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However, it explicitly states that the Union should work on that aim, and I suggest that that will facilitate liberalisation, not stand in its way.

Ms Hewitt: I strongly endorse the points that the hon. Gentleman makes. Beyond simply clarifying the existing powers that the Commission and other EU institutions will have, the treaty also explicitly, and for the first time, protects the sovereignty of member states in respect of exploiting their own energy resources. That is the critical point that Conservative Members completely refuse to recognise. The treaty is an improvement on existing powers, as well as a clarification of them.

Steve Webb: I am grateful to the right hon. Lady for her intervention. My instincts, in all matters European, are to look for subsidiarity. I seek reassurance that the national interest is being protected, and in this case that is made unusually explicit in the article. It states, as she points out, that the measures included

Those are precisely the assurances that someone concerned about possible erosion of national sovereignty would want—and here they are. The hon. Member for Rutland and Melton got extraordinarily worked up over something that appears to say everything that we would want it to say, because of his generally vitriolic attitude to the European Union rather than because of the specifics of what we are discussing.

Mr. Cash: The hon. Gentleman was right to concentrate, in his very first words, on the internal market. However, if he has studied the interaction of all the different provisions in the energy framework, he will appreciate the fact that we will end up with several potential choices within a co-ordinated legal system dominated by shared competencies that will preclude member states from being able to pursue their own energy policies. That is where the problem lies.

Steve Webb: It is clear that the issue of energy, and the related issue of climate change, must be addressed at the Europe-wide level. It is not sufficient for any member state—or any nation state, in fact—to go it alone on such matters. I hesitate to say this to the hon.
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Gentleman, but there is a bigger picture. Our energy policy has two goals, both of which are explicitly mentioned in article 176—security of supply and combating climate change. The very first sentence of the article says that the energy policy will operate in

Those two priorities are stated explicitly, and the advantage of that is that we can pursue our national policies in delivering them, and the European Union will also work together to deliver them.

Issues such as emissions trading have to be agreed at a national level. We cannot address them effectively on our own. Energy policy is a classic example of something that the European Union should be doing. In many ways, the pressures that we face on security of supply and the environment make a more compelling case for European partnership and integration here than in many other areas concerning which people get exercised about the European Union.

Mr. Clappison: The hon. Gentleman makes the same case as was made yesterday by the hon. Member for Eastleigh (Chris Huhne), on the subject of home affairs. It needs no great prescience to suggest that the same case will be made in forthcoming debates about foreign and security policy, the environment and climate change. Is there any area in which the Liberal Democrats do not want further integration and concession of authority?

Steve Webb: There is a hierarchy of issues. Even the hon. Gentleman will accept that some policies are best determined by local government, some by national Governments and some by pan-European bodies— horses for courses. I have no problem with saying that energy policy requires a co-operative element, which is why the European Union has an important role to play.

Mr. Lilley: To paraphrase the hon. Gentleman’s answer, there are no areas in which the Liberal Democrats would not concede more power to the centre.

Steve Webb: The record will show that that is an absurd comment, given what I said.

Article 176 also states that Union policy will

That point has not been addressed much, and I hope that the Minister will say more about what is envisaged. It is an important issue for those of us who want to see more renewable energy. The example that springs to mind is our interconnector with France, which is locked into a high nuclear proportion in its energy supply, so it generates more electricity than it needs in the summer and has to export the excess using its interconnections. Such mechanisms create flexibility in the Europe-wide energy market.

The Minister for Energy (Malcolm Wicks): Given the Liberals’ position of saying no to new nuclear in Britain, is the hon. Gentleman nevertheless happy to receive French nuclear-generated electricity?

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Steve Webb: As the Minister knows, we operate in a Europe-wide energy market and we import nuclear electricity from France. Clearly, the long-term goal is a zero-carbon self-sufficient economy. That is the direction in which we need to head, but nobody is suggesting that we should turn off the taps tomorrow, or that we will become self-sufficient in that sort of timescale.

