Mrs.
Gillan: I thank my hon. Friend and I am glad that he did
not dignify the cheap remarks made by the hon. Member for Vale of
Clwyd. I have been to my hon. Friend’s constituency to see with
him the dedicated work that he carries out with the energy sector
there, on which he is to be congratulated. I particularly remember
being impressed by our visits to the liquefied natural gas terminal and
the port to look at the broader hinterland of the economy and business,
all of which is dependent on a successful energy
policy.
Mr.
David Jones (Clwyd, West) (Con): Of course, my hon. Friend
is right that Wales offers immense opportunities for the development of
tidal and wave power. However, does she share my concern that the
Government’s vehicle for encouraging the development of such
power—the marine renewables deployment fund, which was worth
£50 million—has not yet spent a single penny on the
development of the technology?
Mrs.
Gillan: Again, my hon. Friend has pre-empted something
that I was going to say, but he makes an extremely important point. I
understand that the marine technologies fund has not given out a single
penny in the past four years. Is there any money to be deployed? Why
has no money been deployed for the past four years? Will any of the
money go to Wales and Welsh companies that are carrying out research on
marine renewables, because that would be an important
development? My
hon. Friend will probably agree that the solution to greening our
energy is not the easy one of covering Wales with wind turbines. That
concerns us all. Wind turbines could destroy the environment in some of
our most beautiful areas. We need innovative and forward-looking
policies, and not to take the seemingly easy option of building more
wind farms in an attempt to create green credentials.
I
would like to hear the Minister’s view on the Forestry
Commission sites that the Assembly recently put up for bids. How much
did those bids raise? What are the plans for each of the sites? Some
were meant to sustain wind farm projects and projects in excess of 50
MW. What is the Government’s position on how the income from the
licences is treated? Did the Assembly grant the licences on an agreed
basis with the Government, given that the schemes involved were for
more than 50 MW and therefore subject to a reserved
power?
Chris
Bryant (Rhondda) (Lab): The hon. Lady is talking about
wind farms, and although I do not have an objection to how they look,
they are inappropriate in certain areas and dramatically change the
landscape in an inappropriate way. Last week, I visited an offshore
wind farm off the east coast of England at Caister-on-Sea. Contrary to
the impression given before it was built that it would have a
deleterious effect on the local underwater environment, all the
environmental assessments that have been made since—the wind
farm has been going for four years—have been entirely positive.
Is there not more room for offshore wind farms in
Wales?
The
Chairman: Order. Before the hon. Lady answers that
question, let me tell hon. Members that she and the Secretary of State
have been generous in taking interventions. If there are too many,
however, hon. Members will not be able to speak later this
afternoon.
Mrs.
Gillan: The hon. Gentleman makes a valid point. However,
we are talking about not only the environmental, but the social and
economic impact that a development would have on an area. Furthermore,
I think that my hon. Friend the Member for Clwyd, West might disagree
with him. Some areas of the coastline in Wales are beautiful because of
their tranquillity, and people visit them to look out to sea and relax.
However, some offshore wind farms are imposing, and the one near Colwyn
bay has raised many comments from locals. It is therefore important
that local people have the opportunity to have an input. However, I am
pleased that the hon. Gentleman is taking such an interest, and on his
recommendation I will visit the wind farm that he
mentioned.
Several
hon. Members
rose—
Mrs.
Gillan: The Chairman has admonished me for taking too many
interventions. I want to make some progress and to bring my remarks to
a close so that hon. Members have the opportunity to make their own
speeches. We
have touched on nuclear, and the hon. Member for Ynys Môn, who
speaks for Wylfa B, if I can put it in that fashion, always makes his
point well. As he knows, I have also been worried about the future of
Anglesey Aluminium and I therefore want the Minister to start putting
some flesh on the bones of the Government’s new nuclear policy
at this late stage in the day. What time scales are they discussing?
When will we see the new Wylfa? We are always talking about something
happening in the future, but it is taking as long to come as Christmas
or next year. It has been 11 years, and there has been no
commissioning. It is about time that the Minister pressed the issue on
behalf of the Committee. I hope that he will be able to shed some light
on what is happening.
Will the
Minister also update us on the progress of Trawsfynydd? I spent a very
happy visit there looking at the excellent decommissioning work being
done by our operatives. When will that work be completed? What is the
end game for Trawsfynydd? Is it a possible site for the future storage
of other nuclear waste? There has been concern about that, and I hope
that the Minister will be able to enlighten us.
