Nia
Griffith: There is an issue about how we can prime certain
projects before it becomes economically viable for companies to take
them over. Putting money into research and development is valuable in
that
respect. I
enjoyed my visit on the boat with the hon. Gentleman to see the marine
current turbine in the Severn estuary. I am pleased that we now have
the feasibility study so
that there can be a decision on the most appropriate use of tidal
energy. We should be using tidal energy in the Severn estuary and we
need to know the most appropriate way to provide good energy resources
while respecting the
environment. The
hon. Member for Clwyd, West talked about shipping lanes. We are
discussing the draft Marine Bill in Committee, which proposes a new
comprehensive planning system to help manage Britain’s seas and
make it simpler to deal with the many competing demands such as
fishing, dredging, conservation, marine turbines, offshore wind and
recreation. The draft Bill reflects the current devolution settlement,
and Welsh Assembly Ministers have been involved in discussions with the
Department for Environment, Food and Rural Affairs about the
development of the legislation. I hope that it will provide a clear,
constructive and comprehensive way to plan and implement policies for
the sea because there are hugely competing
interests. On
the issue of coal and fossil fuels, the International Energy Agency
document, “Energy Technology Perspectives 2008—Scenarios
and Strategies to 2050”, pointed out that on today’s best
estimates, a business-as-usual scenario projects a 130 per cent. rise
in world CO2 emissions by 2050. That reflects the increasing
demand for energy in industrialised nations and developing
countries. Between
1980 and 2005 the greatest increase in energy use was in gas, with coal
in second place. Between 2005 and 2030 the biggest increase will be in
the use of coal. There will be a significant increase in demand from
countries such as India and China and from the middle east. We all
recognise that such an increase in CO2 emissions will have
catastrophic consequences. Scientists tell us that it could cause rises
in world temperatures of 4 to 6° C, with the consequent melting
of ice caps. However, we cannot simply blame countries such as China
and India, which are building coal-fired power stations at an enormous
rate. We must consider our own responsibility because of what we have
already pumped into the atmosphere over the last few hundred
years. The
target in the Climate Change Bill is a 60 per cent. reduction by 2050.
That is an enormous challenge and we will have to use every measure
that we can think of to achieve it. While we must do everything
possible to improve energy efficiency and develop renewables, we must
recognise that 40 per cent. of our electricity is generated from gas
and 33 per cent. from coal. Effectively, we are still 70 per cent.
reliant on fossil fuels. With our current usage of fossil fuels, the
worldwide demand and the fact that coal will become increasingly
important, it will come as no surprise to any of us that the
International Energy Agency has stated
that: “CO2
capture and storage for power generation and industry is the most
important single new technology for CO2
savings”. In
other words, we are not going to get rid of our use of fossil fuels
just yet, not even for electricity generation. Therefore, it is
imperative that we press ahead with carbon capture and storage
technology. There are difficulties, of course, and it is still in its
infancy. However, the technology is known and understood as well as
being viable and workable. It needs more investment, research and
development. We have to work out how to use it with existing power
stations—geography raises the issue of whether a facility can be
placed close enough to be a
practical solution—or we have to consider new build. As we look
to build new coal-fired power stations, we need to look carefully at
how to incorporate carbon capture and
storage. I
suggest to my right hon. Friend the Secretary of State that he talk to
the Minister for Energy about what we can do in Wales to develop carbon
capture and storage. It is being talked about in the context of coal.
People seem to forget that all fossil fuels produce carbon dioxide.
Whether we are burning gas, using oil, or even using biomass, we
produce carbon dioxide. We need to be thinking of imaginative ways of
capturing that carbon dioxide and preventing those emissions from
escaping. There is a very real need for us to develop this technology
and to do everything we can to ensure that it is used, both in retrofit
and in new
build. If
coal is to be used worldwide, it becomes more and more viable, as
prices soar, to look at some of the options we have in Wales such as
deep mining. I ask my right hon. Friend the Secretary of State to keep
an open mind about the potential for coal, and to look at possible ways
of encouraging exploration and investment. In that way we can find out
what would be the most viable areas to open up again.
I agree with
other hon. Members who have said that we need to be extremely sensitive
about open-cast. Wrecking the communities and environments that we have
taken considerable time to restore over the past 30 years is not the
way forward. However, we need to look carefully at what we can extract
and how we can use it. Although we might like to move to 100 per cent.
renewables, we will be reliant on fossil fuel for some time to come and
Wales has a strong contribution to make to
that.
3.13
pm Mr.
Stephen Crabb (Preseli Pembrokeshire) (Con): It is a
pleasure to follow the hon. Member for Llanelli. There has been a very
good debate today and I welcome the format of this Committee, with the
Minister for Energy speaking and taking questions at the start of
proceedings. It has demonstrated the value of the Grand
Committee.