Mr. Edward Davey (Kingston and Surbiton) (LD): Does my hon. Friend not agree with me that if the French taxpayer wants to subsidise electricity that the British consumer can buy in an open market, that is a very good deal for the British consumer? French taxpayers have to subsidise nuclear energy generation in France to a huge extent. We are benefiting from France’s having to export it at a market price.

Steve Webb: My hon. Friend has just given us the definition of the spirit of solidarity that we all want to see.

Mr. Gummer: Do we now understand that the Liberal objection to nuclear power would be entirely removed if it were proved to be cheaper and more cost-effective than any other system, irrespective of anything else?

Madam Deputy Speaker (Sylvia Heal): Order. I do not want us to stray too far down that route.

Steve Webb: For the record, Madam Deputy Speaker, I will say simply that we have a range of objections, of which cost is only one.

Returning to the treaty provisions on energy, it seems to me that there are several reasons why we should not be suspicious of greater EU involvement in energy policy, but should welcome it. First, the case for working together on climate change is more pressing than ever, given the worsening situation, and if we are to ensure that the costs of tackling climate change are fairly shared. That will not happen if individual states act in isolation; a co-ordinated effort is needed. That is why I welcome the Europe-wide measures on renewables that were announced last week. The Conservative spokesman did not make clear whether he supports Europe-wide action of that sort. That sort of measure can be very effective but it needs partnership, and the provision in the treaty will facilitate that partnership, rather than make it more difficult or require the work to be done through other provisions in other treaties. Let us be explicit and state clearly what is being provided for.

The second reason why countries need to work together on energy policy is that we face many of the same problems at the same time. The hon. Member for Middlesbrough mentioned dependence on Russian gas, and I think that coal will be of increasing importance. The United Kingdom will not face that problem alone; many other European nations will face it as well. We may well have common answers to those problems, which might be facilitated by the treaty. We have a common need to boost renewables, which in some cases may be done better by working together than by working in isolation. We have a common interest—the Secretary of State mentioned this—in developing
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carbon capture and storage technology, and there is a Europe-wide initiative on that. In my view that work is far too slow, both nationally and internationally, but it will certainly not be any quicker if we all adopt the Conservative “You in your small corner, and I in mine” approach to energy policy.

I admit that we were slightly surprised when energy was chosen as the topic for a day’s debate—not because energy is not incredibly important, but because many of the provisions that we have discussed are consolidating provisions, and because one might have assumed that the Conservatives, who apparently favour free markets and a single European energy market, would be entirely in favour of the treaty’s provisions in this respect.

Let me say a word or two about the other article being discussed—article 100, which relates to exceptional circumstances where there is a problem with energy supply. The point has been well made in the debate that it is one of two paragraphs set in the context of an economic policy section, and that the second paragraph to which it is being added is about EU fiscal support for countries struggling with their energy supply. That seems to be a measure that we should welcome and encourage, not fear. The hon. Member for Rutland and Melton was scaremongering in the extreme, offering all sorts of horror stories and saying that this or that could happen, but he provided no substance or evidence for that view, so it is hard to see what the problem is.

This seems to us one of the more straightforward parts of the treaty. When I realised that I was to have the joy of a day spent debating the Lisbon treaty Bill, I dreaded the prospect of the provisions that I would have to deal with being fiendishly complex—but I was astonished to read how plain and straightforward they were. The policy objectives of tackling climate change—

Mr. Lilley rose—

Steve Webb: I am just about to conclude. The policy objectives of tackling climate change and securing energy supply seem to us entirely laudable. They are objectives on which the national interest and the European interest are in harmony, not in conflict, so rather than be hostile to them, we should embrace them.