On the flip
side of this debate is the issue of energy efficiency. We have talked
about fuel poverty, and I do not want to repeat the arguments, but I
would like to reinforce that Opposition Members believe that smart
meters, real-time energy read-outs, and even the ability to compare
one’s bills like with like with the neighbours’, could
contribute to the reduction in energy use. The new build and the new
houses destined for Wales have also been picked up on, and I am worried
by some of the implications of the stringent standards on a category 6
property. It has been estimated that that will add, at today’s
prices, as much as £30,000 to the cost of a new property. Will
the Minister confirm or deny that, and let us know what plans the
Government have to ameliorate those charges?
Lastly, I once
more put in my plea for smart meters and their inclusion in the Energy
Bill. I hope that the Minister will take that thought away with him.
That topic should be less of a political football and more of an
example of all parties working together, which is how I have tried to
approach my contribution. Wales has always been at the forefront of
energy production for the whole of the United Kingdom, and I would like
to ensure that not only do we have affordable energy for the citizens
of Wales, but that they continue to play a major, important part in the
energy supplies of the
future. 11.12
am Nick
Ainger (Carmarthen, West and South Pembrokeshire) (Lab): I
must apologise to Ministers and colleagues because unfortunately I will
not be here for the winding-up speeches as I am engaged in the Treasury
Committee. The debate
has been interesting, and I echo what the hon. Member for Chesham and
Amersham said about the novelty of the Minister for Energy giving a
statement and of our being able to ask him questions. I hope that we
can replicate that in the future. The attendance this morning indicates
that that was a positive
move. I
will start on a local note, and then move to the global scene. The
proposed RWE npower 2,000 MW power station in my constituency has been
mentioned. I did not ask the Minister about that because he is about to
make a decision on it. However, I ask my hon. Friend the
Under-Secretary of State to raise with the Minister for Energy’s
Department the need to look at the waste heat being produced by that
power station and how it can be used
beneficially. I
am particularly taken by a project called Thanet Earth, which uses
waste heat from a combined heat and power plant to produce what is
hoped will be 10 per cent. of Britain’s perishable
vegetables—tomatoes, peppers and so on. That sort of use of
waste heat could increase the combined heat and power of Pembroke power
station. That is an extremely efficient plant, and in terms of the
ratio between CO2 emissions and electricity produced, it
will probably be the most efficient power station. We can add to that
efficiency by using waste heat for other jobs and
products. Hon. Members
have commented on the price of energy. I want to talk about that and
about why we have seen, over the past 18 months or so, an unprecedented
hike in crude oil and gas prices, which has had an enormous impact, and
not just on our economy. The letter that had to be written yesterday by
the Governor of the Bank of England was driven totally by energy
prices, which have forced up the consumer price index and the retail
price index. We know from our personal experience and that of our
constituents the effect of those price rises at the pump and in
people’s homes. As I indicated to the Minister for Energy, a 1
per cent. rise in energy prices means that another 40,000 UK citizens
move into fuel poverty, spending more than 10 per cent. of their income
on
energy.
David
T.C. Davies: Will the hon. Gentleman give
way?
Nick
Ainger: I am conscious of the time. If the hon. Gentleman
will forgive me, perhaps he may want to come back
later. At
global level, we have seen riots in India because the Indian Government
have cut the subsidy for energy in that country. Currently, they are
spending 2 per cent. of GDP on subsidising energy costs and the same is
true in Indonesia. There are huge problems for people throughout the
developing world. In addition to fuel poverty in the developing world,
we are witnessing the effect on our industry of enormous price hikes. I
have been connected with the oil industry for 35 years, either as a
Member of Parliament or working in it previously, and I have never seen
such a scenario develop before. We have had war, restriction in supply
and increases in demand, but we have never before seen what happened
over the past weekend, when Saudi Arabia announced that it was to
increase its production by 500,000 barrels a day and the oil price went
up. Something else is driving the price rises.
I referred my
hon. Friend the Minister for Energy to the report produced by the
Senate Permanent Sub-Committee on Investigations, “The Role of
Market Speculation in Rising Oil and Gas Prices”, which was
produced in June 2006. There seems to be overwhelming evidence that the
conventional wisdom of supply outstripping demand does not apply. The
evidence is quite the reverse. The US Department of Energy’s
Energy Information Administration recently forecast that in the next
few years, global surplus production capacity would continue to grow
between 3 million and 5 million barrels a day by 2010,
thereby
“substantially
thickening the surplus capacity
cushion”. I
watched a TV interview with the Iraqi Oil Minister yesterday. Due to
the work that has gone on with the coalition forces and the Iraqi
security forces, Iraqi oil production has now gone from 1.7 billion
barrels a day to 2.5 billion, a significant increase. There have also
been significant increases announced by Saudi Arabia. The fact is that
for the past eight years, we have never seen such high levels of crude
oil stored in refineries in America and in Europe. What is driving the
oil price? The Iraqi Oil Minister and Sheikh Yamani, whom many remember
as the Saudi Oil Minister in the 1970s and ’80s when we had the
huge rises, totally agree that it is speculation. That is why I come
back to the Senate Committee.