One reason
we are focusing on energy in Wales is that we are building on a lot of
the work that was done by the Welsh Affairs Select Committee. I pay
tribute to the hon. Member for Aberavon, who led that work very
effectively and, as a result, produced two excellent reports that
helped to shape some of our thinking around energy issues in
Wales. This
is a timely opportunity to be thinking about such things. This
afternoon, even as we speak, there are groups of protesters outside the
gates of the Merco oil refinery in Milford Haven and the Chevron oil
refinery in Pembroke, trying to blockade Wales’s two oil
refineries. They demonstrate the frustration and pain being felt right
across the country by hauliers, people in agriculture and the fishing
industry and across different business sectors as a result of the
crisis linked to the soaring price of oil on the world
markets. As
other Members have mentioned, and as I mentioned in my question to the
Minister for Energy—I make no apologies for reiterating
it—the Government really need to look at the punitive fuel duty
regime in this country, which puts us out of step with our European
competitors and puts our excellent Welsh haulage industry at a
competitive disadvantage to its European, Irish, French,
Hungarian and German competitors. It is losing market share. Many good
Welsh businesses are suffering unnecessarily because of the punitive
fuel duty regime. Again, I call on the Secretary of State for Wales,
when he is sitting at the Cabinet table discussing this, to make the
case not just for not applying the expected fuel duty increase later in
the year, but of looking at ways of using some of the extra taxation
revenue from North sea tax and soaring VAT receipts to try to fund a
decrease right across the board in fuel
duty. I
want to try to be positive this afternoon. The hon. Member for
Carmarthen, East and Dinefwr has stolen my thunder by giving a
positive, upbeat view of the energy industry in Wales. There is an
awful lot for us to smile about and welcome. The Library tells me that,
at a conservative estimate, 8,000 people in Wales are now directly
employed in the energy industry. That does not take account of the many
more thousands working in civil and mechanical engineering and the
support services that help serve our energy industry.
The numbers
employed are expected to increase as the industry develops, as new
projects emerge. Much of what has been exciting in the energy industry
in the UK in recent years has been happening in Wales, and I am very
pleased to say that a lot of that has been happening in my little
corner of Wales, in Pembrokeshire, where there are not just the large
liquefied natural gas projects, but some exciting developments
involving renewables, particularly wave and tidal power.
Take, for
example, the LNG projects. More than £1 billion of
investment is going into just two projects in Pembrokeshire and there
are many other projects around the county. Developers have advanced
millions and millions of pounds to promote projects. This is not about
Government sitting down and planning the projects: they are being
brought forward, and brought forward successfully—as in the case
of the LNG projects—because the private sector is responding to
market
signals. Much
of our discussion on energy policy this afternoon has really been about
the imperfect nature of the energy market. Perfect markets exist only
in economics textbooks, and there are many imperfections and kinks in
the market that need to be looked at. But when we are talking about
energy security, security of supply, responding to the challenges of
climate change, fuel poverty, and social justice linked to energy
policy, we keep faith with the fundamental bedrock principle of energy
policy: the market, a clean, well-functioning market. It is markets
that will deliver new projects and give us the diversity of supply that
the Secretary of State emphasised in his contribution and which is so
important to energy
security. The
hon. Member for Carmarthen, East and Dinefwr repeatedly emphasised the
contribution that electricity generation in Wales is making to the
UK—greater than Wales’s own electricity needs, if I am
correct. I thought he was going to follow through and make the point
that I have heard some of his Plaid Cymru colleagues make that Wales
almost should not be producing this amount of
electricity.
Mr.
Llwyd: No, we did not say that. It is
silly.
Mr.
Crabb: The leader of the Plaid Cymru group says
“silly,” but his colleague in the European Parliament,
Jill Evans, in her campaign against LNG, has repeatedly
argued that we should not be thinking about UK energy needs but only
about Wales’s energy needs. Why do we need LNG projects if we
are just thinking about Wales’s energy needs? There is almost a
kind of energy insularity on the part of Plaid Cymru, and that is a
really dangerous position to get
into.
Adam
Price: It is a fair point to say that decisions in Wales
about energy projects should be made in Wales. The fact that we are
already exporting electricity is, I think, a material fact that is
relevant to that debate. Decisions should be about Welsh needs first
and foremost, and if we can export, then that is another matter. But
most importantly, let us have the right to decide
ourselves.
Mr.
Crabb: There is a fundamental point of difference between
myself and the hon. Gentleman in that respect. The truth is that the
energy industry is becoming more internationalised. There has been some
reference to dependence on foreign imports—specifically imported
gas—but right across the planet, if we look at what is happening
in the energy industry, the world is becoming more and more energy
interdependent. We are relying on other countries for gas needs. What
is happening in the UK is really no different from what is happening in
many other industrialised countries. We are going to have to rely on
more imported energy, which is not necessarily a bad
thing. Albert
Owen (Ynys Môn) (Lab): The hon. Gentleman is
absolutely right. There is interdependency. He will be aware of the
interconnector between north Wales and the Republic of Ireland.
Ireland, one of the fastest growing economies, still needs the energy,
and we have surplus electricity. Does he agree that we should go
further and perhaps have two or three interconnectors? We could get rid
of the surplus electricity to industries in the Republic of Ireland
rather than just storing
it.