3.24 pm

Ms Patricia Hewitt (Leicester, West) (Lab): It is a pleasure to follow the hon. Member for Northavon (Steve Webb) and my hon. Friend the Member for Middlesbrough (Sir Stuart Bell) and to have this opportunity to contribute to the debate on an issue that is of real and growing importance to all our constituents. Despite the fact that the United Kingdom, thanks to our own liberalised energy market, has for many years been enjoying, on average, lower energy prices than those across the rest of the EU, in recent months all of us will have heard complaints from our constituents about the severe prices rises facing consumers following the wholesale price rises across the globe. At the same time, we have seen for many years the rightly increasing concern
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among the British public about the impact of climate change, and therefore the need to change—indeed, to reduce—our energy use.

I intend to develop a point made by my right hon. Friend the Secretary of State for Business, Enterprise and Regulatory Reform in his opening speech: that the need for more action in Europe on energy issues is one reason—for me, one of many reasons—to welcome the Lisbon treaty and the Bill. Some years ago, when I was Secretary of State for Trade and Industry, I presented to the House this Government’s first energy White Paper. We confronted the decline in Britain’s North sea oil resources; we examined the policy implications of Britain ceasing to be self-sufficient—or largely so—in energy supplies and becoming a net importer of energy; for the first time we put climate change and carbon emission reductions at the heart of our energy policy; and we argued that in future, energy policy had to be central both to our relations and actions within the EU and, more broadly, to our foreign policy.

Mr. Harper: If, as we argue, the powers to liberalise energy markets are already available in the EU and what is missing is the resolve to liberalise, what in the treaty will change that lack of resolve and ensure that energy markets across Europe are liberalised in practice?

Ms Hewitt: The hon. Gentleman has had several goes at making that point. I shall return to it later in my speech, but the brief answer is that I have no doubt that, because the treaty clarifies powers or provisions that existed in earlier treaties in different sections and puts them together in a single energy power, the Commission, the European Parliament and the Council of Ministers will all feel a renewed commitment and energy in relation to energy issues.

Secondly, as I said when I intervened on the hon. Member for Northavon, the new provision to protect the energy sovereignty of member states in the context of issues that appropriately should be national competences is an improvement on earlier provisions. I would therefore have expected the hon. Member for Forest of Dean (Mr. Harper) to welcome it.

Mr. Ian Taylor: On the subject of competition, does the right hon. Lady agree that the key element is to reinforce the power of the Commission? The answer to my hon. Friend the Member for Forest of Dean (Mr. Harper) is effectively that bringing that clearly into the body of the treaty reinforces the Commission’s power. The one thing that I am sure my colleagues are keen on is having a stronger and more effective Commission, without which there will be no liberalisation within the European Union.

Ms Hewitt: The hon. Gentleman is right, but I am afraid that there is a paradox—a real contradiction—at the heart of the position taken by those on the Conservative Front Bench, and by so many of his right hon. and hon. Friends. The ends that they want to secure, including the liberalisation of Europe’s energy markets, require a stronger Commission, as well as, in many cases, an increase in qualified majority voting within the Council of Ministers—but that is precisely what they object to. That paradox gives rise to the
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rhetoric that we heard, especially yesterday, about those people in Brussels imposing things on us, as if Europe were an occupying power rather than a club of which we are a leading member.

The changes in the world of energy that we highlighted in the energy White Paper five years ago are taking place even faster than we anticipated—most notably, of course, the extraordinary growth in China, India and other emerging economies. It is not only the United Kingdom that is ceasing to be self-sufficient in energy supplies. The European Union as a whole, the United States, China itself, Japan and soon India—in other words, all the world’s major economic centres—are, or shortly will be, net importers of energy.

I can develop that argument further: 50 per cent. of the world’s daily supplies of oil are internationally traded. In just 10 years’ time, 70 per cent. of the globe’s oil requirements will be internationally traded. Of that 70 per cent., three quarters will come from west Africa, Russia and the middle east. The position with gas is similar. There are many, many more importers and fewer exporters, and many—perhaps most—of those exporters are hardly what one would call stable democracies.