David
T.C. Davies: The hon. Gentleman is right, but the Minister
has put in paragraph 5 that this is a problem of supply and demand, yet
as the hon. Gentleman has rightly said, it is
not.
Nick
Ainger: As I have said, that is the conventional wisdom. I
have a document that was produced by the Treasury only a few days ago,
which states
that “prices
are expected to remain higher than historical real averages due to
increased costs of production, tightness in input markets and
increasing geological complexity of oil
fields.” I
do not agree, nor does the Senate Committee, and I hope that in its
inquiry the Select Committee on Business, Enterprise and Regulatory
Reform will agree with me that there is no justification for the rise
in prices other than speculation.
The Senate
Committee highlighted the fact that when the change occurred at the end
of 2005 and the beginning of 2006 and the intercontinental exchange
futures market went global, at the same time unregulated trading of an
electronic nature suddenly developed. Major hedge funds and banks such
as Goldman Sachs, JPMorgan Chase and Citigroup suddenly got into major
commodity trading. Significantly, that was at the time when they
realised that something was going wrong with their other wonderful
market for making money—collateralised debt obligations. We
ended up with a credit crunch because of the failures in that. My fear
is that unless we start regulating the oil trade market properly, we
will end up with an energy crunch; in fact, I think that we are almost
there. I
asked the Minister to get hold of the Financial Services Authority
because it is the regulatory body for the intercontinental futures
exchange and it needs to get a grip on electronic trading because that
is what forces up the price—I will explain how that works in the
few minutes that I have left. Basically, before the major hedge funds
and banks became involved in the market, trading was between producers
and refiners. They realised that there was an opportunity to make
considerable amounts of money and a third party entered, which created
another market—the futures market. A refiner and Mr.
Goldman Sachs can bid for the same barrel of oil, which forces up the
price. It is paper oil. The oil industry reacts by getting extremely
worried about the price of future oil, and it starts hoarding, which is
why we have some of the highest crude oil inventories throughout the
developed world; the industry is hedging its bets against the rise in
the price of crude.
Mr.
Roger Williams (Brecon and Radnorshire) (LD): The hon.
Gentleman has introduced an interesting analysis, but, in the end,
Mr. Goldman Sachs does not want a barrel of oil; he has to
sell it because he does not want delivery. Surely there is a
self-fulfilling solution to the problem, if it is based on the
principles that the hon. Gentleman is
explaining.
Nick
Ainger: I would love to see an oil price crash. I believe
that if the market was operating properly—on supply and
demand—we would not have a price of $130 a barrel, but $50 a
barrel. Supply and demand, at the moment and in the medium term, are in
balance. We should not forget that biofuels are coming in, which are a
substitute, as well as new supplies of liquefied natural
gas.
Nick
Ainger: I hope that the hon. Gentleman will forgive me,
but I am conscious that I have to finish by 11.25 because I cannot come
back. We—Governments
and Parliaments throughout the world—seem to be accepting that
we have to have massive hikes in energy prices and their effects on our
economies and on our individual constituents. However, if we regulate
the market properly, which is trading in the most important commodity
in the world at the moment, we can address that fundamental problem. We
will not completely get rid of the damage being done
to
our economies and, in many cases, to elderly and vulnerable people, but
it will certainly be moderated substantially. I hope that my hon.
Friend the Under-Secretary, in winding up, will assure me that he
will take the issue to the heart of Government and will ensure that we
regulate the intercontinental futures exchange properly and do
not allow this scandalous speculation to continue, and that we recognise
that something can be done about the damage. It being
twenty-five minutes past Eleven o’clock, The
Chairman adjourned the Committee without
Question put, pursuant to the Standing
Order.
Adjourned
till this day at Two o’clock.
Questions
Not Answered
Orally
The Secretary of State was asked—
Crime
Levels
10.
Alun
Michael: What discussions he has had with
the Home Secretary on measures to cut crime and increase public safety
in Wales, with particular reference to the lessons learned from the
Cardiff violence reduction strategy.
[210780] | 
