 per cent. of the UK’s electricity requirement. I reassure the Committee and the hon. Gentleman that we take the assessment seriously, because we are discussing a special ecological area—one can say that it is unique and use that word properly. We must approach the scheme with great care. Our current programme of work will ensure that if, in a year’s time, our initial assessments show that there is a big showstopper and that the project is not on for environmental or economic reasons, we will stop it. We are not saying that we are going to do this and there is no doubt. The environmental assessments need to be done carefully, and the issue of lagoons is being taken most seriously.
The Chairman: Order. I would like to get to all hon. Members who catch my eye. I ask hon. Members to confine themselves to one fairly short question and call for short answers from the Minister, too, if possible.
Ian Lucas (Wrexham) (Lab): I was pleased to hear my hon. Friend the Minister mention the feed-in tariff. I recall some years ago a debate in this Room, during which I raised that issue. In Wrexham, the photovoltaics and microgeneration sector is a huge employer. When the Minister considers the possible introduction of a feed-in tariff, will he look at its employment implications and the fact that many hundreds of jobs might be created in Wales if the Government were to have the courage to follow the German model and introduce something like the 100,000 roofs project?
Malcolm Wicks: Yes, of course. In general, as we move forward on the major project—indeed, revolution—to take the carbon out of British society and the British economy, which is what we are doing if hon. Members think through the logic behind the 60 per cent. or 80 per cent. targets, it is important to make sure that Welsh industry and British industry benefits. We need more green-collar jobs in Wales, and I am certainly aware of the photovoltaic industry in Wrexham, because I have met the company and discussed the matter.
Let us remember, however, that the feed-in tariff is simply a mechanism. Some people talk about it almost theologically, as if it were the answer. It is a mechanism and a way of incentivising microgeneration. We are looking at it, but we will also look at other mechanisms.
Mr. Stephen Crabb (Preseli Pembrokeshire) (Con): Notwithstanding what the Minister has said about the decline in UK continental shelf production, which is an important bit of context, will he confirm that there has been a tax bonanza for the Treasury from the hugely increasing VAT receipts as a result of the increasing barrel price of oil and from tax revenue from North sea production? At a time when inshore fishermen in Pembrokeshire have put boats up for sale because it is no longer commercial for them to go out fishing, when hauliers in my constituency are laying off drivers, when businesses across the board in Wales are feeling sharp pain as a result of the increase in fuel prices, will he join the hard-working people of Wales and argue for his colleague, the Chancellor of the Exchequer, to use some of the increased taxation revenue he is getting as a direct result of the increasing barrel price of oil to offset a cut across the board in fuel duty and ease the pain of the people of Wales?
Previous Contents Continue
House of Commons 
home page Parliament home page House of 
Lords home page search page enquiries ordering index

©Parliamentary copyright 2008
Prepared 19 June 2008