Mr.
Crabb: I welcome the hon. Gentleman’s intervention,
but I do not have a view on the number of interconnectors. We should
let the market and industry decide that. The role of Government and
politicians is to provide a well-functioning framework for the markets
to make the most sensible assessment of what infrastructure is
required. There
is another point on imports: 100 years ago, 10 million tons of coal
were exported out of Cardiff docks, while now as a country we are 75
per cent. reliant on imports for our coal needs. That is a big
reversal. However, no one can seriously argue that, as a result of
becoming 75 per cent. reliant on imported coal, our security of supply
in coal has been jeopardised and made less sure or secure. One could
plausibly argue that security of coal supply has been enhanced, because
we now rely on five or six major global producers for that energy
source.
Adam
Price: The hon. Gentleman is in danger of suggesting that
he would rather be reliant on foreign producers rather than Welsh coal
miners. Surely that is not what he was
suggesting.
Mr.
Crabb: No, it is not what I was suggesting. That is a
heavy over-interpretation and misrepresentation of what I was saying.
There has been a long-term decline in the UK coal industry. Recent
industry and market
changes might revive a portion of that, which I would welcome. I am a
strong advocate of a strong energy industry in Wales and throughout the
UK, right across the board, from renewables to coal, nuclear, oil and
gas—let us take the whole
lot.
Mr.
Roger Williams: I still do not follow the hon.
Gentleman’s point. I understand that, if we need to import 75
per cent. of coal, it is best imported from a number of sources, but I
cannot see how we have better security of coal by importing it in the
first place. Surely it must be more secure if produced within the
nation.
Mr.
Crabb: We would think and hope so. However, with heavy
reliance on a domestic coal industry, if that industry is for example
threatened with strikes and supply
interruptions—
Mr.
Crabb: The hon. Gentleman may say that, but it is an
important point to make. Not to stretch the point, but leave it as it
is—we should not have an overly irrational fear about imported
energy. That is the way of the world. We shall increasingly move in
that direction. We should adopt an internationalist perspective when it
comes to thinking about
energy.
Ian
Lucas: Surely, the hon. Gentleman must accept that the
position of the Russian Government, for example, on gas exports is
potentially dangerous as far as energy supply to the rest of Europe is
concerned. Should those security of supply issues not be of concern to
the UK
Government?
Mr.
Crabb: Absolutely, and recognising what the hon. Gentleman
said does not negate my point. We should be looking at a diversity of
supply sources for our imported gas. If are going to rely on imported
gas, then let us make sure that it comes from several
locations—from Qatar, Trinidad, Algeria, west Africa. That is
how we guarantee security of gas
supply. I
want to move on to skills and employment. The Secretary of State said
that not nearly enough people were employed in the energy industry in
Wales. The LNG jobs that were brought to west Wales in recent years
have been hugely welcome. Those projects have helped to wipe out the
official rate of male unemployment in Pembrokeshire. I welcome that,
but those projects have highlighted huge skills shortages, not just in
Wales, but in the UK. We have been shown up. We were talking about
being reliant on imported energy, but we are reliant on imported labour
to make those large-scale energy projects happen. While the people I
talk to in the industry recognise that there has been an increasing
focus from the Welsh Assembly Government on energy jobs and skills
related to the energy industry, they feel that there is nothing like as
much energy going into or as much focus on that important area as there
should be. Some of those involved in managing the projects comment that
they are still not seeing enough appropriately skilled
people—from civil engineers to welders, from mechanical
engineers to security guards—from the indigenous local work
force. As we think about future energy policy and development in Wales,
we need to ensure that our education and training regimes produce
better skilled people who can service those projects.
The
hon. Member for Carmarthen, East and Dinefwr rightly flagged up the
tidal and wave power projects that have been developed off the west
Wales coast. I will not repeat his points, other than to say that those
projects are extremely exciting and innovative, and are receiving
support. The Wave Dragon project receives objective 1 money, and money
from DBERR supports the joint venture between Lunar and E.ON. E.ON is a
big company more commonly associated with gas and coal, but it is
heavily backing that project. The tidal waters of the UK have the
potential to supply around 6 or 7 per cent. of total UK energy demand.
That does not sound a lot, but if it can be maximised it brings us an
awfully long way towards reaching some of our wider renewables targets.
In Wales, we have some sections of coastline that are particularly well
suited to wave and tidal projects. They have high movements in tide
levels and are relatively free from shipping lanes. There is exciting
potential
there. To
conclude, this has been a good debate. It is easy to try to score
partisan points, but it is more constructive to engage with some of the
difficult issues. The difficulty with energy policy is that we are
thinking about a world that we would like to get to—
particularly in the context of climate change and responding to
that—but we also have to deal with the world that we live in
here and now. Some decisions are uncomfortable, and will be unpopular
with those who believe that we should be constructing that future world
as quickly as possible. However, we need to be
realistic.
| 