In this world of intensifying competition—a world eloquently described by my hon. Friend the Member for Middlesbrough as this interdependent world—the challenges that we face in Britain are challenges that we face in common with our fellow members of the European Union. They are, notably, challenges involving how we secure our energy supplies and how we deal with and reduce CO2 emissions. Equally, much of the action that we need to take in response to those challenges, we can take only in common with our fellow members of the European Union.

The problem—this is the point made by the hon. Member for Esher and Walton (Mr. Taylor)—is not that we have too much Europe, but that we have too little. [Interruption.] Let me develop the point. There is agreement on both sides of the House, even from the hon. Member for Rutland and Melton (Alan Duncan), that Europe’s energy market is not a proper market; it is certainly not a single market—I think that I am quoting him pretty accurately on that. Instead, it is a highly fragmented market physically, but also economically and politically.

The hon. Member for Northavon said that an essential part of our strategy across Europe to secure energy supplies in future lies in having far more interconnections. It is essential in this world of intense and intensifying competition for energy that we have as many providers of energy as possible, and that we have as many pipelines, sources and supply lines as possible. That means more interconnections and more terminals—more storage capacity—for liquefied natural gas. That in turn requires a pretty substantial amount of private sector investment, and that of course requires far more effective liberalisation of Europe’s energy markets.

The hon. Member for Rutland and Melton himself made the point that Europe’s energy market is economically fragmented. He welcomed, as I hope we all do, the Commission’s proposals to liberalise the market, in particular to unbundle distribution and production of energy.

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Mr. Weir: How is that market to be liberalised when some of the main players in the EU, particularly France and Germany, have a totally different attitude to the idea and to the question of energy security? They see their security as built on their national champions, such as EDF and RWE. Liberalisation will happen only if those bodies are broken up and unbundled. As far as I understand it, not only France and Germany but Austria, Bulgaria, Cyprus, Greece, Latvia, Luxembourg, Slovakia and Malta oppose the proposals for unbundling. Even with qualified majority voting, how does that process have any chance of success?

Ms Hewitt: The hon. Gentleman makes an important point. We will secure our goal of energy liberalisation as we have secured so many other goals in Europe—by making and winning the argument, and by ensuring that the Commission comes forward with proposals that make full use of the powers conferred on it by the original treaty, including the competition power, and those that are so helpfully clarified in the Lisbon treaty.

Of course, the Commission’s most recently published proposals stem directly from a broad strategic review of energy requirements and policy across the EU that was initiated by the Government when the UK held the presidency three years ago. Of course those proposals are not yet agreed, and of course we will argue about them. However, we have a better chance of winning those arguments not only because we are right—as I believe, and as I am sure that the hon. Member for Angus (Mr. Weir) and most other hon. Members believe, too—but because we will have a clearer legal base. That is set out clearly in article 176A, which is article 194 in the consolidated text.

The new provision, which protects subsidiarity for those issues that properly belong to member states, is another welcome aspect of the treaty. The new, helpful energy title ensures that in developing proposals for consideration by the Council and by Parliament, the Commission will concentrate on the four goals in paragraph 1 of article 194 and will not seek to intrude, as one or two of its earlier proposals would have done, on a member state’s right to determine the conditions for exploiting its choice between different energy sources and the general structure of its energy supply. In other words, I believe that on energy the treaty will give us more of the right kind of Europe and less of the wrong kind of Europe.

One of the several reasons why the treaty is known in France as la Britannique may well be that we have won so many of the arguments: we have won all those that really matter.

Sir Nicholas Winterton (Macclesfield) (Con): The right hon. Lady seems to be placing great emphasis on the role of the EU in guaranteeing the security of energy for the countries of Europe. How does she explain the EU’s plans for renewables, which do not include plans for nuclear energy? Even worse, they take no account of the back-up needed when the wind is not blowing. That would require Britain to have some 33 GW of capacity constantly available from conventional power stations. How does the right hon. Lady justify her argument? Surely it is nonsense—and European policy, in the main, is nonsense.

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